MIAMI, June 24, 2021
/PRNewswire/ -- Carnival Corporation & plc (NYSE/LSE: CCL;
NYSE: CUK) provides second quarter 2021 business update.
- U.S. GAAP net loss of $(2.1)
billion and adjusted net loss of $(2.0) billion for the second quarter of
2021.
- Second quarter 2021 ended with $9.3
billion of cash and short-term investments, which the
company believes is sufficient liquidity to return to full cruise
operations.
- Customer deposits increased in the second quarter of 2021
compared to the previous quarter.
- Cash burn rate in the first half of 2021 was better than
forecasted primarily due to the timing of proceeds from ship sales
and working capital changes.
- 42 ships from eight of the company's nine brands either have
resumed or are announced to resume guest cruise operations by
November 30, 2021, which is over 50%
of the company's capacity, with more announcements expected in the
coming weeks.
- Booking volumes for all future cruises during the second
quarter of 2021 were 45% higher than booking volumes during the
first quarter of 2021.
- Cumulative advanced bookings for full year 2022 are ahead of
a very strong 2019, despite minimal advertising or
marketing.
- Building on a legacy of ESG performance, the company
announced its 2030 sustainability goals and 2050 sustainability
aspirations, focusing strategically and holistically on enhancing
its sustainable business model while reinforcing its commitment to
and investment in sustainability solutions.
- The company repriced its first-priority senior secured term
loan facility, reducing its future annual interest expense by over
$120 million per year and has
approval in principle from the relevant export credit agencies to
defer approximately $1.0 billion of
principal payments, increasing its near term liquidity. The company
expects these transactions to close during the third quarter of
2021 and continues to focus on pursuing additional refinancing
opportunities to reduce interest rates and extend
maturities.
Resumption of Guest Operations
Carnival Corporation & plc President and Chief Executive
Officer Arnold Donald noted, "We are
working aggressively on our path to return our full fleet to
operations by next spring. So far, we have announced that 42 ships,
representing over half of our capacity, have been scheduled to
return to serving guests by this fiscal year end. We are currently
evaluating various deployment options with a focus on maximizing
cash flow, while delivering a great guest experience and serving
the best interests of public health." More return to service
announcements will be coming in the weeks ahead. Donald added. "We
can't wait to welcome all our valued guests and crew members back
on board!"
The company is uniquely positioned for its phased resumption in
cruise travel given its multiple brands which are being restarted
independently and tailored to the environment of their respective
source market. Eight of the company's nine brands either have
resumed or have announced they plan to resume guest cruise
operations by the company's fiscal year end, November 30, 2021. 27 ships, or approximately 35%
of capacity, have resumed or are announced to resume by the end of
the third quarter of 2021 and an additional 15 ships, or nearly 20%
of capacity, are announced to resume by the end of the fourth
quarter of 2021. Together these 42 ships represent over 50% of
capacity. More announcements are expected in the coming weeks which
will include additional ship restarts for fiscal year 2021.
Consistent with the company's planned phased resumption of guest
cruise operations, it expects to have its full fleet back in
operation in the spring of 2022. For more detailed information on
the resumption of guest cruise operations by brand as well as the
specific ships and timing of their restart, see the company press
release issued yesterday, June 23,
2021.
The company has been working with a number of world-leading
public health, epidemiological and policy experts to support its
ongoing efforts to implement enhanced health and safety protocols
to help protect against and mitigate the impact of COVID-19 during
cruise vacations. Initial cruises are taking place with guidance
from the company's roster of medical and scientific experts and
enhanced health protocols developed in conjunction with government
and health authorities. Consequently, the company's brands have a
comprehensive set of health and hygiene protocols that facilitate a
safe and healthy return to cruise vacations. These enhanced
protocols are modeled after shoreside health and mitigation
guidelines as provided by each brand's respective country, and
approved by all relevant regulatory authorities. Protocols will be
updated based on evolving scientific and medical knowledge related
to mitigation strategies.
Update on Bookings
Donald added, "Despite our minimal advertising spend, we
continue to experience an acceleration in booking trends globally,
including capturing significant latent demand for our new sailings
this summer. This strong demand affirms confidence in our future.
In addition, customer deposits grew this past quarter, a
significant milestone on our path to resumption."
Donald continued, "With the aggressive actions we have already
taken to optimize our portfolio and reduce capacity, we believe we
are well positioned to capitalize on pent up demand and to emerge a
leaner more efficient company, reinforcing our global industry
leading position."
