Business Update
In the face of the global impact of COVID-19, the company paused its guest cruise operations in mid-March. The company expects to resume guest operations, with ongoing collaboration from both government and health authorities, in a phased manner. Specific brands and ships are expected to return to service over time to provide guests with unmatched joyful vacations in a manner consistent with the company’s highest priorities, which are compliance, environmental protection and the health, safety and well-being of its guests, crew and the communities its ships visit.
AIDA to resume cruise operations
AIDA previously announced it will resume guest cruise operations from ports in
Capacity reduced by ship delivery deferrals and 13 expected ship dispositions
The company expects future capacity to be moderated by the phased re-entry of its ships, the removal of capacity from its fleet and delays in new ship deliveries. As previously announced, the company intends to accelerate the removal of ships in fiscal 2020 which were previously expected to be sold over the ensuing years. The company sold one ship during
Donald added, “We will emerge a leaner, more efficient company to optimize cash generation, pay down debt and position us to return to investment grade credit over time providing strong returns to our shareholders.”
Maximizing Liquidity
Successfully raised over
Since the pause in guest operations, the company has taken significant actions to preserve cash and secure additional financing to maximize its liquidity. While maintaining compliance, environmental protection and safety, the company significantly reduced ship operating expenses by transitioning ships into paused status. The company also reduced its administrative expenses, non-newbuild capital expenditures by
- Borrowed an aggregate principal amount of
$2.8 billion in two tranches under a first priority senior secured term loan facility onJune 30, 2020 - Negotiated Debt Holiday amendments, deferring certain principal repayments otherwise due through
March 2021 . (Certain export credit agencies have offered a 12-month debt amortization and financial covenant holiday (“Debt Holiday”))
In addition, the company has
During the pause in guest operations, the monthly average cash burn rate for the second half of 2020 is estimated to be approximately
The pause in guest operations is continuing to have material negative impacts on all aspects of the company’s business. The longer the full or partial pause in guest operations continues, the greater the impact on the company’s liquidity and financial position. The company continues to expect a net loss on both a
Update on Bookings
Demand continues for 2021 sailings
The company’s brands have announced various incentives and flexibility for certain booking payments on select sailings to support guest confidence in making new bookings. These incentives vary by brand and sailing and include onboard credits and reduced or refundable deposits. In addition, the company is providing flexibility to guests with bookings on sailings cancelled due to the pause by offering guests the flexibility of enhanced future cruise credits (“FCC”) or an election for a refund in cash. Enhanced FCCs increase the value of the guest’s original booking or provide incremental onboard credits. As of
As of
As of
Protecting the Health and Safety of Guests and Team Members
Throughout the pause in its guest cruise operations, the company has acted to protect the health and safety of guests and shipboard team members. The company returned over 260,000 guests to their homes, coordinating with a large number of countries around the globe. In addition, the company worked around the clock with various local governmental authorities, utilized its ships and chartered hundreds of planes to repatriate shipboard team members as quickly as possible. The company is extremely pleased with its ability to successfully repatriate approximately 77,000 of its shipboard team members to more than 130 countries around the globe, which is substantially all of its onboard workforce other than the safe manning team members
Donald commented, “I could not be more proud of how collectively our team has handled this. We looked after our guests, each other and the over 700 places we go each year. Thanks to our crew for continuing to exceed guest expectations through challenging circumstances and our shoreside operations for working 24/7 to enhance our liquidity and to repatriate our guests and our crew. Also, thanks to our loyal guests, travel partners, shareholders and other stakeholders for their support during this challenging time.”
Active consultation with science and medical experts
Throughout the pause in guest cruise operations, the company has been consulting and assembling the best minds in medical science, public health and infectious disease. These individuals include a robust line-up of world renowned medical, epidemiology and public health experts to provide the company with the latest science and medical evidence to inform practical, adaptable and science-based solutions for detection, prevention and mitigation of COVID-19.
In coordination with the
Conference Call
The company has scheduled a conference call with analysts at
Additional information can be found on www.carnivalcorp.com, www.carnivalsustainability.com, www.carnival.com, www.princess.com, www.hollandamerica.com, www.pocruises.com.au, www.seabourn.com, www.costacruise.com, www.aida.de, www.pocruises.com and www.cunard.com.
