Carnival (CCL) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements Presents unaudited consolidated financial statements: income, comprehensive income, balance sheets, cash flows, equity, and detailed notes Consolidated Statements of Income (Loss) Presents the consolidated statements of income (loss) for the three and six months ended May 31, 2025 and 2024 | Metric | 3 Months Ended May 31, 2025 (Millions) | 3 Months Ended May 31, 2024 (Millions) | 6 Months Ended May 31, 2025 (Millions) | 6 Months Ended May 31, 2024 (Millions) | | :----- | :------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Revenues | $6,328 | $5,781 | $12,139 | $11,187 | | Operating Income | $934 | $560 | $1,477 | $836 | | Net Income (Loss) | $565 | $92 | $486 | $(123) | | Basic EPS | $0.43 | $0.07 | $0.37 | $(0.10) | | Diluted EPS | $0.42 | $0.07 | $0.37 | $(0.10) | Consolidated Statements of Comprehensive Income (Loss) Details the consolidated statements of comprehensive income (loss) for the three and six months ended May 31, 2025 and 2024 | Metric | 3 Months Ended May 31, 2025 (Millions) | 3 Months Ended May 31, 2024 (Millions) | 6 Months Ended May 31, 2025 (Millions) | 6 Months Ended May 31, 2024 (Millions) | | :----- | :------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Net Income (Loss) | $565 | $92 | $486 | $(123) | | Other Comprehensive Income (Loss) | $233 | $18 | $221 | $19 | | Total Comprehensive Income (Loss) | $798 | $110 | $708 | $(104) | Consolidated Balance Sheets Provides the consolidated balance sheets as of May 31, 2025, and November 30, 2024, detailing assets, liabilities, and equity | Metric | May 31, 2025 (Millions) | November 30, 2024 (Millions) | | :----- | :---------------------- | :--------------------------- | | Total Assets | $51,165 | $49,057 | | Total Current Assets | $4,349 | $3,378 | | Total Current Liabilities | $12,920 | $11,617 | | Total Debt (net of unamortized costs) | $27,254 | $27,475 | | Customer Deposits | $8,082 | $6,425 | | Total Shareholders' Equity | $10,007 | $9,251 | Consolidated Statements of Cash Flows Outlines the consolidated statements of cash flows for the six months ended May 31, 2025 and 2024, across operating, investing, and financing activities | Activity | 6 Months Ended May 31, 2025 (Millions) | 6 Months Ended May 31, 2024 (Millions) | | :------- | :------------------------------------- | :------------------------------------- | | Net cash provided by (used in) operating activities | $3,317 | $3,807 | | Net cash provided by (used in) investing activities | $(1,191) | $(3,384) | | Net cash provided by (used in) financing activities | $(1,211) | $(1,183) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $940 | $(767) | | Cash, cash equivalents and restricted cash at end of period | $2,171 | $1,669 | Consolidated Statements of Shareholders' Equity Presents the consolidated statements of shareholders' equity as of May 31, 2025, May 31, 2024, November 30, 2024, and November 30, 2023 | Metric | At May 31, 2025 (Millions) | At May 31, 2024 (Millions) | At November 30, 2024 (Millions) | At November 30, 2023 (Millions) | | :----- | :------------------------- | :------------------------- | :------------------------------ | :------------------------------ | | Total Shareholders' Equity | $10,007 | $6,814 | $9,251 | $6,882 | | Retained Earnings | $2,543 | $62 | $2,101 | $185 | | Accumulated Other Comprehensive Income (Loss) | $(1,753) | $(1,919) | $(1,975) | $(1,939) | Notes to Consolidated Financial Statements Provides detailed explanatory notes to the consolidated financial statements, covering accounting policies, debt, contingencies, and other financial disclosures NOTE 1 – General Outlines the basis of presentation for interim financial statements, including estimates, seasonality, brand realignment, and new accounting pronouncements - Brand Realignment: In March 2025, the P&O Cruises (Australia) brand was sunset, with operations folded into Carnival Cruise Line[23] - New Accounting Pronouncements: The company is evaluating new FASB guidance on Segment Reporting (effective 2025/2026), Income Tax Disclosures (effective 2026), Debt with Conversion Options (effective 2027), and Expense Disaggregation (effective 