What do you call an earnings season in which nobody is actually earning anything -- or even making any revenue? That's the question that has dogged cruise industry investors these past couple of months, after Carnival Corporation (NYSE:CCL) reported losing $2.2 billion in a single quarter in January and Royal Caribbean (NYSE:RCL) reported a $1.4 billion quarterly loss a few weeks later.
And now here comes Norwegian Cruise Line Holdings (NYSE:NCLH). Let's see how bad its news is.
Here's a hint: It was bad enough that Norwegian Cruise stock is down 5.7% in 12:15 p.m. EST trading -- and bad enough to drag down Carnival (4.3%) and Royal Caribbean (6.1%) right beside it.
In today's report, Norwegian lamented that "2020 has been without a doubt the most challenging year in the Company's 50 plus year history," necessitating the cancellation of all cruises "through May 31, 2021" at the least. Nevertheless, Norwegian insisted it feels "encouraged by the accelerating rollout of vaccines, the progress toward herd immunity and the strong demand for future cruise vacations."
"Bookings have been strong for future periods," noted the company, and "pricing for the second half of 2021 is in line with pre-pandemic levels." Still, the fact remains: "Overall cumulative booked position for the second half of 2021 remains below historical levels."
Does Norwegian have the cash it needs to survive until this situation improves? Management says it had $3.3 billion as of the end of fiscal 2020 (alongside $11.8 billion in debt). The company is still burning cash at a steady rate of about $175 million a month, however, and that means that by the time you read this, Norwegian probably will have less than $3 billion left. (Indeed, Norwegian actually burned a bit more than $175 million in Q4 -- $190 million -- because of "additional relaunch-related expenses as the Company began preparing vessels for a potential return to service in early 2021.")
That's the slowest rate of cash burn of any of the cruise lines. At last report, Carnival was burning $500 million a month, and Royal Caribbean about $270 million.
Last but not least -- and disappointingly for all cruise stock investors, I fear -- Norwegian had little to tell us about hoped-for "technical regulations" from the Centers for Disease Control and Prevention (CDC). These would permit the resumption of "trial" cruises under the CDC's "Framework for Conditional Sailing Order." As management said, "significant uncertainties remain regarding specific requirements of the Conditional Order including pending technical instructions from the CDC."
For Norwegian and for the rest of the cruise stocks, that actually may be the worst news: no news at all out of the CDC.