10-QPeriod: Q3 FY2009

CARNIVAL CORP Quarterly Report for Q3 Ended Aug 31, 2009

Filed October 1, 2009For Securities:CCL

Summary

Carnival Corporation & plc reported decreased revenues and net income for the three and nine months ended August 31, 2009, compared to the same periods in 2008. This decline is primarily attributed to the adverse impact of the economic downturn on cruise ticket pricing and onboard revenues, compounded by a stronger U.S. dollar against the euro and sterling. Despite the revenue challenges, the company managed to reduce operating costs, largely due to lower fuel prices and cost-containment initiatives. The company also maintained a strong liquidity position, with significant cash and cash equivalents and available borrowing capacity. The company's strategy for navigating the economic climate includes a focus on cash preservation, suspending dividends, and managing debt maturities. The outlook for the fourth quarter of 2009 was cautiously projected with a modest earnings per share guidance.

Financial Highlights

50 data points
Beta

Revenue

$4.14B

46.2% Gross Margin

Net Income

$1.07B

25.9% Net Margin

EPS (Diluted)

$1.33

Total Assets

$36.36B

Cash & Equivalents

$976.00M

Free Cash Flow

$743.00M

Financial Statements
Beta
Revenue$4.14B
Cost of Revenue$2.23B
Gross Profit$1.91B
SG&A Expenses$381.00M
Operating Expenses$2.94B
Operating Income$1.20B
Interest Expense$95.00M
Net Income$1.07B
EPS (Basic)$1.36
EPS (Diluted)$1.33
Shares Outstanding (Basic)787.00M
Shares Outstanding (Diluted)809.00M

Key Highlights

  • 1Total revenues for the third quarter of 2009 decreased by 14.0% to $4.1 billion, and for the first nine months by 12.3% to $10.0 billion, compared to the prior year.
  • 2Net income for the third quarter declined to $1.07 billion from $1.33 billion in the prior year, and for the nine months to $1.60 billion from $1.96 billion.
  • 3Operating costs decreased significantly due to lower fuel prices (down 39.2% in Q3 and 41.6% year-to-date per metric ton) and cost containment efforts.
  • 4The company maintained a healthy cash position, with cash and cash equivalents increasing to $976 million at August 31, 2009, up from $650 million at November 30, 2008.
  • 5Liquidity remained strong, with $6.2 billion in available resources, including cash, cash equivalents, and committed credit facilities.
  • 6Carnival repurchased shares through 'Stock Swap' programs, issuing Carnival plc ordinary shares to fund repurchases of Carnival Corporation common stock, and vice versa, to capitalize on pricing differentials.
  • 7The company suspended its quarterly dividend in October 2008 to preserve cash and enhance financial flexibility.

Frequently Asked Questions

The primary reason for the decline in revenue was the adverse impact of the economic downturn on cruise ticket pricing and onboard revenues, further exacerbated by a stronger U.S. dollar against the euro and sterling. Additionally, recommendations against travel to Mexico due to H1N1 flu also negatively impacted revenue.

Carnival successfully reduced operating costs primarily due to significantly lower fuel prices per metric ton. Cost containment initiatives and a stronger U.S. dollar against foreign currencies also contributed to cost reductions, offsetting some of the increased expenses related to higher capacity (ALBDs).

Carnival maintained a strong liquidity position with $6.2 billion available as of August 31, 2009, comprising cash, cash equivalents, and committed credit facilities. The company expects its current liquidity and cash flow from operations to be sufficient for its cash requirements in the fourth quarter of 2009 and into 2010, with no immediate need for additional debt, although they may seek favorable financing opportunities.

No, Carnival suspended its quarterly dividend starting in March 2009 to preserve cash and enhance financial flexibility. The company stated it would re-evaluate its dividend policy based on its liquidity, business tone, and credit rating but had not resumed dividends by the filing date.