Carnival PLC - Carnival Corporation 3Q 2024 Earnings
-- Third quarter net income was $1.7 billion , an increase of over 60
percent compared to 2023 and adjusted net income1outperformed June
guidance by $170 million .
-- Third quarter revenues hit an all-time high of $7.9 billion , up $1.0
billion compared to the prior year.
-- Record operating income of $2.2 billion exceeded 2023 levels by $554
million .
-- As a result of strong demand and cost saving opportunities, raised its
full year 2024 adjusted EBITDA1guidance to approximately $6.0 billion ,
up over 40 percent compared to 2023 and better than June guidance by
nearly $200 million .
-- The cumulative advanced booked position for full year 2025 is above the
previous 2024 record with prices (in constant currency) ahead of prior
year.
"We delivered a phenomenal third quarter, breaking operational records and outperforming across the board. Our strong improvements were led by high-margin, same-ship yield growth, driving a 26 percent improvement in unit operating income, the highest level we have reached in fifteen years," commented
"We are poised to deliver record operating performance for full year 2024, with adjusted EBITDA now expected to cross
"Looking forward, the momentum continues as our enhanced commercial execution drives demand well in excess of our capacity growth, leaving us well positioned with an even stronger base of business for 2025, a record start to 2026 and firmly on the path toward our SEA Change targets," Weinstein noted.
Third Quarter 2024 Results
-- Net income was $1.7 billion , or $1.26 diluted EPS, an increase of $662
million compared to 2023. Adjusted net income of $1.8 billion , or $1.27
adjusted EPS1, was higher than June guidance by $170 million driven by
outperformance in both yield and cost.
-- Record operating income of $2.2 billion exceeded 2023 levels by $554
million or 34 percent.
-- Record adjusted EBITDA of $2.8 billion increased over 25 percent
compared to 2023 and outperformed June guidance by $160 million .
-- Third quarter revenues hit an all-time high of $7.9 billion , with record
net yields1 (in constant currency) and record net per diems1 (in
constant currency) both significantly exceeding 2023 levels.
-- Gross margin yields increased by 19 percent compared to 2023 and net
yields (in constant currency) exceeded 2023 levels by 8.7 percent.
-- Gross margin per diems were up 16 percent compared to 2023. Net
per diems (in constant currency) were up nearly 6 percent
compared to 2023 with both ticket prices and onboard spending up
mid-single digits.
-- Cruise costs per available lower berth day ("ALBD") increased 3.4
percent compared to 2023. Adjusted cruise costs excluding fuel per ALBD1
(in constant currency) decreased compared to 2023 and were significantly
better than June guidance driven by cost saving opportunities,
accelerated easing of inflationary pressures, benefits from one-time
items and the timing of expenses between the quarters.
-- Total customer deposits reached a third quarter record of $6.8 billion ,
surpassing the previous third quarter record of $6.3 billion as of
August 31, 2023 , despite lower capacity growth.
Bookings
"With nearly half of 2025 booked and less inventory remaining for sale than the prior year, we are leveraging strong demand to achieve record ticket pricing (in constant currency). Our brands continue to deliver robust bookings momentum, with all our brands ahead on price for 2025 sailings, based on the success of their demand generation efforts along with the exciting offerings and unparalleled experiences we consistently provide our guests. Likewise, 2026 is off to an unprecedented start achieving record booking volumes in the last three months," Weinstein noted.
During the third quarter, booking volumes remained robust for 2025 sailings at higher prices (in constant currency) compared to the prior year.
The cumulative advanced booked position for full year 2025 is above the previous 2024 record with prices (in constant currency) ahead of prior year.
_____________________________
1
See "Non-GAAP Financial Measures" at the end of this release for additional information.
2024 Outlook
For the full year 2024, the company expects:
-- Net yields (in constant currency) up approximately 10.4 percent compared
to 2023, better than June guidance, based on continued strength in
demand.
