REG - Carnival PLC - 1st Quarter Results
25/03/2025 14:45
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RNS Number : 1091C Carnival PLC 25 March 2025
March 25, 2025
RELEASE OF CARNIVAL CORPORATION & PLC QUARTERLY REPORT ON FORM 10-Q
FOR THE FIRST QUARTER OF 2025
Carnival Corporation & plc announced its first quarter results of
operations in its earnings release issued on March 21, 2025. Carnival
Corporation & plc is hereby announcing that today it has filed its joint
Quarterly Report on Form 10-Q ("Form 10-Q") with the U.S. Securities and
Exchange Commission ("SEC") containing the Carnival Corporation & plc
unaudited consolidated financial statements as of and for the three months
ended February 28, 2025.
The information included in the Form 10-Q (Schedule A) has been prepared in
accordance with SEC rules and regulations. The Carnival Corporation & plc
unaudited consolidated financial statements contained in the Form 10-Q have
been prepared in accordance with generally accepted accounting principles in
the United States of America ("U.S. GAAP").
Schedule A contains information on Carnival Corporation and Carnival plc's
management's discussion and analysis of financial conditions and results of
operations and the Carnival Corporation & plc unaudited consolidated
financial statements as of and for the three months ended February 28, 2025.
The Directors consider that within the Carnival Corporation and Carnival plc
dual listed company arrangement, the most appropriate presentation of Carnival
plc's results and financial position is by reference to the Carnival
Corporation & plc U.S. GAAP unaudited consolidated financial statements.
MEDIA CONTACT INVESTOR RELATIONS CONTACT
Jody Venturoni Beth Roberts
001 469 797 6380 001 305 406 4832
The Form 10-Q is available for viewing on the SEC website at www.sec.gov under
Carnival Corporation or Carnival plc or the Carnival Corporation & plc
website at www.carnivalcorp.com or www.carnivalplc.com. A copy of the Form
10-Q has been submitted to the National Storage Mechanism and will shortly be
available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism. Additional information
can be obtained via Carnival Corporation & plc's website listed above or
by writing to Carnival plc at Carnival House, 100 Harbour Parade, Southampton,
SO15 1ST, United Kingdom.
Carnival Corporation & plc is the largest global cruise company, and among
the largest leisure travel companies, with a portfolio of world-class cruise
lines - AIDA Cruises, Carnival Cruise Line, Costa Cruises, Cunard, Holland
America Line, P&O Cruises, Princess Cruises, and Seabourn.
Additional information can be found on www.carnivalcorp.com, www.aida.de,
www.carnival.com, www.costacruise.com, www.cunard.com, www.hollandamerica.com,
www.pocruises.com, www.princess.com and www.seabourn.com. For more information
on Carnival Corporation's industry-leading sustainability initiatives, visit
www.carnivalsustainability.com.
SCHEDULE A
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
(in millions, except per share data)
Three Months Ended February 28/29,
2025 2024
Revenues
Passenger ticket $3,832 $3,617
Onboard and other 1,978 1,790
5,810 5,406
Operating Expenses
Commissions, transportation and other 850 819
Onboard and other 599 550
Payroll and related 640 623
Fuel 465 505
Food 354 346
Other operating 858 862
Cruise and tour operating expenses 3,766 3,705
Selling and administrative 848 813
Depreciation and amortization 654 613
5,268 5,131
Operating Income 543 276
Nonoperating Income (Expense)
Interest income 7 33
Interest expense, net of capitalized interest (377) (471)
Debt extinguishment and modification costs (252) (33)
Other income (expense), net 8 (18)
(614) (489)
Income (Loss) Before Income Taxes (71) (214)
Income Tax Benefit (Expense), Net (7) -
Net Income (Loss) $(78) $(214)
Earnings Per Share
Basic $(0.06) $(0.17)
Diluted $(0.06) $(0.17)
The accompanying notes are an integral part of these consolidated financial
statements.
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(in millions)
Three Months Ended February 28/29,
2025 2024
Net Income (Loss) $(78) $(214)
Items Included in Other Comprehensive Income (Loss)
Change in foreign currency translation adjustment (12) -
Other 1 1
Other Comprehensive Income (Loss) (12) 1
Total Comprehensive Income (Loss) $(90) $(213)
The accompanying notes are an integral part of these consolidated financial
statements.
CARNIVAL CORPORATION & PLC
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in millions, except par values)
February 28, November 30, 2024
2025
ASSETS
Current Assets
Cash and cash equivalents $833 $1,210
Trade and other receivables, net 543 590
Inventories 518 507
Prepaid expenses and other 1,083 1,070
Total current assets 2,977 3,378
Property and Equipment, Net 41,654 41,795
Operating Lease Right-of-Use Assets, Net 1,341 1,368
Goodwill 579 579
Other Intangibles 1,162 1,163
Other Assets 822 775
$48,535 $49,057
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $1,531 $1,538
Current portion of operating lease liabilities 164 163
Accounts payable 1,091 1,133
Accrued liabilities and other 1,939 2,358
Customer deposits 6,853 6,425
Total current liabilities 11,578 11,617
Long-Term Debt 25,487 25,936
Long-Term Operating Lease Liabilities 1,209 1,239
Other Long-Term Liabilities 1,078 1,012
Contingencies and Commitments
Shareholders' Equity
Carnival Corporation common stock, $0.01 par value; 1,960 shares authorized; 13 13
1,297 shares issued at 2025 and 1,294 shares issued at 2024
Carnival plc ordinary shares, $1.66 par value; 217 shares issued at 2025 and 361 361
2024
Additional paid-in capital 17,180 17,155
Retained earnings 1,991 2,101
Accumulated other comprehensive income (loss) ("AOCI") (1,986) (1,975)
Treasury stock, 131 shares at 2025 and 130 shares at 2024 of Carnival (8,376) (8,404)
Corporation and 72 shares at 2025 and 73 shares at 2024 of Carnival plc, at
cost
Total shareholders' equity 9,182 9,251
$48,535 $49,057
The accompanying notes are an integral part of these consolidated financial
statements.
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in millions)
Three Months Ended February 28/29,
2025 2024
OPERATING ACTIVITIES
Net income (loss) $(78) $(214)
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities
Depreciation and amortization 654 613
(Gain) loss on debt extinguishment 249 33
(Income) loss from equity-method investments 2 3
Share-based compensation 18 11
Amortization of discounts and debt issue costs 30 36
Non-cash lease expense 37 34
Greenhouse gas regulatory expense 6 3
Other 26 13
944 531
Changes in operating assets and liabilities
Receivables 33 (106)
Inventories (17) (7)
Prepaid expenses and other assets (64) 634
Accounts payable (31) (11)
Accrued liabilities and other (443) 108
Customer deposits 503 619
Net cash provided by (used in) operating activities 925 1,768
INVESTING ACTIVITIES
Purchases of property and equipment (607) (2,138)
Proceeds from sales of ships and other 11 -
Other (9) (25)
Net cash provided by (used in) investing activities (605) (2,163)
FINANCING ACTIVITIES
Principal repayments of long-term debt (3,448) (1,390)
Debt issuance costs (24) (77)
Debt extinguishment costs (197) (31)
Proceeds from issuance of long-term debt 2,980 1,735
Other (1) -
Net cash provided by (used in) financing activities (690) 237
Effect of exchange rate changes on cash, cash equivalents and restricted cash (6) (3)
Net increase (decrease) in cash, cash equivalents and restricted cash (376) (162)
Cash, cash equivalents and restricted cash at beginning of period 1,231 2,436
Cash, cash equivalents and restricted cash at end of period $856 $2,274
The accompanying notes are an integral part of these consolidated financial
statements.
