01—Abstract
Summary
Summary of the 10-Q filed March 28, 2022. Cited figures are marked; the original filing is the authoritative source.
Carnival Corporation & plc reported a net loss of $1.89 billiona 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 billionb 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 billionc 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.
02—Key points
Key Highlights
- Revenues 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.
- The 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.
- Operating costs and expenses rose substantially to $2.03 billion from $535 million due to restart-related expenses, higher fuel costs, and inflation.
- Liquidity 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.
- Fuel costs increased by 256% year-over-year due to higher consumption and a significant rise in fuel prices.
- The company sold two ships in the North America segment and one in the Europe segment, reducing passenger capacity.
- Carnival expects a net loss for the full year 2022 but anticipates profitability in the third quarter.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q1 FY2022, Carnival Corp lost $1.17.
- Revenue$1.62B100.0%
- Cost of revenue−$2.03B125.1%
- Gross profit−$407.0M25.1%
- Operating costs−$1.08B66.8%
- Operating income−$1.49B91.9%
- Interest, other & tax−$400.0M24.6%
- Net income−$1.89B116.5%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2022filed March 28, 2022Financial Statements
Q1 FY2022 against Q1 FY2021
| Line item | Q1 FY2022Q1 FY2021 | Change |
|---|---|---|
| Revenue | $1.62B$26.00M | +6142.3% |
| Cost of Revenue | $2.03B$535.00M | +279.4% |
| Gross Profit | -$407.00M-$509.00M | +20.0% |
| SG&A Expenses | $530.00M$462.00M | +14.7% |
| Operating Expenses | $3.11B$1.55B | +101.0% |
| Operating Income | -$1.49B-$1.52B | +2.2% |
| Interest Expense | $368.00M$398.00M | −7.5% |
| Net Income | -$1.89B-$1.97B | +4.2% |
| EPS (Basic) | $-1.66$-1.80 | +7.8% |
| EPS (Diluted) | $-1.66$-1.80 | +7.8% |
| Shares Outstanding (Basic) | 1.14B1.09B | +3.8% |
| Shares Outstanding (Diluted) | 1.14B1.09B | +3.8% |
05—Questions
Frequently Asked Questions
What is Carnival's current financial health and liquidity position?
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.
What are the main drivers behind the significant increase in operating costs and 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.
What is the outlook for Carnival's profitability in the near future?
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.
How is Carnival managing its debt and financial covenants?
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.
06—Continue