What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-03-25 compared with 2024-09-30 · 81 added, 203 removed, 119 unchanged (70% of the section changed)

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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.

Some of the statements, estimates or projections contained in this document 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.

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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.

• Events and conditions around the world, including geopolitical uncertainty, war and other military actions, pandemics, inflation, higher fuel prices, higher interest rates and other general concerns impacting the ability or desire of people to travel could lead to a decline in demand for cruises as well as have significant negative impacts on our financial condition and operations.

• Incidents concerning our ships, guests or the cruise industry may 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 lead to litigation, enforcement actions, fines, penalties and reputational damage.

• Factors associated with climate change, including evolving and increasing regulations, increasing concerns about climate change and the shift in climate conscious consumerism and stakeholder scrutiny, and increasing frequency and/or severity of adverse weather conditions could have a material impact on our business.

• Inability to meet or achieve our targets, goals, aspirations, initiatives, and our public statements and disclosures regarding them, including those related to sustainability matters, may expose us to risks that may adversely impact our business.

• Cybersecurity incidents and data privacy breaches, 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 have adversely impacted and may in the future materially adversely impact our business operations, the satisfaction of our guests and crew and may lead to fines, penalties and 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.

• We rely on suppliers who are integral to the operations of our businesses.

These suppliers 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.

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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

Additionally, many of these risks and uncertainties are currently, and in the future may continue to be, amplified by our substantial debt balance incurred during the pause of our guest cruise operations.

There may be additional risks that we consider immaterial or

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balance incurred during the pause of our guest cruise operations.

There may be additional risks that we consider immaterial or which are unknown.

which are unknown.

Forward-looking statements should not be relied upon as a prediction of actual results.

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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.

• We believe the volatility in the cost of fuel is reasonably likely to impact our profitability in both the short and long-term.

• We believe the increasing focus on the reduction of greenhouse gas emissions and new and evolving related regulatory requirements, is reasonably likely to have a material negative impact on our future financial results.

We became subject to the EU Emissions Trading System (“ETS”) on January 1, 2024, which includes a three-year phase-in period.

The impact of this regulation in 2024 was $46 million, which represented costs associated with 40% of emissions under the ETS operational scope.

In 2025, 70% of emissions under the ETS scope will be impacted, and in 2026, all in scope emissions will be impacted.

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Three Months Ended

August 31, Nine Months Ended

2024 2023 2024 2023

February 28/29,

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) 103 % 102 %

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 30.3 31.8

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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

(c) For the three months ended February 28, 2025 compared to the three months ended February 29, 2024, we had a 2.5% capacity increase in ALBDs comprised of a 5.7% capacity increase in our North America segment and a 2.9% capacity decrease in our Europe segment.

Our North America segment’s capacity increase was caused by the following:

• 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

• Carnival Cruise Line 4,130-passenger capacity ship that transferred from Costa Cruises and entered into service in April 2024

The increase in our North America segment’s capacity was partially offset by:

• Seabourn 460-passenger capacity ship that was removed from service in September 2024

• P&O Cruises (Australia) 2,000-passenger capacity that was removed from service in February 2025

Our Europe segment’s capacity decrease was caused by a Costa Cruises 4,240-passenger capacity ship that 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

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• 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”)

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Three Months Ended February 28, 2025 (“2025”) Compared to February 29, 2024 (“2024”)

Passenger ticket revenues made up 66% of our 2025 total revenues.

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This increase was caused by:

• $333 million - increase in passenger ticket revenues driven by continued strength in demand, which drove ticket prices higher

• $145 million - higher ticket prices driven by continued strength in demand

• $91 million - 2.5% capacity increase in ALBDs

• $32 million - 1.0 percentage point increase in occupancy

These increases were partially offset by decreases of $45 million in air transportation revenue and other passenger revenue.

These increases were partially offset by a net unfavorable foreign currency translation impact of $50 million.

The remaining 34% of 2025 total revenues was comprised of onboard and other revenues, which increased by $189 million, or 11%, to $2.0 billion in 2025 from $1.8 billion in 2024.

This increase was driven by:

• $164 million - 6.2% capacity increase in ALBDs

This increase was caused by:

• $126 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

Passenger ticket revenues made up 65% of our NAA segment’s 2024 total revenues.

• $63 million - 2.5% capacity increase in ALBDs

North America Segment

Passenger ticket revenues made up 62% of our North America segment’s 2025 total revenues.

Passenger ticket revenues increased by $159 million, or 7.0%, to $2.4 billion in 2025 from $2.3 billion in 2024.

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• $130 million - 5.7% 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

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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.

• $46 million - higher ticket prices driven by continued strength in demand

The remaining 38% of our North America segment’s 2025 total revenues were comprised of onboard and other revenues, which increased by $173 million, or 13%, to $1.5 billion in 2025 from $1.3 billion in 2024.

This increase was caused by:

• $168 million - 10% capacity increase in ALBDs

• $99 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

• $75 million - 5.7% capacity increase in ALBDs

Europe Segment

Passenger ticket revenues made up 77% of our Europe segment’s 2025 total revenues.

Passenger ticket revenues increased by $221 million, or 14%, to $1.8 billion in 2024 from $1.6 billion in 2023.

Passenger ticket revenues increased by $52 million, or 3.8%, and were $1.4 billion in 2025 and 2024.

