Carnival Stock Drops Again After Earnings Report

[BlerkOne]

4 hours ago, BermudaBound2014 said:

Thanks -

 

Just so we are clear, like rcl, CCL appears to be refusing shareholder OBC for those taking advantage of the post popular Casino offerings. 

Yes, let's be clear - I often book CCL casino offers and have never been refused. I don't book the $100 offers (so far).

[BermudaBound2014]

31 minutes ago, BlerkOne said:

Yes, let's be clear - I often book CCL casino offers and have never been refused. I don't book the $100 offers (so far).

Like I said, CCL does not allow shareholder benefits with the MOST POPULAR casino offers (which are the free or $100 offers). There are literally dozens of people reporting they have been denied. 
 

Now, whether or not the free or greatly reduced fares should get shareholder is another topic.

 

I only bring this up because you said Royal has complaints about not being able to use casino offers. My point is that CCL is no different. 
 

“Royal may have changed the rules, but there are still complaints you can't combine it with any casino offer and more.”

 

 

 

Edited March 28, 2023 by BermudaBound2014

[kdr69]

Investing.com -- Carnival Corp. (NYSE:CCL) stock edged higher in choppy early trading on Monday, after cruise operator posted a smaller-than-expected loss in the first quarter of its new fiscal year, as revenue rebounded to within 5% of pre-pandemic levels.

Carnival, which has lost over $25 billion over the last three years due to the acute problems caused by COVID-19 in the cruise sector, said revenue rose to $4.4B in the three months through February, thanks to the highest booking volumes for any quarter in its history. The release of pent-up demand meant that $5.7B of customer deposits for cruises flooded in, some 16% above its previous record, set in 2019.

As a result, the group's basic operating performance was markedly better than its own guidance. Adjusted earnings before interest, taxes, depreciation, and amortization rose to $382 million, more than 25% above the midpoint of the $250-350M guidance range it had given three months earlier.

[thomasale]

16 hours ago, ibarrio said:

This would be a good time to buy for a long hold. 100 shares for less than $900 dollars. That $900 will can come back as OBC so it will pay for itself over time.  

Exactly what we did. Already have received 200 of it back.

[kdr69]

Oh look everyone can relax it went up again.....

[ontheweb]

1 hour ago, kdr69 said:

Oh look everyone can relax it went up again.....

"What goes up must come down"--Spinning Wheel by Blood, Sweat, and Tears.

 

[mz-s]

Went up? The stock is down 50% over the past year and down nearly 90% over the past 5 years. So it went up a penny yesterday, big whoop. Look at the overall trend.

[ontheweb]

1 hour ago, mz-s said:

Went up? The stock is down 50% over the past year and down nearly 90% over the past 5 years. So it went up a penny yesterday, big whoop. Look at the overall trend.

I think the poster you are reacting to was being sarcastic. At least that is how I read his post. Perhaps, he should have used an emoji.

[BlerkOne]

6 hours ago, kdr69 said:

Oh look everyone can relax it went up again.....

By a healthy percentage. Probably would have been higher except for being held back by Royal and NCL.

[BermudaBound2014]

7 hours ago, kdr69 said:

Investing.com -- Carnival Corp. (NYSE:CCL) stock edged higher in choppy early trading on Monday, after cruise operator posted a smaller-than-expected loss in the first quarter of its new fiscal year, as revenue rebounded to within 5% of pre-pandemic levels.

Carnival, which has lost over $25 billion over the last three years due to the acute problems caused by COVID-19 in the cruise sector, said revenue rose to $4.4B in the three months through February, thanks to the highest booking volumes for any quarter in its history. The release of pent-up demand meant that $5.7B of customer deposits for cruises flooded in, some 16% above its previous record, set in 2019.

As a result, the group's basic operating performance was markedly better than its own guidance. Adjusted earnings before interest, taxes, depreciation, and amortization rose to $382 million, more than 25% above the midpoint of the $250-350M guidance range it had given three months earlier.

 

Translation: CCL lost less money than they were expected to lose.

 

Important to note: They still lost money (even at 91% occupancy) and their debt continues to grow. They also expect to lose more money in the upcoming quarters. 

 

During the fiscal first quarter, the company reported a GAAP net loss of $693 million

 

Total debt (current and long-term) as of Feb 28, 2023, was $35.1 billion compared with $34.5 billion as of Nov 30, 2022.

 

 

Edited March 28, 2023 by BermudaBound2014

[BermudaBound2014]

Sorry, I forgot to add this snipit to my above post and imo it's the most important information coming out of yesterdays quarterly release.

 

You can listen to all the rah-rah about beating estimates this quarter, but CCL is telling us they expect to continue to lose money all of 2023 😞. 

