Excellent Quarterly Performance

[jsglow]

All metrics that a professional would look at exceeded or achieved expectation. CCL Corporation had one helluva summer. The return to financial health is certainly ahead of schedule.

 

https://www.carnivalcorp.com/news-releases/news-release-details/carnival-corporation-plc-reports-all-time-record-revenue-and

[Elaine5715]

I helped!

[weezal]

wall st disagrees
https://www.marketwatch.com/investing/stock/ccl

[jimbo5544]

Pretty outstanding new for the company.

 

https://cruiseindustrynews.com/cruise-news/2023/09/carnival-corp-releases-2023-q3-earnings-record-revenue/

[ninjacat123]

1 hour ago, jimbo5544 said:

Pretty outstanding new for the company.

 

https://cruiseindustrynews.com/cruise-news/2023/09/carnival-corp-releases-2023-q3-earnings-record-revenue/

Thanks for posting! Does the statement below mean the highest Third quarter or highest quarter ever?  Thx!

• Third quarter revenues hit an all-time high of $6.9 billion.

[firefly333]

23 minutes ago, ninjacat123 said:

Thanks for posting! Does the statement below mean the highest Third quarter or highest quarter ever?  Thx!

• Third quarter revenues hit an all-time high of $6.9 billion.

Rcl they also said highest ever. But still has no pe, no pe means a overall loss, paying off debt faster. 

 

If earnings were that terrific the stock wouldnt drop everytime they announce earnings. 

 

https://finance.yahoo.com/quote/CCL?p=CCL&.tsrc=fin-srch

 

Inflation means higher than ever prices and higher than ever costs. Oil and wages up up and away headwinds besides the debt. 

 

I guess let's cheer on ever higher cruise prices? .. until they have a profit at least forecast in the near future hard to get too excited. 

[john91498]

Plus the 31 billion in debt is not helping...

[jimbo5544]

As far as I know, they only way to improve is to make money.  Paying off debt is also a good thing, reclassifying debt with new lower offerings is also a good thing.  We can cherry pic the single items to death.  The facts are they had their best quarter in years.

Edited September 29, 2023 by jimbo5544

[BlerkOne]

Carnival is paying down debt faster than expected. No fuel hedging needed - which is overrated anyway.

[tidecat]

1 hour ago, BlerkOne said:

Carnival is paying down debt faster than expected. No fuel hedging needed - which is overrated anyway.

Fuel hedging makes sense only if you expect to save more than what you are paying in interest on the hedge. Given prime is at 8.5%, Carnival would need at least 10% fuel savings to safely break even, and would need more like 15-20% to see any meaningful net savings.

 

Carnival's fuel expense was $200 Million lower in Q3 2023 than in Q3 2022. Even for the nine months, Carnival's fuel expense is $85 Million lower in FY 2023, even in spite of revenues being up nearly 100%. Even when you factor in the increase Available Lower Berth Days, which are up a little over 10% for the quarter, and about 33% though nine months versus last fiscal year, that is a rather impressive result.

[BlerkOne]

9 minutes ago, tidecat said:

Fuel hedging makes sense only if you expect to save more than what you are paying in interest on the hedge. Given prime is at 8.5%, Carnival would need at least 10% fuel savings to safely break even, and would need more like 15-20% to see any meaningful net savings.

 

Carnival's fuel expense was $200 Million lower in Q3 2023 than in Q3 2022. Even for the nine months, Carnival's fuel expense is $85 Million lower in FY 2023, even in spite of revenues being up nearly 100%. Even when you factor in the increase Available Lower Berth Days, which are up a little over 10% for the quarter, and about 33% though nine months versus last fiscal year, that is a rather impressive result.

Given the yo-yo nature of oil prices, world affairs, and the fact that nobody would hedge 100% it is never a slam dunk.

[Lee Cruiser]

Carnival definitely had the best quarter in quite some time.  Turning a profit is always better than a loss, though they do project a loss of 10 cents a share in the fourth quarter due to fuel prices.  Also, it's always good to be paying down debt rather than incurring more.

