10-QPeriod: Q1 FY2010

CARNIVAL CORP Quarterly Report for Q1 Ended Feb 28, 2010

Filed April 1, 2010For Securities:CCL

Summary

Carnival Corporation & plc reported revenues of $3,095 million for the three months ended February 28, 2010, an increase from $2,864 million in the prior year period. However, net income saw a significant decline to $175 million ($0.22 per diluted share) compared to $260 million ($0.33 per diluted share) in the same period of 2009. This decrease was largely driven by a substantial rise in operating costs, particularly fuel expenses which nearly doubled, and increased depreciation and amortization due to new ship additions. Despite revenue growth, higher operating expenses and the non-recurrence of a prior year gain negatively impacted profitability. The company's liquidity remains robust, with significant cash and available borrowing capacity, though it continues to manage a substantial working capital deficit typical for its business model.

Financial Highlights

50 data points
Beta

Revenue

$3.10B

29.5% Gross Margin

Net Income

$175.00M

5.7% Net Margin

EPS (Diluted)

$0.22

Total Assets

$36.73B

Cash & Equivalents

$753.00M

Free Cash Flow

-$773.00M

Financial Statements
Beta
Revenue$3.10B
Cost of Revenue$2.18B
Gross Profit$913.00M
SG&A Expenses$396.00M
Operating Expenses$2.92B
Operating Income$255.00M
Interest Expense$96.00M
Net Income$175.00M
EPS (Basic)$0.22
EPS (Diluted)$0.22
Shares Outstanding (Basic)787.00M
Shares Outstanding (Diluted)805.00M

Key Highlights

  • 1Total revenues increased by 8.1% to $3,095 million for the three months ended February 28, 2010, compared to $2,864 million in the prior year.
  • 2Net income decreased by 32.7% to $175 million for the period, down from $260 million in the same period last year.
  • 3Diluted Earnings Per Share (EPS) fell to $0.22 from $0.33, reflecting the decline in net income.
  • 4Operating income decreased by 18.0% to $255 million, primarily due to increased costs.
  • 5Fuel costs nearly doubled, increasing by $189 million year-over-year, significantly impacting profitability.
  • 6The company continues to invest in its fleet, with $1.2 billion in net capital expenditures for new shipbuilding and improvements during the quarter.
  • 7Liquidity remains strong, with $5.4 billion available at the end of the period through cash, equivalents, and committed financings.

Frequently Asked Questions

The decrease in net income was primarily driven by a significant increase in operating costs. Notably, fuel expenses nearly doubled compared to the prior year period, and depreciation and amortization expenses also rose due to the addition of new ships to the fleet. These higher costs outpaced the revenue growth, leading to reduced profitability.

Carnival Corporation & plc maintains a strong liquidity position with $5.4 billion in cash and committed financings. While the company operates with a typical seasonal working capital deficit, its operational cash flow and access to committed financings are expected to be sufficient to meet its obligations and capital expenditures for the upcoming year. The company also has a reasonable debt maturity profile and holds investment grade credit ratings.

For the second quarter and full year of 2010, the company previously guided for diluted earnings per share in the ranges of $0.26 to $0.30 and $2.25 to $2.35, respectively. This guidance was based on specific fuel price and currency exchange rate assumptions. However, investors should be aware that these are forward-looking statements and actual results could differ materially due to various risks and uncertainties mentioned in the report, including economic conditions and fuel prices.

As Carnival has significant operations in Europe, currency fluctuations, particularly the euro and sterling against the U.S. dollar, can impact reported results. A weaker U.S. dollar generally increases reported U.S. dollar revenues and expenses. The company uses derivative instruments to manage some of this foreign currency exchange rate risk and also monitors results on a 'constant dollar basis' to provide a clearer view of operational performance.