01—Abstract
Summary
Summary of the 10-Q filed April 1, 2010. Cited figures are marked; the original filing is the authoritative source.
Carnival Corporation & plc reported revenues of $3,095 milliona 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 millionb ($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.
02—Key points
Key Highlights
- Total 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.
- Net income decreased by 32.7% to $175 million for the period, down from $260 million in the same period last year.
- Diluted Earnings Per Share (EPS) fell to $0.22 from $0.33, reflecting the decline in net income.
- Operating income decreased by 18.0% to $255 million, primarily due to increased costs.
- Fuel costs nearly doubled, increasing by $189 million year-over-year, significantly impacting profitability.
- The company continues to invest in its fleet, with $1.2 billion in net capital expenditures for new shipbuilding and improvements during the quarter.
- Liquidity remains strong, with $5.4 billion available at the end of the period through cash, equivalents, and committed financings.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2010, Carnival Corp kept $0.06.
- Revenue$3.10B100.0%
- Cost of revenue−$2.18B70.5%
- Gross profit$913.0M29.5%
- Operating costs−$658.0M21.3%
- Operating income$255.0M8.2%
- Interest, other & tax−$80.0M2.6%
- Net income$175.0M5.7%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2010filed April 1, 2010Financial Statements
Q1 FY2010 against Q1 FY2009
| Line item | Q1 FY2010Q1 FY2009 | Change |
|---|---|---|
| Revenue | $3.10B$2.86B | +8.1% |
| Cost of Revenue | $2.18B$1.85B | +17.9% |
| Gross Profit | $913.00M$1.01B | −10.0% |
| SG&A Expenses | $396.00M$392.00M | +1.0% |
| Operating Expenses | $2.92B$2.55B | +14.5% |
| Operating Income | $255.00M$311.00M | −18.0% |
| Interest Expense | $96.00M$96.00M | 0.0% |
| Net Income | $175.00M$260.00M | −32.7% |
| EPS (Basic) | $0.22$0.33 | −33.3% |
| EPS (Diluted) | $0.22$0.33 | −33.3% |
| Shares Outstanding (Basic) | 787.00M— | — |
| Shares Outstanding (Diluted) | 805.00M— | — |
05—Questions
Frequently Asked Questions
What drove the decrease in net income despite revenue growth?
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.
How is the company managing its debt and liquidity?
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.
What is the outlook for the remainder of fiscal 2010?
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.
What is the impact of currency fluctuations on the company's results?
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.
06—Continue