CCL's stock price

[VibeGuy]

The benefit information on the IR site hadn’t  been updated.  The Annual Report had been.  
 

https://www.carnivalcorp.com/static-files/ef80ac8c-e40e-42ad-ba8e-62a02fb13d6d - Page 5.  

Edited March 27, 2023 by VibeGuy

[Sweetrosie]

Obviously I wasn't looking in the right areas  but thank you for  posting for me.  Thanks for the smartass responses as well...

[ontheweb]

7 hours ago, Sweetrosie said:

Been doing some research on purchasing ccl stocks to receive the stockholder benefits...  I have read that it expires in July.  Any guesses if it will extend?  We finally have retired and hope to cruise 2x a year... TIA

They have routinely renewed it for years. There is no reason not to as it is a marketing tool that costs them practically nothing. 

 

When the cruise lines were first negatively affected by Covid, many on these board speculated that they would do away with the shareholder OBC or maybe double the amount of shares needed to qualify. Others, like me, argued that that would not happen as there would be no reason to get rid of this marketing tool. As we have seen, even in the worst of times they still routinely renewed it. There is no reason to believe that it will ever disappear.

[Kellyansapansa]

6 hours ago, VibeGuy said:

The exhaustive FAQ that one user was delightful enough to call a “major waste of space” can be found at https://boards.cruisecritic.com/topic/2925912-princess-specific-carnival-corp-plc-shareholder-benefit-faq/   Imagine that. 

 

I would respectfully suggest that the user who made this comment is a far greater waste of space than your extremely helpful FAQ, which I and countless others appreciate immensely. 😊

[PescadoAmarillo]

13 hours ago, VibeGuy said:

What’s the benefit to Princess of improving pre-cruise customer support for people who have already booked?

 

The line has made a decision about how to resource pre-cruise post-purchase support and it’s roughly as good as it has to be.  

It’s good enough for one time but maybe not good enough to want to go through it again. 

[mowogo]

1 minute ago, PescadoAmarillo said:

It’s good enough for one time but maybe not good enough to want to go through it again. 

Which sadly is a step up from lines like MSC that make most on here want to actively avoid pre-cruise customer support.

[PescadoAmarillo]

9 hours ago, VibeGuy said:

The exhaustive FAQ that one user was delightful enough to call a “major waste of space” can be found at https://boards.cruisecritic.com/topic/2925912-princess-specific-carnival-corp-plc-shareholder-benefit-faq/   Imagine that. 

 

As so often on this forum, that speaks more to the responder than the originator who actually provided valuable information. (But, darn it, I missed seeing who it was this time). As since you are the originator, I thank you for it. 

[Guest ldtr]

For those that think customer service is having a material negative impact, CCL just came out with the earnings release for their most recent quarter.

 

CCL had an EBITDA profit of $382 over 32 million better then guidance.  Their GAAP loss of 690 million was also better than guidance.  In spite of higher fuel and interest costs.

 

Revenue was back to 95% of the same quarter in 2019 (pre-covid)

 

Occupancy up to 98%.

 

https://www.sec.gov/Archives/edgar/data/815097/000081509723000030/a20231qbusinessupdate8-k.htm

Edited March 27, 2023 by ldtr

[wowzz]

Just now, ldtr said:

For those that think customer service is having a material negative impact, CCL just came out with the earnings release for their most recent quarter.

 

CCL had an EBITDA profit of $382 over 32 million better then guidance.  Their GAAP loss of 690 million was also better than guidance.  In spite of higher fuel and interest costs.

 

Revenue was back to 95% of the same quarter in 2019 (pre-covid)

 

https://www.sec.gov/Archives/edgar/data/815097/000081509723000030/a20231qbusinessupdate8-k.htm

And the share price "soared" by 1%!

[Guest ldtr]

2 minutes ago, wowzz said:

And the share price "soared" by 1%!

Again, if one looks at the amount of dilution and the amount of debt, the stock price is already at fair value, compared to pre-covid, assuming  revenue at pre-covid levels.  As such any wild swings in stock price would be more wishful thinking than any realistic review of the fundamentals. In other words the stock price is already assuming a successful return to 2019 business levels.  

[VibeGuy]

Fleetwide utilization of 95% is still abysmal.  They can happy-talk the performance vs 2019 all they want but they have a fundamentally different operating cost environment and an unrecognizable debt picture versus the glory days when they printed money.  
 

