8-KEarnings & ResultsRegulation FD

CARNIVAL CORP 8-K Report, Financial Results (Sep 15, 2020)

Filed September 15, 2020For Securities:CCL

Summary

Carnival Corporation & plc filed an 8-K on September 15, 2020, providing a business update and preliminary financial information for the third quarter ended August 31, 2020. The company reported a significant U.S. GAAP net loss of $2.9 billion, which included $0.9 billion in non-cash impairment charges, leading to an adjusted net loss of $1.7 billion. Despite the ongoing challenges posed by the COVID-19 pandemic, Carnival highlighted that its cash burn rate for the quarter was in line with expectations and projected a similar rate for the fourth quarter. The company ended the quarter with $8.2 billion in cash and cash equivalents, signaling a focus on enhancing liquidity. Key operational developments included the successful resumption of guest cruise operations by its Italian brand, Costa, on September 6, 2020, with plans for AIDA to follow. Furthermore, Carnival announced an acceleration of its fleet optimization strategy by retiring 18 less efficient ships, representing 12% of pre-pause capacity but only 3% of 2019 operating income, aiming for a leaner and more efficient future operation. The company also noted strong cumulative advanced bookings for the second half of 2021, indicating robust demand despite minimal marketing efforts, though pricing reflects the impact of future cruise credits.

Key Highlights

  • 1Reported a U.S. GAAP net loss of $2.9 billion and an adjusted net loss of $1.7 billion for Q3 2020.
  • 2Cash burn rate for Q3 2020 was in line with expectations, with a similar rate anticipated for Q4 2020.
  • 3Ended Q3 2020 with $8.2 billion in cash and cash equivalents, with plans to further enhance liquidity.
  • 4Successfully resumed guest cruise operations with Costa on September 6, 2020, and AIDA plans to restart in fall 2020.
  • 5Accelerated fleet optimization by retiring 18 less efficient ships, representing 12% of pre-pause capacity.
  • 6Cumulative advanced bookings for H2 2021 are at the higher end of the historical range, indicating strong future demand.
  • 7Customer deposits decreased to $2.4 billion as of August 31, 2020, primarily due to refunds and the use of future cruise credits.

Frequently Asked Questions

Carnival reported a U.S. GAAP net loss of $2.9 billion and an adjusted net loss of $1.7 billion for the third quarter ended August 31, 2020. This loss included $0.9 billion in non-cash impairment charges.

The company's cash burn rate in Q3 2020 was in line with expectations, and a similar rate is projected for Q4 2020. Carnival ended the quarter with $8.2 billion in cash and cash equivalents and intends to further enhance its liquidity. Since March 2020, the company has raised nearly $12 billion through various financing transactions.

Carnival successfully resumed guest cruise operations with its Costa brand on September 6, 2020, for Italian guests. The AIDA brand is expected to restart operations in the fall of 2020. These initial operations involve enhanced health protocols and adjusted passenger capacity.

The company is accelerating the retirement of 18 less efficient ships, which represents approximately 12% of its pre-pause capacity. This move aims to create a leaner, more efficient fleet and reduce operating costs. Additionally, new ship deliveries have been deferred, stretching out the newbuild order book.

Despite minimal advertising, cumulative advanced bookings for the second half of 2021 are at the higher end of the historical range, suggesting strong pent-up demand. However, pricing for these bookings is lower by mid-single digits compared to H2 2019, influenced by the application of future cruise credits.