2028)[24][25][26][27] NOTE 2 – Revenue and Expense Recognition Details policies for revenue and expense recognition, including guest cruise deposits, advance onboard purchases, and contract costs | Metric | May 31, 2025 (Millions) | November 30, 2024 (Millions) | | :----- | :---------------------- | :--------------------------- | | Total Customer Deposits | $8,500 | $6,800 | | Incremental Costs of Obtaining Contracts | $445 | $336 | NOTE 3 – Debt Provides a detailed breakdown of the company's debt structure, including maturities, interest rates, new facilities, and recent issuances/redemptions | Metric | May 31, 2025 (Millions) | November 30, 2024 (Millions) | | :----- | :---------------------- | :--------------------------- | | Total Debt | $27,967 | $28,213 | | Long-Term Debt | $25,862 | $25,936 | | Current Portion of Long-Term Debt | $1,392 | $1,538 | - New Revolving Facility: In June 2025, a $4.5 billion unsecured multi-currency revolving credit facility was entered, replacing the previous one and maturing in June 2030[37] - Debt Refinancing Activities in 2025: - Issued $1.0 billion of 5.75% senior unsecured notes due 2030 to redeem 10.50% notes due 2030 - Issued $2.0 billion of 6.13% senior unsecured notes due 2033 to redeem 10.38% senior priority notes due 2028 - Issued $1.0 billion of 5.88% senior unsecured notes due 2031 to redeem 7.63% senior unsecured notes due 2026[41][42][43] | Metric | 3 Months Ended May 31, 2025 (Millions) | 6 Months Ended May 31, 2025 (Millions) | | :----- | :------------------------------------- | :------------------------------------- | | Debt Extinguishment and Modification Costs | $4 | $255 | - Covenant Compliance: As of May 31, 2025, the company was in compliance with all applicable covenants under its debt agreements, including minimum interest coverage and liquidity[48][50] NOTE 4 – Contingencies and Commitments Details ongoing legal proceedings, regulatory inquiries, contingent obligations, including Helms-Burton Act lawsuit, COVID-19 class actions, and ship commitments - Helms-Burton Act Lawsuit: A $110 million judgment against Carnival Corporation was reversed, with the company believing the ultimate outcome will not have a material impact[54] - COVID-19 Class Actions: Courts in Australia and Italy found limited liability or rejected most claims, with the company believing the ultimate outcome will not have a material impact[54] | Year Ending November 30 | New Ship Growth Capital Commitments (Billions) | | :---------------------- | :--------------------------------------------- | | Remainder of 2025 | $0.9 | | 2026 | $0.5 | | 2027 | $1.6 | | 2028 | $1.4 | | 2029 | $1.8 | | Thereafter | $6.3 | NOTE 5 – Fair Value Measurements, Derivative Instruments and Hedging Activities and Financial Risks Discusses fair value measurements, derivative instruments for hedging, and strategies for managing fuel price, foreign currency, and interest rate risks | Metric | May 31, 2025 (Millions) | November 30, 2024 (Millions) | | :----- | :---------------------- | :--------------------------- | | Total Debt (Carrying Value) | $27,967 | $28,213 | | Total Debt (Fair Value) | $28,309 | $28,927 | - Derivative Instruments: As of May 31, 2025, interest rate swaps converted $1.0 billion of SOFR-based variable rate debt to fixed rate debt, designated as cash flow hedges[71] - Risk Management Strategies: - Fuel Price Risks: Managed through fleet optimization, energy efficiency, and new technologies/alternative fuels - Foreign Currency Exchange Rate Risks: Managed through operating/financing activities, netting exposures, and derivative instruments - Interest Rate Risks: Managed through debt portfolio management and investment strategies, including interest rate swaps[73][74][78] NOTE 6 – Segment Information Provides financial information by reportable segment, detailing revenues, operating expenses, and operating income for specified periods Operating Income by Segment (Millions) | Segment | 3 Months Ended May 31, 2025 | 3 Months Ended May 31, 2024 | 6 Months Ended May 31, 2025 | 6 Months Ended May 31, 2024 | | :------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | North America | $691 | $525 | $1,207 | $797 | | Europe | $368 | $168 | $508 | $288 | | Consolidated | $934 | $560 | $1,477 | $836 | Revenue by Geographic Area (Millions) | Geographic Area | 6 Months Ended May 31, 2025 | 6 Months Ended May 31, 2024 | | :-------------- | :-------------------------- | :-------------------------- | | North America | $7,243 | $6,663 | | Europe | $3,590 | $3,199 | | Australia | $735 | $781 | NOTE 7 – Earnings Per Share Presents the calculation of basic and diluted earnings per share, including net income, weighted-average shares, and dilutive effects | Metric | 3 Months Ended May 31, 2025 | 3 Months Ended May 31, 2024 | 6 Months Ended May 31, 2025 | 6 Months Ended May 31, 2024 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Basic EPS | $0.43 | $0.07 | $0.37 | $(0.10) | | Diluted EPS | $0.42 | $0.07 | $0.37 | $(0.10) | - Antidilutive Securities: For the six months ended May 31, 2025, 84 million Convertible Notes were excluded from diluted EPS computations as they were antidilutive[87] NOTE 8 – Supplemental Cash Flow Information Provides a reconciliation of cash and cash equivalents from balance sheets to total cash, cash equivalents, and restricted cash | Metric | May 31, 2025 (Millions) | November 30, 2024 (Millions) | | :----- | :---------------------- | :--------------------------- | | Cash and cash equivalents | $2,146 | $1,210 | | Restricted cash | $25 | $21 | | Total cash, cash equivalents and restricted cash | $2,171 | $1,231 | NOTE 9 – Property and Equipment Reports on ship sales completed in 2025, detailing passenger capacity reduction and continued operation under bareboat charter agreements - Ship Sales in 2025: The company completed sales of one North America segment ship (460 berths) and one Europe segment ship (2,700 berths), reducing passenger capacity[89] - Continued Operation: Sold North America segment ship will operate through May 2026, and Europe segment ship through September 2026, under bareboat charter agreements[89] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Provides management's perspective on financial condition and results, including forward-looking statements, accounting estimates, seasonality, trends, and detailed analysis of revenues and expenses Cautionary Note Concerning Factors That May Affect Future Results Highlights forward-looking statements and outlines significant risks and uncertainties, including geopolitical events, regulatory changes, climate change, cybersecurity, and substantial debt - Key Risk Factors: Include geopolitical uncertainty, pandemics, inflation, higher fuel prices and interest rates, regulatory changes, climate change, cybersecurity, and substantial debt[91] - Debt Amplification: Many identified risks are amplified by the substantial debt balance incurred during the pause of guest cruise operations[92] New Accounting Pronouncements Refers to Note 1 of the consolidated financial statements for discussion of new accounting pronouncements - Reference to Note 1: Additional discussion regarding new accounting pronouncements is in Note 1 - "General, Accounting Pronouncements" of the consolidated financial statements[95] Critical Accounting Estimates Directs readers to the Form 10-K for a discussion of critical accounting estimates, with no new changes in the interim report - Reference to Form 10-K: Critical accounting estimates are discussed in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Form 10-K[96] Seasonality Explains the seasonal nature of passenger ticket revenues, with highest demand in the third quarter and impact from planned maintenance - Seasonal Demand: Cruise demand is highest in the third quarter, leading to higher ticket prices, occupancy, and operating income[97] - Impact of Maintenance: Results are affected by ships taken out-of-service for planned maintenance during non-peak seasons[97] Known Trends and Uncertainties Identifies key trends and uncertainties, including fuel cost volatility and the increasing impact of the EU Emissions Trading System (ETS) - Fuel Cost Volatility: Volatility in fuel costs is reasonably likely to impact profitability in both the short and long-term[98] - EU Emissions Trading System (ETS): Subject to EU ETS since January 1, 2024, with a three-year phase-in; 2024 impact was $46 million (40% of