MIAMI, Jan. 11, 2021 /PRNewswire/ -- Carnival
Corporation & plc (NYSE/LSE: CCL; NYSE: CUK) provides
preliminary financial information for the fourth quarter ended
November 30, 2020.
- U.S. GAAP net loss of $2.2
billion and adjusted net loss of $1.9
billion for the fourth quarter of 2020.
- Fourth quarter 2020 ended with $9.5
billion of cash and cash equivalents.
- Cash burn rate in the fourth quarter 2020 was slightly
better than expected due to the timing of capital
expenditures.
- The company has accelerated the removal of 19 less efficient
ships, 15 of which have already left the fleet.
- Cumulative advanced bookings for the first half of 2022 are
ahead of 2019, despite minimal advertising or marketing.
Carnival Corporation & plc President and Chief Executive
Officer Arnold Donald noted, "2020
has proven to be a true testament to the resilience of our company.
We took aggressive actions to implement and optimize a complete
pause in our guest cruise operations across all brands globally,
and developed protocols to begin our staggered resumption, first in
Italy for our Costa brand, then
followed by Germany for our AIDA
brand. We are now working diligently towards resuming operations in
Asia, Australia, the UK and the U.S. over the course
of 2021."
Donald added, "With the aggressive actions we have taken,
managing the balance sheet and reducing capacity, we are well
positioned to capitalize on pent up demand and to emerge a leaner,
more efficient company, reinforcing our industry leading
position."
Resumption of Guest Operations
Costa Cruises ("Costa") and AIDA Cruises ("AIDA") have resumed
limited guest cruise operations and other 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, shoreside employees and the people in the communities its
ships visit. The initial cruises will continue to take place with
adjusted passenger capacity and enhanced health protocols developed
with government and health authorities, and guidance from our
roster of medical and scientific experts. Many of the company's
brands source the majority of their guests from the geographical
region in which they operate. In the current environment, the
company believes this will benefit it in resuming guest cruise
operations.
Health and Safety Protocols
The company has been working with a number of world-leading
public health, epidemiological and policy experts to support its
ongoing efforts with enhanced protocols and procedures to help
protect against and mitigate the impact of COVID-19 during cruise
vacations. These advisors will continue to provide guidance based
on the latest scientific evidence and best practices for protection
and mitigation.
Working with governments, national health authorities and
medical experts, Costa and AIDA have a comprehensive set of health
and hygiene protocols that has helped 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 of the flag state, Italy. Protocols will be updated based on
evolving scientific and medical knowledge related to mitigation
strategies. Costa is the first cruise company to earn the Biosafety
Trust Certification from Registro Italiano Navale ("RINA"). The
certification process examined all aspects of life onboard and
ashore and assessed the compliance of the system with procedures
aimed at the prevention and control of infections.
The company is also working directly with the Centers for
Disease Control and Prevention ("CDC") on the development of
protocols necessary to resume cruising from the United States. The company, in conjunction
with its advisors, is currently evaluating the requirements set
forth in the CDC's Framework for Conditional Sailing Order
effective as of October 30, 2020. The
framework consists of several initial requirements that cruise ship
operators will need to follow prior to resuming guest operations.
Further, the framework is subject to additional technical
instructions and orders from the CDC and may change based on public
health considerations. While the framework represents an important
step in our return to service, many uncertainties remain as to the
specifics, timing, and cost of implementing the requirements. The
company continues to work closely with governments and health
authorities in other parts of the world to ensure that its health
and safety protocols will also comply with the requirements of each
location.
Optimizing the Future Fleet
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. Since the pause in guest
operations, the company has accelerated the removal of ships in
fiscal 2020 which were previously expected to be sold over the
ensuing years. The company now expects to dispose of 19 ships, 15
of which have already left the fleet. In total, the 19 ships
represent approximately 13 percent of pre-pause capacity and only
three percent of operating income in 2019. The sale of less
efficient ships will result in future operating expense
efficiencies of approximately two percent per available lower berth
day ("ALBD") and a reduction in fuel consumption of approximately
one percent per ALBD. The company recently took delivery of two
ships and expects only one more ship to be delivered in fiscal 2021
compared to five ships that were originally scheduled for delivery
in fiscal 2021.
Based on the actions taken to date and the scheduled newbuild
deliveries through 2022, the company's fleet will be more efficient
with a roughly 14 percent larger average berth size per ship and an
average age of 12 years in 2022 versus 13 years, in each case as
compared to 2019.
Update on Bookings
Carnival Corporation & plc President and Chief Executive
Officer Arnold Donald noted, "The
booking trends that we have consistently experienced throughout
this period affirm the strong fundamental demand for our brands
which will facilitate our staggered resumption and support the
long-term growth of our company."
At December 20, 2020, cumulative
advanced bookings for the second half of 2021 are within the
historical range. Additionally, the cumulative advanced bookings
for the first half of 2022 are ahead of 2019. (Due to the pause in
guest cruise operations in 2020, the company's future booking
trends will be compared to 2019.) The company believes the
continued build in cumulative advanced bookings for this twelve
month period ending May 2022
demonstrates the long-term demand for cruising. The company
highlights this level of bookings was achieved with minimal
advertising and marketing.
