10-QPeriod: Q1 FY2022

CARNIVAL CORP Quarterly Report for Q1 Ended Feb 28, 2022

Filed March 28, 2022For Securities:CCL

Summary

Carnival Corporation & plc reported a net loss of $1.89 billion for the three months ended February 28, 2022, a slight improvement from the $1.97 billion loss in the prior year period. Revenues saw a significant increase to $1.62 billion from $26 million, reflecting the ongoing resumption of cruise operations, with 71% of capacity back in service. However, operating costs and expenses also surged to $2.03 billion from $535 million, driven by restart-related expenses, higher fuel costs, and the return to service. The company ended the quarter with $7.2 billion in liquidity, providing sufficient funds for at least the next twelve months, supported by ongoing refinancing efforts and undrawn export credit facilities. Despite the substantial revenue recovery, the company continues to navigate significant cost pressures and anticipates a net loss for the full year 2022, though a profit is expected for the third quarter.

Financial Highlights

51 data points
Beta

Revenue

$1.62B

-25.1% Gross Margin

Net Income

-$1.89B

-116.5% Net Margin

EPS (Diluted)

$-1.66

Total Assets

$53.28B

Cash & Equivalents

$6.41B

Free Cash Flow

-$3.94B

Financial Statements
Beta
Revenue$1.62B
Cost of Revenue$2.03B
Gross Profit-$407.00M
SG&A Expenses$530.00M
Operating Expenses$3.11B
Operating Income-$1.49B
Interest Expense$368.00M
Net Income-$1.89B
EPS (Basic)$-1.66
EPS (Diluted)$-1.66
Shares Outstanding (Basic)1.14B
Shares Outstanding (Diluted)1.14B

Key Highlights

  • 1Revenues increased significantly to $1.62 billion for the three months ended February 28, 2022, compared to $26 million in the prior year, driven by the resumption of cruise operations.
  • 2The company reported a net loss of $1.89 billion for the quarter, an improvement from a $1.97 billion loss in the prior year period.
  • 3Operating costs and expenses rose substantially to $2.03 billion from $535 million due to restart-related expenses, higher fuel costs, and inflation.
  • 4Liquidity remained strong at $7.2 billion as of February 28, 2022, providing management with confidence in meeting obligations for at least the next twelve months.
  • 5Fuel costs increased by 256% year-over-year due to higher consumption and a significant rise in fuel prices.
  • 6The company sold two ships in the North America segment and one in the Europe segment, reducing passenger capacity.
  • 7Carnival expects a net loss for the full year 2022 but anticipates profitability in the third quarter.

Frequently Asked Questions

As of February 28, 2022, Carnival Corporation & plc reported $7.2 billion in liquidity, which includes cash, short-term investments, and available borrowings under its revolving credit facility. Management believes this level of liquidity is sufficient to meet its obligations for at least the next twelve months. The company is also actively pursuing refinancing opportunities to extend debt maturities and reduce interest expenses.

The substantial increase in operating costs and expenses is primarily due to the ongoing resumption of cruise operations. This includes costs associated with returning ships to service, bringing crew members back, increased dry-dock days, maintaining enhanced health and safety protocols, and inflationary pressures. Fuel costs have also significantly increased due to higher consumption and elevated market prices.

Carnival anticipates a net loss for the full year 2022. However, the company expects to achieve profitability in the third quarter of 2022. This outlook is contingent on the continued successful resumption of guest cruise operations and the management of associated costs and uncertainties, such as fuel prices and geopolitical events.

Carnival has been actively engaged in refinancing efforts to reduce interest rates and extend debt maturities. As of February 28, 2022, the company was in compliance with its debt covenants, which include maintaining minimum interest coverage, shareholders' equity, debt-to-capital ratios, and liquidity levels. The company continues to monitor and manage these covenants as part of its financial strategy.