TIDMCCL
Carnival Corporation & plc Provides Third Quarter 2021 Business Update
MIAMI, Sept. 24, 2021 /PRNewswire/ -- Carnival Corporation & plc (NYSE/LSE:
CCL; NYSE: CUK) provides third quarter 2021 business update.
* U.S. GAAP net loss of $2.8 billion and adjusted net loss of $2.0 billion
for the third quarter of 2021.
* Third quarter 2021 ended with $7.8 billion of liquidity, which the company
believes is sufficient to return to full cruise operations.
* Voyages for the third quarter of 2021 were cash flow positive and the
company expects this to continue.
* As of August 31, 2021, eight of the company's nine brands have resumed
guest operations as part of its gradual return to service.
* Booking volumes for all future cruises during the third quarter of 2021
were higher than booking volumes during the first quarter of 2021, albeit
not as robust as the second quarter of 2021, primarily as a result of lower
booking volumes in August 2021, reflecting the impact on overall U.S.
consumer confidence resulting from heightened uncertainty around the
COVID-19 Delta variant.
* Cumulative advanced bookings for the second half of 2022 are ahead of a
very strong 2019.
* Customer deposits increased $630 million in the third quarter of 2021,
marking the second consecutive quarter since March 2020 the company has
seen an increase in customer deposits.
* Through its debt management efforts, the company has reduced future annual
interest expense by over $250 million per year and has completed cumulative
debt principal payment extensions of approximately $4.0 billion, improving
its future liquidity position.
* The company recently released its Sustainability Report detailing its 2030
sustainability goals and 2050 sustainability aspirations.
Third Quarter 2021 Results and Statistical Information
Carnival Corporation & plc President and Chief Executive Officer Arnold Donald
noted, "We are very glad to be back doing what we do best, delivering memorable
vacation experiences for our guests, while doing so in a way that best serves
the interests of public health. Our team members are executing exceptionally
well on our return to service, exceeding the expectations of our guests and
taking guest satisfaction to new heights. Even at this early stage with
intentionally constrained occupancy levels, our voyages are already cash flow
positive."
* Voyages for the third quarter of 2021 were cash flow positive and the
company expects this trend to continue.
* For the cruise segments, revenue per passenger cruise day ("PCD") for the
third quarter of 2021 increased compared to a strong 2019, despite the
current constraints on itinerary offerings, which did not include many of
the destination rich itineraries offered in 2019. The increase was driven
in part by exceptionally strong onboard and other revenue.
* Occupancy in the third quarter of 2021 was 54%, building consistently
month-to-month from 39% in June to 59% in August.
* Available lower berth days ("ALBD") for the third quarter of 2021 were 3.8
million, which represents 17% of total fleet capacity. ALBDs are expected
to be 10.3 million for the fourth quarter of 2021, which represents 47% of
total fleet capacity.
Donald noted, "Beyond the enthusiasm of our guests and crew and the
unprecedented net promoter scores, it is difficult to demonstrate just how
successful our restart effort has been because many cruises, while generating
positive cash flow, were limited to scenic cruises without ports of call, and
generally priced well below the attractive destination rich cruises we normally
offer. Carnival Cruise Line resumed operations in July offering Caribbean and
Alaska sailings somewhat comparable to prior years and achieved 20% higher
revenue per PCD than 2019 peak levels, despite onboard credits from cancelled
cruises. Even with the unusually short booking window and capacity limitations,
the brand achieved occupancy of approximately 70%, which speaks to the strong
underlying demand for our core product."
The company's monthly average cash burn rate for the third quarter of 2021 was
$510 million, which was better than previous guidance and in line with the $500
million monthly average cash burn rate for the first half of 2021. The 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 its return to service, it expects to continue
incurring incremental restart related spend, including the cost of returning
ships to guest cruise operations, returning crew members to its ships and
maintaining enhanced health and safety protocols. The company expects the
monthly average cash burn rate for the fourth quarter to be higher than the
prior quarters of 2021, due to the timing of incremental restart expenditures.
