TIDMCCL
Carnival Corporation & plc Provides A Business Update And Additional Financial
Information For The Second Quarter
MIAMI, July 10, 2020 -- Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK)
provides a business update and additional financial information for the second
quarter ended May 31, 2020.
Business Update
In the face of the global impact of COVID-19, the company paused its guest
cruise operations in mid-March. The company expects to resume guest operations,
with ongoing collaboration from both government and health authorities, in a
phased manner. Specific brands and ships are expected to return to service over
time to provide guests with unmatched joyful vacations in a manner consistent
with the company's highest priorities, which are compliance, environmental
protection and the health, safety and well-being of its guests, crew and the
communities its ships visit.
AIDA to resume cruise operations
AIDA previously announced it will resume guest cruise operations from ports in
Germany beginning August 2020 with three of its ships, making it the first of
the company's nine cruise brands to resume guest cruise operations. AIDA will
introduce additional safety and protective measures which will include
pre-boarding health questionnaires and temperature checks for both guests and
crew, physical distancing guidelines, routing systems on arrival, departure and
onboard, increased mitigation and sanitation efforts in all cabins and public
areas, as well as closely managing capacities at onboard experiences. These
enhanced measures have been developed with advice from medical experts and
align with the current guidance from the World Health Organization ("WHO") and
the German Robert Koch Institute ("RKI"), as well as other governmental and
health authorities.
Capacity reduced by ship delivery deferrals and 13 expected ship dispositions
The company expects future capacity to be moderated by the phased re-entry of
its ships, the removal of capacity from its fleet and delays in new ship
deliveries. As previously announced, the company intends to accelerate the
removal of ships in fiscal 2020 which were previously expected to be sold over
the ensuing years. The company sold one ship during June 2020 and has
agreements for the disposal of five ships and preliminary agreements for an
additional three ships, all of which are expected to leave the fleet in the
next 90 days. These agreements are in addition to the sale of four ships, which
were announced prior to fiscal 2020. In total, the 13 ships expected to leave
the fleet represent a nearly nine percent reduction in current capacity. The
company currently expects only five of the nine ships originally scheduled for
delivery in fiscal 2020 and fiscal 2021 will be delivered prior to the end of
fiscal year 2021. In addition, the company expects later deliveries of ships
originally scheduled for fiscal 2022 and 2023.
Carnival Corporation & plc President and Chief Executive Officer Arnold Donald
noted, "We have been transitioning the fleet into a prolonged pause and right
sizing our shoreside operations. We have already reduced operating costs by
over $7 billion on an annualized basis and reduced capital expenditures also by
more than $5 billion over the next 18 months. We have secured over $10 billion
of additional liquidity to sustain another full year with additional
flexibility remaining. We have aggressively shed assets while actively
deferring new ship deliveries. We are working hard to resume operations while
serving the best interests of public health with our way forward informed
through consultation with medical experts and scientists from around the
world."
Donald added, "We will emerge a leaner, more efficient company to optimize cash
generation, pay down debt and position us to return to investment grade credit
over time providing strong returns to our shareholders."
Maximizing Liquidity
Successfully raised over $10 billion through a series of financing transactions
Since the pause in guest operations, the company has taken significant actions
to preserve cash and secure additional financing to maximize its liquidity.
While maintaining compliance, environmental protection and safety, the company
significantly reduced ship operating expenses by transitioning ships into
paused status. The company also reduced its administrative expenses,
non-newbuild capital expenditures by $1.3 billion for 2020 and expects to
reduce its newbuild capital expenditures by over $600 million for 2020, (net of
export credit facilities). Additionally, since March, the company has raised
over $10 billion through a series of financing transactions, including
transactions that have occurred in the last three weeks, as follows:
* Borrowed an aggregate principal amount of $2.8 billion in two tranches
under a first priority senior secured term loan facility on June 30, 2020
* Negotiated Debt Holiday amendments, deferring certain principal repayments
otherwise due through March 2021. (Certain export credit agencies have
offered a 12-month debt amortization and financial covenant holiday ("Debt
Holiday"))
In addition, the company has $8.8 billion of committed export credit facilities
that are available to fund ship deliveries originally planned through 2023.
Carnival Corporation & plc Chief Financial Officer and Chief Accounting Officer
David Bernstein noted, "Quickly recognizing the financial situation, we took
swift action to improve our liquidity by reducing expenses and leveraging our
strong balance sheet to complete several capital transactions".
