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Category: Stock Market and Norwegian Cruise Line Holdings (NCLH)
Date: 10 September 2020 Stock Price of NCLH: $17.93 We take a look at the 2nd quarter earnings report of their 2020 fiscal year of Norwegian Cruise Line Holdings. The company and its stock price has been hit extremely hard by the Covid-19 pandemic as travel and tourism grinded to a halt across the world. Revenues declined by more than -98% for the quarter compared to the same quarter of the previous year.
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We continue to adapt to this unprecedented and fluid environment and take swift and proactive measures to reduce costs, conserve cash and enhance our liquidity profile- A. Kempa, executive vice president and chief financial officer of Norwegian Cruise Line Holdings Ltd. "
About Norwegian Cruise Line Holdings
Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH) is a leading global cruise company which operates the Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises brands. With a combined fleet of 28 ships with approximately 59,150 berths, these brands offer itineraries to more than 490 destinations worldwide. The Company will introduce nine additional ships through 2027.
Overview of Norwegian Cruise Line's 2nd quarter 2020 earnings report
Data below refers to the latest quarter's data unless specified otherwise
- Total revenue: $16.929 million (down from $1.664 billion for the same quarter of the previous year)
- Total revenue decreased by-98% over the last 12 months
- Total cruise operating expenses: $301.652 million (up from $958.424 million for the same quarter of the previous year)
- Total cruise operating expenses decreased by -68.5% over the last 12 months
- Net loss: -$715.243 million (down from $240.190 million profit for the same quarter of the previous year)
- Diluted loss per share: -$2.99 (down from $1.11 for the same quarter of the previous year)
- PE ratio of Norwegian Cruise Line Holdings: Since the group is currently loss making a PE ratio cannot be calculated
- Diluted number of shares in issue: 239.342 million (up from 216.810 million for the same quarter of the previous year)
- Cash and cash equivalents: $2.259 billion
- Cash and cash equivalents per share: $9.43
- Cash and cash equivalents makes up 52.4% of Norwegian Cruise Line Holdings market capital
- Cash and cash equivalents makes up 12.9% of Norwegian Cruise Line Holdings total assets
- Trade names of Norwegian Cruise Line Holdings: $500.5 million
- Trade names worth per Norwegian Cruise Line Holdings stock: $2.09
- Trade names makes up 2.9% of Norwegian Cruise Line Holdings' total assets
- Stockholders equity in Norwegian Cruise Line Holdings: $4.337 billion
- Stockholders equity per share: $18.12
- Norwegian Cruise Line Holdings is trading at 0.98 times its stockholders equity per share which is well outside the expected range of between 2 and 4 times that most firms tend to trade at
- For some perspective the average price to book value of firms in the S&P 500 is 3.7
Norwegian Cruise Line's management commentary on their 2nd quarter 2020 earnings
MIAMI, Aug. 06, 2020 (GLOBE NEWSWIRE) -- Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH) (together with NCL Corporation Ltd., “Norwegian Cruise Line Holdings”, “Norwegian” or the “Company”) today reported financial results for the second quarter ended June 30, 2020.
“In recent weeks, we have taken further action to bolster our liquidity position in response to the COVID-19 global pandemic, including our highly successful $1.5 billion gross triple-tranche capital raise in July, which we believe positions us to withstand a scenario of prolonged voyage suspensions,” said Frank Del Rio, president and chief executive officer of Norwegian Cruise Line Holdings Ltd. “Our guests continue to demonstrate their desire for cruise vacations in the future. Looking ahead, we made significant progress in our Roadmap to Relaunch with the formation of our Healthy Sail Panel, comprised of globally recognized public health experts, which is tasked with providing recommendations to advance our public health response to COVID-19 and inform us on the development of a science-backed plan for a safe and healthy return to cruising.”
Booking Environment and Outlook
Along with the broader travel and leisure industry, the Company has experienced swift and significant impacts related to the COVID-19 global pandemic which have resulted in voyage suspensions through October 31, 2020. While booking volumes since the emergence of COVID-19 remain below historical levels, the Company’s overall cumulative booked position and pricing for 2021 are within historical ranges including bookings made with future cruise credits.
All three brands have instituted programs for guests on cancelled sailings as a result of the Company’s voyage suspension which include offering value-add future cruise credits typically for 125% of the cruise fare paid in lieu of providing cash refunds. These future cruise credits are valid for any sailing through December 31, 2022. As of August 3, 2020, approximately 60% of the guests who have had their voyages cancelled have requested cash refunds. As of June 30, 2020, the Company had $1.2 billion of advanced ticket sales, including the long-term portion, which includes approximately $0.8 billion of future cruise credits. The Company continues to take future bookings and receive new customer deposits and final payments on these bookings. To provide additional flexibility to its guests, the Company has also introduced a new final payment schedule for all 2020 voyages which requires final payment 60 days prior to embarkation versus the standard 120 days.
