REG-Carnival PLC: Carnival 2Q Business Update

CarnivalAnnouncement

24/06/2021 14:20

Carnival Corporation & plc Provides Second Quarter 2021 Business Update

MIAMI, June 24, 2021 /PRNewswire/ -- Carnival Corporation & plc (NYSE/LSE:
CCL; NYSE: CUK) provides second quarter 2021 business update.
* U.S. GAAP net loss of $(2.1) billion and adjusted net loss of $(2.0) billion
for the second quarter of 2021.
* Second quarter 2021 ended with $9.3 billion of cash and short-term
investments, which the company believes is sufficient liquidity to return to
full cruise operations.
* Customer deposits increased in the second quarter of 2021 compared to the
previous quarter.
* Cash burn rate in the first half of 2021 was better than forecasted
primarily due to the timing of proceeds from ship sales and working capital
changes.
* 42 ships from eight of the company's nine brands either have resumed or are
announced to resume guest cruise operations by November 30, 2021, which is
over 50% of the company's capacity, with more announcements expected in the
coming weeks.
* Booking volumes for all future cruises during the second quarter of 2021
were 45% higher than booking volumes during the first quarter of 2021.
* Cumulative advanced bookings for full year 2022 are ahead of a very strong
2019, despite minimal advertising or marketing.
* Building on a legacy of ESG performance, the company announced its 2030
sustainability goals and 2050 sustainability aspirations, focusing
strategically and holistically on enhancing its sustainable business model
while reinforcing its commitment to and investment in sustainability
solutions.
* The company repriced its first-priority senior secured term loan facility,
reducing its future annual interest expense by over $120 million per year and
has approval in principle from the relevant export credit agencies to defer
approximately $1.0 billion of principal payments, increasing its near term
liquidity. The company expects these transactions to close during the third
quarter of 2021 and continues to focus on pursuing additional refinancing
opportunities to reduce interest rates and extend maturities.
Resumption of Guest Operations

Carnival Corporation & plc President and Chief Executive Officer Arnold Donald
noted, "We are working aggressively on our path to return our full fleet to
operations by next spring. So far, we have announced that 42 ships,
representing over half of our capacity, have been scheduled to return to
serving guests by this fiscal year end. We are currently evaluating various
deployment options with a focus on maximizing cash flow, while delivering a
great guest experience and serving the best interests of public health." More
return to service announcements will be coming in the weeks ahead. Donald
added. "We can't wait to welcome all our valued guests and crew members back
on board!"

The company is uniquely positioned for its phased resumption in cruise travel
given its multiple brands which are being restarted independently and tailored
to the environment of their respective source market. Eight of the company's
nine brands either have resumed or have announced they plan to resume guest
cruise operations by the company's fiscal year end, November 30, 2021. 27
ships, or approximately 35% of capacity, have resumed or are announced to
resume by the end of the third quarter of 2021 and an additional 15 ships, or
nearly 20% of capacity, are announced to resume by the end of the fourth
quarter of 2021. Together these 42 ships represent over 50% of capacity. More
announcements are expected in the coming weeks which will include additional
ship restarts for fiscal year 2021. Consistent with the company's planned
phased resumption of guest cruise operations, it expects to have its full
fleet back in operation in the spring of 2022. For more detailed information
on the resumption of guest cruise operations by brand as well as the specific
ships and timing of their restart, see the company press release issued
yesterday, June 23, 2021.

The company has been working with a number of world-leading public health,
epidemiological and policy experts to support its ongoing efforts to implement
enhanced health and safety protocols to help protect against and mitigate the
impact of COVID-19 during cruise vacations. Initial cruises are taking place
with guidance from the company's roster of medical and scientific experts and
enhanced health protocols developed in conjunction with government and health
authorities. Consequently, the company's brands have a comprehensive set of
health and hygiene protocols that facilitate a safe and healthy return to
cruise vacations. These enhanced protocols are modeled after shoreside health
and mitigation guidelines as provided by each brand's respective country, and
approved by all relevant regulatory authorities. Protocols will be updated
based on evolving scientific and medical knowledge related to mitigation
strategies.

Update on Bookings

Donald added, "Despite our minimal advertising spend, we continue to
experience an acceleration in booking trends globally, including capturing
significant latent demand for our new sailings this summer. This strong demand
affirms confidence in our future. In addition, customer deposits grew this
past quarter, a significant milestone on our path to resumption."

Donald continued, "With the aggressive actions we have already taken to
optimize our portfolio and reduce capacity, we believe we are well positioned
to capitalize on pent up demand and to emerge a leaner more efficient company,
reinforcing our global industry leading position."

