01—Abstract
Summary
Summary of the 10-Q filed September 30, 2022. Cited figures are marked; the original filing is the authoritative source.
Carnival Corporation & plc (CCL) reported a significant revenue recovery for the three and nine months ended August 31, 2022, driven by the substantial resumption of guest cruise operations, with 93%a of capacity serving guests by the end of the period.
Total revenues increased by $3.8 billionb and $7.7 billion, respectively, compared to the prior year, reflecting higher occupancy and increased ship deployment. Despite the revenue surge, the company continued to incur net losses, albeit reduced compared to the prior year. The nine-month net loss was $4.5 billion, a decrease from $6.9 billion in 2021.
Key cost drivers included increased operating expenses related to the restart of operations, higher fuel costs, and ongoing inflation and supply chain challenges. The company maintains substantial liquidity, with $7.4 billionc available as of August 31, 2022, and expects sufficient liquidity for at least the next twelve months. However, the company faces significant debt obligations and is actively managing its liquidity and financial covenants.
02—Key points
Key Highlights
- Revenue increased significantly due to the resumption of cruise operations, with 93% of capacity back in service by August 31, 2022.
- Despite revenue growth, the company reported net losses for both the three-month ($770 million) and nine-month ($4.5 billion) periods ending August 31, 2022.
- Operating costs and expenses rose substantially due to restart-related expenses, higher fuel prices, inflation, and supply chain disruptions.
- Total debt remains substantial at $34.1 billion (net of issuance costs), with significant maturities upcoming in 2023 and 2024.
- The company ended the period with $7.4 billion in liquidity, providing confidence in meeting obligations for at least the next twelve months.
- Customer deposits increased to $4.5 billion, reflecting strong advance bookings for future cruises.
- The company is actively managing its financial covenants and has secured waivers for certain interest coverage requirements through February 2024.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q3 FY2022, Carnival Corp lost $0.18.
- Revenue$4.30B100.0%
- Cost of revenue−$3.38B78.5%
- Gross profit$926.0M21.5%
- Operating costs−$1.21B28.0%
- Operating income−$279.0M6.5%
- Interest, other & tax−$491.0M11.4%
- Net income−$770.0M17.9%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2022filed September 30, 2022Financial Statements
Q3 FY2022 against Q3 FY2021
| Line item | Q3 FY2022Q3 FY2021 | Change |
|---|---|---|
| Revenue | $4.30B$546.00M | +688.5% |
| Cost of Revenue | $3.38B$1.62B | +109.1% |
| Gross Profit | $926.00M-$1.07B | +186.5% |
| SG&A Expenses | $625.00M$425.00M | +47.1% |
| Operating Expenses | $4.58B$2.60B | +76.1% |
| Operating Income | -$279.00M-$2.06B | +86.4% |
| Interest Expense | $422.00M$418.00M | +1.0% |
| Net Income | -$770.00M-$2.84B | +72.8% |
| EPS (Basic) | $-0.65$-2.50 | +74.0% |
| EPS (Diluted) | $-0.65$-2.50 | +74.0% |
| Shares Outstanding (Basic) | 1.19B1.13B | +4.6% |
| Shares Outstanding (Diluted) | 1.19B1.13B | +4.6% |
05—Questions
Frequently Asked Questions
What is the primary driver of Carnival's revenue recovery?
The primary driver of Carnival's revenue recovery is the substantial resumption of guest cruise operations. By August 31, 2022, 93% of the company's capacity was serving guests, a significant increase from the prior year, leading to higher passenger ticket revenues and onboard spending.
Is Carnival Corporation profitable as of this report?
No, Carnival Corporation & plc is not yet profitable. The company reported net losses for both the three-month period ($770 million) and the nine-month period ($4.5 billion) ending August 31, 2022. While the net loss has decreased compared to the prior year, ongoing operational costs and expenses continue to impact profitability.
How is Carnival managing its significant debt load?
Carnival has a substantial debt load totaling $34.1 billion (net). The company is managing this by addressing upcoming maturities well in advance, obtaining financial covenant amendments or waivers as needed, and leveraging its available liquidity. They also issued $3.3 billion in long-term debt and repaid $1.1 billion during the nine months ended August 31, 2022, to manage their debt profile.
What is the company's liquidity position and outlook?
Carnival reported strong liquidity with $7.4 billion available as of August 31, 2022, including cash and available borrowings under their revolving credit facility. They also have additional undrawn export credit facilities. Management has concluded that they have sufficient liquidity to satisfy their obligations for at least the next twelve months.
06—Continue