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

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

had swung between gains and losses earlier in the session, before it committed to a sharp loss around mid-morning.

Carnival’s stock falls in choppy trading after earnings report.

FactSet, MarketWatch

The stock slumped 7.7% in afternoon trading toward the lowest close since June 9, and to put it on track to suffer a fifth-straight weekly loss. It was also headed for the biggest one-day selloff since it tumbled 13.7% on Nov. 16, 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 sunk 16.2% over its current five-week losing streak, which would be the longest such stretch since the five-week streak that ended May 20, 2022.

It has plunged 22.3% over the past three months but has soared 65.4% year to date. In comparison, the S&P 500 index
has lost 2.6% in the past three months, but has gained 11.6% this year.

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