Carnival pays $6 billion debt in 2023; more debt cuts planned in 2024

By Devika Patel

Knoxville, Tenn., Dec. 22 – Carnival Corp. & plc plans to continue paying down debt in 2024 until it achieves investment-grade credit metrics.

During the last quarter, the company reduced its debt by $725 million and, for the full year 2023, made debt payments of $6 billion.

“Our full year 2023 strong EBITDA of $4.2 billion and strong cash from operations of $4.3 billion, propelled us on our journey to pay down debt and reduce the debt burden necessitated by the pause in guest cruise operations,” chief accounting officer and chief financial officer David Bernstein said on the company’s fourth quarter and year ended Nov. 30 earnings conference call on Thursday.

“During 2023, we made debt payments of $6 billion and ended the year with just over $30 billion of debt, which is $3 billion better than we forecasted just nine months ago during our March conference call.

“During 2023, we proactively addressed our debt profile as we successfully started our refinancing and deleveraging program.

“We accelerated our debt repayment efforts and aggressively managed down our interest expense,” Bernstein said.

The company addressed its 2025 maturity and prepaid additional debt.

“In 2023, we effectively stretched out the 2025 maturity on favorable terms by replacing it with a $1.3 billion term loan B facility [due] in 2027 and a $500 million offering of senior secured notes [due] in 2029,” Bernstein said.

“This refinancing, along with our optimism about our future and the return of customer deposit reserves gave us some confidence to accelerate our debt repayment by calling $1.2 billion of our highest cost debt.

“In addition, we opportunistically prepaid $2.8 billion of additional debt for a total of $4 billion of debt repayment, including the $1.2 billion of debt cost,” Bernstein said.

The company also tried to lower its exposure to floating interest rates.

“We took actions in both 2022 and early in 2023 to increase the fixed rate percentage of our debt portfolio to over 80%, up significantly from our 58% fixed levels at the end of 2021, which provided us protection from rising interest rates,” Bernstein said.

Debt reduction will continue in 2024.

“Looking forward, we will continue to evaluate refinancing opportunities and opportunistically pre-pay additional debt,” Bernstein said.

“During 2024 we will be replacing higher cost fixed-rate debt with lower cost export credit financing as we take delivery of ships during 2024.

“Our leveraged metrics will also continue to improve throughout 2024 as our EBITDA continues to grow.

“We do expect to see debt to go down in 2024; however, we do expect to see strong deleveraging from a metrics perspective because our EBITDA grows substantially, so our debt to EBITDA will also improve,” Bernstein said.

The company’s top executive believes the company is back on track to achieve investment-grade credit metrics after delivering record revenues.

Full-year revenues hit an all-time high of $21.6 billion and the company reported record fourth-quarter revenues of $5.4 billion.

“It’s safe to say we ended the year on a high note and closed another quarter with record revenues, record booking levels and record customer deposits,” president and chief executive officer Josh Weinstein.

“In fact, we consistently set records in all four quarters this past year.

“Strong EBITDA and cash from operations also propelled us on our journey to reduce the debt load necessitated during the pause in operations.

“We made debt payments of $6 billion this year and we still have well over $5 billion of liquidity on top of strong and improving cash flow, which will contribute to further debt reduction over time.

“All of this leaves us firmly placed on our path back to achieve investment-grade leverage metrics by 2026,” Weinstein said.

Cash and cash equivalents were $2,415,000,000 as of Nov. 30, 2023, compared to $4,029,000,000 as of Nov. 30, 2022.

Long-term debt was $28,483,000,000 as of Nov. 30, 2023, compared to $31,953,000,000 as of Nov. 30, 2022.

Current portion of long-term debt was $2,089,000,000 as of Nov. 30, 2023, compared to $2,393,000,000 as of Nov. 30, 2022.

Carnival Corp. is a Miami-based unit of London-based cruise operator Carnival plc.

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