 

However, they should be having higher revenue.  The prices of cruises and all the extras have risen considerably over the last year, much more than the rate of inflation.  The price of onboard internet, cheers, soft drinks, milkshakes, and general onboard shopping has risen greatly! Gone are those 2 for $20 t-shirt sales.  They now have prices like 2 for $30 and 2 for $35.  That's at minimum a 50% increase in price, so they are far outpacing any increases they are paying.  Obviously, there have been many topics on here about extraordinary rising prices like those of cabanas and such.  It's great for them to see rising revenue, but that's mostly because of rising costs of the cruises and all of their onboard products and services.

 

Will there come a point where people are no longer willing, or able to pay the rising price of everything?  For us, we've reached that point on some cruises.  We already cancelled our November cruise on Valor because it was going to be by far the highest cost per day we've ever paid for a cruise and extras.  We decided to take another trip instead for several hundred dollars less for the same amount of time.  While we will probably take our January cruise because it was booked under one of the great rate codes from last year, we are in the process of making a decision about our April Jubilee cruise.  Chances are good we will cancel that one, but not 100% sure yet. Right now we have less cruises booked than we've had in years and for the first time in probably 10 years, don't have a cruise booked past next year.  I suspect there will be more of that in the future, especially if prolonged high interest rates cause an economic downturn.

[Lee Cruiser]

Also, someone please correct me if I am wrong, but hasn't Carnival's cash on hand dropped by about $3 billion this year?

[tidecat]

36 minutes ago, Lee Cruiser said:

Also, someone please correct me if I am wrong, but hasn't Carnival's cash on hand dropped by about $3 billion this year?

Yes, the cash on hand has dropped considerably. It was $7 billion at the end of Q3 2022, compares to $2.87 billion at 8/31/23. That's not necessarily a bad thing, as that cash is paying down debt or being invested in ships that will one day make money (and technically are brining in ones now in terms of deposits)

 

Q4 may see some further erosion in cash on hand. Depreciation expense for Q4 will be a little over $500 million, but the actual cash spend on new builds is only $267 million for Q4. Carnival is scheduled to repay around $462 million in principal. So that only represents a burn of about $200 million plus or minus the net income/loss. Even a $0.20/share net loss will only be about $260 million, so Carnival should end the year with about $2.4 Billion in cash on hand.

 

They do have a short-term borrowing facility if they need it, but I don't see them needing it. Q1 2024 should be profitable even before adding back depreciation (it was in 2019), and the debt and shipbuilding burdens are similar to Q3 and Q4 2023. Obviously if Q2 and Q3 2024 perform similarly to Q3 2023, that would be over $1 Billion of cash being generated even after making principal and shipbuilding payments.

[firefly333]

3 hours ago, BlerkOne said:

Given the yo-yo nature of oil prices, world affairs, and the fact that nobody would hedge 100% it is never a slam dunk.

It was a slam dunk that saudi Arabia wouldnt let oil stay below $80 so they cut their own output. They needed to prove they are in the drivers seat. Typically oil rises in winter which is coming. There is also the oil futures market where professionals are betting where they expect oil to be in nov dec etc.

 

Nov futures now riding around $90. Every day CNBC shows next 2 months of oil futures. 

 

https://www.cnbc.com/quotes/@CL.1

 

.. though oddly oil stocks arent jumping. Out of favor, cheapest values out there. 

 

Even though the fed skipped this last rate hike mostly due to pressure imo because banks are under hedged for rate hikes, doesnt mean inflation under control, though yes plenty of signs of improvement,  still some indicators are up not down and now the worry about wageflation with all the unions pushing. We got into this spiral last time where wages started to drive inflation. I've also noticed even though no rate hike in sept, mortgage rates are going higher. 

 

When oil dropped a while back imo it would have been smart to hedge a bit imo. It's too bad they have so much debt they are so cash strapped, it would have been a easy bet. If I knew so did carnival. 

