Carnival Corporation & plc — Fiscal 2021 Form 10-K Summary
Business Context and Reporting Period
Carnival Corporation and Carnival plc operate as a dual-listed company and a single economic enterprise through nine cruise brands, port destinations, and Holland America Princess Alaska Tours. The filing covers the fiscal year ended November 30, 2021, and was filed January 27, 2022. The business remained in a gradual recovery from the COVID-19-related suspension of guest cruise operations that began in March 2020.
- As of January 13, 2022, eight of nine brands, representing 67% of capacity, had resumed guest operations.
- The company carried approximately 1.2 million passengers in 2021, compared with 12.9 million in 2019, the most recent full year of normal operations.
- As of November 30, 2021, the company had 91 ships in service or expected to return to service, with approximately 243,180 passenger capacity.
Financial Metrics, Liquidity and Capital Structure
The supplied filing text incorporates the detailed financial statements and management discussion by reference to Exhibit 13, but does not provide clear values for fiscal 2021 revenue, net loss, operating cash flow, free cash flow, total debt, operating margins, or loss per share.
- Liquidity was approximately $9.4 billion at November 30, 2021, including cash, short-term investments, and availability under the multicurrency revolving credit facility.
- The company reported refinancing more than $9 billion of debt, reducing expected annual interest expense by approximately $400 million and extending maturities.
- Management stated that the company was in compliance with applicable debt covenants at November 30, 2021.
- Substantial debt, variable-rate borrowings, debt-service requirements, maintenance covenants, and potential collateral requirements remained significant financial risks.
- Dividends on Carnival Corporation common stock and Carnival plc ordinary shares remained suspended since March 30, 2020.
- The stock-swap program generated $19 million of cumulative net proceeds through November 30, 2021; $9 million was generated during the three months ended November 30, 2021.
- In 2021, onboard and other revenues represented 45% of cruise revenues, compared with 30% in 2019, although 2021 results were not representative of normal operations.
Material Changes Versus the Prior Comparable Period
- Guest operations resumed gradually in 2021 after the broad 2020 pause, but passenger volumes remained substantially below 2019 levels.
- The company continued to incur restart costs, health and safety costs, crew-recruitment costs, and other expenses associated with bringing ships back into service.
- Capacity optimization accelerated, including the removal of less efficient ships from the fleet.
- Supply-chain shortages, extended lead times, inflation, labor-market constraints, and higher fuel costs affected operations and profitability.
- The company had 11 ships under construction or scheduled for delivery through 2025, including LNG-powered vessels; certain ships were subject to financing.
- Bookings for near-term sailings were affected by higher cancellations and pre-travel positive COVID-19 tests. Booking activity for the second half of 2022 had recently softened relative to 2019.
Guidance, Outlook, Management Commentary and Risks
- Management expected the full fleet to return to operation for the 2022 summer season, historically the company’s most profitable period.
- The company expected to operate more than 96% of previously disclosed available lower berth days during the first quarter of 2022.
- The outlook remained highly dependent on COVID-19 developments, government restrictions, port access, consumer demand, occupancy, pricing, testing and vaccination requirements, and the ability to recruit crew and shoreside employees.
- Other material risks included substantial leverage, refinancing needs, interest-rate and foreign-currency exposure, fuel-price volatility, supply-chain disruption, labor shortages, cybersecurity incidents, regulatory compliance, environmental liabilities, climate-related regulation, adverse weather, competition, and shipbuilding or repair delays.
- Princess Cruises agreed in January 2022 to plead guilty to a violation of probation, enhance the company’s environmental compliance program, and pay a $1 million criminal penalty. The court-supervised environmental compliance plan was operative until April 2022.
- The company established 2030 sustainability goals, including a 40% carbon-intensity reduction from the 2008 baseline, 60% shore-power capability, and expanded use of LNG and other lower-emission technologies. It also stated an aspiration for net carbon-neutral ship operations by 2050.
Most Important Facts for Investors to Verify
- Fiscal 2021 revenue, net loss, operating cash flow, cash burn, adjusted EBITDA, margins, and diluted loss per share in Exhibit 13.
- Total debt, secured debt, maturities, interest rates, variable-rate exposure, and covenant thresholds.
- Whether liquidity remained sufficient under slower bookings, renewed operating disruptions, or additional COVID-19-related pauses.
- Occupancy, booking volumes, pricing, cancellations, and cash-flow trends as the fleet returned to service.
- Capital commitments and financing requirements for the 11 ships scheduled for delivery through 2025.
- Potential costs and operational effects of environmental compliance obligations, climate regulations, litigation, and the environmental compliance plan.