-- Adjusted cruise costs excluding fuel per ALBD (in constant currency) up
approximately 3.5 percent compared to 2023, approximately 1 percentage
point better than June guidance driven by cost saving opportunities,
accelerated easing of inflationary pressures and benefits from one-time
items.
-- Adjusted EBITDA of approximately $6.0 billion , up over 40 percent
compared to 2023 and better than June guidance by nearly $200 million .
-- Adjusted return on invested capital ("ROIC") of approximately 10.5
percent, an improvement of approximately 5.0 percentage points compared
to 2023 and half a point better than June guidance.
For the fourth quarter of 2024, the company expects:
-- Net yields (in constant currency) up approximately 5.0 percent compared
to particularly strong 2023 levels.
-- Adjusted cruise costs excluding fuel per ALBD (in constant currency) up
approximately 8.0 percent compared to the fourth quarter of 2023 due
primarily to higher dry-dock days and higher investment in advertising.
-- Adjusted EBITDA of approximately $1.14 billion , up 20 percent compared
to the fourth quarter of 2023.
See "Guidance" and "Reconciliation of Forecasted Data" for additional information on the company's 2024 outlook.
Financing and Capital Activity
"We have continued to improve our leverage metrics and balance sheet with strong cash generation and continued debt reduction. We are pleased these efforts were recognized by both S&P and Moody's with their recent credit rating upgrades. For 2024, we expect better than a two turn improvement in net debt to adjusted EBITDA
1
compared to 2023, approaching 4.5x, well on our way to investment grade. In fact, this year's adjusted free cash flow
1
is expected to be over
The company continued its efforts to proactively manage its debt profile. Since
During the third quarter, Fitch initiated its coverage of the company with a BB credit rating with a positive outlook. The company is now rated by all three major internationally recognized rating agencies. Additionally, S&P upgraded its credit rating to BB with a stable outlook and Moody's upgraded to B1 with a positive outlook. The company believes this is a testament to its improved leverage metrics and continuing journey to investment grade ratings.
The company continues to strategically direct new capacity towards its highest returning brand with the
recent order of three additional ships to
The company obtained a new export credit facility, bringing its total committed financings related to ship deliveries to
_____________________________
1
See "Non-GAAP Financial Measures" at the end of this release for additional information.
Other Recent Highlights
-- Named by TIME as one of the World's Best Companies of 2024 and by Forbes
as one of America's Best Employers for Women in 2024.
-- Opened a new innovative Fleet Operations Center in Hamburg, Germany to
support its European brands.
-- Announced the expansion of Half Moon Cay . This popular private island
will be enhanced to include an expanded beach, dining and beverage
experiences along with a new pier that will allow the company's larger
ships to visit.
-- In anticipation of Celebration Key's debut in July 2025 , Carnival Cruise
Line opened bookings for the destination's new exclusive retreat, Pearl
Cove Beach Club , which will offer a premium experience for guests with a
large selection of supervillas, cabanas and shore excursions.
-- Carnival Conquest, AIDAdivaand AIDAluna became the first cruise ships to
connect to shore power at PortMiami, the Port of Stockholm and the Port
of Oslo .
-- AIDA Cruises successfully piloted a new advanced blended biofuel, which
is specifically intended for the maritime industry and lowers greenhouse
gas emissions compared to conventional fossil fuels.
-- Seabourn Pursuit was named in a historic expedition ceremony, debuting
its new itineraries visiting the Kimberley region in Australia .