emissions)[98] Statistical Information Provides key operational statistics for the three and six months ended May 31, 2025 and 2024, including PCDs, ALBDs, occupancy, and fuel data | Metric | 3 Months Ended May 31, 2025 | 3 Months Ended May 31, 2024 | 6 Months Ended May 31, 2025 | 6 Months Ended May 31, 2024 | | :------------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Passenger Cruise Days (PCDs) (in millions) | 25.3 | 24.3 | 49.6 | 47.8 | | Available Lower Berth Days (ALBDs) (in millions) | 24.2 | 23.5 | 47.8 | 46.5 | | Occupancy percentage | 104 % | 104 % | 104 % | 103 % | | Passengers carried (in millions) | 3.4 | 3.3 | 6.5 | 6.3 | | Fuel consumption in metric tons (in millions) | 0.7 | 0.7 | 1.4 | 1.5 | | Fuel cost per metric ton consumed | $614 | $684 | $628 | $685 | - Capacity Increase (3 months): ALBDs increased by 3.1%, with North America up 0.3% and Europe up 8.4%[102] - Capacity Increase (6 months): ALBDs increased by 2.8%, with North America up 2.9% and Europe up 2.6%[103] Three Months Ended May 31, 2025 Compared to Three Months Ended May 31, 2024 Analyzes financial performance for the three months ended May 31, 2025 vs 2024, covering revenues, operating expenses, and income Revenues Consolidated total revenues increased by $547 million (9.5%) to $6.3 billion, driven by higher passenger ticket and onboard revenues | Revenue Type | 3 Months Ended May 31, 2025 (Millions) | 3 Months Ended May 31, 2024 (Millions) | Change (Millions) | Change (%) | | :------------- | :------------------------------------- | :------------------------------------- | :---------------- | :--------- | | Passenger ticket | $4,104 | $3,754 | $351 | 9.3% | | Onboard and other | $2,224 | $2,027 | $197 | 9.7% | | Total Revenues | $6,328 | $5,781 | $547 | 9.5% | - Passenger ticket revenue increased by $169 million from higher ticket prices, $115 million from 3.1% capacity increase, and $51 million from favorable foreign currency translation[109] - Onboard and other revenue increased by $128 million from higher guest spending and $37 million from a 3.1% capacity increase[107] Operating Expenses Consolidated operating expenses increased by $89 million (2.3%) to $3.9 billion, driven by capacity, maintenance, and onboard costs, partially offset by ship sales and lower fuel prices | Expense Type | 3 Months Ended May 31, 2025 (Millions) | 3 Months Ended May 31, 2024 (Millions) | Change (Millions) | Change (%) | | :------------- | :------------------------------------- | :------------------------------------- | :---------------- | :--------- | | Cruise and tour operating expenses | $3,886 | $3,798 | $88 | 2.3% | | Selling and administrative | $816 | $789 | $27 | 3.4% | | Depreciation and amortization | $692 | $634 | $58 | 9.1% | | Total Operating Expenses | $5,394 | $5,221 | $173 | 3.3% | - Key increases in operating expenses included $101 million from capacity, $72 million from repair and maintenance, $31 million from onboard costs, and $31 million from unfavorable foreign currency translation[120] - These increases were partially offset by $103 million gains on ship sales, $40 million lower fuel prices, and $32 million lower fuel consumption per ALBD[120] Operating Income Consolidated operating income significantly increased by $374 million to $934 million, driven by positive revenue and expense trends across segments | Segment | 3 Months Ended May 31, 2025 (Millions) | 3 Months Ended May 31, 2024 (Millions) | Change (Millions) | | :------------ | :------------------------------------- | :------------------------------------- | :---------------- | | Consolidated | $934 | $560 | $374 | | North America | $691 | $525 | $166 | | Europe | $368 | $168 | $200 | Nonoperating Income (Expense) Interest expense, net of capitalized interest, decreased by $109 million due to lower debt and rates; debt extinguishment costs also decreased | Metric | 3 Months Ended May 31, 2025 (Millions) | 3 Months Ended May 31, 2024 (Millions) | Change (Millions) | | :---------------------------------- | :------------------------------------- | :------------------------------------- | :---------------- | | Interest expense, net of capitalized interest | $(341) | $(450) | $109 | | Debt extinguishment and