This summer is going to be extremely telling.  Other players in travel and hospitality have some of their strongest advance indicators in history (US-Europe flight reservations are 22% ahead of average with fares *33%* ahead, Disney is well above pre-pandemic levels, etc). 
 

The only solution to the woes at Carnival Corp is more butts in beds.  It’s far more critical to recoup those relatively fixed per-voyage operating expenses (fuel and crew) from incremental added passengers than find gains in onboard revenue (selling Plus to people who don’t drink and are bad at math).  

[VibeGuy]

2 hours ago, PescadoAmarillo said:

It’s good enough for one time but maybe not good enough to want to go through it again. 

The onboard product has to dazzle, and I think it’s doing that, especially in the eyes of new customers to the line. 
 

I’ve spent, what, pushing six months onboard since the restart, with occupancies ranging from 28% to juuuuuust brushing 90%.  Anecdotally, I think people new to Princess are really enjoying themselves onboard.  The hospitality feels genuine and cutbacks that are obvious to veteran cruisers honestly don’t impact the new blood all that hard.  Some things are dramatically better, even.   If the lines of Carnival are smart (and I’ve never thought they were dumb) they’re looking at sat survey data through the lens of relatively new cruisers and those who have switched lines from peer competitors, and Princess is probably meeting or exceeding expectations across the board.  Hang the diehards.

 

Carnival Corp has a very very short runway to convert a portion of these new guests to diehards - that’s the work of the debt monkey on their back and the fleet renewals that get more expensive to build every day that goes by - macroeconomic pressures all. But I maintain my position that the call center being good is one of the least important factors in doing so. 

[mowogo]

1 hour ago, VibeGuy said:

The onboard product has to dazzle, and I think it’s doing that, especially in the eyes of new customers to the line. 
 

I’ve spent, what, pushing six months onboard since the restart, with occupancies ranging from 28% to juuuuuust brushing 90%.  Anecdotally, I think people new to Princess are really enjoying themselves onboard.  The hospitality feels genuine and cutbacks that are obvious to veteran cruisers honestly don’t impact the new blood all that hard.  Some things are dramatically better, even.   If the lines of Carnival are smart (and I’ve never thought they were dumb) they’re looking at sat survey data through the lens of relatively new cruisers and those who have switched lines from peer competitors, and Princess is probably meeting or exceeding expectations across the board.  Hang the diehards.

 

Carnival Corp has a very very short runway to convert a portion of these new guests to diehards - that’s the work of the debt monkey on their back and the fleet renewals that get more expensive to build every day that goes by - macroeconomic pressures all. But I maintain my position that the call center being good is one of the least important factors in doing so. 

They've announced that until debt is under control they won't be doing the fleet renewals.  I genuinely think the Carnival experiments with bringing Costa ships under Carnival are just preparation to shut down that line to try and save money.  2 different experiments at different price points to convert lets them know exactly how cheap they can be in moving Costa ships worth keeping into the Carnival fleet.  

[VibeGuy]

They’ve already got committed business with the yards - they’re slowing CapEx but they fundamentally understand that they have to operate more “efficient” ships (not just fuel, but more paying customers for the relatively fixed number of officers and expensive staff that it takes to run a ship of any size).  Cutting CapEx in dry dock/updates is smart, but the pressure on the mass market brands to at least incrementally  increase ship size is both fundamental and relentless. 
 

Princess doesn’t necessarily have to be the first or even primary beneficiary.  HAL’s cost structure has dramatically changed through fleet renewal but could still improve.  I think the lower hanging fruit is getting either getting CCL to a “per diem fixed cost per lower berth parity” with MSC, NCL and RCI or find pricing power that I don’t think is there. 
 

If I were running a major cruise holding company, I would have to wonder (a lot) about how the lodging industry has dealt with capital costs vs operating results by using REIT and management company structures to divorce the real estate assets from making the beds and serving up breakfast.   As an investor, I’d actually consider investing in a REIT-like structure that contracts for the build, owns and runs the maritime operations of ships on a long term semi-wet charter basis.  The actual “cruise line” operations (hotel functions, marketing, etc) have fundamentally different pressures and opportunities, and the markets could more easily independently value their worth. This asset-lite model is now the de facto structure in lodging.   
 

Ultimately, there’s one single reason CUK is one of three single equities in my portfolio:  the annual value of the shareholder OBC is greater than the cost of the stock - because we’re onboard 75-90 days a year.  It’s that transactional.  The debt, the dilution, the unimpressive recovery, the segment-wide pressures, the analyst sentiment, the fundamentals - there are way better places to put your money, IMHO, if the goal is income or equity appreciation.   