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(UNAUDITED)
(in millions)
Three Months Ended
Common Ordinary Additional Retained AOCI Treasury Total shareholders' equity
stock shares paid-in earnings stock
capital (accumulated deficit)
At November 30, 2024 $13 $361 $17,155 $2,101 $(1,975) $(8,404) $9,251
Net income (loss) - - - (78) - - (78)
Other comprehensive income (loss) - - - - (12) - (12)
Issuance of treasury shares for vested share-based awards - - - (31) - 31 -
Share-based compensation and other - - 24 - - (4) 21
At February 28, 2025 $13 $361 $17,180 $1,991 $(1,986) $(8,376) $9,182
At November 30, 2023 $12 $361 $16,712 $185 $(1,939) $(8,449) $6,882
Net income (loss) - - - (214) - - (214)
Other comprehensive income (loss) - - - - 1 - 1
Issuance of treasury shares for vested share-based awards - - (47) - - 47 -
Share-based compensation and other - - 14 - - (2) 13
At February 29, 2024 $13 $361 $16,679 $(29) $(1,938) $(8,404) $6,682
The accompanying notes are an integral part of these consolidated financial
statements.
CARNIVAL CORPORATION & PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - General
The consolidated financial statements include the accounts of Carnival
Corporation and Carnival plc and their respective subsidiaries. Together with
their consolidated subsidiaries, they are referred to collectively in these
consolidated financial statements and elsewhere in this joint Quarterly Report
on Form 10-Q as "Carnival Corporation & plc," "our," "us" and "we."
Basis of Presentation
The consolidated financial statements are unaudited and, in the opinion of our
management, contain all adjustments, consisting of only normal recurring
adjustments, necessary for a fair statement. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States of America
("GAAP") have been condensed or omitted as permitted by such Securities and
Exchange Commission rules and regulations. The preparation of our interim
consolidated financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the amounts reported and disclosed. We
have made reasonable estimates and judgments of such items within our
financial statements and there may be changes to those estimates in future
periods. Our operations are seasonal and results for interim periods are not
necessarily indicative of the results for the entire year.
Our interim consolidated financial statements should be read in conjunction
with the audited consolidated financial statements and the related notes
included in the Carnival Corporation & plc 2024 joint Annual Report on
Form 10-K ("Form 10-K") filed with the U.S. Securities and Exchange Commission
("SEC") on January 27, 2025.
For 2024, we reclassified $3 million from other to greenhouse gas regulatory
expense in the Consolidated Statements of Cash Flows to conform to the current
year presentation.
Accounting Pronouncements
In November 2023, the FASB issued guidance, Segment Reporting - Improvements
to Reportable Segment Disclosures. This guidance requires annual and interim
disclosure of significant segment expenses that are provided to the chief
operating decision maker ("CODM") as well as interim disclosures for all
reportable segments' profit or loss and assets. This guidance also requires
disclosure of the title and position of the CODM and an explanation of how the
CODM uses the reported measures of segment profit or loss in assessing segment
performance and deciding how to allocate resources. This guidance is effective
for us for annual periods beginning in 2025 and interim periods beginning in
2026. While this guidance will not have an effect on our Consolidated
Statements of Income (Loss) or Consolidated Balance Sheets, it will affect
certain segment reporting disclosures.
In December 2023, the FASB issued guidance, Income Taxes - Improvements to
Income Tax Disclosures. This guidance requires disaggregation of rate
reconciliation categories and income taxes paid by jurisdiction, as well as
other amendments relating to income tax disclosures. This guidance is required
to be adopted by us in 2026. We are currently evaluating the impact this
guidance will have on our consolidated financial statements.
In November 2024, the FASB issued guidance, Income Statement - Reporting
Comprehensive Income - Expense Disaggregation Disclosures - Disaggregation of
Income Statement Expenses. This guidance requires annual and interim
disclosure of disaggregated information for certain costs and expenses. This
guidance is required to be adopted by us in 2028. We are currently evaluating
the impact this guidance will have on our consolidated financial statements.
In November 2024, the FASB issued guidance, Debt - Debt with Conversion and
Other Options - Induced Conversions of Convertible Debt Instruments. This
guidance clarifies the requirements for determining whether certain
settlements of convertible debt instruments should be accounted for as induced
conversions or extinguishments. This guidance is required to be adopted by us
in 2027. We are currently evaluating the impact this guidance will have on our
consolidated financial statements.
NOTE 2 - Revenue and Expense Recognition
Guest cruise deposits and advance onboard purchases are initially included in
customer deposits when received. Customer deposits are subsequently recognized
as cruise revenues, together with revenues from onboard and other activities,
and all associated direct expenses of a voyage are recognized as cruise
expenses, upon completion of voyages with durations of ten nights or less and
on a pro rata basis for voyages in excess of ten nights. The impact of
recognizing these shorter duration cruise revenues and expenses on a completed
voyage basis versus on a pro rata basis is not material. Certain of our
product offerings are bundled and we allocate the value of the bundled
services and goods between passenger ticket revenues and onboard and other
revenues based upon the estimated standalone selling prices of those goods and
services. Future travel discount vouchers are included as a reduction of
cruise passenger ticket revenues when such vouchers are utilized. Guest
cancellation fees, when applicable, are recognized in passenger ticket
revenues at the time of cancellation.
Our sales to guests of air and other transportation to and from airports near
the home ports of our ships are included in passenger ticket revenues, and the
related expenses of these services are included in prepaid expenses and other
when paid prior to the start of a voyage and are subsequently recognized in
transportation expenses at the time of revenue recognition. The cost of
prepaid air and other transportation expenses at February 28, 2025 and
November 30, 2024 were $241 million and $219 million. The proceeds that we
collect from the sales of third-party shore excursions are included in onboard
and other revenues and the related expenses are included in onboard and other
expenses. The amounts collected on behalf of our onboard concessionaires, net
of the amounts remitted to them, are included in onboard and other revenues as
concession revenues. All of these amounts are recognized on a completed voyage
or pro rata basis as discussed above.
Fees, taxes and charges that vary with guest head counts are expensed in
commissions, transportation and other expenses when the corresponding revenues
are recognized. The remaining portion of fees, taxes and charges are expensed
in other operating expenses when the corresponding revenues are recognized.
Revenues and expenses from our hotel and transportation operations, which are
included in our Tour and Other segment, are recognized at the time the
services are performed.
Customer Deposits
Our payment terms generally require an initial deposit to confirm a
reservation, with the balance due prior to the voyage. Cash received from
guests in advance of the cruise is recorded in customer deposits and in other
long-term liabilities on our Consolidated Balance Sheets. These amounts
include refundable deposits. We had total customer deposits of $7.3 billion as
of February 28, 2025 and $6.8 billion as of November 30, 2024. During the
three months ended February 28/29, 2025 and 2024, we recognized revenues of
$3.8 billion and $3.5 billion related to our customer deposits as of November
30, 2024 and 2023. Our customer deposits balance changes due to the seasonal
nature of cash collections, which typically results from higher ticket prices
and occupancy levels during the third quarter, the recognition of revenue,
refunds of customer deposits and foreign currency changes.
Trade and Other Receivables
Although we generally require full payment from our customers prior to or
concurrently with their cruise, we grant credit terms to a relatively small
portion of our revenue source. We have receivables from credit card merchants
and travel agents for cruise ticket purchases and onboard revenue. These
receivables are included within trade and other receivables, net and are less
allowances for expected credit losses.