Booking volumes for all future cruises during the second quarter
of 2021 were 45% higher than booking volumes during the first
quarter of 2021. Cumulative advanced bookings for full year 2022
are ahead of a very strong 2019 as of May
31, 2021. The company highlights that this level of bookings
was achieved with minimal advertising and marketing. (Due to the
pause in guest cruise operations, the company's current booking
trends will be compared to booking trends for 2019 sailings.)
Total customer deposits as of May 31,
2021 and February 28, 2021
were $2.5 billion and $2.2 billion, respectively. During the
quarter, customer deposits on new bookings exceeded the impact of
refunds provided.
Liquidity and Refinancing
Carnival Corporation & plc Chief Financial Officer
David Bernstein noted, "We ended the
second quarter with $9.3 billion of
cash and short-term investments. We believe we have sufficient
liquidity to get us back to full operations and continue to be
focused on pursuing refinancing opportunities to reduce interest
rates and extend maturities. To date, through our refinancing
efforts, we have reduced our future annual interest expense by over
$120 million per year and expect to
increase our near-term liquidity by $1.0
billion."
Donald added, "Once we return to full operations, our cash flow
will be the primary driver of the company's return to investment
grade credit over time, creating greater shareholder value."
In pursuit of the company's refinancing efforts, during the
second quarter of 2021:
- The company entered into an agreement to reprice its
first-priority senior secured term loan facility, reducing the
overall interest rate and future annual interest expense by over
$120 million per year.
- The relevant export credit agencies have provided approval in
principle to defer approximately $1.0
billion of principal payments that would otherwise have been
due over a one year period with repayments to be made over the
following five years.
The company expects these transactions to close during the third
quarter of 2021.
As of May 31, 2021, the company's
outstanding debt maturities are as follows:
(in
billions)
|
|
3Q
2021
|
|
4Q
2021
|
|
1Q
2022
|
|
2Q
2022
|
Principal payments on
outstanding debt (a)
|
|
$
|
0.3
|
|
|
$
|
0.3
|
|
|
$
|
0.6
|
|
|
$
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Excluding the
revolving facility. As of May 31, 2021, borrowings under the
revolving facility were $3.1 billion. The maturities for these
borrowings are currently extended through September 2021. The
company may re-borrow such amounts subject to satisfaction of the
conditions in the revolving facility agreement.
|
The company's monthly average cash burn rate for the first half
of 2021 was $500 million, which was
better than forecasted primarily due to the timing of proceeds from
ship sales and working capital changes. This monthly average cash
burn rate includes revenues earned on voyages, ongoing ship
operating and administrative expenses, restart spend, working
capital changes (excluding changes in customer deposits), interest
expense and capital expenditures (net of export credit facilities),
and excludes scheduled debt maturities as well as other cash
collateral to be provided. As the company continues to resume guest
cruise operations, it expects to incur incremental spend relating
to bringing ships out of pause status, returning crew members to
its ships and implementing enhanced health and safety
protocols.
The phased resumption of the company's guest cruise operations
continues to have a material impact on all aspects of its business,
including the company's liquidity, financial position and results
of operations. The company expects a net loss on both a U.S. GAAP
and adjusted basis for the third quarter 2021 and full year ending
November 30, 2021.
Sustainability Update
Donald noted, "The 2030 sustainability goals and our aspirations
for 2050 are an important next step in our journey and advance our
ongoing efforts to establish a path to zero emission cruising over
time."
Throughout the pause in guest cruise operations, the company
maintained focus on its Environmental, Social and Governance
("ESG") performance. As the company continues to work towards the
broad restart of guest cruise operations, the company announced its
2030 sustainability goals and 2050 sustainability aspirations
focusing strategically and holistically on enhancing its
sustainable business model while reinforcing its commitment to and
investment in sustainability solutions. The company's goals and
aspirations incorporate six critical focus areas which are aligned
with key United Nations Sustainable Development Goals:
- Climate action
- Circular economy
- Sustainable tourism
- Good health and well-being
- Diversity, equity and inclusion
- Biodiversity and conservation
In each focus area, the company has specified goals, targets and
aspirations that guide its strategy to further strengthen the ESG
performance of the organization. The company's climate actions
align with the International Maritime Organization's commitment to
reduce carbon emission intensity 40% by 2030 and aspires to achieve
net carbon neutral operations by 2050. The company remains focused
on decarbonization by investing in the transition to alternative
fuels and technologies, such as biofuels, large scale batteries and
fuel cells. The company continues to set near-term goals to ensure
its progress is tracking with its longer-term vision. For more
detailed information on the company's 2030 goals and 2050
aspirations, see the company press release issued on June 22, 2021.