Guidance
(See "Reconciliation of Forecasted Data")
4Q 2024 Full Year 2024
Year over CurrentDollars ConstantCurrency CurrentDollars ConstantCurrency
year change
Net yields Approx. 7.0% Approx. 5.0% Approx. 11.0% Approx. 10.4%
Adjusted
cruise costs Approx. 9.5% Approx. 8.0% Approx. 4.0% Approx. 3.5%
excluding
fuel per ALBD
4Q 2024 Full Year 2024
ALBDs (in millions)(a) 24.0 95.6
Capacity growth compared to 3.1 % 4.7 %
prior year
Fuel consumption in metric 0.7 2.9
tons (in millions)
Fuel cost per metric ton
consumed (excluding $ 590 $ 658
European Union Allowance
("EUA"))
Fuel expense (including EUA $ 0.43 $ 1.98
expense) (in billions)
Depreciation and $ 0.67 $ 2.57
amortization (in billions)
Interest expense, net of
capitalized interest and $ 0.41 $ 1.68
interest income (in
billions)
Adjusted EBITDA (in Approx. $1.14 Approx. $6.0
billions )
Adjusted net income (loss) Approx. $60 Approx. $1,760
(in millions)
Adjusted earnings per share Approx. $0.05 Approx. $1.33
- diluted (b)
Weighted-average shares 1,296 1,273
outstanding - basic
Weighted-average shares 1,301 1,398
outstanding - diluted
(a) See "Notes to Statistical Information"
Diluted adjusted earnings per share includes the add-back of dilutive
interest expense related to the company's
(b) convertible notes of $94 million for full year 2024. The add-back expense is
antidilutive to the fourth quarter of 2024
calculation and accordingly has been excluded.
Currencies (USD to 1) 4Q 2024 Full Year 2024
AUD $ $ 0.67
0.68
CAD $ $ 0.74
0.74
EUR $ $ 1.09
1.12
GBP $ $ 1.28
1.33
Sensitivities (impact to adjusted net income (loss) in millions) 4Q 2024
1% change in net yields $
42
1% change in adjusted cruise costs excluding fuel per ALBD $
27
1% change in currency exchange rates $
5
10% change in fuel price $
42
100 basis point change in variable rate debt (including derivatives) $
12
Capital Expenditures
For the fourth quarter of 2024, newbuild capital expenditures are
Conference Call
The company has scheduled a conference call with analysts at
Additional information can be found on
www.carnivalcorp.com
,
www.aida.de
,
www.carnival.com
,
www.costacruise.com
,
www.cunard.com
,
www.hollandamerica.com
,
www.pocruises.com.au
,
www.pocruises.com
,
www.princess.com
and
www.seabourn.com
. For more information on
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, as amended. 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," "aspiration," "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:
• Pricing • Adjusted EBITDA • Booking levels • Adjusted earnings per share • Occupancy • Adjusted free cash flow • Interest, tax and fuel expenses • Net debt to adjusted EBITDA • Currency exchange rates • Net per diems •Goodwill , ship and trademark fair • Net yields values • Liquidity and credit ratings • Adjusted cruise costs per ALBD • Investment grade leverage metrics • Adjusted cruise costs excluding fuel per ALBD • Estimates of ship depreciable lives • Adjusted return on invested capital and residual values • Adjusted net income (loss)
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. These factors include, but are not limited to, the following:
-- Events and conditions around the world, including geopolitical
uncertainty, war and other military actions, inflation, higher fuel
prices, higher interest rates and other general concerns impacting the
ability or desire of people to travel have led, and may in the future
lead, to a decline in demand for cruises as well as negative impacts to
our operating costs and profitability.
-- Pandemics have in the past and may in the future have a significant
negative impact on our financial condition and operations.
-- Incidents concerning our ships, guests or the cruise industry have in
the past and may, in the future, negatively 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-money laundering,
anti-corruption, economic sanctions, trade protection, labor and
employment, and tax may be costly and have in the past and may, in the
future, lead to litigation, enforcement actions, fines, penalties and
reputational damage.
-- Factors associated with climate change, including evolving and
increasing regulations, increasing global concern about climate change
and the shift in climate conscious consumerism and stakeholder scrutiny,
and increasing frequency and/or severity of adverse weather conditions
could adversely affect our business.
-- Inability to meet or achieve our targets, goals, aspirations,
initiatives, and our public statements and disclosures regarding them,
including those that are related to sustainability matters, may expose
us to risks that may adversely impact our business.
-- 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 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.
