Carnival plc(CUK) - 2025 Q2 - Quarterly Results

Financial & Operational Highlights The company achieved record Q2 operating results, exceeding guidance and reaching 2026 financial targets early, driven by record revenues and customer deposits Q2 2025 Key Achievements Carnival Corporation & plc reported its highest-ever second-quarter operating results, exceeding guidance and achieving its 2026 SEA Change financial targets 18 months ahead of schedule - Exceeded 2026 SEA Change financial targets 18 months early, with adjusted ROIC surpassing 12.5% and adjusted EBITDA per ALBD increasing by 52% in under two years[2][4] - The company's cumulative advanced booked position for 2026 is aligned with the record levels of 2025 and at historically high prices (in constant currency)[4][7] - In June, the company extended and increased its revolver capacity by 50% to $4.5 billion[4][8] | Metric | Q2 2025 | Change vs. Q2 2024 | Note | | :--- | :--- | :--- | :--- | | Revenues | $6.3 billion | +$550 million | Record Second Quarter | | Operating Income | $934 million | - | Record Second Quarter | | Net Income | $565 million | +$475 million | - | | Adjusted Net Income | $470 million | More than tripled | Outperformed guidance by $185M | | Adjusted EBITDA | $1.5 billion | +26% | Record Second Quarter | | Customer Deposits | $8.5 billion | - | All-time high | Financial Performance The company achieved record Q2 2025 revenues and operating income, driven by strong net yield growth and effective cost management Q2 2025 Detailed Results In Q2 2025, the company achieved record revenues of $6.3 billion and record operating income of $934 million, with net yields growing 6.4% year-over-year - Operating margins and adjusted EBITDA margins increased by over 500 and 300 basis points, respectively, compared to 2024, significantly exceeding 2019 levels[5] | Performance Metric | Q2 2025 Result | Comparison/Note | | :--- | :--- | :--- | | Record Revenues | $6.3 billion | Up nearly $550 million vs. 2024 | | Record Operating Income | $934 million | - | | Record Net Yields (Constant Currency) | +6.4% vs. 2024 | Outperformed guidance by 200 bps | | Adjusted Cruise Costs ex. Fuel per ALBD (Constant Currency) | +3.5% vs. 2024 | Better than March guidance | | Fuel Consumption per ALBD | -6.3% vs. 2024 | Better than guidance by 300 bps | | Occupancy Percentage | 104% | Same as Q2 2024 | Consolidated Statements of Income For the three months ended May 31, 2025, total revenues increased to $6.33 billion, leading to a significant rise in net income to $565 million | (in millions, except per share data) | Three Months Ended May 31, 2025 | Three Months Ended May 31, 2024 | Six Months Ended May 31, 2025 | Six Months Ended May 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $6,328 | $5,781 | $12,139 | $11,187 | | Operating Income | $934 | $560 | $1,477 | $836 | | Net Income (Loss) | $565 | $92 | $486 | $(123) | | Diluted EPS | $0.42 | $0.07 | $0.37 | $(0.10) | Consolidated Balance Sheets As of May 31, 2025, total assets increased to $51.17 billion, with customer deposits growing significantly to $8.08 billion | (in millions) | May 31, 2025 | November 30, 2024 | | :--- | :--- | :--- | | Total Assets | $51,165 | $49,057 | | Cash and cash equivalents | $2,146 | $1,210 | | Property and Equipment, Net | $42,751 | $41,795 | | Total Liabilities | $41,158 | $39,806 | | Total current liabilities | $12,920 | $11,617 | | Customer deposits (current) | $8,082 | $6,425 | | Long-Term Debt | $25,862 | $25,936 | | Total Shareholders' Equity | $10,007 | $9,251 | Business Outlook & Guidance The company maintains strong booking trends and has raised its full-year 2025 guidance for adjusted net income and EBITDA Booking Trends Booking trends remain exceptionally strong, with the booking curve extending further out than ever before, indicating robust future demand - Close-in demand and onboard spending were very strong for Q2 sailings[6] - The booking curve is the furthest out on record, indicating strong future demand[6] - For the rest of 2025, occupancy is the second-highest on record with pricing at historical highs (in constant currency)[7] - The booked position for 2026 is in line with 2025's record levels at the same point last year, also at historical high prices[7] Full Year & Q3 2025 Guidance The company has raised its full-year 2025 guidance, expecting adjusted net income of approximately $2.69 billion and adjusted EBITDA of around $6.9 billion | Guidance Metric (Full Year 2025) | Forecast | Note | | :--- | :--- | :--- | | Net Yields (Constant Currency) | ~5.0% growth | Better than March guidance | | Adj. Cruise Costs ex. Fuel per ALBD (Constant Currency) | ~3.6% growth | Better than March guidance | | Adjusted EBITDA | ~$6.9 billion | Up >10% vs. 2024 | | Adjusted Net Income | ~$2.69 billion | Up >40% vs. 2024; $200M better than March guidance | | Adjusted EPS - Diluted | ~$1.97 | - | | Guidance Metric (Q3 2025) | Forecast | Note | | :--- | :--- | :--- | | Net Yields (Constant Currency) | ~3.5% growth | - | | Adj. Cruise Costs ex. Fuel per ALBD (Constant Currency) | ~7.0% growth | Includes Celebration Key opening & advertising costs | | Adjusted EBITDA | ~$2.87 billion | - | | Adjusted Net Income | ~$1.8 billion | - | | Adjusted EPS - Diluted | ~$1.30 | - | | Sensitivities (Impact to Adjusted Net Income) | Remainder of 2025 (in millions) | | :--- | :--- | | 1% change in net yields | $104 | | 1% change in adjusted cruise costs ex. fuel per ALBD | $55 | | 10% change in fuel cost per metric ton | $88 | Financial Position & Capital Management The company is actively managing its debt profile to rebuild an investment-grade balance sheet and maintains a strong liquidity position Financing Activities & Debt Management The company is actively managing its debt profile to rebuild an investment-grade balance sheet, with recent credit rating upgrades and debt refinancing efforts - S&P upgraded the company's credit rating to BB+ (stable outlook) and Fitch upgraded it to BB+ (positive outlook), placing it one notch from investment grade[8][9] - Proactively managed debt by prepaying $350 million of 2026 notes and refinancing the remainder, which will reduce net interest expense by over $20 million through 2026[11] - Total debt was $27.3 billion as of May 31, 2025, with the net debt to adjusted EBITDA ratio improving from 4.1x to 3.7x during the quarter[10][12] Liquidity and Capital Expenditures The company maintains a strong liquidity position, enhanced by an upsized revolving credit facility, with planned capital expenditures for newbuilds and non-newbuild projects - Capital expenditures for the remainder of 2025 are projected to be $2.3 billion, comprising $1.1 billion for newbuilds and $1.2 billion for non-newbuilds[17] | Liquidity (in millions) | May 31, 2025 | Note | | :--- | :--- | :--- | | Cash and cash equivalents | $2,146 | - | | Revolver Availability | $3,026 | Facility upsized to $4.5B in June 2025 | | Total Liquidity | $5,172 | - | Other Corporate Developments Carnival announced strategic initiatives including new ship orders, a new loyalty program, and expansion of Caribbean destinations Recent Highlights Carnival announced several strategic initiatives, including ordering two new mid-size class ships for AIDA Cruises and launching a new loyalty program - Ordered two newbuilds for AIDA Cruises, for delivery in fiscal 2030 and 2032, bringing the total newbuild pipeline to eight ships through 2033[13] - Carnival Cruise Line will launch 'Carnival Rewards' in June 2026, a new loyalty program based on spending on fares and onboard activities[13] - Introduced the 'Paradise Collection' of destinations, including the new Celebration Key (opening July 2025) and enhancements to Half Moon Cay and Mahogany Bay[13] - Sold the Costa Fortuna, which is expected to leave the fleet in September 2026, resulting in a gain on the sale[13] Non-GAAP Financial Measures The company uses non-GAAP financial measures to assess core operating performance, excluding non-recurring or non-core items Definitions and Reconciliation The company utilizes non-GAAP financial measures to assess performance, excluding items not considered part of core operations, to understand underlying business trends - Non-GAAP measures like Adjusted Net Income and Adjusted EBITDA are used to provide additional information on core operating profitability by excluding certain non-recurring or non-core business items[45][46] - Net Yields and Adjusted Cruise Costs per ALBD are used to measure cruise segment performance, separating the impact of capacity changes from price and other operational changes[48][49] - Reconciliation of forecasted non-GAAP data to GAAP is not provided because predicting future movements of foreign exchange, fuel prices, and other non-core gains/losses would require unreasonable effort[52] Forward-Looking Statements This report contains forward-looking statements subject to numerous risks and uncertainties that could cause actual results to differ materially Cautionary Note on Future Results This report contains forward-looking statements regarding future results, operations, and strategy, which are subject to numerous risks and uncertainties - The report includes forward-looking statements that are not guarantees of future performance and involve risks and uncertainties[21][22] - Key risk factors that could affect future results include: - Global events (geopolitical uncertainty, inflation, pandemics) - Incidents concerning ships or the cruise industry - Changes in laws and regulations (environmental, health, safety) - Climate change-related factors - Cybersecurity incidents and data breaches - Increases in fuel prices and supply issues - Competition and overcapacity - The company's substantial debt balance[24][28]