The gradual 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 quarter and year ending
November 30, 2021.
Resumption of Guest Cruise Operations
Donald added, "Being the largest in our industry, it is not surprising that we
are now successfully operating at a larger scale than anyone else in the
industry. Our protocols have been working well and are enabling us to build
occupancy levels as we return more ships to service. Looking forward, we
continue to work towards resuming full guest cruise operations by next spring,
in time for our important summer season, where we make the bulk of our
operating profit."
As of August 31, 2021, eight of the company's nine brands have resumed guest
cruise operations as part of its gradual return to service, with 35% of its
capacity operating with guests on board. The company has already announced
plans to resume guest cruise operations with 50 ships, or 61% of its capacity,
by November 30, 2021 and 71 ships, or 75% of its capacity, by June 2022, with
more announcements forthcoming for the remaining ships. For more detailed
information on the resumption of guest cruise operations, refer to the Ships in
Service and Announced Restarts by Brand tables at the end of this release.
Consistent with its planned gradual resumption of guest cruise operations, the
company continues to expect to have its full fleet back in operation in the
spring of 2022. While the company will benefit from the disposal of 19 smaller,
less efficient ships since the beginning of the pause in guest cruise
operations, the company is forecasting its ship operating expenses, on a per
ALBD basis, for 2022 to be higher than 2019. This is driven by a portion of its
fleet being in pause status for part of the year, restart related expenses and
the cost of maintaining enhanced health and safety protocols.
The company has worked closely with health and medical experts globally and
nationally, as well as with authorities in destination countries, to put in
place comprehensive health and safety protocols for protection against and
mitigation of COVID-19 across the entire cruise experience for all of the
company's nine brands. This includes cross-industry learnings and best
practices based on the proven health and safety record of industry-wide
sailings, and input from top scientists and public health, epidemiological and
policy experts. Protocols have been and will continue to be updated based on
evolving scientific and medical knowledge related to mitigation strategies.
Details about enhanced protocols, including the latest information and
requirements for each of the company's brands, is available on their website.
Update on Bookings
Donald added, "Our booked position for the second half of 2022 is at a new
historical high, including our seasonally strong third quarter with all our
ships planned to be in operation, despite reduced marketing spending. The
broader environment for travel, while choppy, has improved dramatically since
last summer and we believe it should improve even further by next summer, if
the current trend of vaccine roll outs and advancements in therapies continues.
We have also opened bookings for further out cruises in 2023, with
unprecedented early demand."
Booking volumes for all future cruises during the third quarter of 2021 were
higher than booking volumes during the first quarter of 2021, albeit not as
robust as the second quarter of 2021, primarily as a result of lower booking
volumes in August 2021, reflecting the impact on overall U.S. consumer
confidence resulting from heightened uncertainty around the COVID-19 Delta
variant. Cumulative advanced bookings for the second half of 2022 are ahead of
a very strong 2019 as of August 31, 2021. (Due to the gradual resumption in
guest cruise operations, the company's current booking trends will be compared
to booking trends for 2019 sailings.)
Total customer deposits increased $630 million to $3.1 billion as of August 31,
2021 from $2.5 billion as of May 31, 2021. For the second consecutive quarter
since March 2020, the company has continued to see an increase in customer
deposits.
Refinancing
Carnival Corporation & plc Chief Financial Officer David Bernstein noted, "We
ended the third quarter with $7.8 billion of liquidity. 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 debt management efforts, we have
reduced our future annual interest expense by over $250 million per year and
have completed cumulative debt principal payment extensions of approximately
$4.0 billion, improving our future liquidity position."
During the third quarter of 2021 the company:
* Completed the repricing of its first-priority senior secured term loan
facility, reducing the overall interest rate and future annual interest
expense by over $120 million per year.
* Completed additional European Debt Holiday amendments, resulting in
cumulative deferred principal of $1.7 billion.
* Issued $2.4 billion of new bonds and repaid $2.0 billion of existing higher
rate debt, effectively extending maturities to 2028 and reducing interest
expense by $135 million annually.