-- The loss of key team members, our inability to recruit or retain
qualified shoreside and shipboard team members and increased labor costs
could have an adverse effect on our business and results of operations.
-- Increases in fuel prices, changes in the types of fuel consumed and
availability of fuel supply may adversely impact our scheduled
itineraries and costs.
-- We rely on supply chain vendors who are integral to the operations of
our businesses. These vendors and service providers may be unable to
deliver on their commitments, which could negatively impact our
business.
-- Fluctuations in foreign currency exchange rates may adversely impact our
financial results.
-- Overcapacity and competition in the cruise and land-based vacation
industry may negatively impact 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.
-- We require a significant amount of cash to service our debt and sustain
our operations. Our ability to generate cash depends on many factors,
including those beyond our control, and we may not be able to generate
cash required to service our debt and sustain our operations.
-- Our substantial debt could adversely affect our financial health and
operating flexibility.
The ordering of the risk factors set forth above is not intended to reflect our indication of priority or likelihood. Additionally, many of these risks and uncertainties are currently, and in the future may continue to be, amplified by our substantial debt balance incurred during the pause of our guest cruise operations. There may be additional risks that we consider immaterial or which are unknown.
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.
Forward-looking and other statements in this document may also address our sustainability progress, plans, and goals (including climate change and environmental-related matters). In addition, historical, current, and forward-looking sustainability- and climate-related statements may be based on standards and tools for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions and predictions that are subject to change in the future and may not be generally shared.
CARNIVAL CORPORATION& PLC
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
(in millions, except per share data)
Three Months Ended Nine Months Ended
August 31,
August 31,
2024 2023 2024 2023
Revenues
Passenger $ $ 4,546 $ 12,609 $ 10,557
ticket 5,239
Onboard and 2,657 2,308 6,474 5,640
other
7,896 6,854 19,083 16,197
Operating
Expenses
Commissions,
transportation 958 823 2,510 2,097
and other
Onboard and 866 752 2,043 1,785
other
Payroll and 575 585 1,812 1,768
related
Fuel 515 468 1,546 1,492
Food 393 364 1,099 1,000
Other operating 995 928 2,796 2,546
Cruise and tour
operating 4,303 3,921 11,805 10,688
expenses
Selling and 763 713 2,366 2,162
administrative
Depreciation and 651 596 1,898 1,774
amortization
5,718 5,230 16,070 14,624
Operating Income 2,178 1,624 3,013 1,572
(Loss)
Nonoperating
Income (Expense)
Interest income 19 59 77 183
Interest
expense, net of (431) (518) (1,352) (1,600)
capitalized
interest
Debt
extinguishment (13) (81) (78) (112)
and modification
costs
Other income (10) (19) (35) (67)
(expense), net
(435) (559) (1,388) (1,595)
Income (Loss)
Before Income 1,743 1,065 1,626 (23)
Taxes
Income Tax
Benefit (8) 9 (13) (3)
(Expense), Net
Net Income $ $ 1,074 $ 1,613 $
(Loss) 1,735 (26)
Earnings Per
Share
Basic $ $ $ $
1.37 0.85 1.27 (0.02)
Diluted $ $ $ $
1.26 0.79 1.21 (0.02)
Weighted-Average
Shares 1,267 1,263 1,266 1,262
Outstanding -
Basic
Weighted-Average
Shares 1,399 1,396 1,398 1,262
Outstanding -
Diluted
CARNIVAL CORPORATION& PLC
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in millions, except par values)
August 31, November 30,
2024 2023
ASSETS
Current Assets
Cash and cash equivalents $ 1,522 $ 2,415
Trade and other receivables, net 632 556
Inventories 492 528
Prepaid expenses and other 980 1,767
Total current assets 3,626 5,266
Property and Equipment, Net 42,380 40,116
Operating Lease Right-of-Use Assets, 1,383 1,265
Net
Goodwill 579 579
Other Intangibles 1,173 1,169
Other Assets 665 725
$ 49,805 $ 49,120
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 2,214 $ 2,089
Current portion of operating lease 159 149
liabilities
Accounts payable 1,062 1,168
Accrued liabilities and other 2,393 2,003
Customer deposits 6,436 6,072
Total current liabilities 12,265 11,481
Long-Term Debt 26,642 28,483
Long-Term Operating Lease Liabilities 1,258 1,170
Other Long-Term Liabilities 1,042 1,105
Shareholders' Equity
Carnival Corporation common stock,
$0.01 par value; 1,960 shares
authorized; 1,253 13 12
shares issued at 2024 and 1,250
shares issued at 2023
Carnival plc ordinary shares, $1.66
par value; 217 shares issued at 2024 361 361
and 2023
Additional paid-in capital 16,723 16,712
Retained earnings 1,798 185
Accumulated other comprehensive (1,894) (1,939)
income (loss)
Treasury stock, 130 shares at 2024
and 2023 of Carnival Corporation and
73 shares at (8,404) (8,449)
2024 and 2023 of Carnival plc ,
at cost
Total shareholders' equity 8,597 6,882
$ 49,805 $ 49,120
CARNIVAL CORPORATION & PLC
OTHER INFORMATION
OTHER BALANCE SHEET August 31, 2024 November 30, 2023
INFORMATION(in millions)
Liquidity $ $
4,519 5,392
Debt (current and long-term) $ $ 30,572
28,856
Customer deposits (current $ $
and long-term) 6,819 6,353
Three Months Ended Nine Months Ended
August 31, August 31,
STATISTICAL 2024 2023 2024 2023
INFORMATION
Passenger cruise
days ("PCDs")(in 28.1 25.8 76.0 67.8
millions)(a)
ALBDs (in 25.2 23.7 71.7 68.1
millions)(b)
Occupancy 112 % 109 % 106 % 100 %
percentage (c)
Passengers
carried(in 3.9 3.6 10.3 9.3
millions)
Fuel consumption
in metric tons 0.7 0.7 2.2 2.2
(in millions)
Fuel consumption
in metric tons 29.5 31.1 31.0 32.3
per thousand
ALBDs
Fuel cost per
metric ton $ $ 636 $ 680 $ 681
consumed 670
(excluding EUA)
Currencies (USD
to 1)
AUD $ $ 0.66 $ 0.66 $ 0.67
0.67
CAD $ $ 0.75 $ 0.74 $ 0.74
0.73
EUR $ $ 1.09 $ 1.08 $ 1.08
1.09
GBP $ $ 1.27 $ 1.27 $ 1.24
1.28
Notes to Statistical Information
PCD represents the number of cruise passengers on a voyage multiplied by the
(a) number of revenue-producing ship
operating days for that voyage.
ALBD is a standard measure of passenger capacity for the period that we use
to approximate rate and capacity variances,
based on consistently applied formulas that we use to perform analyses to
(b) determine the main non-capacity driven factors
that cause our cruise revenues and expenses to vary. ALBDs assume that each
cabin we offer for sale accommodates two
passengers and is computed by multiplying passenger capacity by
revenue-producing ship operating days in the period.
Occupancy, in accordance with cruise industry practice, is calculated using
a numerator of PCDs and a denominator of
(c) ALBDs, which assumes two passengers per cabin even though some cabins can
accommodate three or more passengers.
Percentages in excess of 100% indicate that on average more than two
passengers occupied some cabins.