Contract Costs
We recognize incremental travel agent commissions and credit and debit card
fees incurred as a result of obtaining the ticket contract as assets when paid
prior to the start of a voyage. We record these amounts within prepaid
expenses and other and subsequently recognize these amounts as commissions,
transportation and other at the time of revenue recognition or at the time of
voyage cancellation. We had incremental costs of obtaining contracts with
customers recognized as assets of $354 million as of February 28, 2025 and
$336 million as of November 30, 2024.
NOTE 3 - Debt
February 28, November 30,
(in millions) Maturity Rate (a) 2025 2024
Secured Subsidiary Guaranteed
Notes
Notes Jun 2027 7.9% $192 $192
Notes Aug 2028 4.0% 2,406 2,406
Notes Aug 2029 7.0% 500 500
Loans
Floating rate Aug 2027 - Oct 2028 SOFR + 2.0% (b) 2,449 2,449
Total Secured Subsidiary Guaranteed 5,547 5,547
Senior Priority Subsidiary Guaranteed
Notes (c) May 2028 10.4% - 2,030
Unsecured Subsidiary Guaranteed
Notes
Notes Mar 2026 7.6% 1,351 1,351
Notes Mar 2027 5.8% 2,722 2,722
Convertible Notes Dec 2027 5.8% 1,131 1,131
Notes May 2029 6.0% 2,000 2,000
EUR Notes Jan 2030 5.8% 524 528
Notes Mar 2030 5.8% 1,000 -
Notes (d) Jun 2030 10.5% - 1,000
Notes Feb 2033 6.1% 2,000 -
Loans
EUR floating rate Apr 2025 EURIBOR + 3.3% 210 211
Export Credit Facilities
Floating rate Dec 2031 SOFR + 1.2% (e) 480 514
Fixed rate Aug 2027 - Dec 2032 2.4 - 3.4% 2,290 2,370
EUR floating rate Mar 2025 - Nov 2034 EURIBOR + 0.2 - 0.8% 2,488 2,590
EUR fixed rate Feb 2031 - Sep 2037 1.1 - 4.0% 5,139 5,386
Total Unsecured Subsidiary Guaranteed 21,336 19,803
Unsecured Notes (No Subsidiary Guarantee)
Notes Jan 2028 6.7% 200 200
EUR Notes Oct 2029 1.0% 629 633
Total Unsecured Notes (No Subsidiary Guarantee) 829 833
Total Debt 27,711 28,213
Less: unamortized debt issuance costs and discounts (693) (738)
Total Debt, net of unamortized debt issuance costs and discounts 27,018 27,475
Less: current portion of long-term debt (1,531) (1,538)
Long-Term Debt $25,487 $25,936
(a) The reference rates, together with any applicable credit adjustment
spread, for all of our variable debt have 0.0% to 0.8% floors.
(b) As part of the repricing of our senior secured term loans, we amended
the loans' margin from 2.8% to 2.0%. See "Repricing of Senior Secured Term
Loans" below.
(c) See "2033 Senior Unsecured Notes" below.
(d) See "2030 Senior Unsecured Notes" below.
(e) Includes applicable credit adjustment spread.
Carnival Corporation and/or Carnival plc is the primary obligor of all our
outstanding debt excluding the following:
• $2.9 billion under an undrawn $1.9 billion, €0.9 billion
and £0.1 billion multi-currency revolving credit facility ("Revolving
Facility") of Carnival Holdings (Bermuda) II Limited ("Carnival Holdings II"),
a subsidiary of Carnival Corporation
• $0.8 billion under an export credit facility of Sun Princess
Limited, a subsidiary of Carnival Corporation
• $0.2 billion under an export credit facility of Sun Princess II
Limited, a subsidiary of Carnival Corporation
All of our outstanding debt is issued or guaranteed by substantially the same
entities with the exception of the following:
• The Revolving Facility of Carnival Holdings II, which does not
guarantee our other outstanding debt
• The export credit facilities of Sun Princess Limited and Sun
Princess II Limited, which do not guarantee our other outstanding debt
As of February 28, 2025, the scheduled maturities of our debt are as follows:
(in millions)
Year Principal Payments
Remainder of 2025 $1,122
2026 2,677
2027 4,889
2028 6,691
2029 4,318
Thereafter 8,015
Total $27,711
Revolving Facility
As of February 28, 2025, Carnival Holdings II had $2.9 billion available for
borrowing under the Revolving Facility. Carnival Holdings II may continue to
borrow or otherwise utilize available amounts under the Revolving Facility
through August 2027, subject to the satisfaction of the conditions in the
facility.
Repricing of Senior Secured Term Loans
In January 2025, we entered into amendments with the lender syndicate to
reprice the outstanding principal amounts of our first-priority senior secured
term loan facility maturing in 2027 and our first-priority senior secured term
loan facility maturing in 2028 ("Repriced Loans"), which are included within
the total Secured Subsidiary Guaranteed Loans balance in the debt table above.
The Repriced Loans bear interest at a rate per annum equal to SOFR with a 0.8%
floor, plus a margin equal to 2.0%.
2030 Senior Unsecured Notes
In February 2025, we issued $1.0 billion aggregate principal amount of 5.8%
senior unsecured notes due 2030. We used the net proceeds from the issuance,
together with cash on hand, to redeem the outstanding principal amount of the
10.5% senior unsecured notes due 2030.
2033 Senior Unsecured Notes
In February 2025, we issued $2.0 billion aggregate principal amount of 6.1%
senior unsecured notes due 2033. We used the net proceeds from the issuance,
together with cash on hand, to redeem the outstanding principal amount of the
10.4% senior priority notes due 2028.
Debt Extinguishment and Modification Costs
During the three months ended February 28, 2025, we recognized a total of $252
million of debt extinguishment and modification costs, including $197 million
of premium paid on redemption, within our Consolidated Statements of Income
(Loss) as a result of the above transactions.
Export Credit Facility Borrowings
Our export credit facilities are due in semi-annual installments through 2037.
As of February 28, 2025, we had $7.8 billion of undrawn export credit
facilities to fund ship deliveries planned through 2033. As of February 28,
2025, the net book value of our ships subject to negative pledges pursuant to
export credit facilities was $18.5 billion.
Collateral and Priority Pool
As of February 28, 2025, the net book value of our ships and ship
improvements, excluding ships under construction, is $39.0 billion. Our
secured debt is secured on a first-priority basis by certain collateral, which
includes ships and certain assets related to those ships and material
intellectual property (combined net book value of approximately
$22.1 billion, including $20.5 billion related to ships and certain assets
related to those ships) as of February 28, 2025 and certain other assets.
As of February 28, 2025, $2.8 billion in net book value of our ship and ship
improvements relate to the priority pool ships included in the priority pool
of three unencumbered ships (the "Revolving Facility Subject Ships") for our
Revolving Facility. As of February 28, 2025, there was no change in the
identity of the Revolving Facility Subject Ships.
Covenant Compliance
As of February 28, 2025, our Revolving Facility, unsecured loans and export
credit facilities contain certain covenants listed below:
• Maintain minimum interest coverage (adjusted EBITDA to
consolidated net interest charges, as defined in the agreements) at a ratio of
not less than 2.0 to 1.0 for each testing date until May 31, 2025, at a ratio
of not less than 2.5 to 1.0 for the August 31, 2025 and November 30, 2025
testing dates, and at a ratio of not less than 3.0 to 1.0 for the February 28,
2026 testing date onwards and as applicable through their respective maturity
dates
• For certain of our unsecured loans and export credit facilities,
maintain minimum issued capital and consolidated reserves (as defined in the
agreements) of $5.0 billion
• Limit our debt to capital (as defined in the agreements)
percentage to a percentage not to exceed 65%
• Maintain minimum liquidity of $1.5 billion
• Adhere to certain restrictive covenants through August 2027
(subject to such covenants terminating if we reach an investment grade credit
rating in accordance with the agreement governing the Revolving Facility)
• Limit the amounts of our secured assets as well as secured and
other indebtedness
At February 28, 2025, we were in compliance with the applicable covenants
under our debt agreements. Generally, if an event of default under any debt
agreement occurs, then, pursuant to cross-default and/or cross-acceleration
clauses therein, substantially all of our outstanding debt and derivative
contract payables could become due, and our debt and derivative contracts
could be terminated. Any financial covenant amendment may lead to increased
costs, increased interest rates, additional restrictive covenants and other
available lender protections that would be applicable.