Cautionary Note Concerning Factors That May Affect Future Results
Forward-looking statements include those statements that relate to our outlook and financial position including, but not limited to, statements regarding:
• Net revenue yields |
• Estimates of ship depreciable lives and residual values |
• Booking levels |
• |
• Pricing and occupancy |
• Liquidity |
• Interest, tax and fuel expenses |
• Adjusted earnings per share |
• Currency exchange rates |
• Impact of the COVID-19 coronavirus global pandemic on our financial condition and results of operations |
• Net cruise costs, excluding fuel per available lower berth day |
Because forward-looking statements involve risks and uncertainties, there are many factors that could cause our actual results, performance or achievements to differ materially from those expressed or implied by our forward-looking statements. This note contains important cautionary statements of the known factors that we consider could materially affect the accuracy of our forward looking statements and adversely affect our business, results of operations and financial position. Additionally, many of these risks and uncertainties are currently amplified by and will continue to be amplified by, or in the future may be amplified by, the COVID-19 outbreak. It is not possible to predict or identify all such risks. There may be additional risks that we consider immaterial or which are unknown. These factors include, but are not limited to, the following:
- COVID-19 has had, and is expected to continue to have, a significant impact on our financial condition and operations, which impacts our ability to obtain acceptable financing to fund resulting reductions in cash from operations. The current, and uncertain future, impact of the COVID-19 outbreak, including its effect on the ability or desire of people to travel (including on cruises), is expected to continue to impact our results, operations, outlooks, plans, goals, growth, reputation, litigation, cash flows, liquidity, and stock price
- As a result of the COVID-19 outbreak, we have paused our guest cruise operations, and if we are unable to re-commence normal operations in the near-term, we may be out of compliance with a maintenance covenant in certain of our debt facilities as of
May 31, 2021 - World events impacting the ability or desire of people to travel may lead to a decline in demand for cruises
- Incidents concerning our ships, guests or the cruise vacation industry as well as adverse weather conditions and other natural disasters may impact the satisfaction of our guests and crew and lead to reputational damage
- Changes in and non-compliance with laws and regulations under which we operate, such as those relating to health, environment, safety and security, data privacy and protection, anti-corruption, economic sanctions, trade protection and tax may lead to litigation, enforcement actions, fines, penalties, and reputational damage
- Breaches in data security and lapses in data privacy as well as disruptions and other damages to our principal offices, information technology operations and system networks and failure to keep pace with developments in technology may adversely impact our business operations, the satisfaction of our guests and crew and lead to reputational damage
- Ability to recruit, develop and retain qualified shipboard personnel
who live away from home for extended periods of time may adversely impact our business operations, guest services and satisfaction - Increases in fuel prices, changes in the types of fuel consumed and availability of fuel supply may adversely impact our scheduled itineraries and costs
- Fluctuations in foreign currency exchange rates may adversely impact our financial results
- Overcapacity and competition in the cruise and land-based vacation industry may lead to a decline in our cruise sales, pricing and destination options
- Geographic regions in which we try to expand our business may be slow to develop or ultimately not develop how we expect
- Inability to implement our shipbuilding programs and ship repairs, maintenance and refurbishments may adversely impact our business operations and the satisfaction of our guests
The ordering of the risk factors set forth above is not intended to reflect our indication of priority or likelihood.
Forward-looking statements should not be relied upon as a prediction of actual results. Subject to any continuing obligations under applicable law or any relevant stock exchange rules, we expressly disclaim any obligation to disseminate, after the date of this document, any updates or revisions to any such forward-looking statements to reflect any change in expectations or events, conditions or circumstances on which any such statements are based.
