REG-Carnival PLC: Carnival Corporation 3Q 2022 Business Update
30/09/2022 14:30
CARNIVAL CORPORATION & PLC PROVIDES THIRD QUARTER 2022 BUSINESS UPDATE
MIAMI, Sept. 30, 2022 /PRNewswire/ -- Carnival Corporation & plc (NYSE/LSE:
CCL; NYSE: CUK) provides third quarter 2022 business update.
* U.S. GAAP net loss of $770 million and adjusted net loss of $688 million for
the third quarter of 2022.
* Adjusted EBITDA for the third quarter of 2022 was over $300 million, turning
positive for the first time since the resumption of guest cruise operations
and marking a significant milestone.
* Revenue increased by nearly 80% in the third quarter of 2022 compared to
second quarter 2022, reflecting continued sequential improvement.
* Occupancy in the third quarter of 2022 increased 15 percentage points from
the prior quarter.
* Since the announcement of the company's relaxed protocols in mid-August,
aligning the company towards land-based vacation alternatives, booking volumes
for all future sailings are considerably higher than strong 2019 levels.
* Third quarter 2022 ended with $7.4 billion of liquidity, including cash and
borrowings available under the company's revolving credit facility.
Carnival Corporation & plc's Chief Executive Officer Josh Weinstein commented,
"The well-being of the Caribbean region, Florida and other states still in the
path of Hurricane Ian is very important to us. On behalf of Carnival
Corporation, I would like to extend our deepest concern for those affected by
Hurricane Ian and Fiona, some of whom are our own employees, travel agent
partners, destination communities and loyal guests."
Weinstein noted, "During our third quarter our business continued its positive
trajectory, achieving over $300 million of adjusted EBITDA and reaching nearly
90% occupancy on our August sailings. We are continuing to close the gap to
2019 as we progress through the year, building occupancy on higher capacity
and lower unit costs."
Weinstein continued, "Since announcing the relaxation of our protocols last
month, we have seen a meaningful improvement in booking volumes and are now
running considerably ahead of strong 2019 levels. We expect to further
capitalize on this momentum with renewed efforts to generate demand. We are
focused on delivering significant revenue growth over the long-term, while
taking advantage of near-term tactics to quickly capture price and bookings in
the interim."
Weinstein added, "With a transformed fleet, an unmatched portfolio of well
recognized brands, unparalleled scale in an under-penetrated industry and an
incredibly talented global team, we have the ability to drive durable revenue
growth through pricing improvements over time. We believe this will provide
significant free cash flow and accelerate our return to strong profitability
and investment grade credit ratings."
Third Quarter 2022 Results and Statistical Information
* Revenue increased by nearly 80% in the third quarter of 2022 compared to
second quarter 2022, reflecting continued sequential improvement. For the
cruise segments, revenue per passenger cruise day ("PCD") for the third
quarter of 2022 decreased compared to a strong 2019.
* Onboard and other revenue per PCD for the third quarter of 2022 increased
significantly compared to a strong 2019.
* PCDs for the third quarter of 2022 were 17.7 million, representing a 55%
increase from the prior quarter.
* Occupancy in the third quarter of 2022 increased 15 percentage points from
the prior quarter.
* Available lower berth days ("ALBD") for the third quarter of 2022 were 21.0
million, which represents 92% of total fleet capacity, increasing from 74% in
the second quarter of 2022.
* Adjusted EBITDA for the third quarter of 2022 was over $300 million, turning
positive for the first time since the resumption of guest cruise operations
and marking a significant milestone.
Total customer deposits were $4.8 billion as of August 31, 2022, approaching
the $4.9 billion as of August 31, 2019, which was a record third quarter. New
bookings during the third quarter of 2022 primarily offset the historical
third quarter seasonal decline in customer deposits ($0.3 billion decline in
the third quarter of 2022 compared to $1.1 billion decline for the same period
in 2019).
Guest Cruise Operations
Weinstein noted, "With our return to guest cruise operations essentially
complete, we are now relentlessly focused on driving top line growth and
returning to strong profitability. We believe the strategic changes we have
already made to our fleet resulting in a younger and more efficient fleet,
coupled with our recent portfolio optimization efforts including COSTA(®) by
CARNIVAL(®), will provide strong tailwinds along our path to profitability."