“In recent weeks, we have taken further action to bolster our liquidity position in response to the COVID-19 global pandemic, including our highly successful $1.5 billion gross triple-tranche capital raise in July, which we believe positions us to withstand a scenario of prolonged voyage suspensions,” said Frank Del Rio, president and chief executive officer of Norwegian Cruise Line Holdings Ltd. “Our guests continue to demonstrate their desire for cruise vacations in the future. Looking ahead, we made significant progress in our Roadmap to Relaunch with the formation of our Healthy Sail Panel, comprised of globally recognized public health experts, which is tasked with providing recommendations to advance our public health response to COVID-19 and inform us on the development of a science-backed plan for a safe and healthy return to cruising.”
Booking Environment and Outlook
Along with the broader travel and leisure industry, the Company has experienced swift and significant impacts related to the COVID-19 global pandemic which have resulted in voyage suspensions through October 31, 2020. While booking volumes since the emergence of COVID-19 remain below historical levels, the Company’s overall cumulative booked position and pricing for 2021 are within historical ranges including bookings made with future cruise credits.
All three brands have instituted programs for guests on cancelled sailings as a result of the Company’s voyage suspension which include offering value-add future cruise credits typically for 125% of the cruise fare paid in lieu of providing cash refunds. These future cruise credits are valid for any sailing through December 31, 2022. As of August 3, 2020, approximately 60% of the guests who have had their voyages cancelled have requested cash refunds. As of June 30, 2020, the Company had $1.2 billion of advanced ticket sales, including the long-term portion, which includes approximately $0.8 billion of future cruise credits. The Company continues to take future bookings and receive new customer deposits and final payments on these bookings. To provide additional flexibility to its guests, the Company has also introduced a new final payment schedule for all 2020 voyages which requires final payment 60 days prior to embarkation versus the standard 120 days.
COVID-19 Action Plan
The Company continues to take swift, proactive measures to further mitigate the financial and operational impacts of COVID-19. This action plan includes previously outlined cost reduction and cash conservation levers which include reducing operating and capital expenditures, improving the debt maturity profile and securing additional capital.
The Company's targeted monthly cash burn is on average, approximately $160 million per month during the suspension of operations. This includes ongoing ship operating expenses, administrative operating expenses, interest expense, taxes and expected capital expenditures and excludes cash refunds of customer deposits as well as cash inflows from new and existing bookings. This also excludes debt amortization and newbuild related payments which are currently deferred through March 31, 2021. The new monthly cash burn estimate is at the high end of the previously disclosed range due to additional interest expense related to the July capital raise, maintaining more ships in warm layup due to various port requirements and weather restrictions, increased costs associated with fluctuating travel restrictions for crew and additional marketing investments.
Balance Sheet and Liquidity Position
As of June 30, 2020, the Company’s total debt position was $10.3 billion and the Company’s cash and cash equivalents were $2.3 billion. The Company believes it was in compliance with all debt covenants. In July 2020, the Company closed on a series of capital markets transactions to further bolster liquidity and extend its debt maturity profile. As a result of significant demand, oversubscription and the full exercise of the option to purchase additional ordinary shares and partial exercise of the option to purchase exchangeable senior notes, the total amount of gross proceeds were approximately $1.5 billion. The triple-tranche transaction consisted of (i) approximately $288 million public offering of common equity, (ii) $450 million 5.375% exchangeable senior notes and (iii) $750 million 10.25% senior secured notes, the proceeds of which were used in part to repay the existing $675 million short-term revolving credit facility.
Following the recent capital markets transactions, the repayment of the $675 million short-term revolving credit facility and customer deposit refunds payable, total pro-forma liquidity is approximately $2.8 billion as of June 30, 2020. Total shares issued and outstanding as of July 21, 2020 are 275.6 million.
“We continue to adapt to this unprecedented and fluid environment and take swift and proactive measures to reduce costs, conserve cash and enhance our liquidity profile,” said Mark A. Kempa, executive vice president and chief financial officer of Norwegian Cruise Line Holdings Ltd. “Our recent capital raises have enabled us to extend our debt maturity profile and secure additional liquidity providing us with a strong foundation to withstand the impact of COVID-19.”
The Company continues to take swift, proactive measures to further mitigate the financial and operational impacts of COVID-19. This action plan includes previously outlined cost reduction and cash conservation levers which include reducing operating and capital expenditures, improving the debt maturity profile and securing additional capital.