During the pause in guest operations, the monthly average cash burn rate for
the second half of 2020 is estimated to be approximately $650 million. This
rate includes approximately $250 million of ongoing ship operating and
administrative expenses, working capital changes (excluding changes in customer
deposits and reserves for credit card processors), interest expense and
committed capital expenditures (net of committed export credit facilities) and
also excludes scheduled debt maturities. The company continues to explore
opportunities to further reduce its monthly cash burn rate.
The pause in guest operations is continuing to have material negative impacts
on all aspects of the company's business. The longer the full or partial pause
in guest operations continues, the greater the impact on the company's
liquidity and financial position. The company continues to expect a net loss on
both a U.S. GAAP and adjusted basis for the second half of 2020.
Update on Bookings
Demand continues for 2021 sailings
The company's brands have announced various incentives and flexibility for
certain booking payments on select sailings to support guest confidence in
making new bookings. These incentives vary by brand and sailing and include
onboard credits and reduced or refundable deposits. In addition, the company is
providing flexibility to guests with bookings on sailings cancelled due to the
pause by offering guests the flexibility of enhanced future cruise credits
("FCC") or an election for a refund in cash. Enhanced FCCs increase the value
of the guest's original booking or provide incremental onboard credits. As of
June 21, 2020, approximately half of guests affected have requested cash
refunds. Despite substantially reduced marketing and selling spend, the company
continues to see demand from new bookings for 2021. For the most recent booking
period, the first three weeks in June 2020, almost 60 percent of 2021 bookings
were new bookings. The remaining 2021 booking volumes resulted from guests
applying their FCCs to specific future cruises.
As of June 21, 2020, cumulative advanced bookings for the full year of 2021
capacity currently available for sale remain within historical ranges at prices
that are down in the low to mid-single digits range, on a comparable basis,
including the negative yield impact of FCCs and onboard credits applied.
As of May 31, 2020, the current portion of customer deposits was $2.6 billion,
the majority of which are FCCs. $121 million of the company's customer deposit
balance relates to third quarter sailings and $353 million relates to fourth
quarter sailings. The company continues to expect any decline in the customer
deposits balance in the second half of 2020, all of which is expected to occur
in the third quarter, to be significantly less than the decline in the second
quarter of 2020.
Protecting the Health and Safety of Guests and Team Members
Throughout the pause in its guest cruise operations, the company has acted to
protect the health and safety of guests and shipboard team members. The company
returned over 260,000 guests to their homes, coordinating with a large number
of countries around the globe. In addition, the company worked around the clock
with various local governmental authorities, utilized its ships and chartered
hundreds of planes to repatriate shipboard team members as quickly as possible.
The company is extremely pleased with its ability to successfully repatriate
approximately 77,000 of its shipboard team members to more than 130 countries
around the globe, which is substantially all of its onboard workforce other
than the safe manning team members who will remain on the ships, and thanks the
numerous governments who worked closely with the company during the
repatriation process.
Donald commented, "I could not be more proud of how collectively our team has
handled this. We looked after our guests, each other and the over 700 places we
go each year. Thanks to our crew for continuing to exceed guest expectations
through challenging circumstances and our shoreside operations for working 24/7
to enhance our liquidity and to repatriate our guests and our crew. Also,
thanks to our loyal guests, travel partners, shareholders and other
stakeholders for their support during this challenging time."
Active consultation with science and medical experts
Throughout the pause in guest cruise operations, the company has been
consulting and assembling the best minds in medical science, public health and
infectious disease. These individuals include a robust line-up of world
renowned medical, epidemiology and public health experts to provide the company
with the latest science and medical evidence to inform practical, adaptable and
science-based solutions for detection, prevention and mitigation of COVID-19.
In coordination with the World Travel and Tourism Council, the company is
hosting an online Global Scientific Summit on COVID-19 on July 28, a forum
which is open to the public and free of charge. Speakers and panelists include
the company's expert advisors, representing a diverse range of science,
research and business backgrounds, including amongst others, members of
Scientists to Stop COVID-19, who have volunteered to participate. The company
is grateful to bring together a select group of science and medical experts who
will bring such relevant insight into COVID-19. To register for the Summit,
please go to CovidScienceSummit.com.