The company is providing flexibility to guests with bookings on
sailings cancelled by allowing guests to receive enhanced future
cruise credits ("FCCs") or elect to receive refunds in cash.
Enhanced FCCs increase the value of the guest's original booking or
provide incremental onboard credits. As of November 30, 2020, approximately 45 percent of
guests affected by the company's schedule changes have received
enhanced FCCs and approximately 55 percent have requested
refunds.
Total customer deposits balance at November 30, 2020, was $2.2 billion, the majority of which are FCCs,
compared to the total customer deposits balance of $2.4 billion at August 31,
2020. The decline in customer deposits is less than previous
expectations. As of November 30,
2020, the current portion of customer deposits was
$1.9 billion with minimal
bookings relating to first quarter of 2021 sailings. Approximately
60 percent of bookings taken during the quarter ended November 30, 2020 for fiscal year 2021 were
new bookings as opposed to FCCs re-bookings, despite minimal
advertising or marketing.
Increasing Liquidity
Carnival Corporation & plc Chief Financial Officer
David Bernstein noted, "We ended the
year with $9.5 billion in cash and
have the liquidity in place to sustain ourselves throughout 2021,
even in a zero-revenue environment. While we raised capital mainly
through debt this year, in the last few months we opportunistically
strengthened our capital structure by raising $2.5 billion through at-the-market equity
offering programs and by the early conversion of $1.5 billion of convertible debt. As we return to
full operations, our cash flow will be the primary driver to return
to investment grade credit over time, creating greater shareholder
value."
Due to the pause in guest operations, the company has taken
significant actions to preserve cash and secure additional
financing to increase its liquidity. Since March, the company has
raised $19 billion through a series
of transactions, including the following transactions since
August 31, 2020:
- Borrowed $3.0 billion under
export credit facilities in September, October and December 2020.
- Completed $1.0 billion
"at-the-market" equity offering program ("ATM") that was announced
in September 2020.
- Completed $1.5 billion ATM that
was announced in November 2020.
- Retired $590 million of its
convertible notes through the issuance of common stock in
November 2020.
- Issued $2.0 billion of senior
unsecured notes in November
2020.
As of November 30, 2020, the
company has a total of $9.5 billion of cash and cash equivalents.
During fiscal 2021, the company expects to enter into financial
transactions to optimize its capital structure which may include
opportunistically enhancing liquidity.
Currently, the company is unable to predict when the entire
fleet will return to normal operations, and as a result, unable to
provide an earnings forecast. The pause in guest operations
continues to have a material negative impact on all aspects of the
company's 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 first quarter and
full year ending November 30,
2021.
The company's monthly average cash burn rate for the fourth
quarter 2020 was $500 million, which
was slightly better than expected due to the timing of capital
expenditures. The company expects the monthly average cash burn
rate for the first quarter 2021 to be approximately $600 million. This rate includes ongoing ship
operating and administrative expenses, working capital changes
(excluding changes in customer deposits), interest expense and
capital expenditures (net of unfunded export credit facilities) and
also excludes scheduled debt maturities as well as other cash
collateral to be provided (which may increase in the future). The
company continues to explore opportunities to reduce its monthly
cash burn rate.
As of November 30, 2020, the
company's outstanding debt maturities are as follows:
(in
billions)
|
|
1Q
2021
|
|
2Q
2021
|
|
3Q
2021
|
|
4Q
2021
|
Principal payments on
outstanding debt (a)
|
|
$
|
0.5
|
|
|
$
|
0.4
|
|
|
$
|
0.6
|
|
|
$
|
0.3
|
|
Principal payments on
expected export credits
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
|
$
|
0.5
|
|
|
$
|
0.4
|
|
|
$
|
0.7
|
|
|
$
|
0.3
|
|
|
|
(a)
|
Excluding the
revolving facility. As of November 30, 2020, borrowings under the
revolving facility were $3.0 billion and mature through March 2021.
We may re-borrow such amounts subject to satisfaction of the
conditions in the revolving facility agreement.
|
Other Information
The company is actively addressing an IT security incident
affecting two of its brands. Based on preliminary assessment and on
the information currently known, the company does not believe the
incident will have a material impact on its business, operations or
financial results.
Conference Call
The company has scheduled
a conference call with analysts at 10:00
a.m. EDT (3:00 p.m. GMT) today
to provide a 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. 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
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• Booking
levels
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• Goodwill, ship
and trademark fair values
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•
Occupancy
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• 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
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|
|
our financial condition
and results of operations
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|
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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 a maintenance covenant in certain of our debt
facilities, for which we have amendments for the period through
November 30, 2021 with the next
testing date of February 28,
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
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|
|
Three Months
Ended
November 30,
|
(in
millions)
|
2020
|
|
2019
|
Net income
(loss)
|
|
|
|
U.S. GAAP net income
(loss)
|
$
|
(2,222)
|
|
|
$
|
423
|
|
(Gains) losses on ship sales
and impairments
|
115
|
|
|
(5)
|
|
Restructuring
expenses
|
5
|
|
|
10
|
|
Other
|
239
|
|
|
—
|
|
Adjusted net income
(loss)
|
$
|
(1,862)
|
|
|
$
|
427
|
|
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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SOURCE Carnival Corporation & plc