|
|||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME (LOSS) |
|||||||||||||||
(UNAUDITED) |
|||||||||||||||
(in millions, except per share data) |
|||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||
2020 |
2019 |
2020 |
2019 |
||||||||||||
Revenues |
|||||||||||||||
Passenger ticket |
$ |
446 |
$ |
3,257 |
$ |
3,680 |
$ |
6,456 |
|||||||
Onboard and other (a) |
294 |
1,580 |
1,849 |
3,054 |
|||||||||||
740 |
4,838 |
5,529 |
9,511 |
||||||||||||
Operating Costs and Expenses |
|||||||||||||||
Commissions, transportation and other |
297 |
613 |
1,064 |
1,322 |
|||||||||||
Onboard and other |
114 |
485 |
585 |
952 |
|||||||||||
Payroll and related |
705 |
566 |
1,315 |
1,123 |
|||||||||||
Fuel |
201 |
423 |
598 |
804 |
|||||||||||
Food |
108 |
269 |
385 |
538 |
|||||||||||
Ship and other impairments |
589 |
— |
919 |
— |
|||||||||||
Other operating (b) |
471 |
803 |
1,142 |
1,562 |
|||||||||||
2,484 |
3,159 |
6,007 |
6,301 |
||||||||||||
Selling and administrative |
492 |
621 |
1,170 |
1,250 |
|||||||||||
Depreciation and amortization |
577 |
542 |
1,147 |
1,059 |
|||||||||||
|
1,364 |
— |
2,096 |
— |
|||||||||||
4,918 |
4,323 |
10,420 |
8,609 |
||||||||||||
Operating Income (Loss) |
(4,177) |
515 |
(4,891) |
902 |
|||||||||||
Nonoperating Income (Expense) |
|||||||||||||||
Interest income |
6 |
5 |
11 |
9 |
|||||||||||
Interest expense, net of capitalized interest |
(182) |
(54) |
(237) |
(105) |
|||||||||||
Other income (expense), net |
(32) |
(7) |
(39) |
(9) |
|||||||||||
(208) |
(56) |
(265) |
(105) |
||||||||||||
Income (Loss) Before Income Taxes |
(4,385) |
459 |
(5,155) |
797 |
|||||||||||
Income Tax Benefit (Expense), Net |
11 |
(8) |
— |
(10) |
|||||||||||
Net Income (Loss) |
$ |
(4,374) |
$ |
451 |
$ |
(5,155) |
$ |
787 |
|||||||
Earnings Per Share |
|||||||||||||||
Basic |
$ |
(6.07) |
$ |
0.65 |
$ |
(7.34) |
$ |
1.14 |
|||||||
Diluted |
$ |
(6.07) |
$ |
0.65 |
$ |
(7.34) |
$ |
1.13 |
|||||||
Dividends Declared Per Share |
$ |
— |
$ |
0.50 |
$ |
0.50 |
$ |
1.00 |
|||||||
Weighted-Average Shares Outstanding – Basic |
721 |
691 |
702 |
692 |
|||||||||||
Weighted-Average Shares Outstanding – Diluted |
721 |
693 |
702 |
694 |
(a) |
Includes |
(b) |
Includes |
(c) |
Includes noncash impairment charges for goodwill of |
|
|||||||
CONSOLIDATED BALANCE SHEETS |
|||||||
(UNAUDITED) |
|||||||
(in millions, except par values) |
|||||||
|
|
||||||
ASSETS |
|||||||
Current Assets |
|||||||
Cash and cash equivalents |
$ |
6,881 |
$ |
518 |
|||
Trade and other receivables, net |
604 |
444 |
|||||
Inventories |
362 |
427 |
|||||
Prepaid expenses and other |
374 |
671 |
|||||
Total current assets |
8,222 |
2,059 |
|||||
Property and Equipment, Net |
37,139 |
38,131 |
|||||
Operating Lease Right-of-Use Assets (a) |
1,413 |
— |
|||||
|
790 |
2,912 |
|||||
Other Intangibles |
1,168 |
1,174 |
|||||
Other Assets |
1,086 |
783 |
|||||
$ |
49,817 |
$ |
45,058 |
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|||||||
Current Liabilities |
|||||||
Short-term borrowings |
$ |
3,562 |
$ |
231 |
|||
Current portion of long-term debt |
2,373 |
1,596 |
|||||
Current portion of operating lease liabilities (a) |
153 |
— |
|||||
Accounts payable |
1,809 |
756 |
|||||
Accrued liabilities and other |
1,343 |
1,809 |
|||||
Customer deposits |
2,618 |
4,735 |
|||||
Total current liabilities |
11,858 |
9,127 |
|||||
Long-Term Debt |
14,870 |
9,675 |
|||||
Long-Term Operating Lease Liabilities (a) |
1,292 |
— |
|||||
Other Long-Term Liabilities |