 

Carnival indicated it would lose $0.34 to $0.42 per share in the second quarter. Analysts were anticipating a drop of $0.28. For 2023, the company predicts a loss of $0.28 to $0.44 per share, at least four times more than forecasts.1

 

Carnival Guidance Sinks Shares (investopedia.com)

 

 

Edited March 28, 2023 by BermudaBound2014

[mz-s]

28 minutes ago, BermudaBound2014 said:

Sorry, I forgot to add this snipit to my above post and imo it's the most important information coming out of yesterdays quarterly release.

 

You can listen to all the rah-rah about beating estimates this quarter, but CCL is telling us they expect to continue to lose money all of 2023 😞. 

 

Carnival indicated it would lose $0.34 to $0.42 per share in the second quarter. Analysts were anticipating a drop of $0.28. For 2023, the company predicts a loss of $0.28 to $0.44 per share, at least four times more than forecasts.1

 

Carnival Guidance Sinks Shares (investopedia.com)

 

 

 

What path forward do they have besides bankruptcy? Things don't get much better than 91% occupancy, if that isn't profitable then they're just not a sustainable business.

[Oceansaway17]

I watched on CNBC and I thought his answer was not very good when reply to why is the stock price is down when business is supposed to be good.  I mean a bit embarrassing the value of the stock.

[BermudaBound2014]

16 minutes ago, mz-s said:

 

What path forward do they have besides bankruptcy? Things don't get much better than 91% occupancy, if that isn't profitable then they're just not a sustainable business.

 

Obviously this is just my opinion:

 

From what I understand, pre-covid cruise lines needed to sustain 96% occupancy to turn profit. Obviously that is before the tremendous increase in interest only payments on 35 Billion of debt (not to mention inflation). But, back then it was not uncommon for cruise lines to have 100% occupancy (or greater) on a very regular basis.

 

The thing that makes my eyebrows raise with this quarterly release is that CCL said they expect to reach 100% occupancy in 2023 yet they still predict significant loss in 2023. That's a big admission.

 

However; CCL is the largest player in the industry. It's not even close. They have the option to sell off entire cruise lines to reduce debt. They just sold one Seabourn ship to Japan and the rumor is that they may sell the entire Seabourn fleet to the Saudis. Take a look at what they are doing in the port of Dubai. Saudis have the money and already own a big chunk of CCL. There are other possibilities besides bankruptsy, but I do agree that a major restructuring is inevitable. 

 

I've been short on cruise line stock since the restart. Too many strikes against the industry to ever get it back to pre-pandemic levels.  Prolonged CDC restrictions, inflation, worker shortages, supply chain, and much of Johnny Public left with the image of cruising in a petri dish. While many of these obstacles have been removed, I remain short. On all three cruise lines.  I believe RCL is the strongest of the three, but that's not saying much.

[Honolulu Blue]

Nothing to do with what's been said in this thread so far (I haven't read most of it), and certainly of much more interest to me than anyone else, but I took some notes that I found interesting from Carnival's most recent earnings call transcript:

 

(except for names, emphasis is mine)

 

Daivd Bernstein, Carnival Corp. CFO:  "...the absolute onboard spending on our European brands is less than that on our North American brands. Our European brand guests tend to drink a little bit more but gamble a lot less."

 

"...as we continue to close the gap to 2019 occupancy, many of the remaining cabins left to be filled are inside cabins. As we fill our increasingly shrinking remaining inventory driving adjusted EBITDA higher, we will fill the last of our inside cabins, lowering our average net per diems."

 

"...we remain nimble and continue to aggressively seek opportunities to accelerate our path back to strong profitability."

 

"I feel great as I report that we are beyond the peak of our total debt. Total debt peaked at over $35 billion in the first quarter of 2023 when we drew on the export credit for P&O Cruises Arvia at the time of delivery. We believe with over $8 billion of liquidity, we are well positioned to pay down near-term debt maturities of $1.8 billion for the remainder of 2023 from excess liquidity. And by year-end, we expect our total debt to be down to approximately $33.5 billion."

 

"...looking forward, I expect substantial increases in adjusted free cash flow in 2024 and beyond through durable revenue growth and gross margin improvement to drive down our debt balances on our path back to investment grade. And as a result, we have no intention to issue equity."

 

From Josh Weistein, Carnival Corp. CEO, in response to a question:

 

"...we feel real good about the fact that we’re over 70% booked for the remainder of the year. We’re tracking well, and wave has continued."

 

Question from an analyst that was answered by both Josh W. and David B.:

 

Steve Wieczynsk [analyst from financial company Stifel]i : ...Josh, you made it very clear in the press release that you believe the company is now in a very solid liquidity position and the use of equity won’t be needed moving forward. So you’ve sat in your seat now for not a year, but let’s call it over six months. Have you given any thought as to a time line now as to when Carnival, the corporation, could return to that important investment-grade status?