* Under the stock swap program, repurchased 4.6 million shares of Carnival
plc ordinary shares with the proceeds from selling the same amount of
Carnival Corporation's common stock, increasing liquidity by $10 million as
a result of the difference in market price for the company's two listings.
As of August 31, 2021, the company's outstanding debt maturities are as
follows:
(in billions) 4Q 2021 1Q 2022 2Q 2022 3Q 2022 4Q 2022
Principal payments on $ 0.2 $ 0.3 $ 0.4 $ 0.4 $ 1.3
outstanding debt (a)
(a) Excluding the revolving credit facility. As of August 31,
2021, borrowings under the revolving credit facility were
$3.1 billion.
Sustainability Update
Donald continued, "We are very pleased to affirm our ongoing commitment to
sustainability through the recent publication of our 11th annual Sustainability
Report, Sustainable from Ship to Shore."
Recently, the company released its Sustainability Report, developed in
accordance with the widely recognized Global Reporting Initiative ("GRI")
standard, detailing its 2030 sustainability goals and 2050 sustainability
aspirations. For the first time, the company has incorporated two additional
disclosure frameworks, the Sustainability Accounting Standards Board ("SASB")
and the Task Force on Climate-Related Financial Disclosures ("TCFD") into its
sustainability report.
The company is proud of the achievement of its 2020 sustainability goals and
the progress it has made to date on managing its carbon footprint, improving
resource efficiency and strengthening its workforces and communities. To build
on these achievements, the company's latest report establishes a full suite of
new sustainability goals for 2030 and aspirations for 2050 in six focus areas,
which were initially announced in June 2021 as a preview of the company's
strategic direction for sustainability efforts over time. The six critical
focus areas which are aligned with the United Nations Sustainable Development
Goals are:
* 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 Environmental, Social and
Governance performance of the organization. The company's 2050 sustainability
aspirations are aligned with the Paris Agreement on climate change, and its
aspiration to achieve net carbon-neutral ship operations exceeds the
International Maritime Organization ("IMO") goal of 50% absolute emission
reduction by 2050. For more detailed information on the company's 2030 goals
and 2050 aspirations, see the company report issued on
www.carnivalsustainability.com.
Other Recent Highlights
* Costa Firenze, Costa Cruises' newest ship, departed on its maiden voyage
from the port of Savona.
* Holland America Line took delivery of Rotterdam, becoming the 11th ship in
its fleet.
* Mardi Gras, Carnival Cruise Line's newest and most innovative ship and the
first cruise ship in the Americas to be powered by eco-friendly Liquefied
Natural Gas ("LNG"), departed on its maiden voyage from Port Canaveral.
* Iona, P&O Cruises' (UK) newest and most innovative ship and the first
cruise ship in the UK to be powered by LNG, departed on its maiden voyage
from Southampton, England.
* Carnival Corporation celebrates the 20th anniversary of Princess Cruises'
history-making shore power, its revolutionary program, which paved the way
for shore power availability at 15 ports and growing.
* Seabourn was named the top cruise line for 2021 by the readers of Travel +
Leisure in the magazine's annual World's Best Awards.
* Carnival Corporation announced a new initiative to facilitate access to
pre-cruise COVID-19 viral testing for guests of Carnival Cruise Line,
Holland America Line, Princess Cruises and Seabourn at more than 1,500
convenient Quest Diagnostics patient service centers and retail pharmacy
testing locations throughout the U.S.
Explanation of Statistical Information
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.
PCD represents the number of cruise passengers on a voyage multiplied by the
number of revenue-producing ship operating days for that voyage.
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 * Goodwill, ship and trademark fair
values
* Booking levels * Liquidity and credit ratings
* Occupancy * Adjusted earnings per share
* Interest, tax and fuel expenses * Return of guest cruise operations
* Currency exchange rates * Impact of the COVID-19 coronavirus
global
* Estimates of ship depreciable lives pandemic on our financial condition
and residual and results
values of 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.
