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CARNIVAL CORP (CCL)·Q3 2021 Earnings Summary

Executive Summary

  • Q3 2021 remained a transition quarter: voyages were cash flow positive, but the company posted a GAAP net loss of $2.84B and adjusted net loss of $1.99B as restart costs and reduced capacity weighed on results .
  • Occupancy averaged 54% and improved monthly (June 39%, July 51%, August 59%); Carnival Cruise Line delivered ~70% occupancy and revenue per PCD +20% vs 2019 on comparable itineraries, underscoring strong pricing/onboard trends despite protocols .
  • Liquidity ended at $7.8B, monthly average cash burn was $510M in Q3, and customer deposits rose $630M sequentially to $3.1B, marking the second consecutive quarterly increase .
  • Management guided to Q4 ALBD of 10.3M (~47% capacity), expects cash from operations to turn positive “early” 2022, and reiterated potential for 2023 EBITDA to exceed 2019 driven by cost structure and mix/price tailwinds .

What Went Well and What Went Wrong

What Went Well

  • Cash-positive operations at the ship level; Q3 voyages generated nearly $90M of ship-level cash contribution as more ships returned and occupancy built .
  • Pricing/onboard strength: revenue per passenger cruise day was above 2019; Carnival Cruise Line achieved ~70% occupancy with revenue per PCD +20% vs 2019 despite short booking windows and capacity limits .
  • Deposits/booking momentum: customer deposits increased $630M to $3.1B; long-term deposits are 3x historical levels as 2023 opened earlier with strong demand and “good prices,” despite reduced ad spend .

What Went Wrong

  • Large losses and cash burn persisted: GAAP net loss ($2.84B) and adjusted net loss ($1.99B); monthly average cash burn rose to $510M in Q3 given restart/drydock timing and protocol costs .
  • Delta variant/operational friction: bookings softened in August; protocols, destination timing and supply chain disruptions created uncertainty and constrained occupancy .
  • 2022 unit costs to be higher than 2019 (per ALBD) given pause costs in H1 2022, restart-related expenses, and enhanced health/safety protocols, though management expects many of these to fade by 2023 .

Financial Results

P&L vs Prior Year (Q3)

MetricQ3 2020Q3 2021
GAAP Net Loss ($B)$(2.86) $(2.84)
Adjusted Net Loss ($B)$(1.70) $(1.99)

Liquidity, Cash Burn, Deposits (Q1–Q3 2021)

MetricQ1 2021Q2 2021Q3 2021
Liquidity ($B)$11.5 $9.3 $7.8
Monthly Avg Cash Burn ($M)$500 ~$500 (H1 average) $510
Customer Deposits ($B)$2.2 $2.5 (as of 5/31/21) $3.1 (as of 8/31/21)

Q3 Operational KPIs

KPIValue
Occupancy (Q3 avg)54%
Occupancy by monthJun: 39%; Jul: 51%; Aug: 59%
ALBD (Q3)3.8M (17% of capacity)
ALBD (Q4 guide)10.3M (~47% of capacity)
Fleet capacity in serviceEnded Q3 at ~35% capacity; targeting ~65% by Jan 1, 2022 (55 ships)
NA brands occupancy68% (Q3)
Europe brands occupancy47% (Q3)
Brand highlightCarnival Cruise Line ~70% occupancy; revenue per PCD +20% vs 2019

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance/CommentaryChange
Capacity (ALBD)Q4 2021—10.3M ALBD (~47% capacity) New
Ships/Capacity in serviceBy Jan 1, 202242 ships by Nov 30 FY-end (prior commentary) 55 ships (~65% capacity) by Jan 1 Raised rollout cadence
Cash from OperationsEarly 2022—Expected to turn positive “early next year” New
EBITDAEarly 2022—CFO indicated EBITDA also to break even early 2022 New
2023 EBITDA vs 2019FY 2023—Potential to exceed 2019 on mix/pricing/cost efficiencies New LT aspiration
CapexFY 2022—~$6.0B (non-newbuild ~$1.5B; newbuild ~$4.5B) New
CapexFY 2023—~$4.2B (non-newbuild ~$1.5B; newbuild ~$2.7B) New
Interest expense run-rateOngoing—Reduced by >$250M/yr via refinancings New/updated

Earnings Call Themes & Trends

TopicQ1 2021 (Apr 7)Q2 2021 (Jun 24)Q3 2021 (Sep 24)Trend
Pricing & bundling2022 pricing above 2019 ex-FCC; bundling rising, supports onboard 2022 book position ahead 2019; positive pricing trends; bundling helps CCL +20% revenue/PCD vs 2019; onboard per diems “up significantly” Strengthening
Occupancy & restartInitial restarts abroad; deliberate low occupancy ramp Q3 ALBD guide 3.8M; ramp plan underway Q3 occupancy 54% (Jun 39 → Aug 59); ~35% capacity operating; ~65% by Jan 1 Improving
Cash burn & liquidity$500M/month; $11.5B liquidity H1 avg $500M/month; $9.3B liquidity $510M/month; $7.8B liquidity Still elevated, trending down as capacity ramps
Bookings & deposits2022 book ahead of 2019; deposits flat at $2.2B Booking volumes +45% vs Q1; deposits +$300M; strong 2022 Deposits +$630M to $3.1B; H2’22 ahead of 2019; long-term deposits 3x historical Building
Cost structure & protocols4% ship unit cost and 3% fuel unit improvements from fleet actions longer term Restart to elevate 2021–22 costs; goal to refinance and lower interest 2022 per-ALBD higher near term (pause/protocols); many costs fade in 2023 Near-term pressure, LT efficiency
Sustainability2030 goals/2050 aspirations; LNG strategy Updated sustainability report/targets 11th sustainability report; 2030 goals/2050 aspiration re-affirmed Ongoing
Capex & investment——2022 ~$6B; 2023 ~$4.2B; export credits in place Visibility increased
Refinancing & leverageRaised capital; plan to refinance expensive debt Repriced $2.8B TLB; debt holidays; lower interest >$250M/yr interest reduction; extend maturities Improving profile