NOTE 4 - Contingencies and Commitments
Litigation
We are routinely involved in legal proceedings, claims, disputes, regulatory
matters and governmental inspections or investigations arising in the ordinary
course of or incidental to our business. We have insurance coverage for
certain of these claims and actions, or any settlement of these claims and
actions, and historically the maximum amount of our liability, net of any
insurance recoverables, has been limited to our self-insurance retention
levels.
We record provisions in the consolidated financial statements for pending
litigation when we determine that an unfavorable outcome is probable and the
amount of the loss can be reasonably estimated.
Legal proceedings and government investigations are subject to inherent
uncertainties, and unfavorable rulings or other events could occur.
Unfavorable resolutions could involve substantial monetary damages. In
addition, in matters for which conduct remedies are sought, unfavorable
resolutions could include an injunction or other order prohibiting us from
selling one or more products at all or in particular ways, precluding
particular business practices or requiring other remedies. An unfavorable
outcome might result in a material adverse impact on our business, results of
operations, financial position or liquidity.
As previously disclosed, on May 2, 2019, the Havana Docks Corporation filed a
lawsuit against Carnival Corporation in the U.S. District Court for the
Southern District of Florida under Title III of the Cuban Liberty and
Democratic Solidarity Act, also known as the Helms-Burton Act, alleging that
Carnival Corporation "trafficked" in confiscated Cuban property when certain
ships docked at certain ports in Cuba, and that this alleged "trafficking"
entitles the plaintiffs to treble damages. On March 21, 2022, the court
granted summary judgment in favor of Havana Docks Corporation as to liability.
On December 30, 2022, the court entered judgment against Carnival Corporation
in the amount of $110 million plus $4 million in fees and costs. We
appealed. On October 22, 2024, the Court of Appeals for the 11(th) Circuit
reversed the District Court's judgment against us. On March 6, 2025, Havana
Docks filed a petition for certiorari with the Supreme Court of the United
States. Following resolution of that petition, the case will be remanded to
the District Court for further proceedings. We believe the ultimate outcome of
this matter will not have a material impact on our consolidated financial
statements.
As of February 28, 2025, two purported class actions brought against us by
former guests in the Federal Court in Australia and in Italy remain pending,
as previously disclosed. These actions include claims based on a variety of
theories, including negligence, gross negligence and failure to warn, physical
injuries and severe emotional distress associated with being exposed to and/or
contracting COVID-19 onboard our ships. On October 24, 2023, the court in the
Australian matter held that we were liable for negligence and for breach of
consumer protection warranties as it relates to the lead plaintiff. The court
ruled that the lead plaintiff was not entitled to any pain and suffering or
emotional distress damages on the negligence claim and awarded medical costs.
In relation to the consumer protection warranties claim, the court found that
distress and disappointment damages amounted to no more than the refund
already provided to guests and therefore made no further award. Further
proceedings will determine the applicability of this ruling to the remaining
class participants. We continue to take actions to defend against the above
claims. We believe the ultimate outcome of these matters will not have a
material impact on our consolidated financial statements.
Regulatory or Governmental Inquiries and Investigations
We have been, and may continue to be, impacted by breaches in data security
and lapses in data privacy, which occur from time to time. These can vary in
scope and range from inadvertent events to malicious motivated attacks.
We have incurred legal and other costs in connection with cyber incidents that
have impacted us. The penalties and settlements paid in connection with cyber
incidents over the last three years were not material. While these incidents
did not have a material adverse effect on our business, results of operations,
financial position or liquidity, no assurances can be given about the future
and we may be subject to future attacks, incidents or litigation that could
have such a material adverse effect.
On March 14, 2022, the U.S. Department of Justice and the U.S. Environmental
Protection Agency notified us of potential civil penalties and injunctive
relief for alleged Clean Water Act violations by owned and operated vessels
covered by the 2013 Vessel General Permit. We are working with these agencies
to reach a resolution of this matter. We believe the ultimate outcome will not
have a material impact on our consolidated financial statements.
Under the European Union Treaty certain economic benefits that are provided
under Italian law are subject to approval on a periodic basis by the European
Commission, with the most recent approval granted through December 31, 2023.
One of our subsidiaries continues to receive and recognize these benefits. The
Italian Government has requested approval for these benefits to continue to be
applied after December 31, 2023. The timing of the European Commission's
decision is uncertain and could take more than a year. If the European
Commission were to deny a portion or all of the benefits, the Italian
Government may be required to retroactively disallow these benefits and seek
reimbursement from us which would result in a reversal of the recognition of
such benefits, which depending on the timing of resolution, could have a
material impact on our consolidated financial statements.
Other Contingent Obligations
Some of the debt contracts we enter into include indemnification provisions
obligating us to make payments to the counterparty if certain events occur.
These contingencies generally relate to changes in taxes or changes in laws
which increase the lender's costs. There are no stated or notional amounts
included in the indemnification clauses, and we are not able to estimate the
maximum potential amount of future payments, if any, under these
indemnification clauses.
We have agreements with a number of credit card processors that transact
customer deposits related to our cruise vacations. Certain of these agreements
allow the credit card processors to request, under certain circumstances, that
we provide a capped reserve fund in cash. Although the agreements vary, these
requirements may generally be satisfied either through a withheld percentage
of customer payments or providing cash funds directly to the credit card
processor.
Ship Commitments
As of February 28, 2025, our new ship growth capital commitments were
$0.9 billion for the remainder of 2025 and $0.4 billion, $1.3 billion,
$1.3 billion, $1.5 billion and $3.2 billion for the years ending November
30, 2026, 2027, 2028, 2029 and thereafter.
NOTE 5 - Fair Value Measurements, Derivative Instruments and Hedging
Activities and Financial Risks
Fair Value Measurements
Fair value is defined as the amount that would be received for selling an
asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date and is measured using inputs in one of
the following three categories:
• Level 1 measurements are based on unadjusted quoted prices in
active markets for identical assets or liabilities that we have the ability to
access. Valuation of these items does not entail a significant amount of
judgment.
• Level 2 measurements are based on quoted prices for similar
assets or liabilities in active markets, quoted prices for identical or
similar assets or liabilities in markets that are not active or market data
other than quoted prices that are observable for the assets or liabilities.
• Level 3 measurements are based on unobservable data that are
supported by little or no market activity and are significant to the fair
value of the assets or liabilities.
Considerable judgment may be required in interpreting market data used to
develop the estimates of fair value. Accordingly, certain estimates of fair
value presented herein are not necessarily indicative of the amounts that
could be realized in a current or future market exchange.
