Carnival 10-Q 2023-05-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2023

OR

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-9610												Commission file number: 001-15136
Carnival Corporation												Carnival plc
(Exact name of registrant as specified in its charter)									(Exact name of registrant as specified in its charter)
Republic of Panama									England and Wales
(State or other jurisdiction of incorporation or organization)									(State or other jurisdiction of incorporation or organization)
59-1562976									98-0357772
(I.R.S. Employer Identification No.)									(I.R.S. Employer Identification No.)
3655 N.W. 87th Avenue									Carnival House, 100 Harbour Parade
Miami,			Florida			33178-2428			Southampton			SO15 1ST			United Kingdom
(Address of principal executive offices) (Zip Code)									(Address of principal executive offices) (Zip Code)

(305)			599-2600						011			44 23 8065 5000
(Registrant’s telephone number, including area code)									(Registrant’s telephone number, including area code)
None									None
(Former name, former address and former fiscal year, if changed since last report)									(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Trading Symbol(s)			Name of each exchange on which registered
Common Stock ($0.01 par value)			CCL			New York Stock Exchange, Inc.
Ordinary Shares each represented by American Depository Shares ($1.66 par value), Special Voting Share, GBP 1.00 par value and Trust Shares of beneficial interest in the P&O Princess Special Voting Trust			CUK			New York Stock Exchange, Inc.
1.000% Senior Notes due 2029			CUK29			New York Stock Exchange LLC

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers, smaller reporting companies, or emerging growth companies. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filers			☑			Accelerated filers			☐			Non-accelerated filers			☐			Smaller reporting companies			☐			Emerging growth companies			☐

If emerging growth companies, indicate by check mark if the registrants have elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

At June 22, 2023, Carnival Corporation had outstanding 1,119,265,540 shares of Common Stock, $0.01 par value.						At June 22, 2023, Carnival plc had outstanding 186,806,488 Ordinary Shares $1.66 par value, one Special Voting Share, GBP 1.00 par value and 1,119,265,540 Trust Shares of beneficial interest in the P&O Princess Special Voting Trust.

CARNIVAL CORPORATION & PLC

TABLE OF CONTENTS

									Page
PART I - FINANCIAL INFORMATION
Item 1.			Financial Statements						4
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations						26
Item 3.			Quantitative and Qualitative Disclosures About Market Risk						33
Item 4.			Controls and Procedures						34
PART II - OTHER INFORMATION
Item 1.			Legal Proceedings						35
Item 1A.			Risk Factors						35
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds						35
Item 6.			Exhibits						37
SIGNATURES									39

PART I - FINANCIAL INFORMATION

CARNIVAL CORPORATION & PLC

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(UNAUDITED)

(in millions, except per share data)

			Three Months Ended May 31,												Six Months Ended May 31,
			2023						2022						2023						2022
Revenues
Passenger ticket			$	3,141					$	1,285					$	6,011					$	2,158
Onboard and other			1,770						1,116						3,332						1,866
			4,911						2,401						9,343						4,024
Operating Expenses
Commissions, transportation and other			619						325						1,274						576
Onboard and other			549						314						1,033						523
Payroll and related			601						533						1,183						1,038
Fuel			489						545						1,024						910
Food			325						191						636						327
Ship and other impairments			—						—						—						8
Other operating			875						774						1,619						1,331
Cruise and tour operating expenses			3,457						2,683						6,768						4,713
Selling and administrative			736						619						1,448						1,149
Depreciation and amortization			597						572						1,179						1,126
			4,791						3,874						9,394						6,988
Operating Income (Loss)			120						(1,473)						(52)						(2,964)
Nonoperating Income (Expense)
Interest income			69						6						124						9
Interest expense, net of capitalized interest			(542)						(370)						(1,082)						(738)
Gain (loss) on debt extinguishment, net			(31)						—						(31)						—
Other income (expense), net			(17)						6						(47)						(26)
			(522)						(358)						(1,036)						(755)
Income (Loss) Before Income Taxes			(402)						(1,831)						(1,087)						(3,719)
Income Tax Benefit (Expense), Net			(5)						(3)						(13)						(6)
Net Income (Loss)			$	(407)					$	(1,834)					$	(1,100)					$	(3,726)
Earnings Per Share
Basic			$	(0.32)					$	(1.61)					$	(0.87)					$	(3.27)
Diluted			$	(0.32)					$	(1.61)					$	(0.87)					$	(3.27)

The accompanying notes are an integral part of these consolidated financial statements.