As of September 30, 2022, approximately 95% of the company's capacity is
serving guests. The company expects eight of its nine brands will have their
entire fleet serving guests by the end of the fourth quarter of 2022. Given
Costa Cruises' significant presence in Asia, particularly China, which remains
closed to cruising, the brand continues to evaluate deployment options and
fleet optimization alternatives beyond the previously announced transfers
of Costa Luminosa to Carnival Cruise Line as well as Costa
Venezia and Costa Firenze to the COSTA(®) by CARNIVAL(®) concept.
Based on the evolving nature of COVID-19 and the company's ongoing
collaboration with local and national public health authorities, the company's
brands continue to responsibly relax their COVID-19 related protocols
("relaxed protocols") aligning the company towards land-based vacation
alternatives. This generally includes greatly reduced or eliminated testing
requirements and significantly broadens the demand pool by welcoming
unvaccinated guests. These relaxed protocols generally became effective
throughout September and are subject to local destination regulations.
The company saw a continuation of its 2022 sequential improvement in adjusted
cruise costs excluding fuel per ALBD in constant currency (see "Non-GAAP
Financial Measures" below) in the third quarter of 2022 and expects to see
continued improvement in the fourth quarter of 2022 with a low double-digit
increase as compared to the fourth quarter of 2019 driven in part by higher
advertising expense to drive 2023 revenue. While the company's year-to-date
adjusted cruise costs excluding fuel per ALBD during 2022 has benefited from
the sale of smaller-less efficient ships and the delivery of larger-more
efficient ships, this benefit is offset by a portion of its fleet being in
pause status for part of the year, restart related expenses, an increase in
the number of dry dock days, the cost of maintaining enhanced health and
safety protocols, inflation and supply chain disruptions. The company
anticipates that many of these costs and expenses will end in 2022.
Given the seasonality of its business, the company expects a net loss and
breakeven to slightly negative adjusted EBITDA for the fourth quarter ending
November 30, 2022. Having achieved over $300 million adjusted EBITDA in the
third quarter, the company anticipates positive adjusted EBITDA for the second
half of 2022 despite the seasonality of its business and the increasing
investment in advertising to drive yields in 2023. Additionally, on a
year-over-year basis, the company expects improvement in adjusted EBITDA and
occupancy, with occupancy returning to historical levels during 2023.
Bookings
Booking volumes for all future sailings during the third quarter of 2022 saw a
continuation of the accelerated booking volumes during the second quarter of
2022, closing the gap to strong 2019 levels. Since the announcement of the
company's relaxed protocols in mid-August, aligning the company towards
land-based vacation alternatives, booking volumes for all future sailings are
considerably higher than strong 2019 levels. (The company's current booking
trends will be compared to booking trends for 2019 sailings as it is the most
recent full year of guest cruise operations.)
Cumulative advance bookings for the fourth quarter of 2022 are below the
historical range and at lower prices, primarily due to future cruise credits
("FCCs"), as compared to 2019 sailings.
Cumulative advance bookings for full year 2023 are slightly above the
historical average and at considerably higher prices, as compared to 2019
sailings, normalized for FCCs.
Financing and Capital Activity
During the third quarter of 2022, the company completed a $1.15 billion public
equity offering of its common stock. The company expects to use the net
proceeds from the offering for general corporate purposes, which could include
addressing 2023 debt maturities. In addition, the company invested $0.5
billion in capital expenditures, repaid $0.4 billion of debt principal and
incurred $0.4 billion of interest expense, net during the quarter. The company
ended the third quarter of 2022 with $7.4 billion of liquidity, including
cash and borrowings available under the revolving credit facility.
Additionally, the company exchanged $339 million in aggregate principal amount
of its outstanding Convertible Senior Notes due 2023 (the "Existing Notes")
for the same amount of Convertible Senior Notes due 2024 (the "New Notes"),
extending maturities at the existing rate of 5.75%. The New Notes have the
same initial conversion price as the Existing Notes, representing no dilution
to shareholders at scheduled maturity versus the Existing Notes, the same
coupon and no upfront cost to the company.