This increase was caused by:

• $148 million - increase in passenger ticket revenues driven by continued strength in demand, which drove ticket prices higher

• $100 million - higher ticket prices driven by continued strength in demand

• $25 million - 1.8 percentage point increase in occupancy

These increases were partially offset by:

• $46 million - net unfavorable foreign currency translation

• $39 million - 2.9% capacity decrease in ALBDs

The remaining 23% of our Europe segment’s 2025 total revenues were comprised of onboard and other revenues, which increased by $9 million, or 2.2%, to $413 million in 2025 from $404 million in 2024.

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

This increase was caused by $27 million of higher onboard spending by our guests, partially offset by a 2.9% capacity decrease in ALBDs, representing $12 million.

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Operating Expenses

Operating expenses increased by $62 million, or 1.7%, to $3.8 billion in 2025 from $3.7 billion in 2024.

This increase was driven by:

This increase was caused by:

• $102 million - 2.5% 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

• $38 million - higher commissions, transportation costs, and other expenses driven by increased ticket pricing and an increase in the number of guests

• $33 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.

These increases were partially offset by:

• $40 million - net favorable foreign currency translation

• $28 million - lower fuel prices

• $27 million - lower fuel consumption per ALBD

• $24 million - lower repair and maintenance expenses (including dry-dock expenses)

Selling and administrative expenses increased by $34 million, or 4.2%, to $848 million in 2025 from $813 million in 2024.

Depreciation and amortization expenses increased by $41 million, or 6.7%, to $654 million in 2025 from $613 million in 2024.

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

North America Segment

Operating expenses increased by $34 million, or 1.4%, and were $2.4 billion in 2025 and 2024.

This increase was caused by a 5.7% capacity increase in ALBDs, representing $138 million.

This increase was partially offset by:

• $44 million - lower repair and maintenance expenses (including dry-dock expenses)

• $26 million - lower fuel consumption per ALBD

• $23 million - lower fuel prices

Selling and administrative expenses increased by $19 million, or 3.8%, to $521 million in 2025 from $502 million in 2024.

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Depreciation and amortization expenses increased by $36 million, or 9.0%, to $434 million in 2025 from $398 million in 2024.

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.

Operating expenses were $1.3 billion in 2025 and 2024.

The changes in operating expenses for the Europe segment were not material.

Selling and administrative expenses increased by $16 million, or 6.9%, to $250 million in 2025 from $234 million in 2024.

This increase was driven by higher compensation expense, increased investment in advertising and higher information technology expense.

Depreciation and amortization expenses increased by $5 million, or 3.0%, to $169 million in 2025 from $164 million in 2024.

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.

Our consolidated operating income increased by $267 million to $543 million in 2025 from $276 million in 2024.

Our North America segment’s operating income increased by $244 million to $516 million in 2025 from $272 million in 2024, and our Europe segment’s operating income increased by $21 million to $140 million in 2025 from $119 million in 2024.

These changes were primarily due to the reasons discussed above.

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Interest expense, net of capitalized interest, decreased by $94 million, or 20%, to $377 million in 2025 from $471 million in 2024.

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”)

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

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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

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.

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Depreciation and amortization expenses increased by $123 million, or 7.0%, to $1.9 billion in 2024 from $1.8 billion in 2023.

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.

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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.

Debt extinguishment and modification costs increased by $218 million to $252 million in 2025 from $33 million in 2024 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.

As of February 28, 2025, we had $3.8 billion of liquidity including $0.8 billion of cash and cash equivalents and $2.9 billion of borrowings available under our multi-currency revolving credit facility.

In addition, we had $7.8 billion of undrawn export credit facilities to fund ship deliveries planned through 2033 .

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 had a working capital deficit of $8.6 billion as of February 28, 2025 compared to a working capital deficit of $8.2 billion as of November 30, 2024.

The increase in working capital deficit was caused by an increase in customer deposits and decreases in cash and cash equivalents as well as accrued liabilities and other.

We operate with a substantial working capital deficit.

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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.

Included within our working capital are $6.9 billion and $6.4 billion of current customer deposits as of February 28, 2025 and November 30, 2024.

We have agreements with a number of credit card processors that transact customer deposits related to our cruise vacations.

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In addition, we have a relatively low level of accounts receivable and limited investment in inventories.

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.

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.

Our business provided $0.9 billion of net cash flows from operating activities during the three months ended February 28, 2025, a decrease of $0.8 billion, compared to $1.8 billion provided for the same period in 2024.

This was driven by the nonrecurrence of cash provided by the release of $0.8 billion in credit card reserves in 2024 (included in the change in prepaid expenses and other assets).

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

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During the three months ended February 28, 2025, net cash used in investing activities was $605 million.

This was caused by capital expenditures of $607 million primarily attributable to ship improvements and developments in our port destinations and exclusive islands.

During the three months ended February 29, 2024, net cash used in investing activities was $2.2 billion.

This was driven by capital expenditures of $2.1 billion principally attributable to the delivery of two North America segment ships.

Financing Activities

During the nine months ended August 31, 2024, net cash used in financing activities of $2.0 billion was driven by:

During the three months ended February 28, 2025, net cash used in financing activities of $690 million was driven by:

• Repayments of $3.4 billion of long-term debt

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• 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

During the three months ended February 29, 2024, net cash provided by financing activities of $0.2 billion was caused by:

• Repayments of $1.4 billion of long-term debt

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• Issuances of $1.7 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

Table of Content

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.

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(in billions)

Future export credit facilities at August 31, 2024

2025 2026 2027 2028 2029 Thereafter

Future export credit facilities at February 28, 2025

$ 0.7 $ — $ 1.2 $ 1.2 $ 1.6 $ 3.1

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

At February 28, 2025 , we were in compliance with the applicable covenants under our debt agreements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis