CUK Q2 2021 Earnings

Call Details

• Call Title: Carnival Cruise Lines Q2 2021 Earnings Call
• Date: June 24, 2021 at 2:00 PM UTC
• Management Team:
  • Arnold Donald (President and Chief Executive Officer)
  • Mickey Arison (Chairman)
  • David Vernon (Chief Financial Officer)
  • Beth Roberts (Senior Vice President, Investor Relations)

Call Summary

Financial Performance

• Total cash burn in Q2 was $1.5B for the quarter.
• Monthly average cash burn for the first half of 2021 was $500M per month, which improved from the prior forecast of $550M per month.
• The company used an additional $1.0B of cash in Q2 primarily for debt principal payments.
• Customer deposits increased by $300M during Q2 as deposits on new bookings exceeded refunds.
• The balance sheet held $9.3B of cash and short-term investments as of the call.
• Forecasted interest expense for 2021 was reduced to $1.6B from an earlier $1.7B estimate.
• Company expects the 27 ships in guest cruise operations in Q3 to generate positive cash flow, although many begin operations late in the quarter.

Guidance

• Company expects full fleet operations well before the important summer season of 2022, targeting spring 2022 for full resumption of operations.
• Company will not provide a forecast of the third quarter monthly average cash burn rate due to timing uncertainty around restart expenses and atypical short booking windows.
• Company warned that third quarter margins will be below normal because of anticipated lower occupancy from physical distancing and other protocols.
• Company projects a 4% reduction in ship-level unit costs and a 3% reduction in unit fuel consumption as newer, larger ships enter the fleet and inefficient ships exit.
• Company expects positive EBITDA when the full fleet returns to near-normal occupancy, with pronounced seasonality concentrated in May through August.
• Company intends to pursue additional opportunistic refinancings to lower interest expense and extend maturities.