Sustainability
Carnival Chief Maritime Officer William Burke noted, "We recently completed
successful pilots using biofuels which demonstrate continued innovation in our
commitment to decarbonization. In addition, we are working aggressively toward
our 2030 carbon reduction goals through the technology upgrades currently
being rolled out, investing in port and destination projects and even more
focus on itinerary optimization across the portfolio while realizing the
benefit of our fleet optimization efforts, which combine to drive down our
carbon footprint, fuel consumption and cost. This reinforces our commitment to
maintaining excellence in compliance, protecting the environment and the
health, safety and well-being of our guests, employees and the communities we
touch and serve."
AIDA Cruises and Holland America Line achieve milestones in their
decarbonization strategies through initiating use of biofuels
In July 2022, AIDA Cruises piloted its use of biofuels when AIDAprima became
the first larger-scale cruise ship to be powered with a blend of marine
biofuel, which is made from 100% sustainable raw materials, and marine gas
oil. In addition, Holland America Line recently completed two pilots
on Volendam, one using a blend of marine biofuel and another using 100%
biofuel, becoming the first larger-scale cruise ship to be powered 100% by
biofuel. The certified biofuels used in these pilots offer environmental
benefits compared to using fossil fuels alone, through their lifecycle CO2
reductions. They can be used in currently installed ship main engines without
modifications to the engine or fuel infrastructure, including on ships already
in service.
Global fleet upgrades will improve energy and fuel efficiency and support
sustainability goals
In August 2022, the company announced the global rollout of Service Power
Packages, a comprehensive set of technology upgrades, which will be
implemented over the next several years across a portion of the fleet. These
upgrades include the following elements designed to reduce both fuel usage and
greenhouse gas emissions while also contributing to cost savings:
* Comprehensive upgrades to each ship's hotel HVAC systems
* Technical systems upgrades on each ship
* State-of-the-art LED lighting systems
* Remote monitoring and maintenance of energy usage and performance
The Service Power Package upgrades are part of the company's ongoing energy
efficiency investment program, in which the company has invested over $350
million in energy efficiency improvements since 2016, and are expected to
further improve energy savings and reduce fuel consumption across the
company's nine cruise brands. Upon completion, these upgrades are expected to
generate approximately $150 million in annual fuel cost savings by delivering
an average of 5-10% fuel savings per ship. These investments, along with the
company's fleet optimization and recently launched itinerary reviews, are
expected to drive a 10% reduction in fuel consumption per ALBD in 2023, along
with a 9% reduction in carbon emissions per ALBD on an annualized basis, both
as compared to 2019. This multi-year program will also contribute to carbon
emission reductions in 2024 and beyond, ultimately advancing the company's
2030 sustainability goals.
Other Recent Highlights
* Seabourn took delivery of Seabourn Venture, the line's first purpose-built
ultra-luxury expedition ship.
* Carnival Cruise Line's booking activity for Monday, August 15 nearly doubled
the level for the equivalent day in 2019 after announcing the relaxed
protocols.
* Carnival Cruise Line received the 2022 Seatrade Cruise Award in the
Investment in People Award category for their DEI, Learning and Community
initiatives.
* Carnival continues to lead in destination port development including
Carnival Cruise Line's recently announced economic opportunities for its Grand
Bahama Cruise Port Development, which is opening in late 2024 and will
generate an estimated 1,000 local jobs.
* Holland America Line launched its "See the World from Your Doorstep"
campaign, highlighting the cruise line's leadership in longer duration
round-trip cruises from U.S. homeports, as it sees a higher interest for these
kinds of voyages.
* Carnival Corporation released its 12(th) annual sustainability report,
detailing the key initiatives and progress made in 2021 toward its 2030
sustainability goals and 2050 aspirations.
Selected Forecast Information
Available Lower Berth Days ("ALBDs")
The company's ALBD forecast consists of contracted new ships, announced sales
and planned restart schedule.
Actuals Forecast Full Year
2022
(in millions) 1Q 2022 2Q 2022 3Q 2022 4Q 2022
ALBDs 13 17 21 22 73
Fuel
The company's fuel consumption forecast for the remainder of the year is 724
thousand metric tons. The blended spot price for fuel is currently $675 per
metric ton.
