Carnival plc(CUK) - 2025 Q2 - Quarterly Report

Financial Highlights Overall Performance Carnival Corporation & plc reported strong Q2 2025 growth, driven by robust demand, increased pricing, and strategic debt management Q2 2025 Key Financial Metrics (vs. Q2 2024) | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $6,328 | $5,781 | +9.5% | | Operating Income | $934 | $560 | +66.8% | | Net Income | $565 | $92 | +514.1% | | Diluted EPS | $0.42 | $0.07 | +500.0% | - Customer deposits reached a record $8.5 billion as of May 31, 2025, up from $6.8 billion at November 30, 2024, signaling strong future demand[31] - The company actively refinanced its debt, issuing new lower-rate senior unsecured notes to redeem higher-rate notes, resulting in reduced interest expenses and extended maturities[41][42][43] PART I - FINANCIAL INFORMATION Financial Statements Unaudited consolidated financial statements show significant Q2 and H1 2025 profitability improvement, driven by strong revenue and cash flow Consolidated Statements of Income (Loss) Consolidated Income Statement Highlights (in millions) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $6,328 | $5,781 | $12,139 | $11,187 | | Passenger ticket | $4,104 | $3,754 | $7,936 | $7,370 | | Onboard and other | $2,224 | $2,027 | $4,202 | $3,817 | | 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 Consolidated Balance Sheet Highlights (in millions) | Metric | May 31, 2025 | Nov 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $2,146 | $1,210 | | Total assets | $51,165 | $49,057 | | Customer deposits | $8,082 | $6,425 | | Total debt | $27,254 | $27,475 | | Total shareholders' equity | $10,007 | $9,251 | Consolidated Statements of Cash Flows Six Months Ended May 31, Cash Flow Highlights (in millions) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $3,317 | $3,807 | | Net cash used in investing activities | $(1,191) | $(3,384) | | Net cash used in financing activities | $(1,211) | $(1,183) | | Net increase (decrease) in cash | $940 | $(767) | Segment Information Segment Operating Income (in millions) | Segment | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | North America | $691 | $525 | $1,207 | $797 | | Europe | $368 | $168 | $508 | $288 | | Cruise Support | $(113) | $(114) | $(204) | $(210) | | Tour and Other | $(12) | $(19) | $(34) | $(40) | - In March 2025, the company sunset the P&O Cruises (Australia) brand, folding its operations into Carnival Cruise Line[23] Debt - Total debt was $28.0 billion as of May 31, 2025. The company has actively managed its debt profile, issuing $1.0 billion of 5.75% notes due 2030 to redeem 10.50% notes, $2.0 billion of 6.13% notes due 2033 to redeem 10.38% notes, and $1.0 billion of 5.88% notes due 2031 to redeem 7.63% notes[34][41][42][43] - In June 2025, the company entered into a new $4.5 billion unsecured multi-currency revolving credit facility maturing in 2030, replacing its previous facility[37] Debt Maturity Schedule as of May 31, 2025 (in millions) | Year | Principal Payments | | :--- | :--- | | Remainder of 2025 | $692 | | 2026 | $1,400 | | 2027 | $4,958 | | 2028 | $6,758 | | 2029 | $4,780 | | Thereafter | $9,378 | | Total | $27,967 | Management's Discussion and Analysis (MD&A) Management attributes strong Q2 2025 performance to robust demand, higher pricing, and effective financial management, ensuring strong liquidity Key Performance Indicators & Trends Key Operating Statistics | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | ALBDs (in millions) | 24.2 | 23.5 | 47.8 | 46.5 | | Occupancy percentage | 104% | 104% | 104% | 103% | | Fuel cost per metric ton | $614 | $684 | $628 | $685 | - Capacity, measured in Available Lower Berth Days (ALBDs), increased by 3.1% in Q2 2025 compared to Q2 2024, driven by an 8.4% increase in the Europe segment[101] - The company anticipates that the EU Emissions Trading System (ETS), which began in 2024, will have a material negative impact on future financial results as the phase-in period progresses from 40% of emissions in 2024 to 70% in 2025 and 100% in 2026[98] Results of Operations - Q2 2025 vs Q2 2024: - Passenger ticket revenue increased 9.3% to $4.1 billion, driven by a $169 million increase from higher ticket prices and a $128 million increase from higher onboard spending[105][107] - Operating Expenses: Increased by a modest 2.3%, benefiting from a $103 million gain on ship sales and $72 million in lower fuel costs[113] - Interest Expense: Decreased by 24% ($109 million) due to lower debt balances and interest rates[125] - H1 2025 vs H1 2024: - Passenger ticket revenue increased 7.7% to $7.9 billion, driven by a $320 million increase from higher ticket prices and a $252 million increase from higher onboard spending[126][129] - Operating Income: Increased by $641 million to $1.5 billion[146] - Interest Expense: Decreased by 22% ($203 million)[147] Liquidity and Capital Resources - As of May 31, 2025, the company had $5.2 billion of liquidity, comprising $2.1 billion in cash and $3.0 billion available under its revolving facility[150] - The working capital deficit increased to $8.6 billion from $8.2 billion, primarily due to a significant increase in advance customer deposits, which is a characteristic of the company's business model[151] - Net cash from operating activities was $3.3 billion for the first six months of 2025. Investing activities used $1.2 billion, mainly for capital expenditures, while financing activities used $1.2 billion for net debt repayments[153][154][155] Market Risk Disclosures The company's primary market risk exposures are interest rates, foreign currency, and fuel prices, with no material changes since the 2024 Form 10-K Debt Composition (after swaps) as of May 31, 2025 | Debt Type | Percentage | | :--- | :--- | | Fixed rate | 58% | | EUR fixed rate | 24% | | Floating rate | 7% | | EUR floating rate | 11% | Controls and Procedures Management, including the CEO and CFO, concluded disclosure controls and procedures were effective as of May 31, 2025, with no material internal control changes - The CEO and CFO concluded that disclosure controls and procedures were effective as of the end of the period[161] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[162] PART II - OTHER INFORMATION Legal Proceedings & Risk Factors The company updated on the Havana Docks lawsuit, noting a favorable appeal ruling, and confirmed no material changes to risk factors since the 2024 Form 10-K - In the Havana Docks lawsuit, the Court of Appeals reversed a $110 million judgment against Carnival. The plaintiff has since filed a petition with the U.S. Supreme Court. The company does not expect the ultimate outcome to have a material impact[54] - There has been no material change to the risk factors affecting the business since the filing of the 2024 Form 10-K[166]