Carnival Cruise 2nd Qtr Erngs
Carnival Cruise (CCL) reported their earnings (Losses) yesterday. I’ve posted an excerpt of them below. I figure those interested in the full details will obtain them but that my abbreviated version will suffice for most of us.
I hold some [CCL](https://www.valueforum.com/ratings/rating.mpl?symbol=CCL) but have an extraordinary large position in Norwegian Cruise Lines (NCLH) which is posted in the Shared Portfolio section of VF. IMO the cruise lines current Qtr will be their bottoming & future reports will establish a positive earnings trends. JMO. Institutions hold 53% of CCL & approx 5.5% is Shorts.
News Release
MIAMI (June 24, 2021) – Carnival Corporation & plc (NYSE/LSE: [CCL](https://www.valueforum.com/ratings/rating.mpl?symbol=CCL); NYSE: CUK) provides second quarter 2021 business update.
GAAP net loss of $(2.1) billion and adjusted net loss of $(2.0) billion for the second quarter of 2021.
Second quarter 2021 ended with $9.3 billion of cash and short-term investments, which the company believes is sufficient liquidity to return to full cruise Customer deposits increased in the second quarter of 2021 compared to the previous Cash burn rate in the first half of 2021 was better than forecasted primarily due to the timing of proceeds from ship sales and working capital 42 ships from eight of the company’s nine brands either have resumed or are announced to resume guest cruise operations by November 30, 2021, which is over 50% of the company’s capacity, with more announcements expected in the coming Booking volumes for all future cruises during the second quarter of 2021 were 45% higher than booking volumes during the first quarter of 2021.
Cumulative advanced bookings for full year 2022 are ahead of a very strong 2019, despite minimal advertising or Building on a legacy of ESG performance, the company announced its 2030 sustainability goals and 2050 sustainability aspirations, focusing strategically and holistically on enhancing its sustainable business model while reinforcing its commitment to and investment in sustainability The company repriced its first-priority senior secured term loan facility, reducing its future annual interest expense by over $120 million per year and has approval in principle from the relevant export credit agencies to defer approximately $1.0 billion of principal payments, increasing its near term The company expects these transactions to close during the third quarter of 2021 and continues to focus on pursuing additional refinancing opportunities to reduce interest rates and extend maturities.
Resumption of Guest Operations
Carnival Corporation & plc President and Chief Executive Officer Arnold Donald noted, “We are working aggressively on our path to return our full fleet to operations by next spring. So far, we have announced that 42 ships, representing over half of our capacity, have been scheduled to return to serving guests by this fiscal year end. We are currently evaluating various deployment options with a focus on maximizing cash flow, while delivering a great guest experience and serving the best interests of public health.” More return to service announcements will be coming in the weeks ahead. Donald added. “We can’t wait to welcome all our valued guests and crew members back on board!”
The company is uniquely positioned for its phased resumption in cruise travel given its multiple brands which are being restarted independently and tailored to the environment of their respective source market. Eight of the company’s nine brands either have resumed or have announced they plan to resume guest cruise operations by the company’s fiscal year end, November 30, 2021. 27 ships, or approximately 35% of capacity, have resumed or are announced to resume by the end of the third quarter of 2021 and an additional 15 ships, or nearly 20% of capacity, are announced to resume by the end of the fourth quarter of 2021.
Together these 42 ships represent over 50% of capacity. More announcements are expected in the coming weeks which will include additional ship restarts for fiscal year 2021. Consistent with the company’s planned phased resumption of guest cruise operations, it expects to have its full fleet back in operation in the spring of 2022. For more detailed information on the resumption of guest cruise operations by brand as well as the specific ships and timing of their restart, see the company press release issued yesterday, June 23, 2021.
Update on Bookings
Donald added, “Despite our minimal advertising spend, we continue to experience an acceleration in booking trends globally, including capturing significant latent demand for our new sailings this summer. This strong demand affirms confidence in our future. In addition, customer deposits grew this past quarter, a significant milestone on our path to resumption.”
Donald continued, “With the aggressive actions we have already taken to optimize our portfolio and reduce capacity, we believe we are well positioned to capitalize on pent up demand and to emerge a leaner more efficient company, reinforcing our global industry leading position.”
Booking volumes for all future cruises during the second quarter of 2021 were 45% higher than booking volumes during the first quarter of 2021. Cumulative advanced bookings for full year 2022 are ahead of a very strong 2019 as of May 31, 2021. The company highlights that this level of bookings was achieved with minimal advertising and marketing. (Due to the pause in guest cruise operations, the company’s current booking trends will be compared to booking trends for 2019 sailings.) Total customer deposits as of May 31, 2021 and February 28, 2021 were $2.5 billion and $2.2 billion, respectively. During the quarter, customer deposits on new bookings exceeded the impact of refunds provided.
Liquidity and Refinancing
Carnival Corporation & plc Chief Financial Officer David Bernstein noted, “We ended the second quarter with $9.3 billion of cash and short-term investments. We believe we have sufficient liquidity to get us back to full operations and continue to be focused on pursuing refinancing opportunities to reduce interest rates and extend maturities. To date, through our refinancing efforts, we have reduced our future annual interest expense by over $120 million per year and expect to increase our near-term liquidity by $1.0 billion.” Donald added, “Once we return to full operations, our cash flow will be the primary driver of the company’s return to investment grade credit over time, creating greater shareholder value.”
In pursuit of the company’s refinancing efforts, during the second quarter of 2021:
The company entered into an agreement to reprice its first-priority senior secured term loan facility, reducing the overall interest rate and future annual interest expense by over $120 million per year.
The relevant export credit agencies have provided approval in principle to defer approximately $1.0 billion of principal payments that would otherwise have been due over a one year period with repayments to be made over the following five
The company’s monthly average cash burn rate for the first half of 2021 was $500 million, which was better than forecasted primarily due to the timing of proceeds from ship sales and working capital changes. This monthly average cash burn rate includes revenues earned on voyages, ongoing ship operating and administrative expenses, restart spend, working capital changes (excluding changes in customer deposits), interest expense and capital expenditures (net of export credit facilities), and excludes scheduled debt maturities as well as other cash collateral to be provided. As the company continues to resume guest cruise operations, it expects to incur incremental spend relating to bringing ships out of pause status, returning crew members to its ships and implementing enhanced health and safety protocols.
The phased resumption of the company’s guest cruise operations continues to have a material impact on all aspects of its business, including the company’s liquidity, financial position and results of operations. The company expects a net loss on both a U.S. GAAP and adjusted basis for the third quarter 2021 and full year ending November 30, 2021.
Conference Call
The company has scheduled a conference call with analysts at 10:00 a.m. EDT (3:00 p.m. BST) today to discuss its business update. This call can be listened to live, and additional information can be obtained, via Carnival Corporation & plc’s website at www.carnivalcorp.com and www.carnivalplc.com.
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