CARNIVAL CORPORATION & PLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

(in millions)

			Three Months Ended May 31,												Six Months Ended May 31,
			2023						2022						2023						2022
Net Income (Loss)			$	(407)					$	(1,834)					$	(1,100)					$	(3,726)
Items Included in Other Comprehensive Income (Loss)
Change in foreign currency translation adjustment			102						(260)						99						(246)
Other			(33)						3						(19)						5
Other Comprehensive Income (Loss)			69						(257)						79						(241)
Total Comprehensive Income (Loss)			$	(338)					$	(2,091)					$	(1,021)					$	(3,967)

The accompanying notes are an integral part of these consolidated financial statements.

CARNIVAL CORPORATION & PLC

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in millions, except par values)

			May 31, 2023						November 30, 2022
ASSETS
Current Assets
Cash and cash equivalents			$	4,468					$	4,029
Restricted cash			18						1,988
Trade and other receivables, net			449						395
Inventories			438						428
Prepaid expenses and other			833						652
Total current assets			6,206						7,492
Property and Equipment, Net			39,584						38,687
Operating Lease Right-of-Use Assets			1,310						1,274
Goodwill			579						579
Other Intangibles			1,163						1,156
Other Assets			3,030						2,515
			$	51,873					$	51,703
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Short-term borrowings			$	—					$	200
Current portion of long-term debt			1,789						2,393
Current portion of operating lease liabilities			161						146
Accounts payable			1,042						1,050
Accrued liabilities and other			1,951						1,942
Customer deposits			6,892						4,874
Total current liabilities			11,835						10,605
Long-Term Debt			31,921						31,953
Long-Term Operating Lease Liabilities			1,208						1,189
Other Long-Term Liabilities			1,044						891
Contingencies and Commitments
Shareholders’ Equity
Carnival Corporation common stock, $0.01 par value; 1,960 shares authorized; 1,250 shares at 2023 and 1,244 shares at 2022 issued			12						12
Carnival plc ordinary shares, $1.66 par value; 217 shares at 2023 and 2022 issued			361						361
Additional paid-in capital			16,684						16,872
Retained earnings (accum

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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 net income (loss)
•Booking levels			•Adjusted EBITDA
•Occupancy			•Adjusted earnings per share
•Interest, tax and fuel expenses			•Adjusted free cash flow
•Currency exchange rates			•Net per diems
•Goodwill, ship and trademark fair values			•Net yields
•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 and residual values			•Adjusted return on invested capital

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. Additionally, many of these risks and uncertainties are currently, and in the future may continue to be, amplified by our substantial debt balance as a result of the pause of our guest cruise operations. There may be additional risks that we consider immaterial or which are unknown. These factors include, but are not limited to, the following:

• Events and conditions around the world, including war and other military actions, such as the invasion of Ukraine, 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, impacting 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-corruption, economic sanctions, trade protection, labor and employment, and tax 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 sustainability related goals, aspirations, initiatives, and our public statements and disclosures regarding them, 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.

• Failure to successfully implement our business strategy following our resumption of guest cruise operations would negatively impact the occupancy levels and pricing of our cruises and could have a material adverse effect on our business. 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.

The ordering of the risk factors set forth above is not intended to reflect our indication of priority or likelihood.

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.

New Accounting Pronouncements

Refer to Note 1 - “General, Accounting Pronouncements” of the consolidated financial statements for additional discussion regarding Accounting Pronouncements.

Critical Accounting Estimates

For a discussion of our critical accounting estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” that is included in the Form 10-K.

Seasonality

Our passenger ticket revenues are seasonal. Demand for cruises has been greatest during our third quarter, which includes the Northern Hemisphere summer months. This higher demand during the third quarter results in higher ticket prices and occupancy levels and, accordingly, the largest share of our operating income is typically earned during this period. The seasonality of our results also increases due to ships being taken out-of-service for maintenance, which we schedule during non-peak demand periods. In addition, substantially all of Holland America Princess Alaska Tours’ revenue and net income (loss) is generated from May through September in conjunction with Alaska’s cruise season.