 

Josh Weinstein : Our goal is certainly to get there. I’m a former treasurer, so that’s quite important for all of us. The trajectory is going to be driven by significant free cash flow over time. We are working on longer-term views of the world. This is our first quarter. We just gave a full year outlook. So give me a little more time. And we’ll certainly start talking about longer-term targets and initiatives going forward.

 

David Bernstein : But remember that getting back to investment grade is twofold. It’s both improving EBITDA and paying down debt. And so as Josh mentioned in his prepared remarks, in 2024, we do expect to see considerably improved adjusted EBITDA as a result of the occupancy. And with the lower CapEx and only four ships on order and none for 2026, we do expect to be able to accelerate the paydown in debt."

 

Question from Citibank analyst Fred Wightman:

 

Fred Wightman : ...on the ship pipeline, zero ships for ’26, that’s consistent with what you guys have talked about previously. But I think there was also in the past to comment about expecting one or two ship deliveries annually for several years beyond that. Is that still sort of the cadence and plan?"

 

Josh Weinstein : It will certainly be — that’s certainly the plan, one or two. Whether that starts in 2027 or it starts after 2027 is still a question mark. And so we’re very much focused, if you think about the pipeline over the next 4-plus years, it’s the lowest it’s ever been and it will continue to dwindle down as we get our way through the year.

 

Questions from Stephen Grambling from Morgan Stanley:

 

Stephen Grambling : Just thinking about the ship pipeline. You talked about the gross adds, but the other side of the equation is any attrition. Are we now in the normal retirement cycle for the fleet where we should more or less expect maybe one to two per year? Or did you pull forward some retirements that could actually be lower going forward?

 

Josh Weinstein : Yes, we definitely pulled forward some ships that could have been done at a later time. So not anticipating anything of significance over the next couple of years, and then we’ll probably pick back up the cadence that you’re talking about over time, but nothing imminent.

 

Stephen Grambling : ...you talked about a few of the non-ship related projects, Grand Bahama, private islands, et cetera. Can you talk a bit more about how those could potentially impact yields and how the investments may compare to what you’ve done in the past?

 

Josh Weinstein : Yes. Well, I mean, as a starting point, we have a phenomenal footprint in the Caribbean. I think I mentioned in my prepared remarks, Half Moon Cay being pretty much a jewel of the Caribbean in the Bahamas. With the ability for us to generate more differentiated experiences through Grand port, that will absolutely help the Carnival Cruise Line brand, not only on the yield side, but also on the cost side. We’re talking about being able to put another incredibly attractive destination in a very short distance from South Florida, the East Coast of the United States, which helps us tremendously on the cost side, on the carbon footprint side. And with what we’re doing on Half Moon Cay, by adding a pier, that will open up a lot more opportunity for us to bring bigger ships to that island, more guests, a better guest experience and more opportunity to generate not only enhanced ticket pricing because of that, but also onboard spend in the form of spending on board our destinations."

 

The full Q&A is at https://www.insidermonkey.com/blog/carnival-corporation-plc-nyseccl-q1-2023-earnings-call-transcript-1135799/#q-and-a-session if for some reason you want to follow along at home or want to go mining for the other interesting things that the executives had to say.

Edited March 29, 2023 by Honolulu Blue

[BermudaBound2014]

Aloha Honolulu Blue,

 

Great post, thank for sharing. I'm on Maui time (mentally and physically) so I'm super behind in keeping up and haven't even read the transcripts of the conference call yet.  I wanted to tell you thanks for perking my interest :). 

 

As you might suspect, I question everything that is spun in these conference calls, but do find them entertaining. Remember when CCL said they would hit 100% occupancy by spring of 2022? Or how about when RCL said they didn't anticipate selling more bonds, yet did exactly that the next month? Or NCLH saying they have had record bookings for Q4 and then posted 68% occupancy after the fact? These guys are really good at their jobs.

 

There are a few important notes you have bolded that I will be watching to see if they come to fruition. I'm most interested in the 'accelerated debt pay down plan'.... but then he goes on to say they expect to reduce the debt by only 2 Billion this year (from 35.1 to 33.5). Since CCL is currently paying over 500 million per quarter in interest only (over 2 Billion annually) does this mean they plan to pay 2 Billion in interest only payments (and not default) yet nothing on the principle? For me, it's all about the debt.

 

Totally off financial topic, I am interested in the pier at Half Moon Cay. I know they received permission to build this prior to covid but I'm not sure if they have started construction yet? I know there was talk on the HAL board about a Carnival and HAL ship scheduled at HMC for the first time this year, but I haven't read anywhere where the pier is actually being constructed and have no idea how long that should take.

 

Anyway, thanks again!!

