Carnival Corporation, the world’s largest cruise company, has released its business update for the first quarter of 2023, reporting a record-breaking quarter with exceptional booking volumes and strong financial performance.
The company’s first-quarter revenue was almost equivalent to the levels achieved in 2019, and it exceeded its guidance for the quarter, surpassing expectations. Carnival’s Q1 earnings before interest, taxes, depreciation, and amortization, also outperformed its guidance by more than $30 million. However, the outlook for 2023 could be something that investors are not overjoyed with.
Strong Q1 2023 for Carnival Corporation
Carnival Corporation has started 2023 on a high note, exceeding the guidance it had put out during Q4 of 2022 by a considerable margin. The world’s largest cruise company also set a record for the highest number of bookings in a single quarter in history. At the same time, earnings before interest, taxes, depreciation, and amortization exceeded expectations by more than $30 million.
Carnival Corporation reported a US GAAP net loss of $693 million and an adjusted net loss of $690 million, significantly better than the December guidance range of $750 to $850 million net loss for Q1 2023.
Adjusted EBITDA for the first quarter reached $382 million, outperforming the guidance range of $250 to $350 million. First-quarter revenue reached $4.4 billion, 95% of the company’s revenue in 2019.
CEO Josh Weinstein commented on the company’s performance: “In the first quarter, we outperformed our guidance on all measures. We achieved record first-quarter net per diems, exceeding the high end of our guidance, driven by improving ticket prices and sustained growth in onboard revenue while delivering an additional seven points of occupancy on higher capacity compared to the prior quarter.”
The significantly better numbers for the first quarter have ensured Carnival can also start using cash to pay back the enormous mountain of debt it has accumulated over the last three years. Much of that cash is coming from a record-breaking Wave Season.
Chief Financial Officer David Bernstein noted: “We believe our debt balance has peaked this quarter and will reduce over time based on our ample liquidity position of $8.1 billion and the expected cash flow strength of our business.”
Record Booking Volumes
Carnival Corporation experienced its highest booking volumes for any quarter in its history, breaking records for North American, Australian, and European cruises.
Weinstein continued: “We are enjoying a phenomenal wave season, achieving our highest-ever quarterly booking volumes and breaking records in North America and Europe. Our strong performance has extended into March, and we expect this favorable trend to continue based on the success of our efforts to drive demand.”
Total customer deposits reached a first-quarter record of $5.7 billion as of February 28, 2023, surpassing the previous first-quarter record of $4.9 billion as of February 28, 2019, by 16%.
Is Carnival Corporation on the Way Back?
Carnival expects to return to 100% occupancy levels by the summer, where it already achieved 98% over the last quarter. It is also continuing to slim down, even removing Seabourn Odyssey from the fleet, a move that Carnival expects to make a gain on.
Moving three Costa Cruises cruise ships from Costa to the hugely successful Carnival Cruise Line looks like it will be a tremendously successful strategic decision, with interest in cruises onboard Carnival Luminosa, Carnival Venezia, and Carnival Firenze peaking.
The financial results announced today could signal the turnaround investors have been waiting for. In the past two years, the hope had been that Carnival Corporation could show the same performance as the competition, Royal Caribbean Group, in particular. However, while Royal has gained nearly $40 in its stock price since March 2020, Carnival Corporation has been lagging.
With occupancy levels returning to the 100% barrier and possibly going beyond, and bookings exceeding all expectations for 2023, Carnival Corporation could be returning to being the golden goose it once was. However, investors don’t seem to agree.
Carnival Corporation’s outlook for Q2 and the remainder of 2023 seems to be too negative, despite the company reporting better-than-expected fiscal first-quarter results and record bookings.
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The company’s downbeat outlook for Q2 and the full-year losses caused the stock to turn lower, losing 6% after a strong opening, overshadowing the phenomenal revenue increase. The company expects a per-share loss of 42 cents to 34 cents for Q2 and adjusted per-share losses of 44 cents to 28 cents for the fiscal year 2023.