8-KEarnings & ResultsRegulation FD

CARNIVAL CORP 8-K Report, Financial Results (Jun 18, 2020)

Filed June 18, 2020For Securities:CCL

Summary

Carnival Corporation & plc (CCL) filed an 8-K on June 18, 2020, providing preliminary financial results for the second quarter ended May 31, 2020, and a business update. The company reported a significant U.S. GAAP net loss of $4.4 billion, or $6.07 per diluted share, which included $2.0 billion in non-cash impairment charges. The adjusted net loss was $2.4 billion, or $3.30 per adjusted diluted share. Total revenues plummeted to $0.7 billion from $4.8 billion in the prior year, reflecting the ongoing pause in guest cruise operations due to the COVID-19 pandemic. The company is unable to provide an earnings forecast due to the uncertainty surrounding the resumption of normal operations, noting that the prolonged pause materially impacts its liquidity and financial position. Carnival expects net losses for both the second half of 2020 and the full year. Despite these challenges, the company ended the second quarter with $7.6 billion in available liquidity and is working to enhance this further through debt refinancing and the utilization of committed export credit facilities. The company also provided an update on its preparations for resuming operations, including health and safety protocols, capacity optimization through ship disposals, and strategies to manage bookings and customer deposits.

Key Highlights

  • 1Reported a U.S. GAAP net loss of $4.4 billion ($6.07 EPS) and an adjusted net loss of $2.4 billion ($3.30 EPS) for Q2 2020.
  • 2Total revenues dropped significantly to $0.7 billion in Q2 2020, down from $4.8 billion in Q2 2019.
  • 3Inability to provide an earnings forecast due to the ongoing pause in guest operations and uncertainty around resumption.
  • 4Ended Q2 2020 with $7.6 billion in available liquidity and plans to further enhance it.
  • 5Estimates a monthly cash burn rate of approximately $650 million during the pause.
  • 6Accelerating the removal of 6 ships from the fleet, with preliminary agreements in place, as part of capacity optimization.
  • 7Customer deposits balance stood at $2.9 billion as of May 31, 2020, with approximately half of affected guests requesting cash refunds for cancelled sailings.

Frequently Asked Questions

Carnival reported a substantial U.S. GAAP net loss of $4.4 billion ($6.07 per diluted share) and an adjusted net loss of $2.4 billion ($3.30 per adjusted diluted share) for the second quarter ended May 31, 2020. Total revenues declined sharply to $0.7 billion from $4.8 billion in the same period last year.

The company is unable to provide an earnings forecast because its guest cruise operations have been paused for a majority of the second quarter and it cannot definitively predict when normal operations will resume. The duration of this pause continues to have a material negative impact on all aspects of the business, particularly liquidity and financial position.

As of May 31, 2020, Carnival reported $7.6 billion in available liquidity. The company is actively working to enhance its liquidity through measures such as refinancing scheduled debt maturities, drawing down credit facilities, and potentially selling non-ship assets. They also have $8.8 billion in committed export credit facilities available to fund future ship deliveries.

Carnival is collaborating with government and health authorities to resume operations in a phased manner. This includes developing enhanced health and safety protocols, moderating future capacity by accelerating the removal of 6 older ships from the fleet, and offering booking flexibility and incentives to encourage new reservations for future sailings.