9/19/2023 0 Comments Norwegian cruise line stock![]() ![]() Luckily, better days seem to be ahead for Norwegian Cruise Line, as it was announced that by May of 2022, their entire fleet is supposed to be out and sailing if no major disruptions occur. FCCs – ~60% of the cumulative booked position for full year 2022 are loyal repeat cruisers to our brandsĪll of this serves to point out the fact that the company is in dire need of having its cruise fleet out and sailing again, and would otherwise be faced with severe risks in terms of servicing its debts and staying afloat. – ~70% of the cumulative booked position for full year 2022 is cash bookings vs. The overall cumulative booked position for the first half of 2022 is below the extraordinarily strong levels of 2019 while the second half is in line with the comparable 2019 period and with all periods at higher prices. We would arrive at an EBITDA/Interest Expense ratio of 2.08x.įleet Sail Schedule (NCLH 2021 Annual Report) If the cruise entertainment industry would go back to normal in late 20, it is not unreasonable to expect similar numbers to reappear, so we could compare the last positive EBITDA quarter to today's quarterly interest expense. This might not be as fair considering the company has not been doing business. The same ratio today stands at a negative 2.72x, as the company has to pay an expensive $178 million in interest payments. These days are long gone, since Norwegian Cruise Lines generated a negative EBITDA of $489 million last quarter. The company's EBITDA/Interest Expense ratio before the pandemic outbreak was 7.40x, meaning generated EBITDA could cover the interest payment by more than seven times. They went from having a manageable pre-pandemic Total Debt/EBITDA ratio of 3.72x and a Net Debt/EBITDA ratio of 3.59x to today's negative 7.41x Total Debt/EBITDA ratio and negative 6.42 Net Debt/EBITDA ratio. To place matters into perspective, the company went from a current ratio of 0.20x and a quick ratio of 0.09x at the end of 2019 to a current ratio of 0.89x and a quick ratio of 0.78x at the end of 2021. This means that Norwegian was forced to double its debt as a result of the closed-down operations during the pandemic. In other words, the company had to raise $6.6 billion of debt in order to stay afloat. That is a significant increase from its pre-pandemic debt levels back in early 2019, when the company had little more than $6 billion in debt. Furthermore, management was able to build up a relatively strong cash position of $2.70 billion, given the circumstances.Īs per the latest quarterly filing, the company had $13.10 billion in debt and $11.17 billion in net debt. With a part of the cruise fleet finally sailing, the company has started generating some much-needed cash flow, which has brought some further relief to the finances. On the brighter side, management was successful in stabilizing its finances by bringing the expenditures somewhat under control while putting an end to the rise of debt. In the last year alone, the company burned through $2.6 billion of cash. During this time, with no cash-generating ability, the company had no meaningful way to fund expenditures other than to resort to debt and equity financing. ![]() Norwegian Cruise Line's entire cruise fleet consisting of 28 ships has been docked for the better part of the last two years. However, is this truly the case? We will share our views on the matter and try to answer why we believe Norwegian Cruise Line is still far from a recovery meaningful to its shareholders. With this, many are expecting the long-awaited recovery of cruise stocks and a brighter future for the entertainment giants. Still, with pandemic cases and deaths losing their momentum over the course of the past several months, many countries have been rolling back restrictions amid optimism that the end of Omicron has brought the world one step closer to the end of the entire pandemic. With lockdowns and travel restrictions in place, being literally closed down and with no ability to generate cash, cruise stocks have been fighting an uphill battle for a long time. Seemingly endemic within the industry, cruise stocks have drawn the short end of the stick. ![]() Travel and leisure stocks have been hammered for the better part of the last two years due to ongoing pandemic-related issues. ( NYSE: NCLH) is an American entertainment cruise giant that had a very interesting couple of years in the cruise business. ![]()
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