Conference Call
The company has scheduled a conference call with analysts at 10:00 a.m. EDT (3:
00 p.m. BST) today to provide a business update and discuss its 2020 second
quarter results. 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
Carnival Corporation and Carnival plc and their respective subsidiaries are
referred to collectively in this document as "Carnival Corporation & plc,"
"our," "us" and "we." 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. 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:
* Net revenue yields * Estimates of ship depreciable lives and
residual values
* Booking levels * Goodwill, ship and trademark fair values
* Pricing and occupancy * Liquidity
* Interest, tax and fuel * Adjusted earnings per share
expenses
* Currency exchange rates * Impact of the COVID-19 coronavirus global
pandemic on our financial condition and results
* Net cruise costs, excluding of operations
fuel per available lower berth
day
Because forward-looking statements involve risks and uncertainties, there are
many factors that could cause our actual results, performance or achievements
to differ materially from those expressed or implied by our forward-looking
statements. This note contains important cautionary statements of the known
factors that we consider could materially affect the accuracy of our forward
looking statements and adversely affect our business, results of operations and
financial position. Additionally, many of these risks and uncertainties are
currently amplified by and will continue to be amplified by, or in the future
may be amplified by, the COVID-19 outbreak. It is not possible to predict or
identify all such risks. There may be additional risks that we consider
immaterial or which are unknown. These factors include, but are not limited to,
the following:
* COVID-19 has had, and is expected to continue to have, a significant impact
on our financial condition and operations, which impacts our ability to
obtain acceptable financing to fund resulting reductions in cash from
operations. The current, and uncertain future, impact of the COVID-19
outbreak, including its effect on the ability or desire of people to travel
(including on cruises), is expected to continue to impact our results,
operations, outlooks, plans, goals, growth, reputation, litigation, cash
flows, liquidity, and stock price
* As a result of the COVID-19 outbreak, we have paused our guest cruise
operations, and if we are unable to re-commence normal operations in the
near-term, we may be out of compliance with a maintenance covenant in
certain of our debt facilities as of May 31, 2021
* World events impacting the ability or desire of people to travel may lead
to a decline in demand for cruises
* Incidents concerning our ships, guests or the cruise vacation industry as
well as adverse weather conditions and other natural disasters may impact
the satisfaction of our guests and crew and lead to reputational damage
* Changes in and non-compliance with laws and regulations under which we
operate, such as those relating to health, environment, safety and
security, data privacy and protection, anti-corruption, economic sanctions,
trade protection and tax may lead to litigation, enforcement actions,
fines, penalties, and reputational damage
* Breaches in data security and lapses in data privacy as well as disruptions
and other damages to our principal offices, information technology
operations and system networks and failure to keep pace with developments
in technology may adversely impact our business operations, the
satisfaction of our guests and crew and lead to reputational damage
* Ability to recruit, develop and retain qualified shipboard personnel who
live away from home for extended periods of time may adversely impact our
business operations, guest services and satisfaction
* Increases in fuel prices, changes in the types of fuel consumed and
availability of fuel supply may adversely impact our scheduled itineraries
and costs
* Fluctuations in foreign currency exchange rates may adversely impact our
financial results
* Overcapacity and competition in the cruise and land-based vacation industry
may lead to a decline in our cruise sales, pricing and destination options
* Geographic regions in which we try to expand our business may be slow to
develop or ultimately not develop how we expect
* Inability to implement our shipbuilding programs and ship repairs,
maintenance and refurbishments may adversely impact our business operations
and the satisfaction of our guests
The ordering of the risk factors set forth above is not intended to reflect our
indication of priority or likelihood.
Forward-looking statements should not be relied upon as a prediction of actual
results. Subject to any continuing obligations under applicable law or any
relevant stock exchange rules, we expressly disclaim any obligation to
disseminate, after the date of this document, any updates or revisions to any
such forward-looking statements to reflect any change in expectations or
events, conditions or circumstances on which any such statements are based.
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
(in millions, except per share data)
Three Months Ended Six Months Ended
May 31, May 31,
2020 2019 2020 2019
Revenues
Passenger ticket $ 446 $ 3,257 $ 3,680 $ 6,456
Onboard and 294 1,580 1,849 3,054
other (a)
740 4,838 5,529 9,511
Operating Costs
and Expenses
Commissions, 297 613 1,064 1,322
transportation
and other
Onboard and 114 485 585 952
other
Payroll and 705 566 1,315 1,123
related
Fuel 201 423 598 804
Food 108 269 385 538
Ship and other 589 - 919 -
impairments
Other operating 471 803 1,142 1,562
(b)
2,484 3,159 6,007 6,301
Selling and 492 621 1,170 1,250
administrative
Depreciation and 577 542 1,147 1,059
amortization
Goodwill 1,364 - 2,096 -
impairment (c)
4,918 4,323 10,420 8,609
Operating Income (4,177) 515 (4,891) 902
(Loss)
Nonoperating
Income (Expense)
Interest income 6 5 11 9
Interest (182) (54) (237) (105)
expense, net of
capitalized
interest
Other income (32) (7) (39) (9)
(expense), net
(208) (56) (265) (105)
Income (Loss) (4,385) 459 (5,155) 797
Before Income
Taxes
Income Tax 11 (8) - (10)
Benefit
(Expense), Net
Net Income $ (4,374) $ 451 $ (5,155) $ 787
(Loss)
Earnings Per
Share
Basic $ (6.07) $ 0.65 $ (7.34) $ 1.14
Diluted $ (6.07) $ 0.65 $ (7.34) $ 1.13
Dividends $ - $ 0.50 $ 0.50 $ 1.00
Declared Per
Share
Weighted-Average 721 691 702 692
Shares
Outstanding -
Basic
Weighted-Average 721 693 702 694
Shares
Outstanding -
Diluted
(a) Includes $24 million and $71 million of tour and other
revenues during the three months ended May 31, 2020 and 2019,
respectively. Includes $76 million and $99 million of tour
and other revenues during the six months ended May 31, 2020
and 2019, respectively.