Depreciation and Amortization
The company's depreciation and amortization forecast for the remainder of the
year is $0.6 billion. The 2022 full year forecast, which includes year-to-date
actuals, is $2.3 billion.
Interest Expense, Net of Capitalized Interest
The company's interest expense, net of capitalized interest forecast for the
remainder of the year is $0.4 billion. The 2022 full year forecast, which
includes year-to-date actuals, is $1.6 billion.
Outstanding Debt Maturities
As of August 31, 2022, the company's outstanding debt maturities are as
follows:
(in billions) 2022 2023 2024 2025
Principal payments on outstanding debt (a) $ 1.0 $ 2.4 $ 2.3 $ 4.3
(a) Excludes the revolving credit facility. As of August 31, 2022, borrowings under the revolving credit facility were $2.7 billion, which mature in 2024.
Refer to Financial Information within the Investor Relations section of the
corporate website for further details on its Debt Maturities, which will be
available upon filing the Form
10-Q: https://www.carnivalcorp.com/financial-information/supplemental-schedules
Capital Expenditures
The company's annual capital expenditure forecast, which includes year-to-date
actuals for 2022, is as follows:
(in billions) 2022 2023 2024 2025
Contracted newbuild $ 4.1 (a) $ 2.3 $ 1.5 $ 0.9
Non-newbuild 1.1 1.9 2.0 2.0
Total (b) $ 5.2 $ 4.2 $ 3.5 $ 2.9
(a) Includes three newbuild deliveries during the first quarter of 2022 and one newbuild delivery during the third quarter of 2022.
(b) Forecasted capital expenditures will fluctuate with foreign currency movements relative to the U.S. Dollar.
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," "aspiration," "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 • Goodwill, ship and trademark fair values
• Booking levels • Liquidity and credit ratings
• Occupancy • Adjusted earnings per share
• Interest, tax and fuel expenses • Return to guest cruise operations
• Currency exchange rates • Impact of the COVID-19 coronavirus global pandemic on our financial condition and results of operations
• Estimates of ship depreciable lives and residual values
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, and in the future may continue to be, amplified
by COVID-19. 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. The current, and uncertain future,
impact of COVID-19, 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.
* Events and conditions around the world, including war and other military
actions, such as the current invasion of Ukraine, inflation, higher fuel
prices, higher interest rates and other general concerns impacting the ability
or desire of people to travel, have led, and may in the future lead, to a
decline in demand for cruises, impacting our operating costs and
profitability.
* Incidents concerning our ships, guests or the cruise industry 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.
* Factors associated with climate change, including evolving and increasing
regulations, increasing global concern about climate change and the shift in
climate conscious consumerism and stakeholder scrutiny, and increasing
frequency and/or severity of adverse weather conditions could adversely affect
our business.
* Inability to meet or achieve our sustainability related goals, aspirations,
initiatives, and our public statements and disclosures regarding them, may
expose us to risks that may adversely impact our business.
* Breaches in data security and lapses in data privacy as well as disruptions
and other damages to our principal offices, information technology operations
and system networks and failure to keep pace with developments in technology
may adversely impact our business operations, the satisfaction of our guests
and crew and may lead to reputational damage.
* The loss of key employees, our inability to recruit or retain qualified
shoreside and shipboard employees 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 supply chain vendors who are integral to the operations of our
businesses. These vendors and service providers are also affected by COVID-19
and may be unable to deliver on their commitments which could 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 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.
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-related statements may be based on standards
for measuring progress that are still developing, internal controls and
processes that continue to evolve, and assumptions that are subject to change
in the future.