Financial Instruments that are not Measured at Fair Value on a Recurring Basis
February 28, 2025 November 30, 2024
Carrying Fair Value Carrying Fair Value
Value Value
(in millions) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Liabilities
Fixed rate debt (a) $22,084 $- $22,610 $- $22,449 $- $23,241 $-
Floating rate debt (a) 5,627 - 5,550 - 5,764 - 5,685 -
Total $27,711 $- $28,159 $- $28,213 $- $28,927 $-
(a) The debt amounts above do not include the impact of
interest rate swaps or debt issuance costs and discounts. The fair values of
our publicly-traded notes were based on their unadjusted quoted market prices
in markets that are not sufficiently active to be Level 1 and, accordingly,
are considered Level 2. The fair values of our other debt were estimated based
on current market interest rates being applied to this debt.
Financial Instruments that are Measured at Fair Value on a Recurring Basis
February 28, 2025 November 30, 2024
(in millions) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Assets
Cash equivalents (a) $375 $- $- $404 $- $-
Derivative financial instruments - - - - 2 -
Total $375 $- $- $404 $2 $-
Liabilities
Derivative financial instruments $- $4 $- $- $4 $-
Total $- $4 $- $- $4 $-
(a) Consists of money market funds and cash investments with
original maturities of less than 90 days.
Nonfinancial Instruments that are Measured at Fair Value on a Nonrecurring
Basis
Valuation of Goodwill and Trademarks
As of February 28, 2025 and November 30, 2024, goodwill for our North America
segment was $579 million.
Trademarks
(in millions) North America Europe Total
Segment Segment
November 30, 2024 $927 $234 $1,161
Exchange movements - (1) (1)
February 28, 2025 $927 $233 $1,160
Derivative Instruments and Hedging Activities
(in millions) Balance Sheet Location February 28, 2025 November 30, 2024
Derivative assets
Derivatives designated as hedging instruments
Interest rate swaps (a) Prepaid expenses and other $- $2
Total derivative assets $- $2
Derivative liabilities
Derivatives designated as hedging instruments
Interest rate swaps (a) Other long-term liabilities $4 $4
Total derivative liabilities $4 $4
(a) We have interest rate swaps whereby we receive floating
interest rate payments in exchange for making fixed interest rate payments.
These interest rate swap agreements effectively changed $10 million at
February 28, 2025 and $11 million at November 30, 2024 of EURIBOR-based
floating rate euro debt to fixed rate euro debt, and $1.0 billion at February
28, 2025 and November 30, 2024 of SOFR-based variable rate debt to fixed rate
debt. As of February 28, 2025 and November 30, 2024, the EURIBOR-based
interest rate swaps settle through March 2025 and were not designated as cash
flow hedges; the SOFR-based interest rate swaps settle through 2027 and were
designated as cash flow hedges.
Our derivative contracts include rights of offset with our counterparties. As
of February 28, 2025 and November 30, 2024, we did not have any counterparties
with multiple derivative contracts.
The effect of our derivatives qualifying and designated as hedging instruments
recognized in other comprehensive income (loss) and in net income (loss) was
as follows:
Three Months Ended
February 28/29,
(in millions) 2025 2024
Gains (losses) recognized in AOCI:
Interest rate swaps - cash flow hedges $- $13
(Gains) losses reclassified from AOCI - cash flow hedges:
Interest rate swaps - Interest expense, net of capitalized interest $2 $(11)
Gains (losses) recognized on derivative instruments (amount excluded from
effectiveness testing - net investment hedges)
Cross currency swaps - Interest expense, net of capitalized interest $- $2
The amount of gains and losses on derivatives not designated as hedging
instruments recognized in earnings during the three months ended February 28,
2025 and estimated cash flow hedges' unrealized gains and losses that are
expected to be reclassified to earnings in the next twelve months are not
material.
Financial Risks
Fuel Price Risks
We manage our exposure to fuel price risk by managing our consumption of fuel.
Substantially all of our exposure to market risk for changes in fuel prices
relates to the consumption of fuel on our ships. We manage fuel consumption
through fleet optimization, energy efficiency, itinerary efficiency, and new
technologies and alternative fuels.
Foreign Currency Exchange Rate Risks
Overall Strategy
We manage our exposure to fluctuations in foreign currency exchange rates
through our normal operating and financing activities, including netting
certain exposures to take advantage of any natural offsets and, when
considered appropriate, through the use of derivative and non-derivative
financial instruments. Our primary focus is to monitor our exposure to, and
manage, the economic foreign currency exchange risks faced by our operations
and realized if we exchange one currency for another. We consider hedging
certain of our ship commitments and net investments in foreign operations. The
financial impacts of our hedging instruments generally offset the changes in
the underlying exposures being hedged.
Operational Currency Risks
Our operations primarily utilize the U.S. dollar, Euro, Sterling or the
Australian dollar as their functional currencies. Our operations also have
revenue and expenses denominated in non-functional currencies. Movements in
foreign currency exchange rates affect our consolidated financial statements.
Investment Currency Risks
We consider our investments in foreign operations to be denominated in stable
currencies and of a long-term nature. We have euro-denominated debt which
provides an economic offset for our operations with euro functional currency.
In addition, we have in the past and may in the future utilize derivative
financial instruments, such as cross currency swaps, to manage our exposure to
investment currency risks.
Newbuild Currency Risks
Our shipbuilding contracts are typically denominated in euros. At February 28,
2025, our newbuild currency exchange rate risk relates to euro-denominated
newbuild contract payments for non-euro functional currency brands. The cost
of shipbuilding orders that we may place in the future that are denominated in
a different currency than our cruise brands' functional currency will be
affected by foreign currency exchange rate fluctuations. These foreign
currency exchange rate fluctuations may affect our decision to order new
cruise ships. We have in the past and may in the future utilize derivative
financial instruments, such as foreign currency derivatives, to manage our
exposure to newbuild currency risks. Our decisions to hedge non-functional
currency ship commitments for our cruise brands are made on a case-by-case
basis, considering the amount and duration of the exposure, market volatility,
economic trends, our overall expected net cash flows by currency and other
offsetting risks.
Interest Rate Risks
We manage our exposure to fluctuations in interest rates through our debt
portfolio management and investment strategies. We evaluate our debt
portfolio to determine whether to make periodic adjustments to the mix of
fixed and floating rate debt through the use of interest rate swaps,
refinancing of existing debt and the issuance of new debt.
Concentrations of Credit Risk
As part of our ongoing control procedures, we monitor concentrations of credit
risk associated with financial and other institutions with which we conduct
significant business. We seek to manage these credit risk exposures,
including counterparty nonperformance primarily associated with our cash and
cash equivalents, investments, notes receivables, reserve funds related to
customer deposits (when required), future financing facilities, contingent
obligations, derivative instruments, insurance contracts and new ship progress
payment guarantees, by:
• Conducting business with well-established financial
institutions, insurance companies and export credit agencies
• Diversifying our counterparties
• Having guidelines regarding credit ratings and investment
maturities that we follow to help safeguard liquidity and minimize risk
• Generally requiring collateral and/or guarantees to support
notes receivable on significant asset sales and new ship progress payments to
shipyards
We also monitor the creditworthiness of travel agencies and tour operators in
Australia and Europe and credit and debit card providers to which we extend
credit in the normal course of our business. Our credit exposure also
includes contingent obligations related to cash payments received directly by
travel agents and tour operators for cash collected by them on cruise sales in
Australia and most of Europe where we are obligated to honor our guests'
cruise payments made by them to their travel agents and tour operators
regardless of whether we have received these payments.
Concentrations of credit risk associated with trade receivables and other
receivables, charter-hire agreements and contingent obligations are not
considered to be material, principally due to the large number of unrelated
accounts, the nature of these contingent obligations and their short
maturities. Normally, we have not required collateral or other security to
support normal credit sales and have not experienced significant credit
losses.
