10-QPeriod: Q2 FY2023

CARNIVAL CORP Quarterly Report for Q2 Ended May 31, 2023

Filed June 28, 2023For Securities:CCL

Summary

Carnival Corporation & plc (CCL) reported a significant improvement in its financial performance for the three and six months ended May 31, 2023, compared to the prior year. Revenues more than doubled year-over-year, driven by a substantial increase in fleet deployment and occupancy rates as the company fully resumed guest cruise operations. While the company is still operating at a net loss, the losses have narrowed considerably, reflecting the recovery in demand and operational normalization. Key financial metrics indicate a strong rebound in operational activity. Passenger ticket revenues and onboard/other revenues saw substantial growth. The company's liquidity remains a focus, with substantial debt still on its balance sheet. Management has taken steps to manage liquidity, including refinancing efforts and available credit facilities, and believes it has sufficient liquidity for the next twelve months. Investors should monitor the company's progress in debt reduction and its ability to maintain covenant compliance amidst ongoing economic uncertainties.

Financial Highlights

50 data points
Beta

Revenue

$4.91B

29.6% Gross Margin

Net Income

-$407.00M

-8.3% Net Margin

EPS (Diluted)

$-0.32

Total Assets

$51.87B

Cash & Equivalents

$4.51B

Free Cash Flow

$440.00M

Financial Statements
Beta
Revenue$4.91B
Cost of Revenue$3.46B
Gross Profit$1.45B
SG&A Expenses$736.00M
Operating Expenses$4.79B
Operating Income$120.00M
Interest Expense$542.00M
Net Income-$407.00M
EPS (Basic)$-0.32
EPS (Diluted)$-0.32
Shares Outstanding (Basic)1.26B
Shares Outstanding (Diluted)1.26B

Key Highlights

  • 1Total revenues for the six months ended May 31, 2023, increased to $9.3 billion from $4.0 billion in the prior year, driven by a significant increase in ships in service and higher occupancy rates (95% vs. 62%).
  • 2The company reported a net loss of $1.1 billion for the six months ended May 31, 2023, a significant improvement from a net loss of $3.7 billion in the same period last year.
  • 3Operating income improved substantially, moving from a loss of $3.0 billion for the six months ended May 31, 2022, to a loss of $52 million for the same period in 2023.
  • 4Customer deposits increased significantly to $6.9 billion as of May 31, 2023, from $4.9 billion as of November 30, 2022, indicating strong future booking activity.
  • 5Total debt remains substantial at $33.7 billion (net of unamortized costs) as of May 31, 2023, although total debt decreased from $34.5 billion at November 30, 2022.
  • 6The company generated $1.5 billion in net cash from operating activities for the six months ended May 31, 2023, a significant turnaround from $1.2 billion used in operating activities in the prior year.
  • 7Liquidity remains strong with $7.3 billion in cash and available borrowings under its revolving credit facility as of May 31, 2023.

Frequently Asked Questions

Carnival's financial performance has significantly improved, with revenues more than doubling and net losses narrowing substantially. The company's fleet is fully operational with high occupancy rates. While substantial debt remains, Carnival reports $7.3 billion in liquidity (cash and available borrowings) as of May 31, 2023, and management believes it has sufficient liquidity to fund its obligations and remain compliant with financial covenants for at least the next twelve months. The company is actively pursuing debt refinancing opportunities.

Revenue has seen a dramatic increase. For the six months ended May 31, 2023, total revenues were $9.3 billion, up from $4.0 billion in the same period of 2022. This growth is attributed to the full resumption of cruise operations, increased ship deployment, and significantly higher occupancy rates, which rose from 62% to 95% over the respective periods.

Carnival carries a substantial debt load, with net debt totaling $33.7 billion as of May 31, 2023. The company's past operational disruptions due to COVID-19 contributed to this debt. Carnival is actively working to manage this by refinancing future debt maturities and extending existing debt. They also have significant liquidity and access to revolving credit facilities to manage near-term obligations.

The primary drivers for the improved operating results are the company's full return to guest cruise operations, a substantial increase in the number of ships in service, and a significant rise in occupancy levels. This has led to higher passenger ticket and onboard revenues, coupled with a more efficient utilization of its fleet, despite increased operating costs associated with a full operational tempo.