[Guest ldtr]

2 hours ago, VibeGuy said:

Fleetwide utilization of 95% is still abysmal.  They can happy-talk the performance vs 2019 all they want but they have a fundamentally different operating cost environment and an unrecognizable debt picture versus the glory days when they printed money.  
 

This summer is going to be extremely telling.  Other players in travel and hospitality have some of their strongest advance indicators in history (US-Europe flight reservations are 22% ahead of average with fares *33%* ahead, Disney is well above pre-pandemic levels, etc). 
 

The only solution to the woes at Carnival Corp is more butts in beds.  It’s far more critical to recoup those relatively fixed per-voyage operating expenses (fuel and crew) from incremental added passengers than find gains in onboard revenue (selling Plus to people who don’t drink and are bad at math).  

Considering that a year ago they were well below 70%.  They are now only about 7% below 2019 levels with 98% occupancy not 95%. Their revenue was at 95% of 2019 numbers even with 7% lower occupancy.

 

Sure they have higher cost structure which is why with dilution and debt the stock is fairly priced even with the lower occupancy.

 

Now with occupancy getting back to pre covid level the prices are going to continue to go up.

 

The bad news in the release was lower guidance due to fuel and interest rate expenses and an expected loss for all of 2023.  Not unexpected.

 

 

[Guest ldtr]

1 hour ago, VibeGuy said:

The onboard product has to dazzle, and I think it’s doing that, especially in the eyes of new customers to the line. 
 

I’ve spent, what, pushing six months onboard since the restart, with occupancies ranging from 28% to juuuuuust brushing 90%.  Anecdotally, I think people new to Princess are really enjoying themselves onboard.  The hospitality feels genuine and cutbacks that are obvious to veteran cruisers honestly don’t impact the new blood all that hard.  Some things are dramatically better, even.   If the lines of Carnival are smart (and I’ve never thought they were dumb) they’re looking at sat survey data through the lens of relatively new cruisers and those who have switched lines from peer competitors, and Princess is probably meeting or exceeding expectations across the board.  Hang the diehards.

 

Carnival Corp has a very very short runway to convert a portion of these new guests to diehards - that’s the work of the debt monkey on their back and the fleet renewals that get more expensive to build every day that goes by - macroeconomic pressures all. But I maintain my position that the call center being good is one of the least important factors in doing so. 

A few posts ago you said 95 now you say just brushing 90. Is you next post going to be in the 80s. The occupancy for last quarter was 98% in the release.

[VibeGuy]

21 minutes ago, ldtr said:

A few posts ago you said 95 now you say just brushing 90. Is you next post going to be in the 80s. The occupancy for last quarter was 98% in the release.

The sailings *I’ve been on* have not been at 98 - and I make no claims they are representative at all.  I’m saying I’ve been onboard across a range of occupancy and staffing levels, when there were more crew than guests as well as getting up to normal-ish occupancy, and the onboard experience has been consistently excellent.  What they’re putting out should be perceived by guests as highly desirable.   It’s absolutely not meant to cast any doubt on their reported results, and it’s not meant to be indicative in any way of how they’re executing from a sales perspective fleetwide.  The onboard product is excellent and it’s on sales and marketing activity to get butts in those beds.  
 

GAAP results are what ultimately matters and the company is providing guidance that they’re still going to have a loser of a fiscal year despite being at or above historical occupancy levels and getting higher per diem revenue, and that’s barring any further macro pressure that hits all of leisure.   If they can’t make a buck under GAAP despite returning to historical occupancy levels and having record on board revenue per guest night, I guess it’s the old saw of “we lose a little money on every transaction but we make it up in volume”. 
 

Potential investors should know that the path to real profitability, not BS EBITDA “profitability” is somewhere between uncertain and highly speculative.  The only real hope is eventual interest rate relief (assuming the company is still seen as an average or better credit risk).   The Street saw right through the booking and EBITDA happy talk and sent the stock down 5% on an overall up day for the market. 

 

 

 

[Guest ldtr]

2 hours ago, VibeGuy said:

The onboard product has to dazzle, and I think it’s doing that, especially in the eyes of new customers to the line. 
 

I’ve spent, what, pushing six months onboard since the restart, with occupancies ranging from 28% to juuuuuust brushing 90%.  Anecdotally, I think people new to Princess are really enjoying themselves onboard.  The hospitality feels genuine and cutbacks that are obvious to veteran cruisers honestly don’t impact the new blood all that hard.  Some things are dramatically better, even.   If the lines of Carnival are smart (and I’ve never thought they were dumb) they’re looking at sat survey data through the lens of relatively new cruisers and those who have switched lines from peer competitors, and Princess is probably meeting or exceeding expectations across the board.  Hang the diehards.