 

 

 

 

 

 

 

[BlerkOne]

On 3/28/2023 at 12:30 AM, BermudaBound2014 said:

Like I said, CCL does not allow shareholder benefits with the MOST POPULAR casino offers (which are the free or $100 offers). There are literally dozens of people reporting they have been denied. 
 

MOST POPULAR? Literally dozens? Dozens compared to thousands?

 

But to get back to the actually topic - CCL stock is up AGAIN. And once again by a higher percentage than the wannabe competition. So much for the doom and gloom by false prophets.

[mz-s]

17 minutes ago, BlerkOne said:

MOST POPULAR? Literally dozens? Dozens compared to thousands?

 

But to get back to the actually topic - CCL stock is up AGAIN. And once again by a higher percentage than the wannabe competition. So much for the doom and gloom by false prophets.

 

56 cents is a much bigger percentage of 9 bucks so yes I guess this is a great time to day trade CCL. You stand to make tens of dollars.

[BermudaBound2014]

36 minutes ago, BlerkOne said:

MOST POPULAR? Literally dozens? Dozens compared to thousands?

 

But to get back to the actually topic - CCL stock is up AGAIN. And once again by a higher percentage than the wannabe competition. So much for the doom and gloom by false prophets.

 

Oh please.... Let's look at how CCL has compared to it's 'wannabe competition" since the resumption to cruising. Over the last two years:

 

CCL lost a whopping 62% of it's stock value

RCL lost only 29% of it's value (less than half of what CCL Lost)

Even NCL did far better than CCl losing only 54% of it's value

 

 

 

 

 

 

 

 

 

BTW, CCL was underpreforming compared to it's 'wannabe competators' for the last 5 years. Take a look at 2018-2020. The under-performance compared to the "wannabe competition" is nothing new. Over the last 5 years:

 

CCL lost 85% of its value

NCL lost 75% of its value

RCL lost 47% of its value

 

 

 

 

But it is true that CCL has had a reasonably good couple weeks comparatively. However; it should be noted that CCL has a significantly bigger hill to climb to come even close to the so-called "wannabe competition." 

 

I should also note that I'm not a fan of one line over another. I sail all pretty equally. I'm just speaking to raw data.

 

 

 

 

Edited March 29, 2023 by BermudaBound2014

[BlerkOne]

20 minutes ago, mz-s said:

 

56 cents is a much bigger percentage of 9 bucks so yes I guess this is a great time to day trade CCL. You stand to make tens of dollars.

And when RCL goes bankrupt you lose a lot more.

[BlerkOne]

5 minutes ago, BermudaBound2014 said:

 

Oh please.... Let's look at how CCL has compared to it's 'wannabe competition" since the resumption to cruising. Over the last two years:

 

CCL lost a whopping 62% of it's stock value

RCL lost only 29% of it's value (less than half of what CCL Lost)

Even NCL did far better than CCl losing only 54% of it's value

 

 

 

 

 

 

 

 

 

BTW, CCL was underpreforming compared to it's 'wannabe competators' for the last 5 years. Take a look at 2018-2020. The under-performance compared to the "wannabe competition" is nothing new. Over the last 5 years:

 

CCL lost 85% of its value

NCL lost 75% of its value

RCL lost 47% of its value

 

 

As I have said more than once, anyone who gets stock advice from a cruise board is a fool.

[mz-s]

.

Edited March 29, 2023 by mz-s

[BermudaBound2014]

1 hour ago, BlerkOne said:

Would agree that it is foolish to gather stock advice here on CC.

 

But what is equally foolish is to label those who called the cruise stock decline “doom and gloom false profits”. Because let’s face it, they called it correct. 
 

In fact, I suspect those same “doom and gloom false profits” have laughed all the way to the bank. 
 

 

Edited March 29, 2023 by BermudaBound2014

[BlerkOne]

44 minutes ago, BermudaBound2014 said:

Would agree that it is foolish to gather stock advice here on CC.

 

But what is equally foolish is to label those who called the cruise stock decline “doom and gloom false profits”. Because let’s face it, they called it correct. 
 

In fact, I suspect those same “doom and gloom false profits” have laughed all the way to the bank. 
 

 

I can see false profit was wasted on some. Okay, false prophets are those who continually predict Carnival is going bankrupt, or that CCL stock is somehow inherently worse than other cruise line stocks.

[BermudaBound2014]

41 minutes ago, BlerkOne said:

.......or that CCL stock is somehow inherently worse than other cruise line stocks.

 

All stocks have suffered, but the fact remains: CCL has performed worse than other cruise line stocks. Both during the years immediately preceeding covid, and since the resumption of cruising.

 

No one knows if CCL will continue to perform worse in the future, but those prophets who predicted that CCL would underperform the 'wannabe competition" up to this date were certainly no fools ;-). 

 

 

 

 

Edited March 30, 2023 by BermudaBound2014