Carnival plc(CUK) - 2023 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements The company reported a net loss of $693 million, a significant improvement from the prior year, driven by substantial revenue growth as cruise operations resumed | Metric | Three Months Ended Feb 28, 2023 (in millions) | Three Months Ended Feb 28, 2022 (in millions) | | :--- | :--- | :--- | | Total Revenues | $4,432 | $1,623 | | Passenger ticket | $2,870 | $873 | | Onboard and other | $1,563 | $750 | | Operating Loss | ($172) | ($1,491) | | Net Loss | ($693) | ($1,891) | | Diluted EPS | ($0.55) | ($1.66) | | Metric | Feb 28, 2023 (in millions) | Nov 30, 2022 (in millions) | | :--- | :--- | :--- | | Cash and cash equivalents | $5,455 | $4,029 | | Total Assets | $51,985 | $51,703 | | Customer deposits | $5,495 | $4,874 | | Long-Term Debt | $32,672 | $31,953 | | Total Shareholders' Equity | $6,170 | $7,065 | | Metric | Three Months Ended Feb 28, 2023 (in millions) | Three Months Ended Feb 28, 2022 (in millions) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $388 | ($1,212) | | Net cash used in investing activities | ($1,044) | ($3,032) | | Net cash provided by financing activities | $111 | $1,728 | Note 1: General The company has largely completed its return to guest cruise operations and maintains $8.1 billion in liquidity, deemed sufficient for the next twelve months despite market challenges - As of February 28, 2023, the company's return to guest cruise operations was essentially complete[25] - The company had $8.1 billion of liquidity at February 28, 2023, including cash and available borrowings under its revolving credit facility[26] - Management's liquidity forecast assumes continued revenue and occupancy growth, with occupancy expected to return to historical levels in the summer of 2023[23][28] Note 3: Debt Total debt increased slightly to $36.0 billion, with a new $2.1 billion revolving facility established and all debt covenants in compliance, including waivers through May 2024 Debt Composition | Category | Feb 28, 2023 (in millions) | Nov 30, 2022 (in millions) | | :--- | :--- | :--- | | Total Debt | $35,963 | $35,615 | | Less: unamortized costs | ($828) | ($1,069) | | Total Debt, net | $35,135 | $34,546 | - In February 2023, the company entered into a new $2.1 billion multi-currency revolving facility, which will become available in August 2024 to replace the existing facility[46] - The company obtained waivers for its Interest Coverage Covenant through the May 31, 2024 testing date and was in compliance with all applicable covenants at February 28, 2023[54][55] Debt Maturity Schedule (as of Feb 28, 2023) | Year | Principal Payments (in millions) | | :--- | :--- | | Remainder of 2023 | $1,779 | | 2024 | $2,734 | | 2025 | $4,488 | | 2026 | $4,611 | | 2027 | $5,742 | | Thereafter | $16,611 | | Total | $35,963 | Note 4: Contingencies and Commitments The company faces ongoing legal proceedings, including a $110 million judgment under appeal and a $21 million award in its favor, alongside $4.3 billion in capital commitments for new ships - In the Havana Docks Corporation lawsuit, a court entered a judgment against Carnival for $110 million plus fees; Carnival has filed a notice of appeal[60] - In litigation with former vendor DeCurtis LLC, a jury found in Carnival's favor, awarding $21 million in damages for breach of contract and patent infringement[61] - The company has future capital commitments for new ships totaling $4.26 billion, with payments scheduled through 2025[71] Note 6: Segment Information The NAA segment achieved operating income of $86 million, while the Europe segment significantly narrowed its operating loss, both driven by the continued resumption of operations Segment Performance (Three Months Ended Feb 28) | Segment (in millions) | Revenues 2023 | Operating Income (Loss) 2023 | Revenues 2022 | Operating Income (Loss) 2022 | | :--- | :--- | :--- | :--- | :--- | | NAA | $3,078 | $86 | $1,126 | ($840) | | Europe | $1,294 | ($166) | $457 | ($598) | | Cruise Support | $51 | ($69) | $33 | ($34) | | Tour and Other | $9 | ($21) | $8 | ($20) | - The company has renamed its former EA (Europe & Asia) segment to Europe, noting that China has not reopened to international cruise travel and operations in Asia have been significantly reduced[96] Management's Discussion and Analysis of Financial Condition and Results of Operations Improved financial results are attributed to the ongoing resumption of guest cruise operations, with occupancy reaching 91% and liquidity at $8.1 billion, despite challenges from debt, inflation, and higher costs Key Operating Statistics (Q1 2023 vs Q1 2022) | Metric | Three Months Ended Feb 28, 2023 | Three Months Ended Feb 28, 2022 | | :--- | :--- | :--- | | Occupancy percentage | 91% | 54% | | ALBDs (in millions) | 22.1 | 13.3 | | Passengers carried (in millions) | 2.7 | 1.0 | | Fuel cost per metric ton | $730 | $648 | - As of February 28, 2023, 96% of the company's capacity was serving guests, compared to 71% as of February 28, 2022[124] - The company's liquidity stood at $8.1 billion as of February 28, 2023, comprising cash, cash equivalents, and available borrowings under its Revolving Facility[131] - The company operates with a substantial working capital deficit ($3.9 billion at quarter-end), primarily because passenger ticket receipts are collected in advance of sailings[132] Quantitative and Qualitative Disclosures About Market Risk The company manages market risks from interest rates, fuel prices, and foreign currency through its debt portfolio and derivatives, with 59% of debt fixed in USD Debt Composition by Rate Type (as of Feb 28, 2023) | Rate Type | Percentage of Total Debt | | :--- | :--- | | Fixed rate (USD) | 59% | | EUR fixed rate | 16% | | Floating rate (USD) | 9% | | EUR floating rate | 15% | | GBP floating rate | 1% | Controls and Procedures Management concluded that disclosure controls and procedures were effective as of February 28, 2023, with no material changes to internal control over financial reporting - The President, CEO, and CFO concluded that the company's disclosure controls and procedures were effective as of February 28, 2023[142] - No changes occurred during the quarter that have materially affected or are reasonably likely to materially affect the company's internal control over financial reporting[143] PART II - OTHER INFORMATION Legal Proceedings This section details legal proceedings, including an environmental matter involving an inadvertent food waste discharge by the Coral Princess, with a $1.9 million undertaking provided - The company disclosed an inadvertent discharge of approximately six cubic meters of comminuted food waste by the Coral Princess in the Great Barrier Reef Marine Park in June 2022[147] - A letter of undertaking for approximately $1.9 million, representing the estimated maximum penalty, has been provided for the Coral Princess incident[147] Risk Factors This section refers to the comprehensive risk factors outlined in the company's Annual Report on Form 10-K, which could materially impact business and financial results - The report states that the risk factors discussed in the company's Form 10-K should be carefully considered as they could materially impact the business[148] Unregistered Sales of Equity Securities and Use of Proceeds No sales or repurchases occurred under the company's Stock Swap Program during the three months ended February 28, 2023 - There were no sales of Carnival Corporation common stock or repurchases of Carnival plc ordinary shares under the Stock Swap Program during the three months ended February 28, 2023[151] Exhibits This section lists exhibits filed with the Form 10-Q, including the new Facilities Agreement for the revolving credit facility and standard CEO/CFO certifications - A key exhibit filed is the Facilities Agreement, dated February 28, 2023, for the new multi-currency revolving facility for Carnival Holdings (Bermuda) II Limited[153] Signatures