 

Carnival Corp has a very very short runway to convert a portion of these new guests to diehards - that’s the work of the debt monkey on their back and the fleet renewals that get more expensive to build every day that goes by - macroeconomic pressures all. But I maintain my position that the call center being good is one of the least important factors in doing so. 

The main reason cruise lines have been slower to recover has been the tighter restrictions and the public perception that they were hazardous.  That perception is going away.

 

Take a look at the hotel chains.  They have gone gang busters on pricing and occupancy is back around 2019 level.  But their services are not anywhere close to what they used to be.  Many of the main hotels such as Intercontinental, Hilton and Marriot do not offer daily room service unless you ask for it.  Even the more expensive brands have cut back on service compared to pre-covid.

 

Airlines are busy, but there service level has also dropped with lost luggage, flight cancellations and other issue even with the increased fares.

 

In looking at the big 3 NCLH, CCL and RCL.  CCL has the lowest debt to revenue of the 3.  NCLH is in the worst shape.  When it comes to operational expenses looking at the last 10k for each line.  NCLH runs about 19,668 per berth per quarter, CCL is around 14,442 per berth per quarter and RCL at around 11,882 per berth per quarter. Those do not exactly line up time wise with CCL coming earlier so I expect that numbers for the same period would be a bit better. Which makes sense with the lines under RCL having the largest average ship size and best operational efficiency.  They are all coming down as we get further into the restart.

 

Also keep in mind that most of the ship building is funded by loans and loan guarantees from the countries in which those ships are being built.  So the issue with interest is not so much about new ship construction as it is about the debts incurred to support operations during the shutdown and restart and the refinancing of that debt.  New ship building is certainly going to be reduced for several years so I expect those countries with major ship yards are going to be offering very good loan deals on any cruise line willing to construct new ships.

 

 

[PescadoAmarillo]

12 minutes ago, VibeGuy said:

GAAP results are what ultimately matters…not BS EBITDA “profitability”. The only real hope is eventual interest rate relief (assuming the company is still seen as an average or better credit risk).   The Street saw right through the booking and EBITDA happy talk and sent the stock down 5% on an overall up day for the market. 

Exactly this. CCL is not a high tech startup. Talking EBITDA smacks of desperation, particularly when “I” is as massive as theirs is. 

[Guest ldtr]

7 minutes ago, VibeGuy said:

The sailings *I’ve been on* have not been at 98 - and I make no claims they are representative at all.  I’m saying I’ve been onboard across a range of occupancy and staffing levels, when there were more crew than guests as well as getting up to normal-ish occupancy, and the onboard experience has been consistently excellent.  What they’re putting out should be perceived by guests as highly desirable.   It’s absolutely not meant to cast any doubt on their reported results, and it’s not meant to be indicative in any way of how they’re executing from a sales perspective fleetwide.  The onboard product is excellent and it’s on sales and marketing activity to get butts in those beds.  
 

GAAP results are what ultimately matters and the company is providing guidance that they’re still going to have a loser of a fiscal year despite being at or above historical occupancy levels and getting higher per diem revenue, and that’s barring any further macro pressure that hits all of leisure.   If they can’t make a buck under GAAP despite returning to historical occupancy levels and having record on board revenue per guest night, I guess it’s the old saw of “we lose a little money on every transaction but we make it up in volume”. 
 

Potential investors should know that the path to real profitability, not BS EBITDA “profitability” is somewhere between uncertain and highly speculative.  The only real hope is eventual interest rate relief (assuming the company is still seen as an average or better credit risk).   The Street saw right through the booking and EBITDA happy talk and sent the stock down 5% on an overall up day for the market. 

 

 

 

The main thing that is important about EBITDA is that it shows the most important thing which is cash flow from operations.  With operations being cash flow positive a company has lots of options.  The absolute worst case would be a restructuring BK which would wipe out the shareholders and make the debt holders into shareholders.  With operations being cash flow positive it gives management a lot more leverage in dealing with debt holders as well as the ability for considerable more financing options.  Bottom line is that the cruise lines are moving well on their path in returning to full operations.  Prices will increase.  Ships are sailing fuller.  It will take about 10 years or so before they fully take care of the Covid debt.  But they are showing that there is a path and progress is being made.