The Company's targeted monthly cash burn is on average, approximately $160 million per month during the suspension of operations. This includes ongoing ship operating expenses, administrative operating expenses, interest expense, taxes and expected capital expenditures and excludes cash refunds of customer deposits as well as cash inflows from new and existing bookings. This also excludes debt amortization and newbuild related payments which are currently deferred through March 31, 2021. The new monthly cash burn estimate is at the high end of the previously disclosed range due to additional interest expense related to the July capital raise, maintaining more ships in warm layup due to various port requirements and weather restrictions, increased costs associated with fluctuating travel restrictions for crew and additional marketing investments.
Balance Sheet and Liquidity Position
As of June 30, 2020, the Company’s total debt position was $10.3 billion and the Company’s cash and cash equivalents were $2.3 billion. The Company believes it was in compliance with all debt covenants. In July 2020, the Company closed on a series of capital markets transactions to further bolster liquidity and extend its debt maturity profile. As a result of significant demand, oversubscription and the full exercise of the option to purchase additional ordinary shares and partial exercise of the option to purchase exchangeable senior notes, the total amount of gross proceeds were approximately $1.5 billion. The triple-tranche transaction consisted of (i) approximately $288 million public offering of common equity, (ii) $450 million 5.375% exchangeable senior notes and (iii) $750 million 10.25% senior secured notes, the proceeds of which were used in part to repay the existing $675 million short-term revolving credit facility.
Following the recent capital markets transactions, the repayment of the $675 million short-term revolving credit facility and customer deposit refunds payable, total pro-forma liquidity is approximately $2.8 billion as of June 30, 2020. Total shares issued and outstanding as of July 21, 2020 are 275.6 million.
“We continue to adapt to this unprecedented and fluid environment and take swift and proactive measures to reduce costs, conserve cash and enhance our liquidity profile,” said Mark A. Kempa, executive vice president and chief financial officer of Norwegian Cruise Line Holdings Ltd. “Our recent capital raises have enabled us to extend our debt maturity profile and secure additional liquidity providing us with a strong foundation to withstand the impact of COVID-19.”
Norwegian Cruise Line (NYSE: NCLH) stock price history
The image below, obtained from Google, shows the stock price history of Norwegian Cruise Line Holdings over the last 5 years. And its not been a very good time for Norwegian Cruise Line Holdings investors over the last 5 years. 5 years ago Norwegian Cruise Line Holdings stock was trading at around $59 a stock and its currently trading at $16.40 a stock. That's a loss of -72.2% suffered by Norwegian Cruise Line Holdings stockholders over the last 5 years. And the bulk of this decline has been since the start of 2020
The stock of Norwegian Cruise Line Holdings is trading at a lot closer to its 52 week low of $7.03 than it is to its 52 week high of $59.78 which to us is a clear indication that the short term momentum and sentiment of Norwegian Cruise Line Holdings stock is very negative right now mostly driven by the impact that Covid-19 had on their earnings and will have on the group's future earnings.
The stock of Norwegian Cruise Line Holdings is trading at a lot closer to its 52 week low of $7.03 than it is to its 52 week high of $59.78 which to us is a clear indication that the short term momentum and sentiment of Norwegian Cruise Line Holdings stock is very negative right now mostly driven by the impact that Covid-19 had on their earnings and will have on the group's future earnings.
Norwegian Cruise Line (NCLH) vs Carnival Corporation (CCL) vs Royal Caribbean (RCL)
The image below shows the stock price performance of the three major listed cruise ship companies over the last 3 years. They are Norwegian Cruise Line (NCLH), Carnival Corporation (CCL) and Royal Caribbean Cruises (RCL). As the image shows their stock price trends are very similar and they all recorded massive slumps since the start of 2020.
Over the 5 year period the stock price performance of the three cruise ship companies are as follows (sorted from best performer to worst performer):
- Royal Caribbean Cruises: -42.28%
- Carnival Corporation: -68.89%
- Norwegian Cruise Line: -72.73%
Recent coverage of Norwegian Cruise Line
The extract below discusses the financial position of Norwegian Cruise Line as obtained from Newsheater.com
Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) went up by 0.60% from its latest closing price compared to the recent 1-year high of $59.78. The company’s stock price has collected 8.30% of gains in the last five trading sessions.
Is It Worth Investing in Norwegian Cruise Line Holdings Ltd. (NYSE :NCLH) Right Now?
Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) scored a price-to-earnings ratio above its average ratio, recording 75.22 x from its present earnings ratio. Plus, the 36-month beta value for NCLH is at 2.76. Opinions of the stock are interesting as 4 analysts out of 16 who provided ratings for Norwegian Cruise Line Holdings Ltd. declared the stock was a “buy,” while 1 rated the stock as “overweight,” 10 rated it as “hold,” and 1 as “sell.”
