Summary
Carnival Corporation & plc reported significant financial distress for the three and six months ended May 31, 2020, primarily due to the global COVID-19 pandemic which led to a complete pause in guest operations starting in mid-March 2020. Revenues plummeted by 85% and 42% respectively for the quarter and six-month period compared to the prior year, resulting in substantial net losses of $4.37 billion and $5.16 billion. The company recognized significant impairment charges related to goodwill ($1.4 billion and $2.1 billion) and ships ($498 million and $828 million) due to the pandemic's impact on future cash flows. Despite the dire financial situation, Carnival Corp. has taken aggressive steps to bolster liquidity, including drawing down its revolving credit facility, issuing new debt ($4.0 billion in secured notes and $2.0 billion in convertible notes), and securing additional financing. The company had $7.6 billion in available liquidity as of May 31, 2020, and estimates a monthly cash burn rate of approximately $650 million for the remainder of 2020. Management believes it will have sufficient liquidity for at least the next twelve months, supported by these actions and ongoing cost-reduction efforts, including fleet optimization and workforce adjustments.
Financial Highlights
53 data points| Revenue | $740.00M |
| Cost of Revenue | $2.48B |
| Gross Profit | -$1.74B |
| SG&A Expenses | $492.00M |
| Operating Expenses | $4.92B |
| Operating Income | -$4.18B |
| Interest Expense | $182.00M |
| Net Income | -$4.37B |
| EPS (Basic) | $-6.07 |
| EPS (Diluted) | $-6.07 |
| Shares Outstanding (Basic) | 721.00M |
| Shares Outstanding (Diluted) | 721.00M |
Key Highlights
- 1Net loss of $4.37 billion for Q2 FY2020 and $5.16 billion for the first six months of FY2020, a stark contrast to profits in the prior year.
- 2Revenues significantly declined, down 85% for the quarter and 42% for the six-month period due to the cessation of cruise operations.
- 3Substantial goodwill impairment charges of $1.4 billion (Q2) and $2.1 billion (YTD) and ship impairment charges of $498 million (Q2) and $828 million (YTD) were recognized.
- 4Aggressive capital raising activities: secured $4.0 billion in notes and $2.0 billion in convertible notes in April 2020, and a $2.8 billion term loan in June 2020.
- 5Available liquidity stood at $7.6 billion as of May 31, 2020, with management asserting sufficiency for at least the next twelve months.
- 6Ongoing cost reduction measures include a pause in operations, fleet optimization (selling 9 ships), workforce adjustments, and reduced capital expenditures.
- 7Customer deposits decreased significantly to $2.6 billion from $4.7 billion, reflecting refunds and future cruise credits amid cancellations.