956 |
890 |
|||||
Shareholders’ Equity |
|||||||
Common stock of |
7 |
7 |
|||||
Ordinary shares of |
360 |
358 |
|||||
Additional paid-in capital |
9,683 |
8,807 |
|||||
Retained earnings |
21,155 |
26,653 |
|||||
Accumulated other comprehensive income (loss) |
(1,962) |
(2,066) |
|||||
|
(8,404) |
(8,394) |
|||||
Total shareholders’ equity |
20,840 |
25,365 |
|||||
$ |
49,817 |
$ |
45,058 |
(a) |
We adopted the provisions of Leases on |
CARNIVAL CORPORATION & PLC |
|||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
(UNAUDITED) |
|||||||
(in millions) |
|||||||
Six Months Ended |
|||||||
2020 |
2019 |
||||||
OPERATING ACTIVITIES |
|||||||
Net income (loss) |
$ |
(5,155) |
$ |
787 |
|||
Adjustments to reconcile net income (loss) to net cash provided by operating activities |
|||||||
Depreciation and amortization |
1,147 |
1,059 |
|||||
Impairments |
3,015 |
2 |
|||||
Share-based compensation |
38 |
27 |
|||||
Gain on ship sales and other, net |
56 |
7 |
|||||
(900) |
1,883 |
||||||
Changes in operating assets and liabilities |
|||||||
Receivables |
(202) |
(50) |
|||||
Inventories |
58 |
5 |
|||||
Prepaid expenses and other |
171 |
(302) |
|||||
Accounts payable |
1,052 |
68 |
|||||
Accrued liabilities and other |
3 |
48 |
|||||
Customer deposits |
(1,987) |
1,516 |
|||||
Net cash provided by (used in) operating activities |
(1,804) |
3,169 |
|||||
INVESTING ACTIVITIES |
|||||||
Purchases of property and equipment |
(1,668) |
(3,021) |
|||||
Proceeds from sales of ships |
236 |
6 |
|||||
Payments of fuel derivative settlements |
— |
(6) |
|||||
Purchase of minority interest |
(81) |
— |
|||||
Derivative settlements and other, net |
257 |
103 |
|||||
Net cash provided by (used in) investing activities |
(1,256) |
(2,918) |
|||||
FINANCING ACTIVITIES |
|||||||
Proceeds from (repayments of) short-term borrowings, net |
3,333 |
(357) |
|||||
Principal repayments of long-term debt |
(383) |
(338) |
|||||
Proceeds from issuance of long-term debt |
6,674 |
1,722 |
|||||
Dividends paid |
(689) |
(694) |
|||||
Purchases of treasury stock |
(12) |
(316) |
|||||
Issuance of common stock, net |
558 |
2 |
|||||
Other, net |
(56) |
(45) |
|||||
Net cash provided by (used in) financing activities |
9,425 |
(26) |
|||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
1 |
(5) |
|||||
Net increase (decrease) in cash, cash equivalents and restricted cash |
6,366 |
220 |
|||||
Cash, cash equivalents and restricted cash at beginning of period |
530 |
996 |
|||||
Cash, cash equivalents and restricted cash at end of period |
$ |
6,896 |
$ |
1,215 |
|
|||||||||||||||
NON-GAAP FINANCIAL MEASURES |
|||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||
(in millions, except per share data) |
2020 |
2019 |
2020 |
2019 |
|||||||||||
Net income (loss) |
|||||||||||||||
|
$ |
(4,374) |
$ |
451 |
$ |
(5,155) |
$ |
787 |
|||||||
(Gains) losses on ship sales and impairments |
1,953 |
(16) |
2,882 |
(14) |
|||||||||||
Restructuring expenses |
39 |
— |
39 |
— |
|||||||||||
Other |
— |
22 |
3 |
22 |
|||||||||||
Adjusted net income (loss) |
$ |
(2,382) |
$ |
457 |
$ |
(2,231) |
$ |
795 |
|||||||
Weighted-average shares outstanding |
721 |
693 |
702 |
694 |
|||||||||||
Earnings per share |
|||||||||||||||
|
$ |
(6.07) |
$ |
0.65 |
$ |
(7.34) |
$ |
1.13 |
|||||||
(Gains) losses on ship sales and impairments |
2.71 |
(0.02) |
4.10 |
(0.02) |
|||||||||||
Restructuring expenses |
0.05 |
— |
0.06 |
— |
|||||||||||
Other |
— |
0.03 |
— |
0.03 |
|||||||||||
