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Carnival PLC - Carnival 4Q Preliminary Financial Info

Carnival Corporation & plc Provides Preliminary Financial Information For The Fourth Quarter

, /PRNewswire/ -- Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK) provides preliminary financial information for the fourth quarter ended .MIAMIJan. 11, 2021November 30, 2020

Carnival Corporation & plc President and Chief Executive Officer noted, "2020 has proven to be a true testament to the resilience of our company. We took aggressive actions to implement and optimize a complete pause in our guest cruise operations across all brands globally, and developed protocols to begin our staggered resumption, first in for our Costa brand, then followed by for our AIDA brand. We are now working diligently towards resuming operations in , , the and the over the course of 2021."Arnold DonaldItalyGermanyAsiaAustraliaUKU.S.

Donald added, "With the aggressive actions we have taken, managing the balance sheet and reducing capacity, we are well positioned to capitalize on pent up demand and to emerge a leaner, more efficient company, reinforcing our industry leading position." 

Resumption of Guest Operations

Costa Cruises ("Costa") and AIDA Cruises ("AIDA") have resumed limited guest cruise operations and other brands and ships are expected to return to service over time to provide guests with unmatched joyful vacations in a manner consistent with the company's highest priorities, which are compliance, environmental protection and the health, safety and well-being of its guests, crew, shoreside employees and the people in the communities its ships visit. The initial cruises will continue to take place with adjusted passenger capacity and enhanced health protocols developed with government and health authorities, and guidance from our roster of medical and scientific experts. Many of the company's brands source the majority of their guests from the geographical region in which they operate. In the current environment, the company believes this will benefit it in resuming guest cruise operations.

Health and Safety Protocols

The company has been working with a number of world-leading public health, epidemiological and policy experts to support its ongoing efforts with enhanced protocols and procedures to help protect against and mitigate the impact of COVID-19 during cruise vacations. These advisors will continue to provide guidance based on the latest scientific evidence and best practices for protection and mitigation.

Working with governments, national health authorities and medical experts, Costa and AIDA have a comprehensive set of health and hygiene protocols that has helped facilitate a safe and healthy return to cruise vacations. These enhanced protocols are modeled after shoreside health and mitigation guidelines as provided by each brand's respective country, and approved by all relevant regulatory authorities of the flag state, . Protocols will be updated based on evolving scientific and medical knowledge related to mitigation strategies. Costa is the first cruise company to earn the Biosafety Trust Certification from Registro Italiano Navale ("RINA"). The certification process examined all aspects of life onboard and ashore and assessed the compliance of the system with procedures aimed at the prevention and control of infections.Italy

The company is also working directly with the Centers for Disease Control and Prevention ("CDC") on the development of protocols necessary to resume cruising from . The company, in conjunction with its advisors, is currently evaluating the requirements set forth in the CDC's Framework for Conditional Sailing Order effective as of . The framework consists of several initial requirements that cruise ship operators will need to follow prior to resuming guest operations. Further, the framework is subject to additional technical instructions and orders from the CDC and may change based on public health considerations. While the framework represents an important step in our return to service, many uncertainties remain as to the specifics, timing, and cost of implementing the requirements. The company continues to work closely with governments and health authorities in other parts of the world to ensure that its health and safety protocols will also comply with the requirements of each location.the United StatesOctober 30, 2020

Optimizing the Future Fleet

The company expects future capacity to be moderated by the phased re-entry of its ships, the removal of capacity from its fleet and delays in new ship deliveries. Since the pause in guest operations, the company has accelerated the removal of ships in fiscal 2020 which were previously expected to be sold over the ensuing years. The company now expects to dispose of 19 ships, 15 of which have already left the fleet. In total, the 19 ships represent approximately 13 percent of pre-pause capacity and only three percent of operating income in 2019. The sale of less efficient ships will result in future operating expense efficiencies of approximately two percent per available lower berth day ("ALBD") and a reduction in fuel consumption of approximately one percent per ALBD. The company recently took delivery of two ships and expects only one more ship to be delivered in fiscal 2021 compared to five ships that were originally scheduled for delivery in fiscal 2021.