 

I'm really hoping they get where they are turning a profit. I'd settle for a few cents right now, steady profit. Analysts are concerned about the lack of new builds after jubilee and voicing their concern. New builds command higher prices. Nothing after this dec projected. Just bringing ships not selling well in from other markets. Rcl icon will be built for kids and families. More cabins for 3 and 4 so they can get 10k on that ship of crew and pax. Not for everyone but clearly some want a ship like Disneyland. Utopia coming in brand new to do 3/4 days to coco cay which is already selling it's new adult area. Very little fuel needed to go back and forth to the Bahamas from florida. Changed up celebrity to do shorter runs saving on fuel. 

 

I'm sure I'm missing a lot of buzz but all I saw was john heald announcement carnival will get rid of libraries to put revenue areas there, more bars. I'll be off this b2b cruise sunday and have a better handle on the market, but the news doesnt seem good. Big 3 cant give in completely to uaw or the big 3 go bankrupt within 4 years. Ford is losing 60k per ev its sells. Thank goodness carnival isnt in their shoes, but a good outcome doesnt look possible right now. 

 

Let's see a year from now, and hope carnival and the economy are both in a better place.

 

 

[BlerkOne]

1 hour ago, firefly333 said:

It was a slam dunk that saudi Arabia wouldnt let oil stay below $80 so they cut their own output.

 

 

 

Given the instability in the world there are no slam dunks.

[BlerkOne]

3 hours ago, tidecat said:

They do have a short-term borrowing facility if they need it, but I don't see them needing it.

Carnival hasn't had a problem raising cash when needed. Paying down debt faster than predicted only makes it easier.

[BlerkOne]

More on oil. Given that the newest Carnival ships (including Princess) primarily use LNG, and the price of LNG has been dropping, hedging LNG wouldn't make sense.

[jimbo5544]

4 hours ago, BlerkOne said:

More on oil. Given that the newest Carnival ships (including Princess) primarily use LNG, and the price of LNG has been dropping, hedging LNG wouldn't make sense.

Now don’t you go adding facts to a discussion.  

[stobe1]

Speaking of fuel and the expense of it. Just for some insight at how much it impacts the bottom line, or forces companies to raise prices and fares...

 

I have mentioned before that I am an airline pilot and my company, like most, stress to us constantly about conserving fuel as much as possible. Using ground power when at the gate, minimal use of the auxiliary power unit (which provides electrics and air conditioning while the engines are shut off on the ground), single engine taxi, flying optium routes at optimum flight levels based on winds,  aircraft weight and temperatures, etc...

 

At my airline, a 10 cent increase in fuel expense translates into $83 million annually. A $1 increase is an $830 million extra expense in fuel annually. I am sure the costs are a similiar increase for cruise lines. Heck, we all feel it in our own wallets every time we stop at the pump.

 

As far as hedging, our company hedges about 40% of fuel to lock in lower fuel prices to balance against rising fuel costs. Hedging is a gamble but they have experts, actuaries and spreadsheet gurus making those decisions.

Edited September 30, 2023 by stobe1

[firefly333]

21 minutes ago, stobe1 said:

Speaking of fuel and the expense of it. Just for some insight at how much it impacts the bottom line, or forces companies to raise prices and fares...

 

I have mentioned before that I am an airline pilot and my company, like most, stress to us constantly about conserving fuel as much as possible. Using ground power when at the gate, minimal use of the auxiliary power unit (which provides electrics and air conditioning while the engines are shut off on the ground), single engine taxi, flying optium routes at optimum flight levels based on winds,  aircraft weight and temperatures, etc...

 

At my airline, a 10 cent increase in fuel expense translates into $83 million annually. A $1 increase is an $830 million extra expense in fuel annually. I am sure the costs are a similiar increase for cruise lines. Heck, we all feel it in our own wallets every time we stop at the pump.

 

As far as hedging, our company hedges about 40% of fuel to lock in lower fuel prices to balance against rising fuel costs. Hedging is a gamble but they have experts, actuaries and spreadsheet gurus making those decisions.

Makes sense to me. Had the banks hedged on interest rates and not piled into long term treasuries and long term low rate mortgages they wouldn't have been in such trouble. Besides the ones that went bankrupt I've heard about 20 more smaller regional banks were in trouble. Powell has been under pressure to change his goal from 2% to 3% and stop raising to save the banks. 