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED) (in millions, except per share data)
Three Months Ended August 31, Nine Months Ended August 31,
2022 2021 2022 2021
Revenues
Passenger ticket $ 2,595 $ 303 $ 4,753 $ 326
Onboard and other 1,711 243 3,577 295
4,305 546 8,329 621
Operating Costs and Expenses
Commissions, transportation and other 565 79 1,141 116
Onboard and other 537 72 1,060 94
Payroll and related 563 375 1,601 834
Fuel 668 182 1,577 398
Food 259 52 586 80
Ship and other impairments — 475 8 524
Other operating 787 381 2,118 786
3,379 1,616 8,092 2,832
Selling and administrative 625 425 1,774 1,305
Depreciation and amortization 581 562 1,707 1,681
4,585 2,603 11,573 5,817
Operating Income (Loss) (279) (2,057) (3,244) (5,196)
Nonoperating Income (Expense)
Interest income 24 3 34 10
Interest expense, net of capitalized interest (422) (418) (1,161) (1,253)
Gain (loss) on debt extinguishment, net — (376) — (372)
Other income (expense), net (81) (11) (108) (87)
(479) (802) (1,235) (1,702)
Income (Loss) Before Income Taxes (759) (2,859) (4,478) (6,898)
Income Tax Benefit (Expense), Net (11) 23 (17) 17
Net Income (Loss) $ (770) $ (2,836) $ (4,495) $ (6,881)
Earnings Per Share
Basic $ (0.65) $ (2.50) $ (3.89) $ (6.14)
Diluted $ (0.65) $ (2.50) $ (3.89) $ (6.14)
Weighted-Average Shares Outstanding - Basic 1,185 1,133 1,154 1,120
Weighted-Average Shares Outstanding - Diluted 1,185 1,133 1,154 1,120
CARNIVAL CORPORATION & PLC
CONSOLIDATED BALANCE SHEETS
(UNAUDITED) (in millions, except par values)
August 31, 2022 November 30,
2021
ASSETS
Current Assets
Cash and cash equivalents $ 7,071 $ 8,939
Short term investments — 200
Trade and other receivables, net 360 246
Inventories 420 356
Prepaid expenses and other 581 392
Total current assets 8,432 10,133
Property and Equipment, Net 38,137 38,107
Operating Lease Right-of-Use Assets, Net 1,163 1,333
Goodwill 579 579
Other Intangibles 1,151 1,181
Other Assets 2,455 2,011
$ 51,917 $ 53,344
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $ 2,675 $ 2,790
Current portion of long-term debt 2,877 1,927
Current portion of operating lease liabilities 139 142
Accounts payable 920 797
Accrued liabilities and other 1,873 1,641
Customer deposits 4,470 3,112
Total current liabilities 12,954 10,408
Long-Term Debt 28,518 28,509
Long-Term Operating Lease Liabilities 1,076 1,239
Other Long-Term Liabilities 989 1,043
Shareholders' Equity
Common stock of Carnival Corporation, $0.01 par value; 1,960 shares authorized; 1,243 shares at 2022 and 1,116 shares at 2021 issued 12 11
Ordinary shares of Carnival plc, $1.66 par value; 217 shares at 2022 and 2021 issued 361 361
Additional paid-in capital 16,626 15,292
Retained earnings 1,868 6,448
Accumulated other comprehensive income (loss) (2,024) (1,501)
Treasury stock, 130 shares at 2022 and 2021 of Carnival Corporation and 71 shares at 2022 and 67 shares at 2021 of Carnival plc, at cost (8,464) (8,466)
Total shareholders' equity 8,379 12,144
$ 51,917 $ 53,344
CARNIVAL CORPORATION & PLC
OTHER INFORMATION
OTHER BALANCE SHEET INFORMATION (in millions) August 31, 2022 November 30, 2021
Liquidity $ 7,371 $ 9,378
Debt (current and long-term) $ 34,071 $ 33,226
Customer deposits (current and long-term) $ 4,760 $ 3,508
Three Months Ended August 31, Nine Months Ended August 31,
CASH FLOW INFORMATION (in millions) 2022 2021 2022 2021
Cash from (used in) operations $ (344) $ (879) $ (1,553) $ (3,741)
Capital expenditures $ 538 $ 963 $ (3,759) $ 3,120
STATISTICAL INFORMATION
PCDs (in thousands) (a) 17,700 2,053 36,363 2,219
ALBDs (in thousands) (b) 21,015 3,788 51,004 4,405
Occupancy percentage (c) 84 % 54 % 71 % 50 %
Passengers carried (in thousands) 2,571 340 5,233 372
Fuel consumption in metric tons (in thousands) 701 344 1,899 852
Fuel consumption in metric tons per thousand ALBDs 33 (d) 37 (d)
Fuel cost per metric ton consumed $ 958 $ 537 $ 836 $ 472
Currencies (USD to 1)
AUD $ 0.70 $ 0.75 $ 0.71 $ 0.76
CAD $ 0.78 $ 0.80 $ 0.78 $ 0.80
EUR $ 1.03 $ 1.19 $ 1.08 $ 1.20
GBP $ 1.21 $ 1.39 $ 1.28 $ 1.38
The resumption of guest cruise operations has impacted the comparability of
all aspects of the company's business.
