Carnival Corp Ltd. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations . Cautionary Note Concerning Factors That May Affect Future Results Some of the statements, estimates or projections contained in this Quarterly Report on Form 10-Q 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. 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. These factors include, but are not limited to, the following: • Events and conditions around the world, including geopolitical uncertainty, war and other military actions, 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 as well as negative impacts to 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-money laundering, anti-corruption, economic sanctions, trade protection, labor and employment, and tax may be costly and 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 targets, goals, aspirations, initiatives, and our public statements and disclosures regarding them, including those that are related to sustainability matters, 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. • 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. • Our substantial debt could adversely affect our financial health and operating flexibility. The ordering of the risk factors set forth above is not intended to reflect our indication of priority or likelihood. Additionally, many of these risks and uncertainties are currently, and in the future may continue to be, amplified by our substantial debt 24 Table of Content balance incurred during the pause of our guest cruise operations. There may be additional risks that we consider immaterial or which are unknown. 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. Our results are also impacted by ships being taken out-of-service for planned maintenance, which we schedule during non-peak seasons. In addition, substantially all of Holland America Princess Alaska Tours’ revenue and operating income is generated from May through September in conjunction with Alaska’s cruise season. Known Trends and Uncertainties • We believe the volatility in the price of fuel and foreign currency exchange rates are reasonably likely to impact our profitability. • We believe a global minimum tax could affect us in 2026, with the potential for a one-year deferral. Prior to any mitigating actions, we believe the annual impact could be approximately $200 million. We continue to evaluate the impact of these rules and are currently evaluating a variety of mitigating actions to minimize the impact. The application of the rules continues to evolve, and its outcome may alter our tax obligations in certain countries in which we operate. • We believe the increasing global focus on climate change, including the reduction of greenhouse gas emissions and new and evolving regulatory requirements, is reasonably likely to have a material negative impact on our future financial results. We became subject to the EU ETS on January 1, 2024, which includes a three-year phase-in period. The impact in 2024 will be approximately $50 million. 25 Table of Content Statistical Information Three Months Ended August 31, Nine Months Ended August 31, 2024 2023 2024 2023 Passenger Cruise Days (“PCDs”) (in millions) (a) 28.1 25.8 76.0 67.8 Available Lower Berth Days (“ALBDs”) (in millions) (b) (c) 25.2 23.7 71.7 68.1 Occupancy percentage (d) 112 % 109 % 106 % 100 % Passengers carried (in millions) 3.9 3.6 10.3 9.3 Fuel consumption in metric tons (in millions) 0.7 0.7 2.2 2.2 Fuel consumption in metric tons per thousand ALBDs 29.5 31.1 31.0 32.3 Fuel cost per metric ton consumed (excluding European Union Allowance) $ 670 $ 636 $ 680 $ 681 Currencies (USD to 1) AUD $ 0.67 $ 0.66 $ 0.66 $ 0.67 CAD $ 0.73 $ 0.75 $ 0.74 $ 0.74 EUR $ 1.09 $ 1.09 $ 1.08 $ 1.08 GBP $ 1.28 $ 1.27 $ 1.27 $ 1.24 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) For the three months ended August 31, 2024 compared to the three months ended August 31, 2023, we had a 6.2% capacity increase in ALBDs comprised of a 10% capacity increase in our NAA segment and a 0.7% capacity decrease in our Europe segment. Our NAA segment’s capacity increase was caused by the following: • Seabourn 260-passenger capacity ship that entered into service in July 2023 • Carnival Cruise Line 5,360-passenger capacity ship that entered into service in December 2023 • Princess Cruises 4,310-passenger capacity ship that entered into service in February 2024 • Carnival Cruise Line 4,130-passenger capacity ship that was transferred from Costa Cruises and entered into service in April 2024 Our Europe segment’s capacity decrease was caused by the following: • AIDA Cruises 1,270-passenger capacity ship removed from service in November 2023 • Costa Cruises 4,240-passenger capacity ship that was transferred to Carnival Cruise Line in April 2024 The decrease in our Europe segment’s capacity was partially offset