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Carnival's Q3 net loss higher than expected but EBITDA turns positive

Carnival Corp. & plc's third quarter loss was greater expected on lower than projected revenues, but EBITDA turned positive for the first time since the restart.

Adjusted net loss was $688m, or a loss of 58 cents per share, and US GAAP net loss was $770m, or 65 cents per share. Wall Street had forecast a 13-cent per share loss.

Revenue increased by nearly 80%, to $4.3b, compared to Q2 2022. That was lower than the $5.13b consensus estimate.

For the cruise segments, revenue per passenger cruise day (PCD) decreased compared to a strong 2019. Onboard and other revenue increased significantly compared to a strong 2019.

PCDs for quarter were 17.7m, a 55% increase from Q2.

Occupancy up 15 points

Occupancy increased 15 points from Q2, to 84%. 

Since the company relaxed protocols in mid-August, booking volumes for all future sailings have been considerably higher than strong 2019 levels.

'During our third quarter our business continued its positive trajectory, achieving over $300 million of adjusted EBITDA and reaching nearly 90% occupancy on our August sailings,' CEO Josh Weinstein said, 'We are continuing to close the gap to 2019 as we progress through the year, building occupancy on higher capacity and lower unit costs.'

Weinstein continued, 'Since announcing the relaxation of our protocols last month, we have seen a meaningful improvement in booking volumes and are now running considerably ahead of strong 2019 levels. We expect to further capitalize on this momentum with renewed efforts to generate demand.'

Available lower berth days were 21m, or 92% of total fleet capacity, increasing from 74% in Q2.

Total customer deposits were $4.8b as of Aug. 31, approaching the $4.9b of Aug. 31, 2019, a record Q3. New bookings during the recent quarter primarily offset the historical Q3 seasonal decline in customer deposits — $0.3b decline compared to $1.1b decline for the same 2019 period.

Weinstein noted, 'With our return to guest cruise operations essentially complete, we are now relentlessly focused on driving top line growth and returning to strong profitability. We believe the strategic changes we have already made to our fleet resulting in a younger and more efficient fleet, coupled with our recent portfolio optimization efforts including Costa by Carnival, will provide strong tailwinds along our path to profitability.'

As of today, approximately 95% of the company's capacity is in service. Carnival expects eight of its nine brands will have their entire fleet carrying passengers by the end of Q4.

Continued evaluation of Costa fleet

Given Costa Cruises' significant presence in Asia, particularly China, which remains closed to cruising, the brand continues to evaluate deployment options and fleet optimization alternatives beyond the previously announced transfers of Costa Luminosa to Carnival Cruise Line as well as Costa Venezia and Costa Firenze to the Costa by Carnival concept.

The company saw a continuation of its 2022 sequential improvement in adjusted cruise costs excluding fuel per ALBD in constant currency and expects continued improvement in Q4 with a low double-digit increase compared to Q4 2019, partly due to higher advertising expense to drive 2023 revenue.

While year-to-date adjusted cruise costs excluding fuel per ALBD during 2022 benefited from the sale of smaller, less efficient ships and the delivery of larger, more efficient ships, this benefit is offset by a portion of its fleet paused for part of the year, restart-related expenses, an increase in the number of dry dock days, the cost of maintaining enhanced health and safety protocols, inflation and supply chain disruptions. The company anticipates many of these costs and expenses will end in 2022.

Q4 net loss projected

Carnival expects a net loss and break-even to slightly negative adjusted EBITDA for Q4, ending Nov. 30. Having achieved over $300m of adjusted EBITDA in Q3, the company anticipates positive adjusted EBITDA for the second half of 2022 despite the seasonality of its business and higher advertising spending to drive yields in 2023. Additionally, on a year-over-year basis, the company expects improvement in adjusted EBITDA and occupancy, with occupancy returning to historical levels during 2023.


Booking volumes for all future sailings during Q3 saw a continuation of the accelerated booking volumes from Q2, closing the gap to strong 2019 levels. Since protocols were eased in mid-August, booking volumes for all future sailings are 'considerably higher than strong 2019 levels.' 

Cumulative advance bookings for Q4 are below the historical range and at lower prices, primarily due to future cruise credits, compared to 2019 sailings.

Cumulative advance bookings for full year 2023 are 'slightly above the historical average and at considerably higher prices' compared to 2019 sailings, normalized for FCCs.

$7.4b liquidity

The quarter ended with $7.4b of liquidity, including cash and borrowings available under the company's revolving credit facility.