Known Trends and Uncertainties

• We believe the increased cost of fuel and other related costs are reasonably likely to continue to impact our profitability in both the short and long-term.

• We believe inflation and higher interest rates are reasonably likely to continue to impact our profitability.

• We believe the increasing global focus on climate change, including the reduction of carbon emissions and new and evolving regulatory requirements, is reasonably likely to have a material negative impact on our future financial results. The full impact of climate change to our business is not yet known.

Statistical Information

			Three Months Ended May 31,												Six Months Ended May 31,
			2023						2022						2023						2022
Passenger Cruise Days (“PCDs”) (in millions) (a)			21.8						11.4						42.0						18.7
Available Lower Berth Days (“ALBDs”) (in millions) (b)			22.3						16.7						44.3						30.0
Occupancy percentage (c)			98		%				69		%				95		%				62		%
Passengers carried (in millions)			3.0						1.7						5.7						2.7
Fuel consumption in metric tons (in millions)			0.7						0.6						1.5						1.2
Fuel consumption in metric tons per thousand ALBDs			32.5						37.9						33.0						40.0
Fuel cost per metric ton consumed			$	677					$	869					$	704					$	765
Currencies (USD to 1)
AUD			$	0.67					$	0.73					$	0.68					$	0.72
CAD			$	0.74					$	0.79					$	0.74					$	0.79
EUR			$	1.08					$	1.08					$	1.08					$	1.11
GBP			$	1.23					$	1.29					$	1.23					$	1.32

Notes to Statistical Information

(a)PCD represents the number of cruise passengers on a voyage multiplied by the number of revenue-producing ship operating days for that voyage.

(b)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 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.

(c)Occupancy, in accordance with cruise industry practice, is calculated using a numerator of PCDs and a denominator of 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.

Results of Operations

Consolidated
			Three Months Ended May 31,																								Six Months Ended May 31,
(in millions)			2023						2022						Change									2023						2022						Change
Revenues
Passenger ticket			$	3,141					$	1,285					$	1,856											$	6,011					$	2,158					$	3,853
Onboard and other			1,770						1,116						654												3,332						1,866						1,466
			4,911						2,401						2,510												9,343						4,024						5,319
Operating Costs and Expenses
Commissions, transportation and other			619						325						294												1,274						576						698
Onboard and other			549						314						235												1,033						523						510
Payroll and related			601						533						68												1,183						1,038						145
Fuel			489						545						(56)												1,024						910						114
Food			325						191						134												636						327						309
Ship and other impairments			—						—						—												—						8						(8)
Other operating			875						774						101												1,619						1,331						287
Cruise and tour operating expenses			3,457						2,683						774												6,768						4,713						2,055
Selling and administrative			736						619						118												1,448						1,149						299
Depreciation and amortization			597						572						25												1,179						1,126						52
			4,791						3,874						917												9,394						6,988						2,406
Operating Income (Loss)			120						(1,473)						1,593												(52)						(2,964)						2,913
Nonoperating Income (Expense)
Interest income			69						6						62												124						9						115
Interest expense, net of capitalized interest			(542)						(370)						(172)												(1,082)						(738)						(343)
Gain (loss) on debt extinguishment, net			(31)						—						(31)												(31)						—						(31)
Other income (expense), net			(17)						6						(23)												(47)						(26)						(21)
			(522)						(358)						(164)												(1,036)						(755)						(281)
Income (Loss) Before Income Taxes			$	(402)					$	(1,831)					$	1,430											$	(1,087)					$	(3,719)					$	2,632

NAA
			Three Months Ended May 31,																								Six Months Ended May 31,
(in millions)			2023						2022						Change									2023						2022						Change
Revenues
Passenger ticket			$	2,041					$	862					$	1,180											$	3,933					$	1,447					$	2,486
Onboard and other			1,314						804						510												2,501						1,345						1,156
			3,355						1,666						1,689												6,434						2,792						3,642
Operating Costs and Expenses			2,282						1,768						514												4,471						3,055						1,415
Selling and administrative			435						366						68												875						710						165
Depreciation and amortization			374						353						21												738						687						50
			3,091						2,487						603												6,083						4,453						1,630
Operating Income (Loss)			$	265					$	(821)					$	1,086											$	351					$	(1,661)					$	2,012