CARNIVAL CORPORATION & PLC
NON-GAAP FINANCIAL MEASURES
Three Months Ended Nine Months Ended
August 31,
August 31,
(in millions,
except per share 2024 2023 2024 2023
data)
Net income $ $ 1,074 $ 1,613 $
(loss) 1,735 (26)
(Gains) losses
on ship sales (6) — (6) (54)
and impairments
Debt
extinguishment 13 81 78 112
and modification
costs
Restructuring 9 1 20 16
expenses
Other — 20 — 43
Adjusted net $ $ 1,176 $ 1,705 $
income (loss) 1,751 90
Interest
expense, net of 431 518 1,352 1,600
capitalized
interest
Interest income (19) (59) (77) (183)
Income tax
benefit 8 (9) 13 3
(expense), net
Depreciation 651 596 1,898 1,774
and amortization
Adjusted EBITDA $ $ 2,221 $ 4,890 $ 3,285
2,822
Earnings per $ $ $ $
share - diluted 1.26 0.79 1.21 (0.02)
(a)
Adjusted
earnings per $ $ $ $
share - diluted 1.27 0.86 1.27 0.07
(a)
Weighted-average
shares 1,399 1,396 1,398 1,262
outstanding -
diluted
Diluted earnings per share includes the add-back of dilutive interest
(a) expense related to the company's convertible notes
of $25 million and $73 million for the three and nine months ended August
31, 2024 .
Three Months Ended Nine Months Ended
August 31,
August 31,
(in millions) 2024 2023 2024 2023
Cash from $
(used in) 1,205 $ 1,834 $ 5,012 $ 3,359
operations
Capital
expenditures
(Purchases of (578) (837) (4,034) (2,609)
Property and
Equipment)
Proceeds from — 140 2,314 1,157
export credits
Adjusted free $ $ 1,137 $ 3,292 $ 1,906
cash flow 627
(See Non-GAAP Financial Measures)
NON-GAAP FINANCIAL MEASURES (CONTINUED)
Gross margin per diems and net per diems were computed by dividing the gross margin and adjusted gross margin by PCDs. Gross margin yields and net yields were computed by dividing the gross margin and adjusted gross margin by ALBDs as follows:
Three Months Ended August 31, Nine Months Ended August 31,
(in 2024 2024
millions,
except per 2024 Constant 2023 2024 Constant 2023
diems and
yields data) Currency Currency
Total $ 7,896 $ $ 19,083 $ 16,197
revenues 6,854
Less: Cruise
and tour (4,303) (3,921) (11,805) (10,688)
operating
expenses
Depreciation
and (651) (596) (1,898) (1,774)
amortization
Gross margin 2,941 2,337 5,380 3,734
Less: Tour
and other (181) (172) (222) (216)
revenues
Add: Payroll 575 585 1,812 1,768
and related
Fuel 515 468 1,546 1,492
Food 393 364 1,099 1,000
Ship and
other — — — —
impairments
Other 995 928 2,796 2,546
operating
Depreciation
and 651 596 1,898 1,774
amortization
Adjusted $ 5,891 $ 5,894 $ $ 14,307 $ 14,293 $ 12,099
gross margin 5,107
PCDs 28.1 28.1 25.8 76.0 76.0 67.8
Gross margin $ $
per diems $ 104.49 90.45 $ 70.80 55.04
(per PCD)
% increase 16 % 29 %
(decrease)
Net per $
diems(per $ 209.28 $ 209.39 197.64 $ 188.30 $ 188.10 $ 178.36
PCD)
% increase 5.9 % 5.9 % 5.6 % 5.5 %
(decrease)
ALBDs 25.2 25.2 23.7 71.7 71.7 68.1
Gross margin $ $
yields(per $ 116.77 98.50 $ 75.05 54.85
ALBD)
% increase 19 % 37 %
(decrease)
Net yields $ 233.87 $ 234.00 $ $ 199.60 $ 199.40 $ 177.73
(per ALBD) 215.22
% increase 8.7 % 8.7 % 12 % 12 %
(decrease)
(See Non-GAAP Financial Measures)
NON-GAAP FINANCIAL MEASURES (CONTINUED)
Cruise costs per ALBD, adjusted cruise costs per ALBD and adjusted cruise costs excluding fuel per ALBD were computed by dividing cruise costs, adjusted cruise costs and adjusted cruise costs excluding fuel by ALBDs as follows:
Three Months Ended August 31, Nine Months Ended August 31,
2024 2024
(in millions,
except costs 2024 Constant 2023 2024 Constant 2023
per ALBD data)
Currency Currency
Cruise and $ $
tour operating $ 4,303 3,921 $ 11,805 10,688
expenses
Selling and
administrative 763 713 2,366 2,162
expenses
Less: Tour and (105) (112) (174) (190)
other expenses
Cruise costs 4,962 4,522 13,998 12,660
Less:
Commissions, (958) (823) (2,510) (2,097)
transportation
and other
Onboard and (866) (752) (2,043) (1,785)
other costs
Gains (losses)
on ship sales 6 — 6 54
and
impairments
Restructuring (9) (1) (20) (16)
expenses
Other — — — —
Adjusted 3,134 3,138 2,946 9,430 9,421 8,817