modification costs | $(4) | $(33) | $29 | Six Months Ended May 31, 2025 Compared to Six Months Ended May 31, 2024 Analyzes financial performance for the six months ended May 31, 2025 vs 2024, covering revenues, operating expenses, and income Revenues Consolidated total revenues increased by $952 million (8.5%) to $12.1 billion, driven by higher passenger ticket and onboard revenues | Revenue Type | 6 Months Ended May 31, 2025 (Millions) | 6 Months Ended May 31, 2024 (Millions) | Change (Millions) | Change (%) | | :------------- | :------------------------------------- | :------------------------------------- | :---------------- | :--------- | | Passenger ticket | $7,936 | $7,370 | $566 | 7.7% | | Onboard and other | $4,202 | $3,817 | $385 | 10.1% | | Total Revenues | $12,139 | $11,187 | $952 | 8.5% | - Passenger ticket revenue increased by $320 million from higher ticket prices, $207 million from 2.8% capacity increase, and $68 million from 0.9% occupancy increase[129] - Onboard and other revenue increased by $252 million from higher guest spending, $103 million from 2.8% capacity increase, and $29 million from 0.9% occupancy increase[128][129] Operating Expenses Consolidated operating expenses increased by $150 million (2.0%) to $7.7 billion, driven by capacity, onboard costs, and maintenance, partially offset by ship sales and lower fuel prices | Expense Type | 6 Months Ended May 31, 2025 (Millions) | 6 Months Ended May 31, 2024 (Millions) | Change (Millions) | Change (%) | | :------------- | :------------------------------------- | :------------------------------------- | :---------------- | :--------- | | Cruise and tour operating expenses | $7,653 | $7,502 | $151 | 2.0% | | Selling and administrative | $1,663 | $1,603 | $60 | 3.7% | | Depreciation and amortization | $1,346 | $1,247 | $99 | 7.9% | | Total Operating Expenses | $10,662 | $10,352 | $310 | 3.0% | - Key increases in operating expenses included $206 million from capacity, $63 million from onboard costs, and $50 million from repair and maintenance[138] - These increases were partially offset by $103 million gains on ship sales, $68 million lower fuel prices, and $58 million lower fuel consumption per ALBD[138] Operating Income Consolidated operating income significantly increased by $641 million to $1.5 billion, reflecting strong revenue and expense trends across segments | Segment | 6 Months Ended May 31, 2025 (Millions) | 6 Months Ended May 31, 2024 (Millions) | Change (Millions) | | :------------ | :------------------------------------- | :------------------------------------- | :---------------- | | Consolidated | $1,477 | $836 | $641 | | North America | $1,207 | $797 | $410 | | Europe | $508 | $288 | $220 | Nonoperating Income (Expense) Interest expense, net of capitalized interest, decreased by $203 million; however, debt extinguishment and modification costs increased significantly | Metric | 6 Months Ended May 31, 2025 (Millions) | 6 Months Ended May 31, 2024 (Millions) | Change (Millions) | | :---------------------------------- | :------------------------------------- | :------------------------------------- | :---------------- | | Interest expense, net of capitalized interest | $(718) | $(921) | $203 | | Debt extinguishment and modification costs | $(255) | $(66) | $(189) | Liquidity, Financial Condition and Capital Resources Discusses the company's liquidity, working capital, and strategies for managing cash and debt, highlighting new revolving credit and export credit facilities Sources and Uses of Cash Details cash sources and uses for operating, investing, and financing activities, noting decreased operating and investing cash flow, and substantial debt transactions | Activity | 6 Months Ended May 31, 2025 (Millions) | 6 Months Ended May 31, 2024 (Millions) | | :------- | :------------------------------------- | :------------------------------------- | | Net cash provided by (used in) 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) | - Investing activities in 2025 were driven by $1.5 billion in capital expenditures and $312 million in proceeds from ship sales[154][155] - Financing activities in 2025 included $5.1 billion in long-term debt repayments and $4.1 billion in