(b) Includes $28 million and $61 million of tour and other costs
and expenses during the three months ended May 31, 2020 and
2019, respectively. Includes $47 million and $90 million of
tour and other costs and expenses during the six months ended
May 31, 2020 and 2019, respectively.
(c) Includes noncash impairment charges for goodwill of $1.0
billion in our North America and Australia ("NAA") segment
and $345 million in our Europe and Asia ("EA") segment during
the three months ended May 31, 2020. Includes noncash
impairment charges for goodwill of $1.3 billion in our NAA
segment and $777 million in our EA segment during the six
months ended May 31, 2020.
CARNIVAL CORPORATION & PLC
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in millions, except par values)
May 31, November
2020 30,
2019
ASSETS
Current Assets
Cash and cash equivalents $ 6,881 $ 518
Trade and other receivables, net 604 444
Inventories 362 427
Prepaid expenses and other 374 671
Total current assets 8,222 2,059
Property and Equipment, Net 37,139 38,131
Operating Lease Right-of-Use Assets (a) 1,413 -
Goodwill 790 2,912
Other Intangibles 1,168 1,174
Other Assets 1,086 783
$ 49,817 $ 45,058
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $ 3,562 $ 231
Current portion of long-term debt 2,373 1,596
Current portion of operating lease liabilities (a) 153 -
Accounts payable 1,809 756
Accrued liabilities and other 1,343 1,809
Customer deposits 2,618 4,735
Total current liabilities 11,858 9,127
Long-Term Debt 14,870 9,675
Long-Term Operating Lease Liabilities (a) 1,292 -
Other Long-Term Liabilities 956 890
Shareholders' Equity
Common stock of Carnival Corporation, $0.01 par value; 7 7
1,960 shares authorized; 731 shares at 2020 and 657
shares at 2019 issued
Ordinary shares of Carnival plc, $1.66 par value; 217 360 358
shares at 2020 and 2019 issued
Additional paid-in capital 9,683 8,807
Retained earnings 21,155 26,653
Accumulated other comprehensive income (loss) (1,962) (2,066)
Treasury stock, 130 shares at 2020 and 2019 of Carnival (8,404) (8,394)
Corporation and 60 shares at 2020 and 2019 of Carnival
plc, at cost
Total shareholders' equity 20,840 25,365
$ 49,817 $ 45,058
(a) We adopted the provisions of Leases on December 1,
2019.