Other Recent Highlights
- Carnival Corporation's Ethics and Compliance Program was one of
five finalists for "Program of the Year" in Compliance Week's 2021
Excellence in Compliance Awards. These awards recognize compliance
programs, leaders and consultants for their outstanding performance
in this critical field. The company's nomination for this award
includes highlights and successes from its "Operations Oceans
Alive" program.
- AIDA Cruises announced that Europe's largest shore power plant was
officially inaugurated with one of its ships, AIDAsol.
Establishing a shore power supply for cruise ships in
Rostock-Warnemünde, Germany, is
the result of a joint agreement between AIDA Cruises, the state
government of Mecklenburg-Western Pomerania, the Hanseatic and
University City of Rostock and Rostock Port.
- Carnival Corporation & plc was:
-
- Awarded two Silver Anvils, the top PR award for campaigns by
the Public Relations Society of America (PRSA) for its crisis work
tied to COVID-19, as well as a Bronze Anvil and an award of
excellence.
- Recognized as one of the Best Companies for Latinos to Work by
Latino Leaders Magazine, the only national magazine fully dedicated
to showcasing and promoting leadership in the Latino community in
the U.S.
- Recognized on Forbes' annual listings of America's Best Large
Employers of 2021 for the third time, Best Employers for Diversity
for the second consecutive year and America's Best Employers for
Women in 2020.
- Named Glassdoor Employee's Choice Award winner, recognizing the
company as one of the Best Places to Work in 2021.
- Recognized for its commitment to corporate social
responsibility leadership by Newsweek as one of America's Most
Responsible Companies for 2021 for the second consecutive
year.
- Earned a perfect score on the Human Rights Campaign
Foundation's 2021 Corporate Equality Index, designating the company
as a Best Place to Work for LGBTQ Equality for the fifth
consecutive year.
Conference Call
The company has scheduled
a conference call with analysts at 10:00
a.m. EDT (3:00 p.m. BST) today
to discuss its business update. This call can be listened to live,
and additional information can be obtained, via Carnival
Corporation & plc's website at www.carnivalcorp.com and
www.carnivalplc.com.
Carnival Corporation & plc is one of the world's
largest leisure travel companies with a portfolio of nine of the
world's leading cruise lines. With operations in North
America, Australia, Europe and Asia, its portfolio features – Carnival Cruise
Line, Princess Cruises, Holland America Line, P&O
Cruises (Australia),
Seabourn, Costa Cruises, AIDA Cruises, P&O Cruises (UK)
and Cunard.
Additional information can be found on www.carnivalcorp.com,
www.carnivalsustainability.com, www.carnival.com, www.princess.com,
www.hollandamerica.com, www.pocruises.com.au, www.seabourn.com,
www.costacruise.com, www.aida.de, www.pocruises.com and
www.cunard.com.
Cautionary Note Concerning Factors That May Affect Future
Results
Some of the statements, estimates or projections contained in
this document are "forward-looking statements" that involve risks,
uncertainties and assumptions with respect to us, including some
statements concerning future results, operations, outlooks, plans,
goals, reputation, cash flows, liquidity and other events which
have not yet occurred. These statements are intended to qualify for
the safe harbors from liability provided by Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934, as amended. All statements other than statements of
historical facts are statements that could be deemed
forward-looking. These statements are based on current
expectations, estimates, forecasts and projections about our
business and the industry in which we operate and the beliefs and
assumptions of our management. We have tried, whenever possible, to
identify these statements by using words like "will," "may,"
"could," "should," "would," "believe," "depends," "expect," "goal,"
"anticipate," "forecast," "project," "future," "intend," "plan,"
"estimate," "target," "indicate," "outlook," and similar
expressions of future intent or the negative of such terms.
Forward-looking statements include those statements that relate
to our outlook and financial position including, but not limited
to, statements regarding:
•
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Pricing
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•
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Estimates of ship
depreciable lives and residual values
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•
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Booking
levels
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•
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Goodwill, ship and
trademark fair values
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•
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Occupancy
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•
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Liquidity and credit
ratings
|
•
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Interest, tax and
fuel expenses
|
•
|
Adjusted earnings per
share
|
•
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Currency exchange
rates
|
•
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Impact of the
COVID-19 coronavirus global pandemic on our financial condition and
results of operations
|
|
|
•
|
Return to guest
cruise operations
|
Because forward-looking statements involve risks and
uncertainties, there are many factors that could cause our actual
results, performance or achievements to differ materially from
those expressed or implied by our forward-looking statements. This
note contains important cautionary statements of the known factors
that we consider could materially affect the accuracy of our
forward-looking statements and adversely affect our business,
results of operations and financial position. Additionally, many of
these risks and uncertainties are currently amplified by and will
continue to be amplified by, or in the future may be amplified by,
the COVID-19 outbreak. It is not possible to predict or identify
all such risks. There may be additional risks that we consider
immaterial or which are unknown. These factors include, but are not
limited to, the following:
- COVID-19 has had, and is expected to continue to have, a
significant impact on our financial condition and operations, which
impacts our ability to obtain acceptable financing to fund
resulting reductions in cash from operations. The current, and
uncertain future, impact of the COVID-19 outbreak, including its
effect on the ability or desire of people to travel (including on
cruises), is expected to continue to impact our results,
operations, outlooks, plans, goals, reputation, litigation, cash
flows, liquidity, and stock price.