Booking volumes for all future cruises during the second quarter of 2021 were
45% higher than booking volumes during the first quarter of 2021. Cumulative
advanced bookings for full year 2022 are ahead of a very strong 2019 as of May
31, 2021. The company highlights that this level of bookings was achieved with
minimal advertising and marketing. (Due to the pause in guest cruise
operations, the company's current booking trends will be compared to booking
trends for 2019 sailings.)

Total customer deposits as of May 31, 2021 and February 28, 2021 were $2.5
billion and $2.2 billion, respectively. During the quarter, customer deposits
on new bookings exceeded the impact of refunds provided.

Liquidity and Refinancing

Carnival Corporation & plc Chief Financial Officer David Bernstein noted, "We
ended the second quarter with $9.3 billion of cash and short-term investments.
We believe we have sufficient liquidity to get us back to full operations and
continue to be focused on pursuing refinancing opportunities to reduce
interest rates and extend maturities. To date, through our refinancing
efforts, we have reduced our future annual interest expense by over $120
million per year and expect to increase our near-term liquidity by $1.0
billion."

Donald added, "Once we return to full operations, our cash flow will be the
primary driver of the company's return to investment grade credit over time,
creating greater shareholder value."

In pursuit of the company's refinancing efforts, during the second quarter of
2021:  
* The company entered into an agreement to reprice its first-priority senior
secured term loan facility, reducing the overall interest rate and future
annual interest expense by over $120 million per year.
* The relevant export credit agencies have provided approval in principle to
defer approximately $1.0 billion of principal payments that would otherwise
have been due over a one year period with repayments to be made over the
following five years.
The company expects these transactions to close during the third quarter of
2021.

As of May 31, 2021, the company's outstanding debt maturities are as follows:

 (in billions)                                                                                  3Q 2021                                                                                 4Q 2021                                                                                 1Q 2022                                                                                 2Q 2022                              
 Principal payments on outstanding debt (a)                        $                     0.3                                                               $                     0.3                                                               $                     0.6                                                               $                     0.6                                         
                                                                                                                                                                                                                                                                                                                                                                                                             
                                                                                                                                                                                                                                                                                                                                                                                                             
 (a)                                         Excluding the revolving facility. As of May 31, 2021, borrowings under the revolving facility were $3.1 billion. The maturities for these borrowings are currently extended through September 2021. The company may re-borrow such amounts subject to satisfaction of the conditions in the revolving facility agreement.                                       

The company's monthly average cash burn rate for the first half of 2021 was
$500 million, which was better than forecasted primarily due to the timing of
proceeds from ship sales and working capital changes. This monthly average
cash burn rate includes revenues earned on voyages, ongoing ship operating and
administrative expenses, restart spend, working capital changes (excluding
changes in customer deposits), interest expense and capital expenditures (net
of export credit facilities), and excludes scheduled debt maturities as well
as other cash collateral to be provided. As the company continues to resume
guest cruise operations, it expects to incur incremental spend relating to
bringing ships out of pause status, returning crew members to its ships and
implementing enhanced health and safety protocols.

The phased resumption of the company's guest cruise operations continues to
have a material impact on all aspects of its business, including the company's
liquidity, financial position and results of operations. The company expects a
net loss on both a U.S. GAAP and adjusted basis for the third quarter 2021 and
full year ending November 30, 2021.

Sustainability Update

Donald noted, "The 2030 sustainability goals and our aspirations for 2050 are
an important next step in our journey and advance our ongoing efforts to
establish a path to zero emission cruising over time."

Throughout the pause in guest cruise operations, the company maintained focus
on its Environmental, Social and Governance ("ESG") performance. As the
company continues to work towards the broad restart of guest cruise
operations, the company announced its 2030 sustainability goals and 2050
sustainability aspirations focusing strategically and holistically on
enhancing its sustainable business model while reinforcing its commitment to
and investment in sustainability solutions. The company's goals and
aspirations incorporate six critical focus areas which are aligned with key
United Nations Sustainable Development Goals: 
* Climate action
* Circular economy
* Sustainable tourism
* Good health and well-being
* Diversity, equity and inclusion
* Biodiversity and conservation
In each focus area, the company has specified goals, targets and aspirations
that guide its strategy to further strengthen the ESG performance of the
organization. The company's climate actions align with the International
Maritime Organization's commitment to reduce carbon emission intensity 40% by
2030 and aspires to achieve net carbon neutral operations by 2050. The company
remains focused on decarbonization by investing in the transition to
alternative fuels and technologies, such as biofuels, large scale batteries
and fuel cells. The company continues to set near-term goals to ensure its
progress is tracking with its longer-term vision. For more detailed
information on the company's 2030 goals and 2050 aspirations, see the company
press release issued on June 22, 2021.