* 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 Nine Months Ended
August 31, August 31,
(in millions) 2021 2020 2021 2020
Net income (loss)
U.S. GAAP net income (loss) $ (2,836) $ (2,858) $ (6,881) $ (8,014)
(Gains) losses on ship sales 472 937 510 3,819
and impairments
(Gains) losses on debt 376 220 372 220
extinguishment, net
Restructuring expenses 2 3 5 42
Other - - 17 3
Adjusted net income (loss) $ (1,986) $ (1,699) $ (5,976) $ (3,930)
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, gains and
losses on debt extinguishments, 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 a 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.
Ships in Service and Announced Restarts by Brand
Number Passenger Capacity % of Brand % of Total
of (Lower Berths) Capacity Capacity
Ships (a)
North America and
Australia ("NAA")
Brands
Carnival Cruise 17 54,630 73 %
Line
Princess Cruises 10 31,260 68 %
Holland America 11 22,890 100 %
Line
P&O Cruises - - -
(Australia)
Seabourn 6 2,840 100 %
44 111,620 73 %
Europe and Asia ("EA")
Brands
Costa Cruises 8 30,170 72 %
AIDA Cruises 10 26,800 74 %
P&O Cruises (UK) 6 19,000 100 %
Cunard 3 6,820 100 %
27 82,790 80 %
71 194,410 75 %
(a) NAA Brands capacity for 60 ships, EA Brands capacity for 35 ships, total
company capacity for 95 ships, including newbuild deliveries through June 2022
Ships in Service and Announced Restarts by Ship
in Order of Actual or Announced Restart Date
Ship Name Passenger Capacity
(Lower Berths)
March 2021
AIDAperla 3,280
May 2021
Costa Smeralda 5,220
Costa Luminosa 2,260
AIDAsol 2,190
AIDAblu 2,200
June 2021
Costa Deliziosa 2,260
Britannia 3,640
July 2021
Seabourn Ovation 600
Carnival Vista 3,930
Costa Firenze 4,240
Carnival Horizon 3,960
AIDAprima 3,280
Carnival Breeze 3,690
Seabourn Odyssey 460
Nieuw Amsterdam 2,100
Majestic Princess 3,560
Carnival Miracle 2,120
AIDAstella 2,200
Regal Princess 3,560
Mardi Gras 5,280
AIDAmar 2,190
August 2021
Iona 5,200
Carnival Magic 3,690
Queen Elizabeth 2,080
Carnival Sunrise 2,980
Eurodam 2,100
Carnival Panorama 4,010
Sky Princess 3,660
September 2021
AIDAluna 2,080
Carnival Pride 2,120
Carnival Glory 2,980
Carnival Dream 3,640
Costa Diadema 3,690
Grand Princess 2,600
October 2021
Ventura 3,080
Carnival Freedom 2,980
Koningsdam 2,650
Carnival Elation 2,190
Emerald Princess 3,090
AIDAdiva 2,070
Rotterdam 2,670
Ruby Princess 3,080
November 2021
Carnival Valor 2,980
AIDAbella 2,080
Enchanted Princess 3,660
Carnival Legend 2,120
Nieuw Statendam 2,660
Queen Mary 2 2,680
Caribbean Princess 3,140
Costa Fascinosa 2,980
December 2021
Azura 3,080
Carnival Radiance 2,980
Carnival Conquest 2,980
AIDAnova 5,230
Zuiderdam 1,960
February 2022
Aurora 1,910
March 2022
Costa Toscana 5,320
Noordam 1,970
Arcadia 2,090
April 2022
Seabourn Venture 260
Seabourn Encore 600
Queen Victoria 2,060
Island Princess 2,210
Diamond Princess 2,700
May 2022
Volendam 1,430
Oosterdam 1,960
Costa Venezia 4,200
Westerdam 1,960
Seabourn Quest 460
Zaandam 1,430
June 2022
Seabourn Sojourn 460
CONTACT: MEDIA: Roger Frizzell, +1 305 406 7862; INVESTOR RELATIONS CONTACT:
Beth Roberts, +1 305 406 4832
END
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