Europe
			Three Months Ended May 31,																								Six Months Ended May 31,
(in millions)			2023						2022						Change									2023						2022						Change
Revenues
Passenger ticket			$	1,112					$	490					$	622											$	2,104					$	832					$	1,273
Onboard and other			353						175						178												655						291						364
			1,465						666						800												2,759						1,123						1,637
Operating Costs and Expenses			1,101						848						252												2,179						1,546						633
Selling and administrative			222						175						47												436						352						84
Depreciation and amortization			169						179						(10)												338						359						(21)
			1,492						1,202						290												2,952						2,257						696
Operating Income (Loss)			$	(27)					$	(536)					$	510											$	(193)					$	(1,134)					$	941

The effects of the pause in guest cruise operations in March 2020 and subsequent resumption of our guest cruise operations, inflation, higher fuel prices, higher interest rates and fluctuations in foreign currency rates are collectively having a material negative impact on all aspects of our business, including our results of operations, liquidity and financial position. We have a substantial debt balance and require a significant amount of cash to service our debt and sustain our operations. Our ability to generate cash will be affected by our ability to successfully implement our business strategy, which includes increasing our occupancy levels and pricing of our cruises, as well as general macroeconomic, financial, geopolitical, competitive, regulatory and other factors beyond our control. The full extent of these impacts is uncertain and may be amplified by our substantial debt balance.

Three Months Ended May 31, 2023 (“2023”) Compared to Three Months Ended May 31, 2022 (“2022”)

Revenues

Consolidated

Cruise passenger ticket revenues made up 64% of our total revenues in 2023 while onboard and other revenues made up 36%. Revenues in 2023 increased by $2.5 billion to $4.9 billion from $2.4 billion in 2022 due to the significant increase of ships in service and considerably higher occupancy levels in 2023 as compared to 2022. Our full fleet was serving guests as of May 31, 2023, compared to 86% as of May 31, 2022. ALBDs increased to 22.3 million in 2023 as compared to 16.7 million in 2022. Occupancy for 2023 was 98% compared to 69% in 2022.

NAA Segment

Cruise passenger ticket revenues made up 61% of our NAA segment’s total revenues in 2023 while onboard and other cruise revenues made up 39%. NAA segment revenues in 2023 increased by $1.7 billion to $3.4 billion from $1.7 billion in 2022 due to the significant increase of ships in service and considerably higher occupancy levels in 2023 as compared to 2022. Our NAA segment’s full fleet was serving guests as of May 31, 2023, compared to 90% as of May 31, 2022. ALBDs increased to 13.7 million in 2023 as compared to 10.1 million in 2022. Occupancy for 2023 was 102% compared to 79% in 2022.

Europe Segment

Cruise passenger ticket revenues made up 76% of our Europe segment’s total revenues in 2023 while onboard and other cruise revenues made up 24%. Europe segment revenues in 2023 increased by $0.8 billion to $1.5 billion from $0.7 billion in 2022 due to the significant increase of ships in service and considerably higher occupancy levels in 2023 as compared to 2022. Our Europe segment’s full fleet was serving guests as of May 31, 2023, compared to 81% as of May 31, 2022. ALBDs increased to 8.5 million in 2023 as compared to 6.6 million in 2022. Occupancy for 2023 was 91% compared to 53% in 2022.

Operating Cost and Expenses

Consolidated

Operating costs and expenses increased by $0.8 billion to $3.5 billion in 2023 from $2.7 billion in 2022. These increases were driven by our resumption of guest cruise operations, an increase in ships in service and considerably higher occupancy.

Fuel costs decreased by $56 million to $489 million in 2023 from $545 million in 2022. $137 million of this decrease was caused by a decrease in fuel prices and changes in fuel mix of $189 per metric ton consumed in 2023 compared to 2022, partially offset by $80 million from higher fuel consumption of 0.1 million metric tons, due to the resumption of guest cruise operations.

Selling and administrative expenses increased by $118 million to $736 million in 2023 from $619 million in 2022. The increase was caused by higher administrative expenses and advertising costs incurred as part of our resumption of guest cruise operations.

The drivers in changes in costs and expenses for our NAA and Europe segments are the same as those described for our consolidated results.