- As a result of the COVID-19 outbreak, we may be out of
compliance with one or more maintenance covenants in certain of our
debt facilities, with the next testing date of November 30, 2022.
- World events impacting the ability or desire of people to
travel have and may continue to lead to a decline in demand for
cruises.
- Incidents concerning our ships, guests or the cruise vacation
industry as well as adverse weather conditions and other natural
disasters have in the past and may, in the future, impact the
satisfaction of our guests and crew and lead to reputational
damage.
- Changes in and non-compliance with laws and regulations under
which we operate, such as those relating to health, environment,
safety and security, data privacy and protection, anti-corruption,
economic sanctions, trade protection and tax have in the past and
may, in the future, lead to litigation, enforcement actions, fines,
penalties and reputational damage.
- Breaches in data security and lapses in data privacy as well as
disruptions and other damages to our principal offices, information
technology operations and system networks, including the recent
ransomware incidents, and failure to keep pace with developments in
technology may adversely impact our business operations, the
satisfaction of our guests and crew and may lead to reputational
damage.
- Ability to recruit, develop and retain qualified shipboard
personnel who live away from home for extended periods of time may
adversely impact our business operations, guest services and
satisfaction.
- Increases in fuel prices, changes in the types of fuel consumed
and availability of fuel supply may adversely impact our scheduled
itineraries and costs.
- Fluctuations in foreign currency exchange rates may adversely
impact our financial results.
- Overcapacity and competition in the cruise and land-based
vacation industry may lead to a decline in our cruise sales,
pricing and destination options.
- Inability to implement our shipbuilding programs and ship
repairs, maintenance and refurbishments may adversely impact our
business operations and the satisfaction of our guests.
The ordering of the risk factors set forth above is not intended
to reflect our indication of priority or likelihood.
Forward-looking statements should not be relied upon as a
prediction of actual results. Subject to any continuing obligations
under applicable law or any relevant stock exchange rules, we
expressly disclaim any obligation to disseminate, after the date of
this document, any updates or revisions to any such forward-looking
statements to reflect any change in expectations or events,
conditions or circumstances on which any such statements are
based.
CARNIVAL
CORPORATION & PLC
|
NON-GAAP FINANCIAL
MEASURES
|
|
|
Three Months
Ended
May
31,
|
|
Six Months
Ended
May
31,
|
(in
millions)
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net income
(loss)
|
|
|
|
|
|
|
|
U.S. GAAP net income
(loss)
|
$
|
(2,072)
|
|
|
$
|
(4,374)
|
|
|
$
|
(4,045)
|
|
|
$
|
(5,155)
|
|
(Gains) losses on ship sales
and impairments
|
36
|
|
|
1,953
|
|
|
39
|
|
|
2,882
|
|
Restructuring
expenses
|
3
|
|
|
39
|
|
|
3
|
|
|
39
|
|
Other
|
(2)
|
|
|
—
|
|
|
13
|
|
|
3
|
|
Adjusted net income
(loss)
|
$
|
(2,036)
|
|
|
$
|
(2,382)
|
|
|
$
|
(3,990)
|
|
|
$
|
(2,231)
|
|
Explanations of Non-GAAP Financial
Measures
Non-GAAP Financial Measures
We use adjusted net income (loss) as a non-GAAP financial
measure of our cruise segments' and the company's financial
performance. This non-GAAP financial measure is provided along with
U.S. GAAP net income (loss).
We believe that gains and losses on ship sales, impairment
charges, restructuring costs and other gains and losses are not
part of our core operating business and are not an indication of
our future earnings performance. Therefore, we believe it is more
meaningful for these items to be excluded from our net income
(loss), and accordingly, we present adjusted net income (loss)
excluding these items.
The presentation of our non-GAAP financial information is not
intended to be considered in isolation from, as substitute for, or
superior to the financial information prepared in accordance with
U.S. GAAP. It is possible that our non-GAAP financial measures may
not be exactly comparable to the like-kind information presented by
other companies, which is a potential risk associated with using
these measures to compare us to other companies.
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SOURCE Carnival Corporation & plc