Carnival Corp Ltd. 10-Q Summary: Q1 2026
Business Context and Reporting Period
This report covers the quarterly period ended February 28, 2026, for Carnival Corporation & plc. The company operates as a large accelerated filer with a dual-listed company structure (Carnival Corporation in Panama and Carnival plc in the UK). The period reflects strong operational performance with a return to profitability, driven by increased ticket prices, higher onboard spending, and favorable foreign currency impacts, partially offset by higher repair and maintenance costs.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Revenues | $6,165 million | $5,810 million |
| Operating Income | $607 million | $543 million |
| Net Income (Attributable to CCL) | $258 million | $(78) million |
| Diluted EPS | $0.19 | $(0.06) |
| Operating Cash Flow | $1,263 million | $925 million |
| Total Debt (Gross) | $26,004 million | $27,383 million |
| Liquidity (Cash + Revolver) | $5.9 billion | N/A |
| Customer Deposits | $7.9 billion | $7.2 billion |
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased 6.1% year-over-year. Passenger ticket revenues rose 5.0% to $4.0 billion, driven by a $42 million increase in ticket prices and $158 million in favorable foreign currency translation. Onboard and other revenues grew 8.3% to $2.1 billion, fueled by higher guest spending.
- Profitability Turnaround: The company reported a net income of $258 million compared to a net loss of $78 million in Q1 2025. This improvement was aided by a $85 million reduction in net interest expense and the absence of $252 million in debt extinguishment costs recorded in the prior year.
- Expense Management: Operating expenses increased 4.6% to $3.9 billion. While fuel costs decreased by $68 million due to lower prices and improved efficiency, repair and maintenance expenses (including dry-docking) increased by $75 million.
- Debt Reduction: Total debt decreased by approximately $1.4 billion, primarily due to the settlement of $1.1 billion in convertible notes (partially via cash, partially via equity issuance) and regular principal repayments.
Guidance, Outlook, and Risks
- Capital Allocation: The Board approved a new $2.5 billion share repurchase program in March 2026, commencing after shareholder meetings expected on April 17, 2026. A cash dividend of $0.15 per share was paid in February 2026.
- Corporate Structure: The company is proceeding with the unification of its dual-listed company structure and the redomiciliation of Carnival Corporation to Bermuda. The S-4 registration statement was declared effective by the SEC in late February 2026.
- Regulatory Risks: The company is subject to the EU Emissions Trading System (ETS), with full scope impact expected in 2026. The 2025 impact was $91 million. Additionally, the company is awaiting a Supreme Court ruling on the Havana Docks Corporation litigation regarding alleged trafficking in confiscated Cuban property.
- Operational Outlook: Management cites fuel costs, foreign currency fluctuations, and geopolitical uncertainty as key variables affecting future profitability. Capacity increased 0.5% year-over-year, with growth in the North America segment offset by a decrease in the Europe segment due to dry-docking.
Investor Verification Checklist
- Debt Covenants: Verify continued compliance with the 3.0x interest coverage ratio and 65% debt-to-capital ratio, especially given the high leverage profile.
- Convertible Note Settlement: Confirm the dilutive impact of the 69.1 million shares issued in December 2025 to settle the 2027 Convertible Notes.
- Customer Deposits: Monitor the $7.9 billion in customer deposits as a key liquidity buffer and indicator of future revenue recognition.
- Legal Contingencies: Track the outcome of the Supreme Court review of the Havana Docks case and ongoing class actions in Australia and Italy regarding COVID-19 exposure.
- Share Repurchase Timing: Note that the new $2.5 billion buyback program is contingent on shareholder approval for the DLC unification, expected in mid-April 2026.