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in millions)
Six Months Ended
May 31,
2020 2019
OPERATING ACTIVITIES
Net income (loss) $ (5,155) $ 787
Adjustments to reconcile net income (loss) to net cash
provided by operating activities
Depreciation and amortization 1,147 1,059
Impairments 3,015 2
Share-based compensation 38 27
Gain on ship sales and other, net 56 7
(900) 1,883
Changes in operating assets and liabilities
Receivables (202) (50)
Inventories 58 5
Prepaid expenses and other 171 (302)
Accounts payable 1,052 68
Accrued liabilities and other 3 48
Customer deposits (1,987) 1,516
Net cash provided by (used in) operating activities (1,804) 3,169
INVESTING ACTIVITIES
Purchases of property and equipment (1,668) (3,021)
Proceeds from sales of ships 236 6
Payments of fuel derivative settlements - (6)
Purchase of minority interest (81) -
Derivative settlements and other, net 257 103
Net cash provided by (used in) investing activities (1,256) (2,918)
FINANCING ACTIVITIES
Proceeds from (repayments of) short-term borrowings, net 3,333 (357)
Principal repayments of long-term debt (383) (338)
Proceeds from issuance of long-term debt 6,674 1,722
Dividends paid (689) (694)
Purchases of treasury stock (12) (316)
Issuance of common stock, net 558 2
Other, net (56) (45)
Net cash provided by (used in) financing activities 9,425 (26)
Effect of exchange rate changes on cash, cash equivalents 1 (5)
and restricted cash
Net increase (decrease) in cash, cash equivalents and 6,366 220
restricted cash
Cash, cash equivalents and restricted cash at beginning of 530 996
period
Cash, cash equivalents and restricted cash at end of period $ 6,896 $ 1,215
CARNIVAL CORPORATION & PLC
NON-GAAP FINANCIAL MEASURES
Three Months Ended Six Months Ended
May 31, May 31,
(in millions, except per share data) 2020 2019 2020 2019
Net income (loss)
U.S. GAAP net income (loss) $ (4,374) $ 451 $ (5,155) $ 787
(Gains) losses on ship sales and 1,953 (16) 2,882 (14)
impairments
Restructuring expenses 39 - 39 -
Other - 22 3 22
Adjusted net income (loss) $ (2,382) $ 457 $ (2,231) $ 795
Weighted-average shares outstanding 721 693 702 694
Earnings per share
U.S. GAAP diluted earnings per $ (6.07) $ 0.65 $ (7.34) $ 1.13
share
(Gains) losses on ship sales and 2.71 (0.02) 4.10 (0.02)
impairments
Restructuring expenses 0.05 - 0.06 -
Other - 0.03 - 0.03
Adjusted earnings per share $ (3.30) $ 0.66 $ (3.18) $ 1.15
Explanations of Non-GAAP Financial Measures
Non-GAAP Financial Measures
We use adjusted net income and adjusted earnings per share as non-GAAP
financial measures of our cruise segments' and the company's financial
performance. These non-GAAP financial measures are provided along with U.S.
GAAP net income (loss) and U.S. GAAP diluted earnings per share.
We believe that gains and losses on ship sales, impairment charges,
restructuring costs and other gains and losses are not part of our core
operating business and are not an indication of our future earnings
performance. Therefore, we believe it is more meaningful for these items to be
excluded from our net income (loss) and earnings per share and, accordingly, we
present adjusted net income and adjusted earnings per share excluding these
items.
The presentation of our non-GAAP financial information is not intended to be
considered in isolation from, as substitute for, or superior to the financial
information prepared in accordance with 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.
CARNIVAL CORPORATION & PLC
STATISTICAL INFORMATION
Three Months Ended Six Months Ended
May 31, May 31,
2020 2019 2020 2019
ALBDs (in thousands) (a) 3,621 21,645 25,598 42,944
Occupancy percentage (b) 96.1 % 105.3 % 103.1 % 105.0 %
Passengers carried (in thousands) 426 3,101 3,489 6,038
Fuel consumption in metric tons (in 482 835 1,314 1,664
thousands)
Fuel cost per metric ton consumed $ 418 $ 507 $ 455 $ 483
Currencies (USD to 1)
AUD $ 0.63 $ 0.70 $ 0.66 $ 0.71
CAD $ 0.72 $ 0.75 $ 0.74 $ 0.75
EUR $ 1.09 $ 1.12 $ 1.10 $ 1.13
GBP $ 1.24 $ 1.30 $ 1.27 $ 1.29
RMB $ 0.14 $ 0.15 $ 0.14 $ 0.15
We paused our guest operations in mid-March 2020 and have been in a pause for a
majority of the second quarter. The pause in guest operations is continuing to
have material negative impacts on all aspects of our business, including the
above statistical information.
Notes to Statistical Information
(a) ALBD is a standard measure of passenger capacity for the period that we use
to approximate rate and capacity variances, based on consistently applied
formulas that we use to perform analyses to determine the main non-capacity
driven factors that cause our cruise revenues and expenses to vary. ALBDs
assume that each cabin we offer for sale accommodates two passengers and is
computed by multiplying passenger capacity by revenue-producing ship
operating days in the period.
(b) In accordance with cruise industry practice, occupancy is calculated using
a denominator of ALBDs, which assumes two passengers per cabin even though
some cabins can accommodate three or more passengers. Percentages in excess
of 100% indicate that on average more than two passengers occupied some
cabins.
SOURCE Carnival Corporation & plc
MEDIA CONTACT: Roger Frizzell, +1 305 406 7862, or INVESTOR RELATIONS CONTACT:
Beth Roberts, +1 305 406 4832
END
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