NOTE 6 - Segment Information
The chief operating decision maker, who is the President, Chief Executive
Officer and Chief Climate Officer of Carnival Corporation and Carnival plc
assesses performance and makes decisions to allocate resources for Carnival
Corporation & plc based upon review of the results across all of our
segments. The operating segments within each of our reportable segments have
been aggregated based on the similarity of their economic and other
characteristics, including geographic guest sourcing. Our four reportable
segments are comprised of (1) North America cruise operations ("North
America"), (2) Europe cruise operations ("Europe"), (3) Cruise Support and
(4) Tour and Other.
Our Cruise Support segment includes our portfolio of leading port destinations
and exclusive islands as well as other services, all of which are operated for
the benefit of our cruise brands. Our Tour and Other segment represents the
hotel and transportation operations of Holland America Princess Alaska Tours
and other operations.
Three Months Ended February 28/29,
(in millions) Revenues Operating Selling Depreciation Operating
expenses and and income (loss)
administrative amortization
2025
North America (a) $3,906 $2,436 $521 $434 $516
Europe 1,830 1,270 250 169 140
Cruise Support 72 45 72 45 (91)
Tour and Other 2 15 4 6 (22)
$5,810 $3,766 $848 $654 $543
2024
North America (a) $3,574 $2,402 $502 $398 $272
Europe 1,769 1,251 234 164 119
Cruise Support 59 36 73 45 (95)
Tour and Other 4 15 4 6 (21)
$5,406 $3,705 $813 $613 $276
(a) Beginning in the first quarter of 2025, we renamed the North America
and Australia segment to the North America segment.
Revenue by geographic areas, which are based on where our guests are sourced,
were as follows:
Three Months Ended
February 28/29,
(in millions) 2025 2024
North America $3,469 $3,121
Europe 1,626 1,567
Australia 420 425
Other 296 293
$5,810 $5,406
NOTE 7 - Earnings Per Share
Three Months Ended
February 28/29,
(in millions, except per share data) 2025 2024
Net income (loss) for basic and diluted earnings per share $(78) $(214)
Weighted-average shares outstanding 1,309 1,264
Diluted weighted-average shares outstanding 1,309 1,264
Basic earnings per share $(0.06) $(0.17)
Diluted earnings per share $(0.06) $(0.17)
Antidilutive shares excluded from diluted earnings per share computations were
as follows:
Three Months Ended
February 28/29,
(in millions) 2025 2024
Equity awards 7 6
Convertible Notes 84 127
Total antidilutive securities 92 133
NOTE 8 - Supplemental Cash Flow Information
(in millions) February 28, 2025 November 30, 2024
Cash and cash equivalents (Consolidated Balance Sheets) $833 $1,210
Restricted cash (included in prepaid expenses and other and other assets) 23 21
Total cash, cash equivalents and restricted cash (Consolidated Statements $856 $1,231
of Cash Flows)
NOTE 9 - Property and Equipment
Ship Sales
In March 2025, we completed the sale of one North America segment ship for an
expected gain which is not material and represents a passenger-capacity
reduction of 460 berths. We will continue to operate the ship under a bareboat
charter agreement through May 2026.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Cautionary Note Concerning Factors That May Affect Future Results
Some of the statements, estimates or projections contained in this document
are "forward-looking statements" that involve risks, uncertainties and
assumptions with respect to us, including some statements concerning future
results, operations, outlooks, plans, goals, reputation, cash flows, liquidity
and other events which have not yet occurred. These statements are intended to
qualify for the safe harbors from liability provided by Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,
as amended. All statements other than statements of historical facts are
statements that could be deemed forward-looking. These statements are based on
current expectations, estimates, forecasts and projections about our business
and the industry in which we operate and the beliefs and assumptions of our
management. We have tried, whenever possible, to identify these statements by
using words like "will," "may," "could," "should," "would," "believe,"
"depends," "expect," "goal," "aspiration," "anticipate," "forecast,"
"project," "future," "intend," "plan," "estimate," "target," "indicate,"
"outlook," and similar expressions of future intent or the negative of such
terms.
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. These factors include, but are not limited
to, the following:
• Events and conditions around the world, including geopolitical
uncertainty, war and other military actions, pandemics, inflation, higher fuel
prices, higher interest rates and other general concerns impacting the ability
or desire of people to travel could lead to a decline in demand for cruises as
well as have significant negative impacts on our financial condition and
operations.
• Incidents concerning our ships, guests or the cruise industry
may negatively 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-money laundering, anti-corruption,
economic sanctions, trade protection, labor and employment, and tax may be
costly and lead to litigation, enforcement actions, fines, penalties and
reputational damage.
• Factors associated with climate change, including evolving and
increasing regulations, increasing concerns about climate change and the shift
in climate conscious consumerism and stakeholder scrutiny, and increasing
frequency and/or severity of adverse weather conditions could have a material
impact on our business.
• Inability to meet or achieve our targets, goals, aspirations,
initiatives, and our public statements and disclosures regarding them,
including those related to sustainability matters, may expose us to risks that
may adversely impact our business.
• Cybersecurity incidents and data privacy breaches, 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 have adversely impacted and may in the future materially adversely
impact our business operations, the satisfaction of our guests and crew and
may lead to fines, penalties and reputational damage.
• The loss of key team members, our inability to recruit or retain
qualified shoreside and shipboard team members and increased labor costs could
have an adverse effect on our business and results of operations.
• Increases in fuel prices, changes in the types of fuel consumed
and availability of fuel supply may adversely impact our scheduled itineraries
and costs.
• We rely on suppliers who are integral to the operations of our
businesses. These suppliers and service providers may be unable to deliver on
their commitments, which could negatively impact our business.
• Fluctuations in foreign currency exchange rates may adversely
impact our financial results.
• Overcapacity and competition in the cruise and land-based
vacation industry may negatively impact our cruise sales, pricing and
destination options.
• Inability to implement our shipbuilding programs and ship
repairs, maintenance and refurbishments may adversely impact our business
operations and the satisfaction of our guests.
• We require a significant amount of cash to service our debt and
sustain our operations. Our ability to generate cash depends on many factors,
including those beyond our control, and we may not be able to generate cash
required to service our debt and sustain our operations.
• Our substantial debt could adversely affect our financial health
and operating flexibility.
The ordering of the risk factors set forth above is not intended to reflect
our indication of priority or likelihood. Additionally, many of these risks
and uncertainties are currently, and in the future may continue to be,
amplified by our substantial debt balance incurred during the pause of our
guest cruise operations. There may be additional risks that we consider
immaterial or which are unknown.
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.
Forward-looking and other statements in this document may also address our
sustainability progress, plans, and goals (including climate change- and
environmental-related matters). In addition, historical, current, and
forward-looking sustainability- and climate-related statements may be based on
standards and tools for measuring progress that are still developing, internal
controls and processes that continue to evolve, and assumptions and
predictions that are subject to change in the future and may not be generally
shared.
New Accounting Pronouncements
Refer to Note 1 - "General, Accounting Pronouncements" of the consolidated
financial statements for additional discussion regarding Accounting
Pronouncements.
Critical Accounting Estimates
For a discussion of our critical accounting estimates, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations" that
is included in the Form 10-K.
Seasonality
Our passenger ticket revenues are seasonal. Demand for cruises has been
greatest during our third quarter, which includes the Northern Hemisphere
summer months. This higher demand during the third quarter results in higher
ticket prices and occupancy levels and, accordingly, the largest share of our
operating income is typically earned during this period. Our results are also
impacted by ships being taken out-of-service for planned maintenance, which we
schedule during non-peak seasons. In addition, substantially all of Holland
America Princess Alaska Tours' revenue and operating income is generated from
May through September in conjunction with Alaska's cruise season.
