The Shocking Secret Behind Carnivalâs Debt
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- āđāļāļĒāđāļāļĢāđāđāļĄāļ·āđāļ 11 āļ.āļ. 2023
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A couple of things you missing, the customer deposits are technically like an interest free loan and from a nominal point of view really valuable. Also the capex cycle looks to slowing down for the next 3 years, so all that additional FCF will go towards deleveraging
I see you have been researching. Lol
Most of Carnivalâs deposits are under early saver rates. These deposits are not refundable so it is cash that will remain in their accounts.
It's a very good analysis. It reinforces a very favorable characteristic of the cruise industry (and applies to cargo/containerization as well): they get your money, in full, prior to delivering the service. Paying down debt has to be their priority because it is squeezing out new capital investment (new ships). Cunard's Queen Ann may be an exception as far as the order books. So it's a bit of a trade-off for Carnival: retire debt consistent with your scale and industry peers
and be ultra stingy with your new build profile. But an aging fleet can be an issue over time. Near term, all the industry metrics look robust except for fuel. So would keep on eye on that. As to how much marginal revenue they can squeeze out, i would say that apart from the 5 star rated lines that price very high but are all inclusive, you are seeing a greater trend to up-charge for on-ship ammenities that were previously included. Increasingly, the cruise industry is justifying their pricing value proposition by comparing the pricing to that of land side hotels/resorts. So I think they have pricing upside given the cost of a 3-4 star hotel that does not include food. Overall, Carnival is on the right track. But they took on far more debt than their industry peers. This could very well have a happy ending. But any road bumps (bad seas) could upset things. And at some point, you have to build new ships. And then of course there is privately held MSC who seems to have a very big appetite to grow and invest (who also happens to be the only major cruise operator with a strong foothold in marine cargo operations.)
AMAZING analysis!!!
This company has a great moat and fantastic management. No one expects that CCL will just walk away from a one off like covid. That said the biggest risk that I see is, if another covid like event occurs. They are not a US based company so they will not be bailed out or helped if such a event were to occur again.
About to buy tomorrow, it Will Turn around
@@jorgefitnessroad8302 I agree, I would wait. their debt is no where in sight to be paid and if there was another recession that stock will suffer. I think a better price will be had.
Hi I'm an investor of carnival and I saw your video very interesting.
If you have time could you analyze the 3rd quarter sales report of CCL?
I saw that their EPS has turned to positive and the demand of the Cruise is ATH
I'm looking foward to these numbers and forecasting that their business will develop and I hope the stock price will reflect the future expectations of the buisness. But it's just my opionion and I might be biased. So I ask you to analyze the 3rd quarter sales report and diagnose their buisness status. Thanks for the video. I recognized the risk of this stock because of you.
I was looking at the Q3 report in this video. Results are definitely turning around. The challenge is the debt overhang and what I think is the inability to raise prices and capacity from here.
The core cash flow from the business is after you pull out the change in deposits (which isn't really cash flow, it's "unearned revenue") and take out capex (which is ongoing) is still only slightly positive. And with $33 billion in debt and interest rates rising that's a tough spot to be in.
exactly and with upcoming recession people may not put deposit for cruising
The cash cycle could go the other direction really quickly.
@@asymmetricinvesting you do very interesting analysis here. I subscribed, but then saw that you work with motleyfool. I hope those idiots won't spoil you. :)
Hello. Can they use depreciation and amortization funds to cover the debt? More than $500 million is written off every quarter, but they don't actually spend that money.
Look up the definition of those terms before you ask stupid questions
@@oilpricesgoingup3337 ð
@@oilpricesgoingup3337 HAHAHAHA Man hes probably just learning take it easy on him. The Answer is no, you can not use depreciate and amortization to cover the debt
We do own CCL as part of our individual equities, we love the potential comeback of it and profiting from it. If we double our investment here, we will be thrilled. We are already up 25% since jumping in while itâs beaten down.
I hope you can answer this question, and the question is that if Carnival no longer had the free cash flow to pay down the debt fast or even cover the interest, could as shareholders we look at the assets of the company i.e- their ocean liners, ships..etc as security in case the company does go down because the majority of their ships individually are worth around a half billion dollars and they have this year just finished developing their newest ship The Queen Anne which costed them around 400 to 400 million. If CCL did and I hope they don't Go in Debt and they liquidated some of their assets could this benefit us?
Debtholders are in line to collect any value from selling ships before shareholders. So, the short answer to your question is no thatâs not a way to look at a company with this much debt.
@asymmetricinvesting Oh I see, I didn't think of that, thanks.
Well you missed the boat. I bought 6000 shares @$8.50 and will ride it for as long as it takes. Cruise Lines, Airlines, Banks, Big Oil and Auto almost always get a bail out. Learned that in 2008-09 crash. Keep trading on fundamentals for pennies at a time.
Cruise lines weren't bailed out during the pandemic
man YOLO it out