Nonoperating Income (Expense)

Interest expense, net of capitalized interest, increased by $172 million to $542 million in 2023 from $370 million in 2022. The increase was caused by a higher average interest rate in 2023 compared to 2022.

Six Months Ended May 31, 2023 (“2023”) Compared to Six Months Ended May 31, 2022 (“2022”)

Revenues

Consolidated

Cruise passenger ticket revenues made up 64% of our total revenues in 2023 while onboard and other revenues made up 36%. Revenues in 2023 increased by $5.3 billion to $9.3 billion from $4.0 billion in 2022 due to the significant increase of ships in service and considerably higher occupancy levels in 2023 as compared to 2022. Our full fleet was serving guests as of May 31, 2023, compared to 86% as of May 31, 2022. ALBDs increased to 44.3 million in 2023 as compared to 30.0 million in 2022. Occupancy for 2023 was 95% compared to 62% in 2022.

NAA Segment

Cruise passenger ticket revenues made up 61% of our NAA segment’s total revenues in 2023 while onboard and other cruise revenues made up 39%. NAA segment revenues in 2023 increased by $3.6 billion to $6.4 billion from $2.8 billion in 2022 due to the significant increase of ships in service and considerably higher occupancy levels in 2023 as compared to 2022. Our NAA segment’s full fleet was serving guests as of May 31, 2023, compared to 90% as of May 31, 2022. ALBDs increased to 27.6 million in 2023 as compared to 18.8 million in 2022. Occupancy for 2023 was 100% compared to 70% in 2022.

Europe Segment

Cruise passenger ticket revenues made up 76% of our Europe segment’s total revenues in 2023 while onboard and other cruise revenues made up 24%. Europe segment revenues in 2023 increased by $1.6 billion to $2.8 billion from $1.1 billion in 2022 due to the significant increase of ships in service and considerably higher occupancy levels in 2023 as compared to 2022. Our Europe segment’s full fleet was serving guests as of May 31, 2023, compared to 81% as of May 31, 2022. ALBDs increased to 16.7 million in 2023 as compared to 11.2 million in 2022. Occupancy for 2023 was 85% compared to 50% in 2022.

Operating Cost and Expenses

Consolidated

Operating costs and expenses increased by $2.1 billion to $6.8 billion in 2023 from $4.7 billion in 2022. These increases were driven by our resumption of guest cruise operations, an increase in ships in service and considerably higher occupancy.

Fuel costs increased by $0.1 billion to $1.0 billion in 2023 from $0.9 billion in 2022. $0.2 billion of this increase was caused by higher fuel consumption of 0.3 million metric tons, due to the resumption of guest cruise operations, partially offset by $0.1 billion from a decrease in fuel prices and changes in fuel mix of $60 per metric ton consumed in 2023 compared to 2022.

Selling and administrative expenses increased by $0.3 billion to $1.4 billion in 2023 from $1.1 billion in 2022. The increase was caused by higher administrative expenses and advertising costs incurred as part of our resumption of guest cruise operations.

The drivers in changes in costs and expenses for our NAA and Europe segments are the same as those described for our consolidated results.

Nonoperating Income (Expense)

Interest expense, net of capitalized interest, increased by $0.3 billion to $1.1 billion in 2023 from $0.7 billion in 2022. The increase was caused by a higher average interest rate in 2023 compared to 2022.

Liquidity, Financial Condition and Capital Resources

As of May 31, 2023, we had $7.3 billion of liquidity including cash and cash equivalents and borrowings available under our Revolving Facility. We will continue to pursue various opportunities to refinance future debt maturities and/or to extend the maturity dates associated with our existing indebtedness and obtain relevant financial covenant amendments or waivers, if needed.

We had a working capital deficit of $5.6 billion as of May 31, 2023 compared to a working capital deficit of $3.1 billion as of November 30, 2022. The increase in working capital deficit was caused by an increase in customer deposits and an overall decrease in cash and cash equivalents and restricted cash. We operate with a substantial working capital deficit. This deficit is mainly attributable to the fact that, under our business model, substantially all of our passenger ticket receipts are collected in advance of the applicable sailing date. These advance passenger receipts generally remain a current liability until the sailing date. The cash generated from these advance receipts is used interchangeably with cash on hand from other sources, such as our borrowings and other cash from operations. The cash received as advanced receipts can be used to fund operating expenses, pay down our debt, make long-term investments or any other use of cash. Included within our working capital are $6.9 billion and $4.9 billion of customer deposits as of May 31, 2023 and November 30, 2022, respectively. We have agreements with a number of credit card processors that transact customer deposits related to our cruise vacations. Certain of these agreements allow the credit card processors to request, under certain circumstances, that we provide a reserve fund in cash. In addition, we have a relatively low level of accounts receivable and limited investment in inventories.