Known Trends and Uncertainties
• We believe the volatility in the cost of fuel is reasonably
likely to impact our profitability in both the short and long-term.
• We believe the increasing focus on the reduction of greenhouse
gas emissions and new and evolving related regulatory requirements, is
reasonably likely to have a material negative impact on our future financial
results. We became subject to the EU Emissions Trading System ("ETS") on
January 1, 2024, which includes a three-year phase-in period. The impact of
this regulation in 2024 was $46 million, which represented costs associated
with 40% of emissions under the ETS operational scope. In 2025, 70% of
emissions under the ETS scope will be impacted, and in 2026, all in scope
emissions will be impacted.
Statistical Information
Three Months Ended
February 28/29,
2025 2024
Passenger Cruise Days ("PCDs") (in millions) (a) 24.3 23.5
Available Lower Berth Days ("ALBDs") (in millions) (b) (c) 23.6 23.0
Occupancy percentage (d) 103% 102%
Passengers carried (in millions) 3.2 3.0
Fuel consumption in metric tons (in millions) 0.7 0.7
Fuel consumption in metric tons per thousand ALBDs 30.3 31.8
Fuel cost per metric ton consumed (excluding European Union Allowance) $643 $686
Currencies (USD to 1)
AUD $0.63 $0.66
CAD $0.70 $0.74
EUR $1.04 $1.09
GBP $1.25 $1.27
Notes to Statistical Information
(a) PCD represents the number of cruise passengers on a voyage multiplied
by the number of revenue-producing ship operating days for that voyage.
(b) 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.
(c) For the three months ended February 28, 2025 compared to the three
months ended February 29, 2024, we had a 2.5% capacity increase in ALBDs
comprised of a 5.7% capacity increase in our North America segment and a 2.9%
capacity decrease in our Europe segment.
Our North America segment's capacity increase was caused by the following:
• Carnival Cruise Line 5,360-passenger capacity ship that entered
into service in December 2023
• Princess Cruises 4,310-passenger capacity ship that entered into
service in February 2024
• Carnival Cruise Line 4,130-passenger capacity ship that
transferred from Costa Cruises and entered into service in April 2024
The increase in our North America segment's capacity was partially offset by:
• Seabourn 460-passenger capacity ship that was removed from
service in September 2024
• P&O Cruises (Australia) 2,000-passenger capacity that was
removed from service in February 2025
Our Europe segment's capacity decrease was caused by a Costa Cruises
4,240-passenger capacity ship that transferred to Carnival Cruise Line in
April 2024.
The decrease in our Europe segment's capacity was partially offset by a Cunard
2,960-passenger capacity ship that entered into service in May 2024.
(d) Occupancy, in accordance with cruise industry practice, is calculated
using a numerator of PCDs and 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% indicate that on average more than
two passengers occupied some cabins.
Three Months Ended February 28, 2025 ("2025") Compared to February 29, 2024
("2024")
Revenues
Consolidated
Passenger ticket revenues made up 66% of our 2025 total revenues. Passenger
ticket revenues increased by $216 million, or 6.0%, to $3.8 billion in 2025
from $3.6 billion in 2024.
This increase was caused by:
• $145 million - higher ticket prices driven by continued strength
in demand
• $91 million - 2.5% capacity increase in ALBDs
• $32 million - 1.0 percentage point increase in occupancy
These increases were partially offset by a net unfavorable foreign currency
translation impact of $50 million.
The remaining 34% of 2025 total revenues was comprised of onboard and other
revenues, which increased by $189 million, or 11%, to $2.0 billion in 2025
from $1.8 billion in 2024.
This increase was caused by:
• $126 million - higher onboard spending by our guests
• $63 million - 2.5% capacity increase in ALBDs
North America Segment
Passenger ticket revenues made up 62% of our North America segment's 2025
total revenues. Passenger ticket revenues increased by $159 million, or 7.0%,
to $2.4 billion in 2025 from $2.3 billion in 2024.
This increase was caused by:
• $130 million - 5.7% capacity increase in ALBDs
• $46 million - higher ticket prices driven by continued strength
in demand
The remaining 38% of our North America segment's 2025 total revenues were
comprised of onboard and other revenues, which increased by $173 million, or
13%, to $1.5 billion in 2025 from $1.3 billion in 2024.
This increase was caused by:
• $99 million - higher onboard spending by our guests
• $75 million - 5.7% capacity increase in ALBDs
Europe Segment
Passenger ticket revenues made up 77% of our Europe segment's 2025 total
revenues. Passenger ticket revenues increased by $52 million, or 3.8%, and
were $1.4 billion in 2025 and 2024.
This increase was caused by:
• $100 million - higher ticket prices driven by continued strength
in demand
• $25 million - 1.8 percentage point increase in occupancy
These increases were partially offset by:
• $46 million - net unfavorable foreign currency translation
• $39 million - 2.9% capacity decrease in ALBDs
The remaining 23% of our Europe segment's 2025 total revenues were comprised
of onboard and other revenues, which increased by $9 million, or 2.2%, to $413
million in 2025 from $404 million in 2024. This increase was caused by $27
million of higher onboard spending by our guests, partially offset by a 2.9%
capacity decrease in ALBDs, representing $12 million.
Operating Expenses
Consolidated
Operating expenses increased by $62 million, or 1.7%, to $3.8 billion in 2025
from $3.7 billion in 2024.
This increase was caused by:
• $102 million - 2.5% capacity increase in ALBDs
• $38 million - higher commissions, transportation costs, and
other expenses driven by increased ticket pricing and an increase in the
number of guests
• $33 million - higher onboard and other cost of sales driven by
higher onboard revenues
These increases were partially offset by:
• $40 million - net favorable foreign currency translation
• $28 million - lower fuel prices
• $27 million - lower fuel consumption per ALBD
• $24 million - lower repair and maintenance expenses (including
dry-dock expenses)
Selling and administrative expenses increased by $34 million, or 4.2%, to $848
million in 2025 from $813 million in 2024.
Depreciation and amortization expenses increased by $41 million, or 6.7%, to
$654 million in 2025 from $613 million in 2024.
North America Segment
Operating expenses increased by $34 million, or 1.4%, and were $2.4 billion in
2025 and 2024.
This increase was caused by a 5.7% capacity increase in ALBDs, representing
$138 million.
This increase was partially offset by:
• $44 million - lower repair and maintenance expenses (including
dry-dock expenses)
• $26 million - lower fuel consumption per ALBD
• $23 million - lower fuel prices
Selling and administrative expenses increased by $19 million, or 3.8%, to $521
million in 2025 from $502 million in 2024.
Depreciation and amortization expenses increased by $36 million, or 9.0%, to
$434 million in 2025 from $398 million in 2024.
Europe Segment
Operating expenses were $1.3 billion in 2025 and 2024. The changes in
operating expenses for the Europe segment were not material.
Selling and administrative expenses increased by $16 million, or 6.9%, to $250
million in 2025 from $234 million in 2024.
Depreciation and amortization expenses increased by $5 million, or 3.0%, to
$169 million in 2025 from $164 million in 2024.
Operating Income
Our consolidated operating income increased by $267 million to $543 million in
2025 from $276 million in 2024. Our North America segment's operating income
increased by $244 million to $516 million in 2025 from $272 million in 2024,
and our Europe segment's operating income increased by $21 million to $140
million in 2025 from $119 million in 2024. These changes were primarily due to
the reasons discussed above.
Nonoperating Income (Expense)
Interest expense, net of capitalized interest, decreased by $94 million, or
20%, to $377 million in 2025 from $471 million in 2024. The decrease was
substantially all due to a decrease in total debt and lower average interest
rates.