 

The main reason for the drop was the increased fuel costs and the delay in profitability being pushed back from 2023 to 2024.

 

I will use a comment from a former CEO of American Airlines a few years ago.  Airlines are good industry to be in, but not a good investment. 

 

Being a similar high capital, low margin business on can say the same thing about cruise lines.  One can use their product, one can be in the industry, but their stocks have never shown good returns compared to other investments

[VibeGuy]

I agree that export financing is going to be key to sustained fleet renewal.  I also agree that the interest pressure is really coming from debt they’ve already accrued and have to hope they can refinance it at more commercially advantageous terms.  While it’s not bad to have the lowest debt:revenue ratio of the peer group (as I mutter something about being the skinniest person at WeightWatchers), in absolute terms, their debt:income ratio is so wildly different from the historical norms that I’m still struggling to see how they dig out in seven or eight years.   That’s an investment horizon beyond many equity investors’ comfort level.  
 

The amazing thing about the hotel sector is how operators have been able to get monster REVPAR growth while delivering a substantially degraded cost-reduced product, and it’s not just in full-service/upper upscale, it’s in virtually every segment from roadside exterior-corridor to top tier luxury.  People want to go somewhere and they’re biting the bullet and doing so.    The cruise business just isn’t seeing that kind of pricing power for whatever reasons and, more importantly, they can’t rapidly pivot costs the way land-based operators can.  
 

I like the product, I think Princess is doing a great job onboard, I think Carnival Corporation is a lousy investment over the foreseeable future.  All of these things can be true simultaneously. 

[Guest ldtr]

1 minute ago, PescadoAmarillo said:

Exactly this. CCL is not a high tech startup. Talking EBITDA smacks of desperation, particularly when “I” is as massive as theirs is. 

Not really.  What they are saying with EBITDA is that their operations are cash flow positive. A pretty critical step.

 

As far as the other CCL has a lower revenue to debt load than with NCLH or RCL.  RCL has a bit better operational efficiency is a lower cost per berth, but that is largely because they sold off their premium line and they have the largest average ship size across their brands. CCL is also doing a bit better in occupancy rate.

 

Balance sheet wise if CCL is bad the others are worse.  You expect both RCL and NCLH to also talk about EBITDA and that they are cash flow positive on their operations if they turn the corner in their next quarterly releases.

[Guest ldtr]

2 minutes ago, VibeGuy said:

I agree that export financing is going to be key to sustained fleet renewal.  I also agree that the interest pressure is really coming from debt they’ve already accrued and have to hope they can refinance it at more commercially advantageous terms.  While it’s not bad to have the lowest debt:revenue ratio of the peer group (as I mutter something about being the skinniest person at WeightWatchers), in absolute terms, their debt:income ratio is so wildly different from the historical norms that I’m still struggling to see how they dig out in seven or eight years.   That’s an investment horizon beyond many equity investors’ comfort level.  
 

The amazing thing about the hotel sector is how operators have been able to get monster REVPAR growth while delivering a substantially degraded cost-reduced product, and it’s not just in full-service/upper upscale, it’s in virtually every segment from roadside exterior-corridor to top tier luxury.  People want to go somewhere and they’re biting the bullet and doing so.    The cruise business just isn’t seeing that kind of pricing power for whatever reasons and, more importantly, they can’t rapidly pivot costs the way land-based operators can.  
 

I like the product, I think Princess is doing a great job onboard, I think Carnival Corporation is a lousy investment over the foreseeable future.  All of these things can be true simultaneously. 

Sure do doubt about that all of the cruise lines are lousy investments.  Some of the bond holders might just find themselves to be shareholders in a year or two.

 

Considering that they were totally shutdown, with public outcry in many countries concerning ship board outbreaks, they are actually doing pretty well in getting passengers back on board. The next year will show if how much pricing power they have.  I expect they will try for at least a 25% increase in daily cabin rate, in addition to the increased on board spend from the packages.  I expect that we will continue to see more ways that they try and push the packages.  I am waiting for and dreading the day that Princess follows HAL and makes non-package deposits non-refundable.

 

In the meantime we have 80 days booked on Princess over the next year and about 60 days on other lines (Elixir, Oceania, HAL, etc).  Still find the product is a good value.

[VibeGuy]

Padgett has previously said their goal is 80% of pax on Plus or Premium and I can totally see it happening.   I’m actually of the belief that they can exceed that with the switch to allowing onboard upgrades.  

[Jeal]

Soooo - is this a good time to buy 100 shares of CCL stock?