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) Occupancy, in accordance with cruise industry practice, is calculated using a numerator of PCDs and 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.
(d) Fuel consumption in metric tons per thousand ALBDs for 2021 is not meaningful.
CARNIVAL CORPORATION & PLC
NON-GAAP FINANCIAL MEASURES
Data in the below table is compared against 2019 as it is the most recent year of full operations since 2021 and 2020 were impacted by the pause and resumption of guest cruise operations.
Consolidated cruise costs per ALBD, adjusted cruise costs per ALBD and adjusted cruise costs excluding fuel per ALBD were computed by dividing cruise costs, adjusted cruise costs and adjusted cruise costs excluding fuel by ALBD as follows:
Three Months Ended August 31, Nine Months Ended August 31,
(dollars in millions, except costs per ALBD) 2022 2022 Constant 2019 2022 2022 Constant 2019
Currency Currency
Operating costs and expenses $ 3,379 $ 3,532 $ 8,092 $ 9,833
Selling and administrative expenses 625 563 1,774 1,813
Tour and other expenses (100) (117) (169) (220)
Cruise costs 3,904 3,978 9,697 11,426
Less
Commissions, transportation and other (565) (803) (1,141) (2,125)
Onboard and other (537) (668) (1,060) (1,620)
Gains (losses) on ship sales and impairments — (3) (1) 11
Restructuring expenses (1) — (2) —
Other — (23) — (43)
Adjusted cruise costs 2,801 2,480 7,492 7,648
Less fuel (668) (401) (1,577) (1,204)
Adjusted cruise costs excluding fuel $ 2,133 $ 2,182 $ 2,079 $ 5,914 $ 5,986 $ 6,444
ALBDs (in thousands) 21,015 21,015 22,727 51,004 51,004 65,671
Cruise costs per ALBD $ 185.77 $ 175.01 $ 190.12 $ 173.98
% increase (decrease) vs 2019 6 % 9 %
Adjusted cruise costs per ALBD $ 133.28 $ 109.12 $ 146.89 $ 116.46
% increase (decrease) vs 2019 22 % 26 %
Adjusted cruise costs excluding fuel per ALBD $ 101.51 $ 103.85 $ 91.49 $ 115.96 $ 117.37 $ 98.12
% increase (decrease) vs 2019 11 % 14 % 18 % 20 %
(See Non-GAAP Financial Measures)
CARNIVAL CORPORATION & PLC
NON-GAAP FINANCIAL MEASURES (CONTINUED)
Three Months Ended
(in millions) August 31, 2022 May 31, 2022
Net income (loss)
U.S. GAAP net income (loss) $ (770) $ (1,834)
(Gains) losses on ship sales and impairments — (5)
(Gains) losses on debt extinguishment, net — —
Restructuring expenses — 1
Other 82 (29)
Adjusted net income (loss) $ (688) $ (1,867)
Interest expense, net of capitalized interest 422 370
Interest income (24) (6)
Income tax (expense), benefit 11 3
Depreciation and amortization 581 572
Adjusted EBITDA $ 303 $ (928)
Three Months Ended August 31, Nine Months Ended August 31,
(in millions) 2022 2021 2022 2021
Net income (loss)
U.S. GAAP net income (loss) $ (770) $ (2,836) $ (4,495) $ (6,881)
(Gains) losses on ship sales and impairments — 472 1 510
(Gains) losses on debt extinguishment, net — 376 — 372
Restructuring expenses — 2 2 5
Other 82 — 53 17
Adjusted net income (loss) $ (688) $ (1,986) $ (4,439) $ (5,976)
Interest expense, net of capitalized interest 422 418 1,161 1,253
Interest income (24) (3) (34) (10)
Income tax (expense), benefit 11 (23) 17 (17)
Depreciation and amortization 581 562 1,707 1,681
Adjusted EBITDA $ 303 $ (1,033) $ (1,588) $ (3,069)
Non-GAAP Financial Measures
We use adjusted net income (loss) and adjusted EBITDA as non-GAAP financial
measures of the company's financial performance. We use adjusted cruise costs
per ALBD and adjusted cruise costs excluding fuel per ALBD as non-GAAP
financial measures of our cruise segments' financial performance. These
non-GAAP financial measures are provided along with U.S. GAAP cruise costs per
ALBD and U.S. GAAP net income (loss).