Refer to Note 1 - “General, Liquidity and Management’s Plans” of the consolidated financial statements for additional discussion regarding our liquidity.

Sources and Uses of Cash

Operating Activities

Our business provided $1.5 billion of net cash flows from operating activities during the six months ended May 31, 2023, an increase of $2.7 billion, compared to $1.2 billion used for the same period in 2022. This was driven by a decrease in the net loss compared to the same period in 2022 and other working capital changes.

Investing Activities

During the six months ended May 31, 2023, net cash used in investing activities was $1.5 billion. This was driven by:

• Capital expenditures of $1.1 billion for our ongoing new shipbuilding program

• Capital expenditures of $649 million for ship improvements and replacements, information technology and buildings and improvements

• Proceeds from sales of ships of $255 million

During the six months ended May 31, 2022, net cash used in investing activities was $3.1 billion. This was driven by:

• Capital expenditures of $2.6 billion for our ongoing new shipbuilding program

• Capital expenditures of $581 million for ship improvements and replacements, information technology and buildings and improvements

• Proceeds from sale of ships and other of $55 million

• Purchases of short-term investments of $315 million

• Proceeds from maturity of short-term investments of $364 million

Financing Activities

During the six months ended May 31, 2023, net cash used in financing activities of $1.6 billion was driven by:

• Repayments of $0.2 billion of short term-borrowings

• Repayments of $2.3 billion of long-term debt

• Issuances of $1.0 billion of long-term debt

• Payments of $94 million related to debt issuance costs

• Purchases of $20 million of Carnival plc ordinary shares and issuances of $22 million of Carnival Corporation common stock under our Stock Swap Program

During the six months ended May 31, 2022, net cash provided by financing activities of $2.5 billion was caused by:

• Issuances of $3.3 billion of long-term debt

• Repayments of $0.7 billion of long-term debt

• Payments of $110 million related to debt issuance costs

• Net repayments of short-term borrowings of $114 million

• Purchases of $82 million of Carnival plc ordinary shares and issuances of $89 million of Carnival Corporation common stock under our Stock Swap Program

Funding Sources

As of May 31, 2023, we had $7.3 billion of liquidity including $4.5 billion of cash and cash equivalents and $2.9 billion of borrowings available under our Revolving Facility, which matures in 2024. In February 2023, Carnival Holdings II entered into the New Revolving Facility, which may be utilized beginning in August 2024, at which date it will replace our Revolving Facility. Refer to Note 3 - “Debt” of the consolidated financial statements for additional discussion. In addition, we had $3.1 billion of undrawn export credit facilities to fund ship deliveries planned through 2025. We plan to use existing liquidity and future cash flows from operations to fund our cash requirements including capital expenditures not funded by our export credit facilities. We seek to manage our credit risk exposures, including counterparty nonperformance associated with our cash and cash equivalents, and future financing facilities by conducting business with well-established financial institutions, and export credit agencies and diversifying our counterparties.

(in billions)						2023						2024						2025
Future export credit facilities at May 31, 2023						$	0.1					$	2.2					$	0.7

Our export credit facilities contain various financial covenants as described in Note 3 - “Debt”. At May 31, 2023, we were in compliance with the applicable covenants under our debt agreements.

Off-Balance Sheet Arrangements

We are not a party to any off-balance sheet arrangements, including guarantee contracts, retained or contingent interests, certain derivative instruments and variable interest entities that either have, or are reasonably likely to have, a current or future material effect on our consolidated financial statements.

For a discussion of our hedging strategies and market risks, see the discussion below and Note 10 - “Fair Value Measurements, Derivative Instruments and Hedging Activities and Financial Risks” in our consolidated financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations within our Form 10-K.

