Carnival Corporation has provided its first quarter 2023 business update.

• U.S. GAAP net loss of $693 million, or $(0.55) diluted EPS, and adjusted net loss of $690 million, or $(0.55) adjusted EPS, better than the December guidance range of $750 to $850 million net loss for the first quarter of 2023 (see “Non-GAAP Financial Measures” below).
• Adjusted EBITDA for the first quarter of 2023 was $382 million, better than the December guidance range of $250 million to $350 million, despite a $31 million unfavorable impact from fuel price and currency rates since December guidance.
• Revenue in the first quarter of 2023 was $4.4 billion, representing 95% of 2019 levels.
• The company experienced the highest booking volumes for any quarter in its history, breaking booking records for both the North America and Australia (“NAA”) and Europe segments.
• Total customer deposits reached a first quarter record of $5.7 billion (as of February 28, 2023), surpassing the previous first quarter record of $4.9 billion (as of February 28, 2019) by 16%.
• Cash from operations turned positive in the first quarter of 2023. The company expects continued growth in cash from operations to be the driver for paying down debt over time.
• First quarter 2023 ended with $8.1 billion of liquidity.

Carnival Corporation & plc’s Chief Executive Officer Josh Weinstein commented: “In the first quarter, we outperformed our guidance on all measures. We achieved record first quarter net per diems, exceeding the high end of our guidance, driven by improving ticket prices and sustained growth in onboard revenue, while delivering an additional seven points of occupancy on higher capacity compared to the prior quarter.”

Weinstein continued: “We are enjoying a phenomenal wave season, achieving our highest ever quarterly booking volumes and breaking records in both North America and Europe. Our strong performance has extended into March and we expect this favorable trend to continue based on the success of our efforts to drive demand.”

Weinstein added: “We remain focused on executing our overarching strategy of driving net yield growth, while maintaining our industry-leading cost base. With adjusted free cash flow for the year expected to be positive, our revolver renewal behind us, more committed export credit financings in hand, a reduced capex profile going forward and over $8 billion of liquidity, we believe we are well positioned to pay down near term debt maturities from excess liquidity and therefore have no intention to sell equity (except in connection with our advantageous and non-dilutive stock swap program).”

First Quarter 2023 Results and Statistical Information

First quarter 2023 results exceeded the company’s guidance due to stronger pricing and onboard spending, higher occupancy and favorable timing of operating costs.

• Adjusted EBITDA for the first quarter of 2023 was $382 million, better than the December guidance range of $250 million to $350 million, despite a $31 million unfavorable impact from fuel price and currency rates since December guidance.
• Continuing to close the gap to a strong 2019:
  • Revenue in the first quarter of 2023 was $4.4 billion, representing 95% of 2019 levels. This was better than the fourth quarter of 2022, which was 80% of 2019 levels, an improvement of 15 percentage points.
  • Occupancy in the first quarter of 2023 was 91%, higher than December guidance. Occupancy increased by seven percentage points compared to the prior quarter, on higher capacity.
• Cruise costs per available lower berth day (“ALBD”) increased 3.3% as compared to the first quarter of 2019.
• In constant currency, adjusted cruise costs excluding fuel per ALBD (see “Non-GAAP Financial Measures” below) increased 5.9% compared to the first quarter of 2019, continuing its sequential quarterly improvement and better than the December guidance of up to 6.5% to 7.5%. Costs remain higher as compared to 2019 as a result of higher advertising investments to drive 2023 revenue as well as partially mitigating the impacts of a high inflation environment.
• Total customer deposits reached a first quarter record of $5.7 billion (as of February 28, 2023), surpassing the previous first quarter record of $4.9 billion (as of February 28, 2019) by 16%, driven by strong demand, bundled package offerings and pre-cruise sales.

Bookings

Weinstein noted: “We are well booked for the remainder of the year at higher prices (normalized for FCCs), which coupled with continued strength in onboard revenue, supports our improving outlook for the remainder of the year. We expect the extension of booking lead times, combined with our investment in advertising, to position us even better in 2024 and beyond.”

The company said in a statement that it is very encouraged with the improving demand environment, kicked off by an early start to wave season (peak booking period) on very strong Black Friday and Cyber Monday booking volumes. The company experienced the highest booking volumes for all future sailings for any quarter in its history. Both the company’s NAA and Europe segments broke records, contributing to the company’s record-breaking quarter. Consistent with previous comments, during the first quarter of 2023 the company continued its increased advertising activities, supporting its booking volumes.

The booking window has continued to return to historical patterns, providing further confidence in the continued strengthening of the demand environment and facilitating improving revenue yields over time. The company’s NAA segment’s booking curve mirrored peak 2019 levels, while the company’s Europe segment continued to see an extension of its booking curve, which is over 80% recovered compared to 2019 levels.

The company’s cumulative advanced booked position for the remainder of 2023 is at higher ticket prices in constant currency, normalized for future cruise credits (“FCCs”), as compared to strong 2019 pricing and a booked occupancy position that is solidly in the higher end of the historical range. (The company’s current booking trends are compared to booking trends for 2019 as it is the most recent full year of guest cruise operations.)

2023 Outlook

For the full year 2023, the company expects:

• Adjusted EBITDA of $3.9 billion to $4.1 billion
  • Includes approximately $0.5 billion unfavorable impact from fuel price and currency compared to 2019
  • Sequential improvement in each quarter in adjusted EBITDA per ALBD compared to 2019, driven by closing the gap in occupancy to 2019 levels while achieving net per diems above 2019 levels
• Occupancy of 100% or higher, returning to historical levels this summer
• Adjusted cruise costs excluding fuel per ALBD (in constant currency) one point higher than December guidance, reflecting an expected increase in occupancy levels and strategic decisions taken during the quarter

For the second quarter of 2023, the company expects:

• Adjusted EBITDA of $600 million to $700 million, a significant improvement compared to the first quarter of 2023
• Occupancy of 98% or higher
  • A seven percentage point gap (or less) from 2019
  • An improvement from a 13 percentage point gap for the first quarter of 2023 compared to 2019
• Net per diems of 2.5% to 3.5% (in constant currency) above 2019 levels
  • Net per diems reflect the changing brand mix and cabin mix as compared to the first quarter
  • Net yields (see “Non-GAAP Financial Measures” below) of $160, higher than first quarter of $149, which reflects continuing net yield improvement
• Adjusted cruise costs excluding fuel per ALBD higher than first quarter of 2023, reflecting an expected increase in occupancy levels and higher dry-dock related expenses

Financing and Capital Activity

Carnival Corporation & plc Chief Financial Officer David Bernstein noted, “We believe our debt balance has peaked this quarter and will reduce over time based on our ample liquidity position of $8.1 billion and the expected cash flow strength of our business.”

Cash from operations turned positive in the first quarter of 2023. The company expects continued growth in cash from operations to be the driver for paying down debt over time.