Other Recent Highlights
* Carnival Corporation's Ethics and Compliance Program was one of five
finalists for "Program of the Year" in Compliance Week's 2021 Excellence in
Compliance Awards. These awards recognize compliance programs, leaders and
consultants for their outstanding performance in this critical field. The
company's nomination for this award includes highlights and successes from its
"Operations Oceans Alive" program.
* AIDA Cruises announced that Europe's largest shore power plant was
officially inaugurated with one of its ships, AIDAsol. Establishing a shore
power supply for cruise ships in Rostock-Warnemünde, Germany, is the result
of a joint agreement between AIDA Cruises, the state government of
Mecklenburg-Western Pomerania, the Hanseatic and University City of Rostock
and Rostock Port.
* Carnival Corporation & plc was: * Awarded two Silver Anvils, the top PR
award for campaigns by the Public Relations Society of America (PRSA) for its
crisis work tied to COVID-19, as well as a Bronze Anvil and an award of
excellence.
* Recognized as one of the Best Companies for Latinos to Work by Latino
Leaders Magazine, the only national magazine fully dedicated to showcasing and
promoting leadership in the Latino community in the U.S.
* Recognized on Forbes' annual listings of America's Best Large Employers of
2021 for the third time, Best Employers for Diversity for the second
consecutive year and America's Best Employers for Women in 2020.
* Named Glassdoor Employee's Choice Award winner, recognizing the company as
one of the Best Places to Work in 2021.
* Recognized for its commitment to corporate social responsibility leadership
by Newsweek as one of America's Most Responsible Companies for 2021 for the
second consecutive year.
* Earned a perfect score on the Human Rights Campaign Foundation's 2021
Corporate Equality Index, designating the company as a Best Place to Work for
LGBTQ Equality for the fifth consecutive year.
Conference Call 
The company has scheduled a conference call with analysts at 10:00 a.m. EDT
(3:00 p.m. BST) today to discuss its business update. This call can be
listened to live, and additional information can be obtained, via Carnival
Corporation & plc's website at www.carnivalcorp.com and www.carnivalplc.com. 

Carnival Corporation & plc is one of the world's largest leisure travel
companies with a portfolio of nine of the world's leading cruise lines. With
operations in North America, Australia, Europe and Asia, its portfolio
features – Carnival Cruise Line, Princess Cruises, Holland America
Line, P&O Cruises (Australia), Seabourn, Costa Cruises, AIDA Cruises, P&O
Cruises (UK) and Cunard.

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

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," "anticipate," "forecast," "project," "future,"
"intend," "plan," "estimate," "target," "indicate," "outlook," and similar
expressions of future intent or the negative of such terms.

Forward-looking statements include those statements that relate to our outlook
and financial position including, but not limited to, statements regarding:

 •    Pricing                          •    Estimates of ship depreciable lives and residual values                                                  
 •    Booking levels                   •    Goodwill, ship and trademark fair values                                                                 
 •    Occupancy                        •    Liquidity and credit ratings                                                                             
 •    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  
                                       •    Return to guest cruise operations                                                                        

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, reputation, litigation, cash flows, liquidity, and stock price.
* As a result of the COVID-19 outbreak, we may be out of compliance with one
or more maintenance covenants in certain of our debt facilities, with the next
testing date of November 30, 2022.
* World events impacting the ability or desire of people to travel have and
may continue to 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 have in the
past and may, in the future, 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 have in the past and may, in the future, 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, including the recent ransomware incidents, and failure to
keep pace with developments in technology may adversely impact our business
operations, the satisfaction of our guests and crew and may 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.
* 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.

                                                           CARNIVAL CORPORATION & PLC                                                            
                                                           NON-GAAP FINANCIAL MEASURES                                                           
                                                                                                                                                 
                                                         Three Months Ended  May 31,                        Six Months Ended  May 31,            
 (in millions)                                         2021                       2020                   2021                       2020         
 Net income (loss)                                                                                                                               
 U.S. GAAP net income (loss)                       $  (2,072)                 $  (4,374)             $  (4,045)                 $  (5,155)       
 (Gains) losses on ship sales and impairments              36                      1,953                     39                      2,882       
 Restructuring expenses                                     3                         39                      3                         39       
 Other                                                    (2)                          —                     13                          3       
 Adjusted net income (loss)                        $  (2,036)                 $  (2,382)             $  (3,990)                 $  (2,231)       

Explanations of Non-GAAP Financial Measures 

Non-GAAP Financial Measures

We use adjusted net income (loss) as a non-GAAP financial measure of our
cruise segments' and the company's financial performance. This non-GAAP
financial measure is provided along with U.S. GAAP net income (loss).   

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 accordingly, we present adjusted net
income (loss) 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 U.S. GAAP. It is possible that our
non-GAAP financial measures may not be exactly comparable to the like-kind
information presented by other companies, which is a potential risk associated
with using these measures to compare us to other companies.

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CONTACT - Beth Roberts, +1 305 406 4832



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