Interest Rate Risks

The composition of our debt, interest rate swaps and cross currency swaps, was as follows:

			May 31, 2023
Fixed rate			61		%
EUR fixed rate			17		%
Floating rate			7		%
EUR floating rate			14		%
GBP floating rate			1		%

A. Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported, within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in our reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Our President, Chief Executive Officer and Chief Climate Officer and our Chief Financial Officer and Chief Accounting Officer have evaluated our disclosure controls and procedures and have concluded, as of May 31, 2023, that they are effective at a reasonable level of assurance, as described above.

B. Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended May 31, 2023 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings**.**

The legal proceedings described in Note 4 – “Contingencies and Commitments” of our consolidated financial statements, including those described under “COVID-19 Actions” and “Regulatory or Governmental Inquiries and Investigations,” are incorporated in this “Legal Proceedings” section by reference. Additionally, SEC rules require disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that we believe may exceed $1 million.

On June 20, 2022, Princess Cruises notified the Australian Maritime Safety Authorization (“AMSA”) and the flag state, Bermuda, regarding approximately six cubic meters of comminuted food waste (liquid biodigester effluent) inadvertently discharged by Coral Princess inside the Great Barrier Reef Marine Park. On June 23, 2022, the UK P&I Club N.V. provided a letter of undertaking for approximately $1.9 million (being the estimated maximum combined penalty). On May 31, 2023, we received a summons from the Australia Federal Prosecution Service indicating that formal charges are being pursued against Princess Cruises and the Captain of the vessel. We believe the ultimate outcome will not have a material impact on our consolidated financial statements.

The risk factors in this Form 10-Q below should be carefully considered, including the risk factors discussed in “Risk Factors” and other risks discussed in our Form 10-K. These risks could materially and adversely affect our results, operations, outlooks, plans, goals, growth, reputation, cash flows, liquidity, and stock price. Our business also could be affected by risks that we are not presently aware of or that we currently consider immaterial to our operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds**.**

**A.**Stock Swap Program

We have a program that allows us to realize a net cash benefit when Carnival Corporation common stock is trading at a premium to the price of Carnival plc ordinary shares. Under the Stock Swap Program, we may elect to offer and sell shares of Carnival Corporation common stock at prevailing market prices in ordinary brokers’ transactions and repurchase an equivalent number of Carnival plc ordinary shares in the UK market.

Under the Stock Swap Program effective as of June 2021, the Board of Directors authorized the sale of up to $500 million shares of Carnival Corporation common stock in the U.S. market and the purchase of Carnival plc ordinary shares on at least an equivalent basis.

We may in the future implement a program to allow us to obtain a net cash benefit when Carnival plc ordinary shares are trading at a premium to the price of Carnival Corporation common stock.

Any sales of Carnival Corporation common stock and Carnival plc ordinary shares have been or will be registered under the Securities Act of 1933, as amended. During the three months ended May 31, 2023 under the Stock Swap Program, we sold 2.3 million shares of Carnival Corporation common stock and repurchased the same amount of Carnival plc ordinary shares resulting in net proceeds of $2 million, which were used for general corporate purposes. In addition, during the three months ended May 31, 2023, we sold 0.5 million shares of Carnival Corporation common stock at an average price per share of $9.83, resulting in net proceeds of $5 million. Since the beginning of the Stock Swap Program, first authorized in June 2021, we have sold 17.2 million shares of Carnival Corporation common stock and repurchased the same amount of Carnival plc ordinary shares, resulting in net proceeds of $29 million. No shares of Carnival Corporation common stock or Carnival plc ordinary shares were repurchased during the three months ended May 31, 2023 outside of the Stock Swap Program.

Period						Total Number of Shares of Carnival plc Ordinary Shares Purchased (a) (in millions)						Average Price Paid per Share of Carnival plc Ordinary Share						Maximum Number of Carnival plc Ordinary Shares That May Yet Be Purchased Under the Carnival Corporation Stock Swap Program (in millions)
March 1, 2023 through March 31, 2023						—						$	—					3.7
April 1, 2023 through April 30, 2023						1.6						$	8.60					2.2
May 1, 2023 through May 31, 2023						0.8						$	8.92					1.4
Total						2.3						$	8.70

(a) No ordinary shares of Carnival plc were purchased outside of publicly announced plans or programs.

