JWI 531 SU Week 10 Financial Growth and Organizational Leaders Discussion

Circle of Competence

• Locate and post a link to a recording of the most recent earnings call or to a press release from a company you are personally interested in

https://www.fool.com/earnings/call-transcripts/202…

• How did the CEO and/or CFO present the company in a positive light and address concerns and questions?

• CEO Jeff Bezos stated, Right now I see Amazon at its most inventive ever, making it an optimal time for this transition.” Net sales are expected to be between $100.0 billion and $106.0 billion, or to grow between 33% and 40% compared with first quarter 2020. This guidance anticipates a favorable impact of approximately 300 basis points from foreign exchange rates.

• What did they say that demonstrated the competence of the senior leadership team and the company’s strategy to manage risks and drive growth?

“Amazon is what it is because of invention. We do crazy things together and then make them normal. We pioneered customer reviews, 1-Click, personalized recommendations, Prime’s insanely-fast shipping, Just Walk Out shopping, the Climate Pledge, Kindle, Alexa, marketplace, infrastructure cloud computing, Career Choice, and much more,” said Jeff Bezos, Amazon founder and CEO. “If you do it right, a few years after a surprising invention, the new thing has become normal. People yawn. That yawn is the greatest compliment an inventor can receive. When you look at our financial results, what you’re actually seeing are the long-run cumulative results of invention. Include at least two specific examples to support your response.

• Reflect on your Week 1 Discussion response. Share what you learned since then. How has your own circle of competence in finance grown?

My confidence has grown tremendously since Week 1. I have invested in the stock market and working on diversifying my portfolio. I am very excited because this is something I always wanted to do and this class answered a lot of unknowns I had and I am going to continue to educate myself on financial growth.

Dr. Lou and Classmates

Royal Caribbean Cruise (NYSE: RCL)

https://www.webcaster4.com/Player/Index?webcastId=40066&g=28f422d1-9559-4e06-bf4c-549038add9fe&uid=6343106&sid=

Overall the CEO, Michael Bailey had an optimistic tone and shed a positive light on the future of the Royal Caribbean Group cruise line the timing to set sail, but could not answer some questions about the future.

What did they say that demonstrated the competence of the senior leadership team and the company’s strategy to manage risks and drive growth?

Most of their new ships have been idle due to COVID-19, and the CEO expressed a positive narrative about the future of the Royal Caribbean getting back to sailing its vessels in 2021. The CEO mentioned that the company still managed to raise billions in new capital. The company has prepared over 2,000 new protocols for passengers to regain confidence that their vessels are ready for its passengers’ safe experience.

The CFO mentioned that the company requires passenger testing before sailing, physical distancing on board, disembarking of COVID passengers with symptoms on board to ensure that vacations do not get disrupted due to an isolated case. The CFO Jason Liberty was optimistic about the post-pandemic and mentioned that the US sees 1 million vaccines per day and coordinates with governments, port authorities, and stakeholders worldwide, including the CDC.

The CEO mentioned that Royal has a $1.1b loss of $3.9 b for the year. Royal said that it controls its operating costs and reduces its Capex by 55%, and liquidity is a top priority. The CEO also stated the importance of accessing capital, managing liabilities, and the importance of working with its banking partners and export credit agencies.

How did the CEO and/or CFO present the company in a positive light and address concerns and questions?

Since suspending its cruises, the company has raised $9.3 billion in new capital due to the strength of the brand, products, banks, shipyards, and vendors. The CEO mentioned that Royal closed with $4 billion in liquidity in 2020. In the fourth quarter, Royal spent approximately $1.3 billion, and the cash burn per month is $250 million.

Realigned capital allocation and improved SG&A and divested three of its oldest ships, improving efficiencies and reshaping its cost structures will improve margins when returning to service. When Royal returns to service, they expect customer deposits of $1.8 b and cash flows from operations will further strengthen its cash position and seen booking activity increase 30%, but not expecting the same capacity compared to past years.

One investor asked about hedging fuel and consumption for the timing of going back to service, but the CEO could not answer. Another investor asked a question about the ship’s inventory and bookings stage, and the CEO feels that customers have pent-up demand to get out and take vacations – vague responses.

Reflect on your Week 1 Discussion response. Share what you learned since then. How has your own circle of competence in finance grown?

I have thoroughly enjoyed Finance II. My competency has grown exponentially, and I now understand the language. My confidence is raised to a higher level when discussing cash flows, rolling forecasts, capital structure, measuring what matters, risks, and strategy alignment with budgets. I also learned how to analyze value and overvalued stocks that helped guide me to measure a company’s performance and cash flows.

My favorite part of the class was assignment three. We explored working capital and examined the use of ratios by comparing two companies in the same industry. That said, probably the most important class in my MBA experience. Special thanks to Dr. Lou for our 1:1 calls before each assignment and his availability and patience to explain those assignments’ critical components. Also, thank you to my classmates that added many ideas and supporting documents to enhance my experience.

Reference:

1. 1. 1. Royal Caribbean Group. https://www.rclinvestor.com/stock-info/

https://www.webcaster4.com/Player/Index?webcastId=40066&g=28f422d1-9559-4e06-bf4c-549038add9fe&uid=6343106&sid=