by a Cunard 2,960-passenger capacity ship that entered into service in May 2024. For the nine months ended August 31, 2024 compared to the nine months ended August 31, 2023, we had a 5.3% capacity increase in ALBDs comprised of a 8.2% capacity increase in our NAA segment and a 0.5% capacity increase in our Europe segment. Our NAA segment’s capacity increase was caused by the following: • Carnival Cruise Line 4,090-passenger capacity ship that was transferred from Costa Cruises and entered into service in May 2023 • Seabourn 260-passenger capacity ship that entered into service in July 2023 • Carnival Cruise Line 5,360-passenger capacity ship that entered into service in December 2023 26 Table of Content • Princess Cruises 4,310-passenger capacity ship that entered into service in February 2024 • Carnival Cruise Line 4,130-passenger capacity ship that was transferred from Costa Cruises and entered into service in April 2024 Our Europe segment’s capacity increase was caused by the following: • The return to service of two ships as part of the completion of our return to guest cruise operations • P&O Cruises (UK) 5,280-passenger capacity ship that entered into service in December 2022 • Cunard 2,960-passenger capacity ship that entered into service in May 2024 The increase in our Europe segment’s capacity was partially offset by the following: • Costa Cruises 4,090-passenger capacity ship transferred to Carnival Cruise Line in March 2023 • AIDA Cruises 1,270-passenger capacity ship removed from service in November 2023 • Costa Cruises 4,240-passenger capacity ship that was transferred to Carnival Cruise Line in February 2024 • The Red Sea rerouting as certain ships repositioned without guests (d) 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. Three Months Ended August 31, 2024 (“2024”) Compared to Three Months Ended August 31, 2023 (“2023”) Revenues Consolidated Passenger ticket revenues made up 66% of our 2024 total revenues. Passenger ticket revenues increased by $693 million, or 15%, to $5.2 billion in 2024 from $4.5 billion in 2023. This increase was caused by: • $333 million - increase in passenger ticket revenues driven by continued strength in demand, which drove ticket prices higher • $299 million - 6.2% capacity increase in ALBDs • $114 million - 2.9 percentage point increase in occupancy These increases were partially offset by decreases of $45 million in air transportation revenue and other passenger revenue. The remaining 34% of 2024 total revenues was comprised of onboard and other revenues, which increased by $349 million, or 15%, to $2.7 billion in 2024 from $2.3 billion in 2023. This increase was driven by: • $164 million - 6.2% capacity increase in ALBDs • $95 million - higher onboard spending by our guests • $43 million - 2.9 percentage point increase in occupancy • $23 million - increase in other revenues primarily due to pre-and post-cruise land package revenues NAA Segment Passenger ticket revenues made up 65% of our NAA segment’s 2024 total revenues. Passenger ticket revenues increased by $480 million, or 16%, to $3.4 billion in 2024 from $3.0 billion in 2023. This increase was caused by: • $310 million - 10% capacity increase in ALBDs • $184 million - increase in passenger ticket revenues driven by continued strength in demand, which drove ticket prices higher • $39 million - 1.5 percentage point increase in occupancy 27 Table of Content These increases were partially offset by decreases of $53 million in air transportation revenue and other passenger revenue. The remaining 35% of our NAA segment’s 2024 total revenues were comprised of onboard and other revenues, which increased by $275 million, or 17%, to $1.9 billion in 2024 from $1.6 billion in 2023. This increase was caused by: • $168 million - 10% capacity increase in ALBDs • $66 million - higher onboard spending by our guests • $21 million - 1.5 percentage point increase in occupancy • $21 million - increase in other revenues primarily due to pre-and post-cruise land package revenues Europe Segment Passenger ticket revenues made up 78% of our Europe segment’s 2024 total revenues. Passenger ticket revenues increased by $221 million, or 14%, to $1.8 billion in 2024 from $1.6 billion in 2023. This increase was caused by: • $148 million - increase in passenger ticket revenues driven by continued strength in demand, which drove ticket prices higher • $75 million - 5.0 percentage point increase in occupancy The remaining 22% of our Europe segment’s 2024 total revenues were comprised of onboard and other revenues, which increased by $50 million, or 11%, to $515 million in 2024 from $465 million in 2023. This increase was caused by: • $29 million - higher onboard spending by our guests • $22 million - 5.0 percentage point increase in occupancy Costs and Expenses Consolidated Operating expenses increased by $383 million, or 9.8%, to $4.3 billion in 2024 from $3.9 billion in 2023. This increase was driven by: • $270 million - 6.2% capacity increase in ALBDs • $81 million - higher commissions, transportation costs, and other expenses driven by higher commission on increased ticket pricing and an increase in the number of guests • $48 million - higher onboard and other cost of sales driven by higher onboard revenues These increases were partially offset by a $23 million change in pension valuation. Selling and administrative expenses increased by $50 million, or 7.0%, to $763 million in 2024 from $713 million in 2023. Depreciation and amortization expenses increased by $55 million, or 9.3%, to $651 million in 2024 from $596 million in 2023. NAA Segment Operating expenses increased by $339 million, or 13%, to $3.0 billion in 2024 from $2.7 billion in 2023. This increase was caused by: • $278 million - 10% capacity increase in ALBDs • $44 million - higher commissions, transportation costs, and other expenses driven by higher commission on increased ticket pricing and an increase in the number of guests • $31 million - higher onboard and other cost of sales driven by higher onboard revenues Selling and administrative expenses increased by $35 million, or 8.3%, to $455 million in 2024 from $420 million in 2023. 28 Table of Content Depreciation and amortization expenses increased by $47 million, or 12%, to $424 million in 2024 from $377 million in 2023. This increase was driven by a 10% capacity increase in ALBDs, representing $39 million. Europe Segment Operating expenses increased by $42 million or 3.7%, to $1.2 billion in 2024 from $1.1 billion 2023. This increase was driven by: • $36 million - higher commissions, transportation costs, and other expenses driven by higher commission on increased ticket pricing and an increase in the number of guests. • $17 million - higher onboard and other cost of sales driven by higher onboard revenues These increases were partially offset by a $23 million change in pension valuation. Selling and administrative expenses increased by $24 million, or 12%, to $223 million in 2024 from $199 million in 2023. This increase was driven by higher compensation expense, increased investment in advertising and higher information technology expense. Depreciation and amortization expenses increased by $4 million, or 2.6%, to $173 million in 2024 from $168 million in 2023. Operating Income Our consolidated operating income increased by $554 million to $2.2 billion in 2024 from $1.6 billion in 2023. Our NAA segment’s operating income increased by $335 million to $1.4 billion in 2024 from $1.1 billion in 2023, and our Europe segment’s operating income increased by $201 million to $770 million in 2024 from $569 million in 2023. These changes were primarily due to the reasons discussed above. Nonoperating Income (Expense) Interest expense, net of capitalized interest, decreased by $87 million, or 17%, to $431 million in 2024 from $518 million in 2023. The decrease was caused by a decrease in total debt and lower average interest rates. Debt extinguishment and modification costs decreased by $68 million, or 84%, to $13 million in 2024 from $81 million in 2023 as a result of debt transactions occurring during the respective periods. Nine Months Ended August 31, 2024 (“2024”) Compared to Nine Months Ended August 31, 2023 (“2023”) Revenues Consolidated Passenger ticket revenues made up 66% of our 2024 total revenues. Passenger ticket revenues increased by $2.1 billion, or 19%, to $12.6 billion in 2024 from $10.6 billion in 2023. This increase was caused by: • $810 million - increase in passenger ticket revenues driven by continued strength in demand, which drove ticket prices higher • $666 million - 6.4 percentage point increase in occupancy • $586 million - 5.3% capacity increase in ALBDs • $36 million - net favorable foreign currency translational impact The remaining 34% of 2024 total revenues was comprised of onboard and other revenues, which increased by $834 million, or 15%, to $6.5 billion in 2024 from $5.6 billion in 2023. This increase was driven by: • $343 million - 5.3% capacity increase in ALBDs • $267 million - 6.4 percentage point increase in occupancy • $161 million - higher onboard spending by our guests 29 Table of Content NAA Segment Passenger ticket revenues made up 64% of our NAA segment’s 2024 total revenues. Passenger ticket revenues increased by $1.3 billion, or 19%, to $8.2 billion in 2024 from $6.9 billion in 2023. This increase was caused by: • $567 million - 8.2% capacity increase in ALBDs • $566 million - increase in passenger ticket revenues driven by continued strength in demand, which drove ticket prices higher • $223 million - 3.4 percentage point increase in occupancy The remaining 36% of our NAA segment’s 2024 total revenues were comprised of onboard