INDEX TO EXHIBITS
												Incorporated by Reference																		Filed/ Furnished Herewith
Exhibit Number						Exhibit Description						Form						Exhibit						Filing Date
Articles of incorporation and by-laws
3.1						Third Amended and Restated Articles of Incorporation of Carnival Corporation.						8-K						3.1						4/17/2003
3.2						Third Amended and Restated By-Laws of Carnival Corporation.						8-K						3.1						4/20/2009
3.3						Articles of Association of Carnival plc.						8-K						3.3						4/20/2009
Material Contracts
10.1						Amendment of the 2020 Stock Plan.						8-K						10.1						4/26/2023
10.2						Form of Performance-Based Restricted Stock Unit Agreement for the Carnival Corporation 2020 Stock Plan.																								X
10.3						Form of Time-Based Restricted Stock Unit Agreement for the Carnival Corporation 2020 Stock Plan.																								X
10.4						Amendment and Restatement Agreement dated May 25, 2023 in respect of the Multicurrency Revolving Facilities Agreement dated May 18, 2011, as most recently amended and restated on August 6, 2019 (and as otherwise amended from time to time), among Carnival Corporation, Carnival plc and Costa Crociere S.p.A., JPMorgan Chase Bank, N.A. as retiring arranger, Bank of America Europe Designated Activity Company as retiring facilities agent, and J.P. Morgan SE as new arranger and successor facilities agent.																								X
Rule 13a-14(a)/15d-14(a) certifications
31.1						Certification of President, Chief Executive Officer and Chief Climate Officer of Carnival Corporation pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.																								X
31.2						Certification of Chief Financial Officer and Chief Accounting Officer of Carnival Corporation pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.																								X
31.3						Certification of President, Chief Executive Officer and Chief Climate Officer of Carnival plc pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.																								X
31.4						Certification of Chief Financial Officer and Chief Accounting Officer of Carnival plc pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.																								X
Section 1350 certifications
32.1*						Certification of President, Chief Executive Officer and Chief Climate Officer of Carnival Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.																								X
32.2*						Certification of Chief Financial Officer and Chief Accounting Officer of Carnival Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.																								X

INDEX TO EXHIBITS
												Incorporated by Reference																		Filed/ Furnished Herewith
Exhibit Number						Exhibit Description						Form						Exhibit						Filing Date
32.3*						Certification of President, Chief Executive Officer and Chief Climate Officer of Carnival plc pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.																								X
32.4*						Certification of Chief Financial Officer and Chief Accounting Officer of Carnival plc pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.																								X
Interactive Data File
101						The consolidated financial statements from Carnival Corporation & plc’s joint Quarterly Report on Form 10-Q for the quarter ended May 31, 2023, as filed with the Securities and Exchange Commission on June 28, 2023, formatted in Inline XBRL, are as follows:
						(i) the Consolidated Statements of Income (Loss) for the three and six months ended May 31, 2023 and 2022;																								X
						(ii) the Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended May 31, 2023 and 2022;																								X
						(iii) the Consolidated Balance Sheets at May 31, 2023 and November 30, 2022;																								X
						(iv) the Consolidated Statements of Cash Flows for the six months ended May 31, 2023 and 2022;																								X
						(v) the Consolidated Statements of Shareholders’ Equity for the three and six months ended May 31, 2023 and 2022;																								X
						(vi) the notes to the consolidated financial statements, tagged in summary and detail.																								X
104						The cover page from Carnival Corporation & plc’s joint Quarterly Report on Form 10-Q for the quarter ended May 31, 2023, as filed with the Securities and Exchange Commission on June 28, 2023, formatted in Inline XBRL (included as Exhibit 101).

*			These items are furnished and not filed.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each of the registrants has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			CARNIVAL CORPORATION									CARNIVAL PLC
By:			/s/ Josh Weinstein						By:			/s/ Josh Weinstein
			Josh Weinstein									Josh Weinstein
			President, Chief Executive Officer and Chief Climate Officer									President, Chief Executive Officer and Chief Climate Officer
By:			/s/ David Bernstein						By:			/s/ David Bernstein
			David Bernstein									David Bernstein
			Chief Financial Officer and Chief Accounting Officer									Chief Financial Officer and Chief Accounting Officer
			Date: June 28, 2023									Date: June 28, 2023