The average price from analysts is $16.71, which is -$1.91 below the current price. NCLH currently public float of 273.74M and currently shorts hold a 20.49% ratio of that float. Today, the average trading volume of NCLH was 48.93M shares.
NCLH’s Market Performance
NCLH stocks went up by 8.30% for the week, with a monthly jump of 32.45% and a quarterly performance of -23.21%, while its annual performance rate touched -65.00%. The volatility ratio for the week stands at 6.32% while the volatility levels for the past 30 days are set at 6.55% for Norwegian Cruise Line Holdings Ltd.. The simple moving average for the period of the last 20 days is 13.98% for NCLH stocks with a simple moving average of -34.95% for the last 200 days.
Analysts’ Opinion of NCLH
Many brokerage firms have already submitted their reports for NCLH stocks, with SunTrust repeating the rating for NCLH by listing it as a “Hold.” The predicted price for NCLH in the upcoming period, according to SunTrust is $13 based on the research report published on July 14th of the current year 2020.
Read the full article here
Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) went up by 0.60% from its latest closing price compared to the recent 1-year high of $59.78. The company’s stock price has collected 8.30% of gains in the last five trading sessions.
Is It Worth Investing in Norwegian Cruise Line Holdings Ltd. (NYSE :NCLH) Right Now?
Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) scored a price-to-earnings ratio above its average ratio, recording 75.22 x from its present earnings ratio. Plus, the 36-month beta value for NCLH is at 2.76. Opinions of the stock are interesting as 4 analysts out of 16 who provided ratings for Norwegian Cruise Line Holdings Ltd. declared the stock was a “buy,” while 1 rated the stock as “overweight,” 10 rated it as “hold,” and 1 as “sell.”
The average price from analysts is $16.71, which is -$1.91 below the current price. NCLH currently public float of 273.74M and currently shorts hold a 20.49% ratio of that float. Today, the average trading volume of NCLH was 48.93M shares.
NCLH’s Market Performance
NCLH stocks went up by 8.30% for the week, with a monthly jump of 32.45% and a quarterly performance of -23.21%, while its annual performance rate touched -65.00%. The volatility ratio for the week stands at 6.32% while the volatility levels for the past 30 days are set at 6.55% for Norwegian Cruise Line Holdings Ltd.. The simple moving average for the period of the last 20 days is 13.98% for NCLH stocks with a simple moving average of -34.95% for the last 200 days.
Analysts’ Opinion of NCLH
Many brokerage firms have already submitted their reports for NCLH stocks, with SunTrust repeating the rating for NCLH by listing it as a “Hold.” The predicted price for NCLH in the upcoming period, according to SunTrust is $13 based on the research report published on July 14th of the current year 2020.
Read the full article here
Norwegian Cruise Line (NYSE: NCLH) stock valuation
Based on Norwegian Cruise Line Holdings latest earnings reports what do we value their stock at? Based on the earnings reported and the fact that the group is currently loss making and will be into the foreseeable future we value Norwegian Cruise Line Holdings stock at $39.20 a stock. Sure they in a tough spot now. But travel will recover, they will operate again and the good times will be back.
We therefore believe that stock of Norwegian Cruise Line Holdings is undervalued.
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price which in this case is $39.20. We therefore believe a good entry point into the stock of Norwegian Cruise Line Holdings is at $35.30 or below.
Since the stock of Norwegian Cruise Line Holdings is trading at well below our recommended entry point into the stock we rate the stock of Norwegian Cruise Line Holdings as a buy. But this call is only for investors willing to sit on the stock for a prolonged period and wait for the Coronavirus to pass, which could be a while. But we believe the strong drop in Norwegian Cruise Line Holdings stock in recent weeks has created a good buying opportunity for those looking for quality assets at depressed prices.
We therefore believe that stock of Norwegian Cruise Line Holdings is undervalued.
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price which in this case is $39.20. We therefore believe a good entry point into the stock of Norwegian Cruise Line Holdings is at $35.30 or below.
Since the stock of Norwegian Cruise Line Holdings is trading at well below our recommended entry point into the stock we rate the stock of Norwegian Cruise Line Holdings as a buy. But this call is only for investors willing to sit on the stock for a prolonged period and wait for the Coronavirus to pass, which could be a while. But we believe the strong drop in Norwegian Cruise Line Holdings stock in recent weeks has created a good buying opportunity for those looking for quality assets at depressed prices.
Next earnings release of Norwegian Cruise Line
It is expected that Norwegian Cruise Line Holdings will release their 3rd quarter 2020 earnings report in late November 2020