and other revenues, which increased by $595 million, or 15%, to $4.7 billion in 2024 from $4.1 billion in 2023. This increase was driven by: • $338 million - 8.2% capacity increase in ALBDs • $133 million - 3.4 percentage point increase in occupancy • $117 million - higher onboard spending by our guests Europe Segment Passenger ticket revenues made up 77% of our Europe segment’s 2024 total revenues. Passenger ticket revenues increased by $784 million, or 21%, to $4.5 billion in 2024 from $3.7 billion in 2023. This increase was driven by: • $442 million - 11 percentage point increase in occupancy • $244 million - increase in passenger ticket revenues driven by continued strength in demand, which drove ticket prices higher • $40 million - net favorable foreign currency translational impact The remaining 23% of our Europe segment’s 2024 total revenues were comprised of onboard and other revenues, which increased by $194 million, or 17%, to $1.3 billion in 2024 from $1.1 billion in 2023. This increase was driven by: • $134 million - 11 percentage point increase in occupancy • $44 million - higher onboard spending by our guests Costs and Expenses Consolidated Operating expenses increased by $1.1 billion, or 10%, to $11.8 billion in 2024 from $10.7 billion in 2023. This increase was caused by: • $603 million - 5.3% capacity increase in ALBDs • $298 million - higher commissions, transportation costs, and other expenses driven by higher commission on increased ticket pricing and an increase in the number of guests • $130 million - 6.4 percentage point increase in occupancy • $126 million - higher onboard and other cost of sales driven by higher onboard revenues • $41 million - nonrecurrence of a gain on sale of one NAA segment ship in 2023 • $33 million - higher port expenses • $29 million - net unfavorable foreign currency translational impact These increases were partially offset by: • $32 million - lower fuel price and consumption • $23 million - change in pension valuation Selling and administrative expenses increased by $205 million, or 9.5%, to $2.4 billion in 2024 from $2.2 billion in 2023. 30 Table of Content Depreciation and amortization expenses increased by $123 million, or 7.0%, to $1.9 billion in 2024 from $1.8 billion in 2023. NAA Segment Operating expenses increased by $851 million, or 12%, to $8.0 billion in 2024 from $7.1 billion in 2023. This increase was caused by: • $587 million - 8.2% capacity increase in ALBDs • $148 million - higher commissions, transportation costs, and other expenses driven by higher commission on increased ticket pricing and an increase in the number of guests • $77 million - higher onboard and other cost of sales driven by higher onboard revenues • $43 million - 3.4 percentage point increase in occupancy • $41 million - nonrecurrence of a gain on sale of one NAA segment ship in 2023 • $30 million - higher repair and maintenance expenses (including dry-dock expenses) These increases were partially offset by $39 million of lower fuel price and consumption. Selling and administrative expenses increased by $126 million, or 10%, to $1.4 billion in 2024 from $1.3 billion in 2023. This increase was driven by higher compensation expense, increased investment in advertising and higher information technology expense. Depreciation and amortization expenses increased by $122 million, or 11%, to $1.2 billion in 2024 from $1.1 billion in 2023. This increase was caused by: • $92 million - 8.2% capacity increase in ALBDs • $31 million - fleet enhancements and investments in shoreside assets Europe Segment Operating expenses increased by $249 million, or 7.5%, to $3.6 billion in 2024 from $3.3 billion in 2023. This increase was caused by: • $150 million - higher commissions, transportation costs, and other expenses driven by an increase in the number of guests • $86 million - 11 percentage point increase in occupancy • $49 million - higher onboard and other cost of sales driven by higher onboard revenues • $32 million - net unfavorable foreign currency translational impact These increases were partially offset by: • $23 million - lower repair and maintenance expenses (including dry-dock expenses) • $23 million - change in pension valuation Selling and administrative expenses increased by $52 million, or 8.3%, to $687 million in 2024 from $634 million in 2023. Depreciation and amortization expenses decreased by $5 million, or 1.1%, to $501 million in 2024 from $506 million in 2023. Operating Income Our consolidated operating income increased by $1.4 billion to $3.0 billion in 2024 from $1.6 billion in 2023. Our NAA segment’s operating income increased by $781 million to $2.2 billion in 2024 from $1.5 billion in 2023, and our Europe segment’s operating income increased by $682 million to $1.1 billion in 2024 from $0.4 billion in 2023. These changes were primarily due to the reasons discussed above. Nonoperating Income (Expense) Interest expense, net of capitalized interest, decreased by $248 million, or 16%, to $1.4 billion in 2024 from $1.6 billion in 2023. The decrease was substantially all due to a decrease in total debt and lower average interest rates. 