 

Anyone who says no sense hedging is a gambler. I'm more conservative. I inherited a bit of money when my last parent passed in January and right now I'm flipping 6 month CDs. So I'm betting on higher not lower rates 6 months from now. I watch the rates like a hawk. Enough in those 6 treasuries to make a difference. 

 

Banks even used the excuse when they went under they were stupid enough to believe the inflation was transitory baloney. If I knew govt spending was continuing and it's why inflation was rising, doesnt matter if the cause was good or bad, you knew, I knew, banks should be as smart as what I knew just from the numbers. Though of course yes i knew they paid themselves huge bonuses before they went under. 

 

Politics dont matter just the numbers, facts. Hedging might mean less profit but it also protects on the downside losses. Like if you trade stocks, some use a trailing stop to protect profits, though it could catch and potential future profits also be lost. It's always a gamble. I tend to be conservative and protect capital. Hence treasuries not random stocks which have higher risk with the trust money.  

 

Ccl not hedging could mean higher profits ..or higher losses. 

 

Credit card companies are seeing ever higher amounts of spending .. and defaults. Could be a next domino. Defaults. 

[BlerkOne]

Hedging is a guaranteed gamble. Cruise ships are adding shore power as a way to cut back on fuel consumption. Whether that really saves anything as far as the planet goes depends on how the electricity is generated. It was strange on our recent Miracle cruise when they switched over to shore power - the ship went dark for the minute or so it took for the transition to take place.

 

Carnival knows better than armchair admirals what is best for their business model.

 

"Management explained that the company has never employed fuel hedges, nor does Carnival think it's a bright idea for a cruise line to hedge against rising fuel costs. CEO Donald remarked that Carnival believed in maintaining its economic freedom, meaning that when a company purchases directional futures contracts on commodities, it's sacrificing profit if commodities drop instead of rise. Donald remarked that Carnival never tries to play "the fuel game," as "even oil companies don't know where the fuel prices are going.""

 

Meanwhile, I think I read Carnival is running at 109% occupancy? And that's the average across 9 brands.

 

Besides, the ticket contract is clear that Carnival can pass increased fuel costs onto cruisers if the price of oil goes high enough.

[Elaine5715]

48 minutes ago, BlerkOne said:

Hedging is a guaranteed gamble. Cruise ships are adding shore power as a way to cut back on fuel consumption. Whether that really saves anything as far as the planet goes depends on how the electricity is generated. It was strange on our recent Miracle cruise when they switched over to shore power - the ship went dark for the minute or so it took for the transition to take place.

 

Carnival knows better than armchair admirals what is best for their business model.

 

"Management explained that the company has never employed fuel hedges, nor does Carnival think it's a bright idea for a cruise line to hedge against rising fuel costs. CEO Donald remarked that Carnival believed in maintaining its economic freedom, meaning that when a company purchases directional futures contracts on commodities, it's sacrificing profit if commodities drop instead of rise. Donald remarked that Carnival never tries to play "the fuel game," as "even oil companies don't know where the fuel prices are going.""

 

Meanwhile, I think I read Carnival is running at 109% occupancy? And that's the average across 9 brands.

 

Besides, the ticket contract is clear that Carnival can pass increased fuel costs onto cruisers if the price of oil goes high enough.

It wasn't that long ago that they had fuel surcharges.  

[ninjacat123]

12 minutes ago, Elaine5715 said:

It wasn't that long ago that they had fuel surcharges.  

When did that happen?  I haven't seen fuel surcharges on my cruises from 2010 to now.  Maybe I was lucky...

[stobe1]

11 minutes ago, ninjacat123 said:

When did that happen?  I haven't seen fuel surcharges on my cruises from 2010 to now.  Maybe I was lucky...

I feel her pain. It was the late '00s and early teens when oil was way up that they had the fuel surcharges. I think it's an issue of the the older you get the faster time goes by. I have that problem. 10 years doesnt seem all that long ago to me at all. It goes by in a blink. Especially since now they are calling '90s music "oldies" on the radio.

 

The great ancient philosopher Ferris Bueller once said, "Life moves pretty fast. If you don't stop and look around once in a while, you could miss it."

Edited September 30, 2023 by stobe1