Carnival’s Bonds Fall on Revenue Miss and Weakening Balance Sheet

American cruise operator Carnival posted a net loss of $770mn in Q3 2022 vs. a loss of $2.8bn in Q3 2021. Quarterly revenues jumped 7.9x to $4.3bn compared to the same period last year and improved 80% from Q2 2022. However, it fell short of analysts’ estimates of $4.9bn, sending its shares and bonds tumbling. Operating costs and expenses rose to $3.4bn vs. $1.6bn in Q3 2021. Adjusted EBITDA came in at $300mn, turning positive for the first time since resuming cruise operations. On the balance sheet front, total debt stood at around $34bn while its liquidity decreased 21.4% to $7.4bn compared to November 2021. For the last quarter, the cruise line lowered its forecasts citing rising costs and supply chain issues, expecting a further net loss and slightly negative adjusted EBITDA. CEO Josh Weinstein said, “During our third quarter, our business continued its positive trajectory, achieving over $300 million of adjusted EBITDA and reaching nearly 90% occupancy on our August sailings. We are continuing to close the gap to 2019 as we progress through the year, building occupancy on higher capacity and lower unit costs.”

Carnival’s stock and bonds slipped on the earnings release. Its 7.625% 2026s fell 7.21 points to 76.14 cents on the dollar to yield 17.16%.