Carnival books first post-COVID profit but stock dives after outlook disappoints

By Tomi Kilgore

Cruise operator swung to an adjusted profit that beat expectations on record revenue and bookings

Shares of Carnival Corp. took a dive Friday, as the cruise operator's first quarterly profit since before the COVID pandemic, amid record revenue and bookings, was overshadowed by a disappointing outlook.

"While we see no signs of demand slowing for our brands, at some point, booking volumes for 2024 will recede as we simply run out of inventory," said Chief Executive Josh Weinstein on a post-earnings conference call with analysts, according to an AlphaSense transcript.

The stock (CCL) (UK:CCL) had swung between gains and losses earlier in the session, before it committed to a sharp loss around mid-morning.

The stock slumped 5% to $13.72 on Friday, the lowest close since June 9. It has dropped 10% amid a five-week losing streak, which is the longest such streak since the five-week stretch that ended May 20, 2022.

The company swung to fiscal third-quarter net income for the quarter to Aug. 31 of $1.07 billion, or 79 cents a share, from a loss of $770 million, or 65 cents a share, in the same period a year ago.

Excluding nonrecurring items, adjusted earnings per share for the quarter to Aug. 31 of 86 cents, which compared with a per-share loss of 58 cents last year, beat the FactSet consensus of 75 cents.

The company had not reported a net profit since the quarter that ended in November 2019, according to FactSet data, while the adjusted profit was the first since the quarter that ended February 2020. (COVID was declared a pandemic on March 11, 2020.)

Revenue grew 59.2% to $6.85 billion, above the FactSet consensus of $6.71 billion, as passenger ticket revenue rose 75.2% to $4.55 billion and onboard and other revenue increased 34.9% to $2.31 billion.

"Now, we appreciate there are heightened concerns around the state of the consumer as of late. But the fact is, we just haven't seen it in our bookings or results," Weinstein said. "And we believe consumers are continuing to prioritize spending on experiences over material goods."

Booking volumes continued at "significantly elevated levels," Carnival said, as the company set a new third-quarter record for total bookings that were running nearly 20% above 2019 levels.

For the fourth quarter, however, the company said it expects an adjusted per-share loss of 18 cents to 10 cents, wider than the current FactSet loss consensus of 8 cents a share.

And the company expects earnings before interest, taxes, depreciation and amortization (Ebitda) -- what companies use as a measure of underlying profitability -- of $800 million to $900 million, below the FactSet consensus of $950 million.

For the company's fiscal 2023 outlook, the guidance range for adjusted Ebitda was revised lower to $4.10 billion to $4.20 billion from $4.10 billion to $4.25 billion.

And the outlook for growth in adjusted cruise costs excluding fuel, compared with 2019 levels, was raised to approximately 9.5% from prior guidance of 8% to 9%.

The stock has plunged 27.1% over the past three months but has soared 70.2% year to date. In comparison, the S&P 500 index SPX has lost 3.7% in the past three months, but has gained 11.7% this year.

-Tomi Kilgore

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

10-02-23 0732ET

Copyright (c) 2023 Dow Jones & Company, Inc.