Carnival plc(CUK) - 2024 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents Carnival Corporation & plc's unaudited consolidated financial statements, including income, balance sheets, cash flows, and detailed notes Consolidated Statements of Income (Loss) The company reported a net income of $92 million for Q2 2024, significantly improving from a prior year loss due to revenue growth Consolidated Income Statement Highlights (in millions, except EPS) | Metric | Three Months Ended May 31, 2024 | Three Months Ended May 31, 2023 | Six Months Ended May 31, 2024 | Six Months Ended May 31, 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $5,781 | $4,911 | $11,187 | $9,343 | | Operating Income (Loss) | $560 | $120 | $836 | $(52) | | Net Income (Loss) | $92 | $(407) | $(123) | $(1,100) | | Diluted EPS | $0.07 | $(0.32) | $(0.10) | $(0.87) | Consolidated Balance Sheets As of May 31, 2024, total assets were $49.6 billion, with increased customer deposits and reduced long-term debt Key Balance Sheet Items (in millions) | Account | May 31, 2024 | November 30, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,646 | $2,415 | | Total assets | $49,603 | $49,120 | | Customer deposits | $7,883 | $6,072 | | Long-Term Debt | $27,154 | $28,483 | | Total shareholders' equity | $6,814 | $6,882 | Consolidated Statements of Cash Flows Net cash from operating activities significantly increased to $3.8 billion for the six months ended May 31, 2024 Cash Flow Summary (in millions) | Activity | Six Months Ended May 31, 2024 | Six Months Ended May 31, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $3,807 | $1,525 | | Net cash used in investing activities | $(3,384) | $(1,509) | | Net cash used in financing activities | $(1,183) | $(1,552) | | Net (decrease) in cash | $(767) | $(1,530) | Notes to Consolidated Financial Statements The notes detail accounting policies, customer deposits, debt, prepayments, litigation, and segment performance - Total customer deposits reached $8.3 billion as of May 31, 2024, up from $6.4 billion at November 30, 2023, reflecting strong future bookings[38] - The company became subject to the EU Emissions Trading Scheme (ETS) on January 1, 2024, with the cost of allowances purchased totaling $49 million as of May 31, 2024[33] - During the first six months of 2024, the company made debt prepayments totaling $3.2 billion across several debt instruments to reduce interest expense[50] - In June 2024, the company announced the integration of P&O Cruises Australia into Carnival Cruise Line, effective March 2025, which is not expected to have a material financial impact[95] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 and H1 2024 financial results, highlighting improved profitability driven by strong demand and revenue growth Statistical Information Key operating metrics for Q2 2024 showed strong growth, with Passenger Cruise Days increasing and occupancy rising to 104% Key Operating Statistics | Metric | Three Months Ended May 31, 2024 | Three Months Ended May 31, 2023 | | :--- | :--- | :--- | | Passenger Cruise Days (millions) | 24.3 | 21.8 | | Available Lower Berth Days (millions) | 23.5 | 22.3 | | Occupancy percentage | 104% | 98% | Results of Operations Consolidated revenues increased by 20% to $3.8 billion for Q2 2024, significantly boosting operating income to $560 million - For Q2 2024 vs Q2 2023, passenger ticket revenue increased by $613 million (20%), driven by a $253 million increase from higher ticket prices, a $185 million increase from a 5.4% capacity growth, and a $176 million increase from a 5.6 percentage point rise in occupancy[111][115] - The NAA segment's Q2 operating income increased by $260 million to $525 million, while the Europe segment's operating income improved by $195 million, swinging from a $27 million loss to a $168 million profit[124] - Interest expense for Q2 2024 decreased by $93 million (17%) year-over-year due to a reduction in total debt and lower interest rates[125] Liquidity, Financial Condition and Capital Resources As of May 31, 2024, the company maintained strong liquidity of $4.6 billion, with robust cash flow from operations - Total liquidity as of May 31, 2024, was $4.6 billion, including $1.6 billion in cash and $3.0 billion in available borrowings under the Revolving Facility[142] - Net cash from operating activities for the first six months of 2024 was $3.8 billion, a $2.3 billion increase from the same period in 2023, driven by improved earnings and a substantial release of credit card reserves[145] - The working capital deficit increased to $9.6 billion from $6.2 billion, largely due to a significant increase in customer deposits to $7.9 billion, reflecting strong future bookings[144] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company reports no material changes to its market risk exposure, with primary risks including interest rates, foreign currency, and fuel prices Debt Composition by Interest Rate Type (May 31, 2024) | Debt Type | Percentage | | :--- | :--- | | Fixed rate | 61% | | EUR fixed rate | 23% | | Floating rate | 4% | | EUR floating rate | 11% | Item 4. Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of May 31, 2024, with no material changes - The President, CEO, and CFO have concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period, May 31, 2024[154] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[155] PART II - OTHER INFORMATION Item 1. Legal Proceedings This section details legal proceedings, including the Helms-Burton Act lawsuit and environmental matters, with no material financial impact - The company is appealing a $110 million judgment against it in a lawsuit filed by Havana Docks Corporation under the Helms-Burton Act, with oral arguments held on May 17, 2024[60] - Princess Cruises is facing formal charges in Australia regarding an inadvertent release of comminuted food waste by the Coral Princess inside the Great Barrier Reef Marine Park in June 2022[158] Item 1A. Risk Factors The company reports no material changes to its risk factors, with key risks including geopolitical uncertainty, fuel prices, and interest rates - There has been no material change to the risk factors since the company's 2023 Form 10-K filing[160] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company discusses its Stock Swap Program, which had no sales or repurchases during the three months ended May 31, 2024 - No sales or repurchases were made under the Stock Swap Program during the three months ended May 31, 2024[163] Item 5. Other Information No director or Section 16 officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading plans during the quarter - No director or Section 16 officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading plans during the quarter[164] Item 6. Exhibits This section provides an index of all exhibits filed with the Form 10-Q, including loan agreements, notes, plans, and certifications