We believe that gains and losses on ship sales, impairment charges, gains and
losses on debt extinguishments, restructuring costs and certain 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 as
additional information to investors.
We believe that the presentation of adjusted EBITDA provides additional
information to investors about our operating profitability by excluding
certain gains and expenses that we believe are not part of our core operating
business and are not an indication of our future earnings performance as well
as excluding interest, taxes and depreciation and amortization. In addition,
we believe that the presentation of adjusted EBITDA provides additional
information to investors about our ability to operate our business in
compliance with the covenants set forth in our debt agreements. We define
adjusted EBITDA as adjusted net income (loss) adjusted for (i) interest, (ii)
taxes and (iii) depreciation and amortization. There are material limitations
to using adjusted EBITDA. Adjusted EBITDA does not take into account certain
significant items that directly affect our net income (loss). These
limitations are best addressed by considering the economic effects of the
excluded items independently, and by considering adjusted EBITDA in
conjunction with net income (loss) as calculated in accordance with U.S. GAAP.
Adjusted cruise costs per ALBD and adjusted cruise costs excluding fuel per
ALBD enable us to separate the impact of predictable capacity or ALBD
changes from price and other changes that affect our business. We believe
these non-GAAP measures provide useful information to investors and expanded
insight to measure our cost performance as a supplement to our U.S. GAAP
consolidated financial statements. Adjusted cruise costs per ALBD and adjusted
cruise costs excluding fuel per ALBD are the measures we use to monitor our
ability to control our cruise segments' costs rather than cruise costs per
ALBD. We exclude our most significant variable costs, which are travel agent
commissions, cost of air and other transportation, certain other costs that
are directly associated with onboard and other revenues and credit and debit
card fees, as well as fuel expense to calculate adjusted cruise costs without
fuel. Substantially all of our adjusted cruise costs excluding fuel are
largely fixed, except for the impact of changing prices once the number of
ALBDs has been determined.
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.
Constant Currency
Our operations primarily utilize the U.S. dollar, Australian dollar, euro and
sterling as functional currencies to measure results and financial condition.
Functional currencies other than the U.S. dollar subject us to foreign
currency translational risk. Our operations also have revenues and expenses
that are in currencies other than their functional currency, which subject us
to foreign currency transactional risk.
We report adjusted cruise costs excluding fuel per ALBD on a "constant
currency" basis assuming the 2022 periods' currency exchange rates have
remained constant with the 2019 periods' rates. These metrics facilitate a
comparative view for the changes in our business in an environment with
fluctuating exchange rates.
Constant currency reporting removes the impact of changes in exchange rates on
the translation of our operations plus the transactional impact of changes in
exchange rates from revenues and expenses that are denominated in a currency
other than the functional currency.
Examples:
* The translation of our operations with functional currencies other than U.S.
dollar to our U.S. dollar reporting currency results in decreases in reported
U.S. dollar revenues and expenses if the U.S. dollar strengthens against these
foreign currencies and increases in reported U.S. dollar revenues and expenses
if the U.S. dollar weakens against these foreign currencies.
* Our operations have revenue and expense transactions in currencies other
than their functional currency. If their functional currency strengthens
against these other currencies, it reduces the functional currency revenues
and expenses. If the functional currency weakens against these other
currencies, it increases the functional currency revenues and expenses.
CONTACT: MEDIA CONTACT: Roger Frizzell, +1 305 406 7862; INVESTOR RELATIONS
CONTACT: Beth Roberts, +1 305 406 4832
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