Management Commentary

  • “Even at this early stage with intentionally constrained occupancy levels, our voyages are already cash flow positive.” – CEO Arnold Donald .
  • “Revenue per passenger cruise day… increased compared to a strong 2019… driven in part by exceptionally strong onboard and other revenue.” – Q3 update .
  • “We expect cash from operations for the whole Company to turn positive at some point early next year… [and] have the potential to generate higher EBITDA in 2023 compared to 2019.” – CEO/CFO .
  • “We ended the quarter with 35% of our fleet capacity in service… anticipate celebrating with 55 ships or nearly 65% of our fleet capacity back in service [by New Year’s Day].” – CFO David Bernstein .
  • “Booking volumes… were higher than… Q1 2021… Cumulative advanced bookings for the second half of 2022 are ahead of a very strong 2019.” – Q3 press release .

Q&A Highlights

  • 2023 EBITDA bridge: richer cabin mix, new larger ships, 10% net capacity increase net of exits, 4% ship-level unit cost reduction, 25–35% fuel efficiency on new ships; supports potential EBITDA > 2019 .
  • 2022 ramp/availability: Selling dates largely reflect actual restart expectations; back half 2022 targeting full fleet; no capacity restriction on selling for H2’22 .
  • Cost outlook: 2022 per-ALBD higher (pause, restart, protocols); many costs non-recurring; working to offset inflation via shore-side efficiencies .
  • Deposits dynamics: Deposits at $3.1B; expected to rise as capacity ramps and final payments for near-term sailings increase .
  • Capex: 2022 ~$6B (non-newbuild ~$1.5B; newbuild ~$4.5B); 2023 ~$4.2B (non-newbuild ~$1.5B; newbuild ~$2.7B) with export credit financing .

Estimates Context

  • Wall Street consensus estimates (S&P Global) for Q3 2021 EPS and revenue were unavailable due to access limits, so we cannot provide “vs. estimates” comparisons for this quarter. Management did not provide formal financial guidance and focused instead on capacity ramp, cash flow inflection “early 2022,” and 2023 EBITDA potential .

Key Takeaways for Investors

  • Near-term losses remain large, but operating momentum is clear: cash-positive voyages, improving occupancy (54% in Q3, 59% in August), and strong onboard/pricing trends (CCL +20% revenue/PCD vs 2019) .
  • Balance sheet flexibility improved: liquidity $7.8B; interest expense reduced by >$250M/year via repricing/refinancing; deposit base building ($3.1B, +$630M q/q) .
  • Capacity ramp accelerates into Q4/early 2022 (10.3M ALBD Q4; ~65% capacity by Jan 1), providing operating leverage to drive cash from operations positive “early 2022” .
  • 2022 unit costs per ALBD will remain elevated due to restart/protocols, but management expects these to fade in 2023 alongside structural ship/shoreside efficiencies .
  • Longer-term setup: management sees a credible path to 2023 EBITDA > 2019 on mix, pricing, pent-up demand and lower unit costs, contingent on full deployment and normalization of protocols .
  • Tactical focus: maintain price (even through Delta), maximize onboard capture (bundling, “fresh wallet”), and progress refinancing to lower interest burden further .
  • Watch catalysts: deposit trajectory and occupancy build through Q4/H1’22, protocol easing, and further debt repricing to compress interest expense .

Supporting Detail

Additional Operational/Segment Data (Q3 2021)

Segment/MeasureQ3 2021
North America brands occupancy68%
Europe brands occupancy47%
Onboard per diems“Up significantly” vs 2019; bar, casino, shops, spa, internet led
CCL brand~70% occupancy; revenue per PCD +20% vs 2019

Non-GAAP Adjustments Snapshot (Q3 2021)

ItemQ3 2021 ($MM)
GAAP Net Loss(2,836)
(Gains) losses on ship sales/impairments472
(Gains) losses on debt extinguishment, net376
Restructuring expenses2
Adjusted Net Loss(1,986)

Cash Flow and Capacity Context

  • Monthly average cash burn: Q3 $510M; expected higher in Q4 due to restart and drydock timing .
  • Capacity: Q3 ALBD 3.8M (17% of capacity); Q4 ALBD expected 10.3M (47% of capacity) .
  • Capacity in service path: ~35% at Q3-end; ~65% by Jan 1 (55 ships) .

Bookings/Deposits

  • Booking volumes for “all future cruises” rose vs Q1; August saw softness due to Delta; H2’22 book is ahead of 2019 .
  • Customer deposits rose $630M to $3.1B; long-term deposits 3x historical .

Citations:

  • Q3 2021 business update press release and 8-K highlights .
  • Q3 2021 earnings call transcript –.
  • Q2 2021 earnings call transcript –.
  • Q1 2021 earnings call transcript –.