long-term debt issuances[155] Funding Sources Outlines the company's funding strategy, relying on liquidity and cash flows for capital expenditures, and managing credit risk - Liquidity: As of May 31, 2025, the company had $5.2 billion of liquidity, including $2.1 billion in cash and $3.0 billion available under the Revolving Facility[150] - Undrawn Export Credit Facilities: The company had $8.4 billion of undrawn export credit facilities to fund ship deliveries planned through 2033[150] | Year | Future Export Credit Facilities at May 31, 2025 (Billions) | | :--- | :------------------------------------------------------- | | 2025 | $0.8 | | 2026 | — | | 2027 | $1.3 | | 2028 | $1.3 | | 2029 | $1.7 | | Thereafter | $3.4 | Item 3. Quantitative and Qualitative Disclosures About Market Risk Provides disclosures on market risk exposure, particularly interest rate risks, confirming no material changes since the previous Form 10-K filing Interest Rate Risks Provides debt composition by interest rate type after swaps, indicating no material changes to market risk exposure since the 2024 Form 10-K | Debt Type | May 31, 2025 (%) | | :---------- | :--------------- | | Fixed rate | 58 % | | EUR fixed rate | 24 % | | Floating rate | 7 % | | EUR floating rate | 11 % | - No Material Changes: There have been no material changes to the company's exposure to market risks since its 2024 Form 10-K filing[158] Item 4. Controls and Procedures Addresses the effectiveness of disclosure controls and procedures and reports on changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures States that disclosure controls and procedures were evaluated and concluded to be effective as of May 31, 2025 - Effectiveness: The company's disclosure controls and procedures were evaluated and concluded to be effective as of May 31, 2025[161] Changes in Internal Control over Financial Reporting Reports no material changes in the company's internal control over financial reporting during the quarter ended May 31, 2025 - No Material Changes: There have been no material changes in internal control over financial reporting during the quarter ended May 31, 2025[162] PART II - OTHER INFORMATION Item 1. Legal Proceedings Incorporates legal proceedings disclosures from Note 4, including regulatory inquiries and SEC environmental disclosure requirements for sanctions exceeding $1 million - Reference to Note 4: Legal proceedings, including regulatory inquiries, are described in Note 4 – "Contingencies and Commitments" of the consolidated financial statements[165] - Environmental Disclosure: SEC rules require disclosure of environmental matters with potential monetary sanctions exceeding $1 million[165] Item 1A. Risk Factors Refers to the Form 10-K for a comprehensive discussion of risk factors, confirming no material changes since the filing - Reference to Form 10-K: Risk factors affecting business and financial results are discussed in "Item 1A. Risk Factors" in the Form 10-K[166] - No Material Changes: There have been no material changes to these risk factors since the Form 10-K filing[166] Item 5. Other Information Reports no director or Section 16 officer adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - Trading Plans: No director or Section 16 officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended May 31, 2025[167] Item 6. Exhibits Provides an index of exhibits filed with Form 10-Q, including articles, material contracts, various certifications, and the Interactive Data File - Exhibits List: Includes Articles of Incorporation, By-Laws, Indenture for 5.875% Senior Unsecured Notes due 2031, stock award agreements, and various executive officer certifications[169] - Interactive Data File: Consolidated financial statements for the quarter ended May 31, 2025, are filed in Inline XBRL format as Exhibit 101[169][170] SIGNATURES Signatures Contains signatures of authorized representatives, including the Chief Executive Officer and Chief Financial Officer, certifying the report filing - Signatories: The report is duly signed by Josh Weinstein (Chief Executive Officer) and David Bernstein (Chief Financial Officer and Chief Accounting Officer) for both Carnival Corporation and Carnival plc[173][174]