10-QPeriod: Q1 FY2023

CARNIVAL CORP Quarterly Report for Q1 Ended Feb 28, 2023

Filed March 29, 2023For Securities:CCL

Summary

Carnival Corporation & plc reported a significant improvement in revenue for the three months ended February 28, 2023, compared to the same period in the prior year. Total revenues increased to $4.43 billion from $1.62 billion, driven by the substantial resumption of cruise operations. Occupancy rates improved dramatically to 91% from 54%, reflecting a higher percentage of fleet capacity in service. Despite the revenue surge and improved occupancy, the company still reported a net loss of $693 million, an improvement from the $1.89 billion loss in the prior year. This continued loss is largely attributable to substantial interest expenses on its significant debt load and higher operating costs associated with increased operations. Positively, Carnival's liquidity position strengthened, with cash and cash equivalents increasing to $5.46 billion from $4.03 billion, and available borrowings under its revolving credit facility standing at $2.6 billion, bringing total liquidity to $8.1 billion. The company generated positive cash flow from operations ($0.39 billion) for the quarter, a notable turnaround from the prior year's negative operating cash flow. Management believes it has sufficient liquidity to meet its obligations for the next twelve months, supported by these operational improvements and strategic refinancing efforts. However, significant debt levels and ongoing economic uncertainties remain key challenges.

Financial Highlights

50 data points
Beta

Revenue

$4.43B

25.3% Gross Margin

Net Income

-$693.00M

-15.6% Net Margin

EPS (Diluted)

$-0.55

Total Assets

$51.98B

Cash & Equivalents

$5.49B

Free Cash Flow

-$687.00M

Financial Statements
Beta
Revenue$4.43B
Cost of Revenue$3.31B
Gross Profit$1.12B
SG&A Expenses$712.00M
Operating Expenses$4.60B
Operating Income-$172.00M
Interest Expense$539.00M
Net Income-$693.00M
EPS (Basic)$-0.55
EPS (Diluted)$-0.55
Shares Outstanding (Basic)1.26B
Shares Outstanding (Diluted)1.26B

Key Highlights

  • 1Total revenues for Q1 2023 surged to $4.43 billion, up from $1.62 billion in Q1 2022, reflecting the robust recovery in cruise operations.
  • 2Occupancy significantly improved to 91% from 54% year-over-year, with 96% of fleet capacity serving guests compared to 71% in the prior year.
  • 3Net loss narrowed to $693 million ($0.55 per share) from $1.89 billion ($1.66 per share) in the prior year, indicating operational improvements.
  • 4Cash and cash equivalents increased to $5.46 billion as of February 28, 2023, from $4.03 billion as of November 30, 2022.
  • 5Total liquidity, including available credit facilities, stood at $8.1 billion as of February 28, 2023, providing a strong buffer for operations.
  • 6Operating cash flow turned positive, generating $0.39 billion in Q1 2023, a significant improvement from negative $1.21 billion in Q1 2022.
  • 7Total debt remains substantial at $35.96 billion, contributing to significant interest expenses of $539 million in the quarter.

Frequently Asked Questions

For the three months ended February 28, 2023, Carnival reported a net loss of $693 million, or $0.55 per share. While this is a significant improvement from the $1.89 billion loss in the same period last year, the company is still operating at a loss, primarily due to high interest expenses on its substantial debt and increased operating costs associated with resuming full operations.

Carnival's liquidity position has improved. As of February 28, 2023, the company had $5.46 billion in cash and cash equivalents and $2.6 billion available under its revolving credit facility, totaling $8.1 billion in liquidity. Management believes this is sufficient to fund its obligations and remain in compliance with financial covenants for at least the next twelve months.

The substantial increase in revenue, from $1.62 billion to $4.43 billion, is primarily driven by the ongoing resumption of cruise operations following the COVID-19 pandemic. This includes a significant increase in the number of ships in service and a dramatic improvement in occupancy rates, which rose to 91% from 54% year-over-year.

The primary financial challenge is Carnival's significant debt load of approximately $35.96 billion, which results in substantial interest expenses. The company also faces ongoing risks from inflation, higher fuel prices, interest rate fluctuations, and potential disruptions from global events. Management is actively pursuing debt refinancing and covenant management strategies to mitigate these risks.