Adjusted earnings per share |
$ |
(3.30) |
$ |
0.66 |
$ |
(3.18) |
$ |
1.15 |
|||||||
Explanations of Non-GAAP Financial Measures
Non-GAAP Financial Measures
We use adjusted net income and adjusted earnings per share as non-GAAP financial measures of our cruise segments’ and the company’s financial performance. These non-GAAP financial measures are provided along with
We believe that gains and losses on ship sales, impairment charges, restructuring costs and other gains and losses are not part of our core operating business and are not an indication of our future earnings performance. Therefore, we believe it is more meaningful for these items to be excluded from our net income (loss) and earnings per share and, accordingly, we present adjusted net income and adjusted earnings per share excluding these items.
The presentation of our non-GAAP financial information is not intended to be considered in isolation from, as substitute for, or superior to the financial information prepared in accordance with
|
|||||||||||||||
STATISTICAL INFORMATION |
|||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||
2020 |
2019 |
2020 |
2019 |
||||||||||||
ALBDs (in thousands) (a) |
3,621 |
21,645 |
25,598 |
42,944 |
|||||||||||
Occupancy percentage (b) |
96.1 |
{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} |
105.3 |
{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} |
103.1 |
{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} |
105.0 |
{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} |
|||||||
Passengers carried (in thousands) |
426 |
3,101 |
3,489 |
6,038 |
|||||||||||
Fuel consumption in metric tons (in thousands) |
482 |
835 |
1,314 |
1,664 |
|||||||||||
Fuel cost per metric ton consumed |
$ |
418 |
$ |
507 |
$ |
455 |
$ |
483 |
|||||||
Currencies (USD to 1) |
|||||||||||||||
AUD |
$ |
0.63 |
$ |
0.70 |
$ |
0.66 |
$ |
0.71 |
|||||||
CAD |
$ |
0.72 |
$ |
0.75 |
$ |
0.74 |
$ |
0.75 |
|||||||
EUR |
$ |
1.09 |
$ |
1.12 |
$ |
1.10 |
$ |
1.13 |
|||||||
GBP |
$ |
1.24 |
$ |
1.30 |
$ |
1.27 |
$ |
1.29 |
|||||||
RMB |
$ |
0.14 |
$ |
0.15 |
$ |
0.14 |
$ |
0.15 |
We paused our guest operations in
Notes to Statistical Information
(a) |
ALBD is a standard measure of passenger capacity for the period that we use to approximate rate and capacity variances, based on consistently applied formulas that we use to perform analyses to determine the main non-capacity driven factors that cause our cruise revenues and expenses to vary. ALBDs assume that each cabin we offer for sale accommodates two passengers and is computed by multiplying passenger capacity by revenue-producing ship operating days in the period. |
(b) |
In accordance with cruise industry practice, occupancy is calculated using a denominator of ALBDs, which assumes two passengers per cabin even though some cabins can accommodate three or more passengers. Percentages in excess of 100{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} indicate that on average more than two passengers occupied some cabins. |
View original content:http://www.prnewswire.com/news-releases/carnival-corporation–plc-provides-a-business-update-and-additional-financial-information-for-the-second-quarter-301091289.html
SOURCE
MEDIA CONTACT: Roger Frizzell, +1 305 406 7862, or INVESTOR RELATIONS CONTACT: Beth Roberts, +1 305 406 4832
More Stories
Exclusive Travel Packages for Adventure Seekers
Elevate Your Home: Key Upgrades to Consider During Renovation
Inflation is No Deterrent for the Majority of Travellers