Debt extinguishment and modification costs increased by $218 million to $252
million in 2025 from $33 million in 2024 as a result of debt transactions
occurring during the respective periods.
Liquidity, Financial Condition and Capital Resources
As of February 28, 2025, we had $3.8 billion of liquidity including
$0.8 billion of cash and cash equivalents and $2.9 billion of borrowings
available under our multi-currency revolving credit facility. In addition, we
had $7.8 billion of undrawn export credit facilities to fund ship deliveries
planned through 2033. We will continue to pursue various opportunities to
repay portions of our existing indebtedness and refinance future debt
maturities to extend maturity dates and reduce interest expense. Refer to Note
3 - "Debt" of the consolidated financial statements and Funding Sources below
for additional details.
We had a working capital deficit of $8.6 billion as of February 28, 2025
compared to a working capital deficit of $8.2 billion as of November 30,
2024. The increase in working capital deficit was caused by an increase in
customer deposits and decreases in cash and cash equivalents as well as
accrued liabilities and other. We operate with a substantial working capital
deficit. This deficit is mainly attributable to the fact that, under our
business model, substantially all of our passenger ticket receipts are
collected in advance of the applicable sailing date. These advance passenger
receipts generally remain a current liability on our balance sheet until the
sailing date. The cash generated from these advance receipts is used
interchangeably with cash on hand from other sources, such as our borrowings
and other cash from operations. The cash received as advanced receipts can be
used to fund operating expenses, pay down our debt, make long-term investments
or any other use of cash. Included within our working capital are $6.9 billion
and $6.4 billion of current customer deposits as of February 28, 2025 and
November 30, 2024. We have agreements with a number of credit card processors
that transact customer deposits related to our cruise vacations. Certain of
these agreements allow the credit card processors to request, under certain
circumstances, that we provide a capped reserve fund in cash. In addition, we
have a relatively low level of accounts receivable and limited investment in
inventories.
We are not a party to any off-balance sheet arrangements, including guarantee
contracts, retained or contingent interests, certain derivative instruments
and variable interest entities that either have, or are reasonably likely to
have, a current or future material effect on our consolidated financial
statements.
Sources and Uses of Cash
Operating Activities
Our business provided $0.9 billion of net cash flows from operating activities
during the three months ended February 28, 2025, a decrease of $0.8 billion,
compared to $1.8 billion provided for the same period in 2024. This was
driven by the nonrecurrence of cash provided by the release of $0.8 billion in
credit card reserves in 2024 (included in the change in prepaid expenses and
other assets).
Investing Activities
During the three months ended February 28, 2025, net cash used in investing
activities was $605 million. This was caused by capital expenditures of
$607 million primarily attributable to ship improvements and developments in
our port destinations and exclusive islands.
During the three months ended February 29, 2024, net cash used in investing
activities was $2.2 billion. This was driven by capital expenditures of
$2.1 billion principally attributable to the delivery of two North America
segment ships.
Financing Activities
During the three months ended February 28, 2025, net cash used in financing
activities of $690 million was driven by:
• Repayments of $3.4 billion of long-term debt
• Debt issuance costs of $24 million
• Debt extinguishment costs of $197 million
• Issuances of $3.0 billion of long-term debt
During the three months ended February 29, 2024, net cash provided by
financing activities of $0.2 billion was caused by:
• Repayments of $1.4 billion of long-term debt
• Debt issuance costs of $77 million
• Debt extinguishment costs of $31 million
• Issuances of $1.7 billion of long-term debt
Funding Sources
We plan to use existing liquidity and future cash flows from operations to
fund our cash requirements including capital expenditures not funded by our
export credit facilities. We seek to manage our credit risk exposures,
including counterparty nonperformance associated with our cash and cash
equivalents, and future financing facilities by conducting business with
well-established financial institutions, and export credit agencies and
diversifying our counterparties.
(in billions) 2025 2026 2027 2028 2029 Thereafter
Future export credit facilities at February 28, 2025 $0.7 $- $1.2 $1.2 $1.6 $3.1
Our export credit facilities contain various financial covenants as described
in Note 3 - "Debt". At February 28, 2025, we were in compliance with the
applicable covenants under our debt agreements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
For a discussion of our hedging strategies and market risks, see the
discussion below and Note 10 - "Fair Value Measurements, Derivative
Instruments and Hedging Activities and Financial Risks" in our consolidated
financial statements and Management's Discussion and Analysis of Financial
Condition and Results of Operations within our Form 10-K. There have been no
material changes to our exposure to market risks since the date of our 2024
Form 10-K.
Interest Rate Risks
The composition of our debt, after the effect of interest rate swaps, was as
follows:
February 28, 2025
Fixed rate 61%
EUR fixed rate 23%
Floating rate 7%
EUR floating rate 10%
Item 4. Controls and Procedures.
A. Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to provide reasonable
assurance that information required to be disclosed by us in the reports that
we file or submit under the Securities Exchange Act of 1934, is recorded,
processed, summarized and reported, within the time periods specified in the
U.S. Securities and Exchange Commission's rules and forms. Disclosure
controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by us in our
reports that we file or submit under the Securities Exchange Act of 1934 is
accumulated and communicated to our management, including our principal
executive and principal financial officers, or persons performing similar
functions, as appropriate, to allow timely decisions regarding required
disclosure.
Our President, Chief Executive Officer and Chief Climate Officer and our Chief
Financial Officer and Chief Accounting Officer have evaluated our disclosure
controls and procedures and have concluded, as of February 28, 2025, that they
are effective to provide a reasonable level of assurance, as described above.
B. Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting
during the quarter ended February 28, 2025 that have materially affected or
are reasonably likely to materially affect our internal control over financial
reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The legal proceedings described in Note 4 - "Contingencies and Commitments" of
our consolidated financial statements, including those described under
"Regulatory or Governmental Inquiries and Investigations," are incorporated in
this "Legal Proceedings" section by reference. Additionally, SEC rules require
disclosure of certain environmental matters when a governmental authority is
a party to the proceedings and such proceedings involve potential monetary
sanctions that we believe will exceed $1 million for such proceedings.
On June 20, 2022, Princess Cruises notified the Australian Maritime Safety
Authorization ("AMSA") and the flag state, Bermuda, regarding approximately
six cubic meters of comminuted food waste (liquid biodigester effluent)
inadvertently released by Coral Princess inside the Great Barrier Reef Marine
Park. On June 23, 2022, the UK P&I Club N.V. provided a letter of
undertaking for approximately $1.9 million (being the estimated maximum
combined penalty). On May 31, 2023, we received a summons from the Australia
Federal Prosecution Service indicating that formal charges are being pursued
against Princess Cruises and the captain of the vessel. At an arraignment held
on February 18, 2025, Princess Cruises and the captain both entered pleas of
not guilty. We believe the ultimate outcome will not have a material impact on
our consolidated financial statements.
Item 1A. Risk Factors.
The risk factors that affect our business and financial results are discussed
in "Item 1A. Risk Factors," included in the Form 10-K, and there has been no
material change to these risk factors since the Form 10-K filing. These risks
should be carefully considered, and could materially and adversely affect our
results, operations, outlooks, plans, goals, growth, reputation, cash flows,
liquidity, and stock price. Our business also could be affected by risks that
we are not presently aware of or that we currently consider immaterial to our
operations.
Item 5. Other Information.
C. Trading Plans
During the quarter ended February 28, 2025, no director or Section 16 officer
adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1
trading arrangements (in each case, as defined in Item 408(a) of Regulation
S-K).
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