cruise costs
Less: Fuel (515) (515) (468) (1,546) (1,546) (1,492)
Adjusted $ $
cruise costs $ 2,619 $ 2,622 2,478 $ 7,885 $ 7,876 7,325
excluding fuel
ALBDs 25.2 25.2 23.7 71.7 71.7 68.1
Cruise costs $ 196.98 $ 190.58 $ 195.29 $ 185.97
per ALBD
% increase 3.4 % 5.0 %
(decrease)
Adjusted
cruise costs $ 124.44 $ 124.56 $ 124.16 $ 131.56 $ 131.44 $ 129.51
per ALBD
% increase 0.2 % 0.3 % 1.6 % 1.5 %
(decrease)
Adjusted
cruise costs $ 103.97 $ 104.09 $ 104.42 $ 110.00 $ 109.87 $ 107.59
excluding fuel
per ALBD
% increase (0.4) % (0.3) % 2.2 % 2.1 %
(decrease)
(See Non-GAAP Financial Measures)
Non-GAAP Financial Measures
We use non-GAAP financial measures and they are provided along with their most comparative
Non-GAAP Measure U.S. GAAP Measure Use Non-GAAP Measure to
Assess
• Adjusted net income
(loss) and • Net income (loss) • Company Performance
adjusted EBITDA
• Adjusted earnings per • Earnings per share • Company Performance
share
• Adjusted free cash flow • Cash from (used in) • Impact on Liquidity
operations Level
• Net debt to adjusted — • Company Leverage
EBITDA
• Net per diems • Gross margin per diems • Cruise Segments
Performance
• Net yields • Gross margin yields • Cruise Segments
Performance
• Adjusted cruise costs
per ALBD and • Gross cruise costs per • Cruise Segments
adjusted cruise costs ALBD Performance
excluding fuel
per ALBD
• Adjusted ROIC — • Company Performance
The presentation of our non-GAAP financial information is not intended to be considered in isolation from, as a substitute for, or superior to the financial information prepared in accordance with
Adjusted net income (loss) and adjusted earnings per share provide additional information to us and investors about our future earnings performance by excluding certain gains, losses and expenses that we believe are not part of our core operating business and are not an indication of our future earnings performance. We believe that gains and losses on ship sales, impairment charges, debt extinguishment and modification costs, restructuring costs and certain other gains and losses are not part of our core operating business and are not an indication of our future earnings performance.
Adjusted EBITDA
provides additional information to us and investors about our core operating profitability by excluding certain gains, losses and expenses that we believe are not part of our core operating business and are not an indication of our future earnings performance as well as excluding interest, taxes and depreciation and amortization. In addition, we believe that the presentation of adjusted EBITDA provides additional information to us and investors about our ability to operate our business in compliance with the covenants set forth in our debt agreements. We define adjusted EBITDA as adjusted net income (loss) adjusted for (i) interest, (ii) taxes and (iii) depreciation and amortization. There are material limitations to using adjusted EBITDA. Adjusted EBITDA does not take into account certain significant items that directly affect our net income (loss). These limitations are best addressed by considering the economic effects of the excluded items independently and by considering adjusted EBITDA in conjunction with net income (loss) as calculated in accordance with
Adjusted free cash flow provides additional information to us and investors to assess our ability to repay our debt after making the capital investments required to support ongoing business operations and value creation as well as the impact on the company's liquidity level. Adjusted free cash flow represents net cash provided by operating activities adjusted for capital expenditures (purchases of property and equipment) and proceeds from export credits that are provided for related capital expenditures. Adjusted free cash flow does not represent the residual cash flow available for discretionary expenditures as it excludes certain mandatory expenditures such as repayment of maturing debt.
Net debt to adjusted EBITDA provides additional information to us and investors about our overall leverage. We define net debt to adjusted EBITDA as total debt less cash and cash equivalents excluding a minimum cash balance divided by twelve-month adjusted EBITDA.
Net per diems and net yields enable us and investors to measure the performance of our cruise segments on a per PCD and per ALBD basis. We use adjusted gross margin rather than gross margin to calculate net per diems and net yields. We believe that adjusted gross margin is a more meaningful measure in determining net per diems and net yields than gross margin because it reflects the cruise revenues earned net of only our most significant variable costs, which are travel agent commissions, cost of air and other transportation, certain other costs that are directly associated with onboard and other revenues and credit and debit card fees.
Adjusted cruise costs per ALBD and adjusted cruise costs excluding fuel per ALBD enable us and investors to separate the impact of predictable capacity or ALBD changes from price and other changes that affect our business. We believe these non-GAAP measures provide useful information to us and investors and expanded insight to measure our cost performance. Adjusted cruise costs per ALBD and adjusted cruise costs excluding fuel per ALBD are the measures we use to monitor our ability to control our cruise segments' costs rather than cruise costs per ALBD. We exclude gains and losses on ship sales, impairment charges, restructuring costs and certain other gains and losses that we believe are not part of our core operating business as well as excluding our most significant variable costs, which are travel agent commissions, cost of air and other transportation, certain other costs that are directly associated with onboard and other revenues and credit and debit card fees. We exclude fuel expense to calculate adjusted cruise costs excluding fuel. The price of fuel, over which we have no control, impacts the comparability of period-to-period cost performance. The adjustment to exclude fuel provides us and investors with supplemental information to understand and assess the company's non-fuel adjusted cruise cost performance. Substantially all of our adjusted cruise costs excluding fuel are largely fixed, except for the impact of changing prices once the number of ALBDs has been determined.
Adjusted ROIC provides additional information to us and investors about our operating performance relative to the capital we have invested in the company. We define adjusted ROIC as the twelve-month adjusted net income (loss) before interest expense and interest income divided by the monthly average of debt plus equity minus construction-in-progress, excess cash, goodwill and intangibles.
Reconciliation of Forecasted Data
We have not provided a reconciliation of forecasted non-GAAP financial measures to the most comparable
Constant Currency
Our operations primarily utilize the
Constant currency reporting removes the impact of changes in exchange rates on the translation of our operations plus the transactional impact of changes in exchange rates from revenues and expenses that are denominated in a currency other than the functional currency.
We report adjusted gross margin, net yields, net per diems, adjusted cruise costs excluding fuel and adjusted cruise costs excluding fuel per ALBD on a "constant currency" basis assuming the current periods' currency exchange rates have remained constant with the prior periods' rates. These metrics facilitate a comparative view for the changes in our business in an environment with fluctuating exchange rates.
Examples:
-- The translation of our operations with functional currencies other than
U.S. dollar to our U.S. dollar reporting currency results in decreases
in reported U.S. dollar revenues and expenses if the U.S. dollar
strengthens against these foreign currencies and increases in reported
U.S. dollar revenues and expenses if the U.S. dollar weakens against
these foreign currencies.
-- Our operations have revenue and expense transactions in currencies other
than their functional currency. If their functional currency strengthens
against these other currencies, it reduces the functional currency
revenues and expenses. If the functional currency weakens against these
other currencies, it increases the functional currency revenues and
expenses.
CONTACT: MEDIA CONTACT,
SOURCE