31 Table of Content Debt extinguishment and modification costs decreased by $33 million, or 30%, to $78 million in 2024 from $112 million in 2023 as a result of debt transactions occurring during the respective periods. Liquidity, Financial Condition and Capital Resources As of August 31, 2024, we had $4.5 billion of liquidity including $1.5 billion of cash and cash equivalents and $3.0 billion of borrowings available under our Revolving Facility. We will continue to pursue various opportunities to repay portions of our existing indebtedness and refinance future debt maturities to extend maturity dates and reduce interest expense. Refer to Note 3 - “Debt” of the consolidated financial statements and Funding Sources below for additional details. We had a working capital deficit of $8.6 billion as of August 31, 2024 compared to a working capital deficit of $6.2 billion as of November 30, 2023. The increase in working capital deficit was caused by an increase in customer deposits, an increase in accrued liabilities and other, a decrease in cash and cash equivalents and a decrease in prepaid expenses and other. 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 on our balance sheet 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 $6.4 billion and $6.1 billion of customer deposits as of August 31, 2024 and November 30, 2023, 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 capped reserve fund in cash. In addition, we have a relatively low level of accounts receivable and limited investment in inventories. Sources and Uses of Cash Operating Activities Our business provided $5.0 billion of net cash flows from operating activities during the nine months ended August 31, 2024, an increase of $1.7 billion, compared to $3.4 billion provided for the same period in 2023. This was caused by an increase in cash provided by the release of $0.8 billion in credit card reserve funds (included in the change in prepaid expenses and other assets) and our net income position of $1.6 billion in 2024 compared to our net loss position of $26 million for the same period in 2023, partially offset by a decrease in other working capital changes. Investing Activities During the nine months ended August 31, 2024, net cash used in investing activities was $4.0 billion. This was caused by capital expenditures of $4.0 billion primarily attributable to the delivery of a 5,360 and a 4,310-passenger capacity NAA segment ships and one 2,960-passenger capacity Europe segment ship. During the nine months ended August 31, 2023, net cash used in investing activities was $2.3 billion. This was driven by: • Capital expenditures of $2.6 billion primarily attributable to the delivery of one 5,280-passenger capacity Europe segment ship and one 260-passenger capacity NAA segment ship • Proceeds from sales of ships of $260 million relating to one 2,700-passenger capacity Europe segment ship, one 1,270-passenger capacity Europe segment ship and one 460-passenger capacity NAA segment ship 32 Table of Content Financing Activities During the nine months ended August 31, 2024, net cash used in financing activities of $2.0 billion was driven by: • Repayments of $4.8 billion of long-term debt • Debt issuance costs of $122 million • Debt extinguishment costs of $41 million • Issuances of $3.0 billion of long-term debt During the nine months ended August 31, 2023, net cash used in financing activities of $4.2 billion was driven by: • Repayments of $200 million of short-term borrowings • Repayments of $6.8 billion of long-term debt • Debt issuance costs of $116 million • Debt extinguishment costs of $67 million • Issuances of $3.0 billion of long-term debt • Proceeds from issuance of $22 million of Carnival Corporation common stock and purchases of $20 million of Carnival plc ordinary shares under our Stock Swap Program Funding Sources As of August 31, 2024, we had $4.5 billion of liquidity including $1.5 billion of cash and cash equivalents and $3.0 billion of borrowings available under our Revolving Facility. Refer to Note 3 - “Debt” of the consolidated financial statements for additional discussion. In addition, we had $3.4 billion of undrawn export credit facilities to fund ship deliveries planned through 2028. 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) 2024 2025 2026 2027 2028 Future export credit facilities at August 31, 2024 $ — $ 0.8 $ — $ 1.3 $ 1.3 Our export credit facilities contain various financial covenants as described in Note 3 - “Debt”. At August 31, 2024 , 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.