Based on the actions taken to date and the scheduled newbuild deliveries through 2022, the company's fleet will be more efficient with a roughly 14 percent larger average berth size per ship and an average age of 12 years in 2022 versus 13 years, in each case as compared to 2019.

 Update on Bookings

Carnival Corporation & plc President and Chief Executive Officer noted, "The booking trends that we have consistently experienced throughout this period affirm the strong fundamental demand for our brands which will facilitate our staggered resumption and support the long-term growth of our company."Arnold Donald

At , cumulative advanced bookings for the second half of 2021 are within the historical range. Additionally, the cumulative advanced bookings for the first half of 2022 are ahead of 2019. (Due to the pause in guest cruise operations in 2020, the company's future booking trends will be compared to 2019.) The company believes the continued build in cumulative advanced bookings for this twelve month period ending demonstrates the long-term demand for cruising. The company highlights this level of bookings was achieved with minimal advertising and marketing.December 20, 2020May 2022

The company is providing flexibility to guests with bookings on sailings cancelled by allowing guests to receive enhanced future cruise credits ("FCCs") or elect to receive refunds in cash. Enhanced FCCs increase the value of the guest's original booking or provide incremental onboard credits. As of , approximately 45 percent of guests affected by the company's schedule changes have received enhanced FCCs and approximately 55 percent have requested refunds. November 30, 2020

Total customer deposits balance at , was , the majority of which are FCCs, compared to the total customer deposits balance of at . The decline in customer deposits is less than previous expectations. As of , the current portion of customer deposits was .9 billion with minimal bookings relating to first quarter of 2021 sailings. Approximately 60 percent of bookings taken during the quarter ended November 30, 2020 for fiscal year 2021 were new bookings as opposed to FCCs re-bookings, despite minimal advertising or marketing.November 30, 2020August 31, 2020November 30, 2020$2.2 billion$2.4 billion$1

 Increasing Liquidity

Carnival Corporation & plc Chief Financial Officer noted, "We ended the year with in cash and have the liquidity in place to sustain ourselves throughout 2021, even in a zero-revenue environment. While we raised capital mainly through debt this year, in the last few months we opportunistically strengthened our capital structure by raising through at-the-market equity offering programs and by the early conversion of of convertible debt. As we return to full operations, our cash flow will be the primary driver to return to investment grade credit over time, creating greater shareholder value."David Bernstein$9.5 billion$2.5 billion$1.5 billion

Due to the pause in guest operations, the company has taken significant actions to preserve cash and secure additional financing to increase its liquidity. Since March, the company has raised through a series of transactions, including the following transactions since :$19 billionAugust 31, 2020

As of , the company has a total of .5 billion of cash and cash equivalents. During fiscal 2021, the company expects to enter into financial transactions to optimize its capital structure which may include opportunistically enhancing liquidity.November 30, 2020$9

Currently, the company is unable to predict when the entire fleet will return to normal operations, and as a result, unable to provide an earnings forecast. The pause in guest operations continues to have a material negative impact on all aspects of the company's business, including the company's liquidity, financial position and results of operations. The company expects a net loss on both a GAAP and adjusted basis for the first quarter and full year ending .U.S.November 30, 2021

The company's monthly average cash burn rate for the fourth quarter 2020 was , which was slightly better than expected due to the timing of capital expenditures. The company expects the monthly average cash burn rate for the first quarter 2021 to be approximately . This rate includes ongoing ship operating and administrative expenses, working capital changes (excluding changes in customer deposits), interest expense and capital expenditures (net of unfunded export credit facilities) and also excludes scheduled debt maturities as well as other cash collateral to be provided (which may increase in the future). The company continues to explore opportunities to reduce its monthly cash burn rate.$500 million$600 million

As of , the company's outstanding debt maturities are as follows:November 30, 2020

Other Information

The company is actively addressing an IT security incident affecting two of its brands. Based on preliminary assessment and on the information currently known, the company does not believe the incident will have a material impact on its business, operations or financial results.

  The company has scheduled a conference call with analysts at () today to provide a business update. This call can be listened to live, and additional information can be obtained, via Carnival Corporation & plc's website at and .  Conference Call
10:00 a.m. EDT3:00 p.m. GMTwww.carnivalcorp.comwww.carnivalplc.com

Carnival Corporation & plc is one of the world's largest leisure travel companies with a portfolio of nine of the world's leading cruise lines. With operations in North America, Australia, Europe and , its portfolio features – Carnival Cruise Line, Princess Cruises, Holland America Line, P&O Cruises (), Seabourn, Costa Cruises, AIDA Cruises, P&O Cruises () and Cunard.AsiaAustraliaUK

Additional information can be found on , , , , , , , , , and .www.carnivalcorp.comwww.carnivalsustainability.comwww.carnival.comwww.princess.comwww.hollandamerica.comwww.pocruises.com.auwww.seabourn.comwww.costacruise.comwww.aida.dewww.cunard.comwww.pocruises.com

Cautionary Note Concerning Factors That May Affect Future Results

Some of the statements, estimates or projections contained in this document are "forward-looking statements" that involve risks, uncertainties and assumptions with respect to us, including some statements concerning future results, operations, outlooks, plans, goals, reputation, cash flows, liquidity and other events which have not yet occurred. These statements are intended to qualify for the safe harbors from liability provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts are statements that could be deemed forward-looking. These statements are based on current expectations, estimates, forecasts and projections about our business and the industry in which we operate and the beliefs and assumptions of our management. We have tried, whenever possible, to identify these statements by using words like "will," "may," "could," "should," "would," "believe," "depends," "expect," "goal," "anticipate," "forecast," "project," "future," "intend," "plan," "estimate," "target," "indicate," "outlook," and similar expressions of future intent or the negative of such terms.

Forward-looking statements include those statements that relate to our outlook and financial position including, but not limited to, statements regarding: 

Because forward-looking statements involve risks and uncertainties, there are many factors that could cause our actual results, performance or achievements to differ materially from those expressed or implied by our forward looking statements. This note contains important cautionary statements of the known factors that we consider could materially affect the accuracy of our forward-looking statements and adversely affect our business, results of operations and financial position. Additionally, many of these risks and uncertainties are currently amplified by and will continue to be amplified by, or in the future may be amplified by, the COVID-19 outbreak. It is not possible to predict or identify all such risks. There may be additional risks that we consider immaterial or which are unknown. These factors include, but are not limited to, the following:

The ordering of the risk factors set forth above is not intended to reflect our indication of priority or likelihood.

Forward-looking statements should not be relied upon as a prediction of actual results. Subject to any continuing obligations under applicable law or any relevant stock exchange rules, we expressly disclaim any obligation to disseminate, after the date of this document, any updates or revisions to any such forward-looking statements to reflect any change in expectations or events, conditions or circumstances on which any such statements are based.

 Explanations of Non-GAAP Financial Measures

Non-GAAP Financial Measures

We use adjusted net income (loss) as a non-GAAP financial measure of our cruise segments' and the company's financial performance. This non-GAAP financial measure is provided along with GAAP net income (loss).   U.S.

We believe that gains and losses on ship sales, impairment charges, restructuring costs and other gains and losses are not part of our core operating business and are not an indication of our future earnings performance. Therefore, we believe it is more meaningful for these items to be excluded from our net income (loss), and accordingly, we present adjusted net income (loss) excluding these items.

The presentation of our non-GAAP financial information is not intended to be considered in isolation from, as substitute for, or superior to the financial information prepared in accordance with GAAP. It is possible that our non-GAAP financial measures may not be exactly comparable to the like-kind information presented by other companies, which is a potential risk associated with using these measures to compare us to other companies.U.S.

CONTACT: MEDIA, , +1 305 406 7862; INVESTOR RELATIONS, , +1 305 406 4832Roger FrizzellBeth Roberts

--   GAAP net loss of  and adjusted net loss of 
        for the fourth quarter of 2020.
    --  Fourth quarter 2020 ended with  of cash and cash
        equivalents.
    --  Cash burn rate in the fourth quarter 2020 was slightly better than
        expected due to the timing of capital expenditures.
    --  The company has accelerated the removal of 19 less efficient ships, 15
        of which have already left the fleet.
    --  Cumulative advanced bookings for the first half of 2022 are ahead of
        2019, despite minimal advertising or marketing.U.S.$2.2 billion$1.9 billion$9.5 billion
--  Borrowed  under export credit facilities in September,
        October and .
    --  Completed  "at-the-market" equity offering program ("ATM")
        that was announced in .
    --  Completed  ATM that was announced in .
    --  Retired  of its convertible notes through the issuance of
        common stock in .
    --  Issued  of senior unsecured notes in .$3.0 billion$1.0 billion$1.5 billion$590 million$2.0 billionDecember 2020September 2020November 2020November 2020November 2020
(in billions)          1Q 2021  2Q 2021  3Q 2021             4Q 2021

Principal payments on              
outstanding debt (a)

Principal payments on  $   —    $   —        $   —
expected export
credits

                                   

(a)                   Excluding the revolving facility. As of November 30,
                      2020, borrowings under the revolving facility were 
                      billion and mature through March 2021. We may re-borrow
                      such amounts subject to satisfaction of the conditions in
                      the revolving facility agreement.$ 0.5$ 0.4$ 0.6$ 0.3$ 0.1$ 0.5$ 0.4$ 0.7$ 0.3$3.0
• Pricing                         • Estimates of ship depreciable lives
                                  and residual values

• Booking levels                  • Goodwill, ship and trademark fair
                                  values

• Occupancy                       • Liquidity and credit ratings

• Interest, tax and fuel expenses • Adjusted earnings per share

• Currency exchange rates         • Impact of the COVID-19 coronavirus
                                  global pandemic on

                                   our financial condition and
                                   results of operations
--  COVID-19 has had, and is expected to continue to have, a significant
        impact on our financial condition and operations, which impacts our
        ability to obtain acceptable financing to fund resulting reductions in
        cash from operations. The current, and uncertain future, impact of the
        COVID-19 outbreak, including its effect on the ability or desire of
        people to travel (including on cruises), is expected to continue to
        impact our results, operations, outlooks, plans, goals, reputation,
        litigation, cash flows, liquidity, and stock price.
    --  As a result of the COVID-19 outbreak, we may be out of compliance with a
        maintenance covenant in certain of our debt facilities, for which we
        have amendments for the period through  with the next
        testing date of .
    --  World events impacting the ability or desire of people to travel have
        and may continue to lead to a decline in demand for cruises.
    --  Incidents concerning our ships, guests or the cruise vacation industry
        as well as adverse weather conditions and other natural disasters have
        in the past and may, in the future, impact the satisfaction of our
        guests and crew and lead to reputational damage.
    --  Changes in and non-compliance with laws and regulations under which we
        operate, such as those relating to health, environment, safety and
        security, data privacy and protection, anti-corruption, economic
        sanctions, trade protection and tax have in the past and may, in the
        future, lead to litigation, enforcement actions, fines, penalties, and
        reputational damage.
    --  Breaches in data security and lapses in data privacy as well as
        disruptions and other damages to our principal offices, information
        technology operations and system networks, including the recent
        ransomware incidents, and failure to keep pace with developments in
        technology may adversely impact our business operations, the
        satisfaction of our guests and crew and may lead to reputational damage.
    --  Ability to recruit, develop and retain qualified shipboard personnel who
        live away from home for extended periods of time may adversely impact
        our business operations, guest services and satisfaction.
    --  Increases in fuel prices, changes in the types of fuel consumed and
        availability of fuel supply may adversely impact our scheduled
        itineraries and costs.
    --  Fluctuations in foreign currency exchange rates may adversely impact our
        financial results.
    --  Overcapacity and competition in the cruise and land-based vacation
        industry may lead to a decline in our cruise sales, pricing and
        destination options.
    --  Inability to implement our shipbuilding programs and ship repairs,
        maintenance and refurbishments may adversely impact our business
        operations and the satisfaction of our guests.November 30, 2021February 28, 2022
CARNIVAL CORPORATION & PLC
                  NON-GAAP FINANCIAL MEASURES

                                             Three Months Ended

                                                November 30,

(in millions)                                   2020      2019

Net income (loss)

U.S. GAAP net income (loss)                     

(Gains) losses on ship sales and impairments       115     (5)

Restructuring expenses                               5      10

Other                                              239       —

Adjusted net income (loss)$ (2,222)$ 423$ (1,862)$ 427

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