01—Abstract
Summary
Summary of the 10-Q filed April 1, 2011. Cited figures are marked; the original filing is the authoritative source.
Carnival Corporation & plc reported its quarterly results for the period ending February 28, 2011.
Net income for the quarter was $152 milliona, or $0.19 per diluted share, a decrease from $175 million, or $0.22 per diluted share, in the same period last year. This decline in profitability was largely attributable to increased operating costs, including higher fuel prices and capacity expansion, which outpaced revenue growth. Despite the decrease in net income, the company saw an increase in total revenues driven by a 5.0% rise in available lower berth days (ALBDs) and improved cruise ticket pricing, particularly within the EAA segment.
The company's financial position remains robust, with total assets of $37.965 billionb and shareholders' equity of $23.435 billion. Liquidity is strong, with $5.7 billion available, comprising cash, cash equivalents, and committed credit facilities.
Carnival Corporation & plc continues to manage its debt effectively, with a healthy mix of fixed and floating rate debt, and remains compliant with its debt covenants. The company also reiterated its positive outlook for the full fiscal year 2011, projecting diluted earnings per share in the range of $2.55 to $2.65c.
02—Key points
Key Highlights
- Net income decreased to $152 million ($0.19/share) from $175 million ($0.22/share) year-over-year, primarily due to rising operating costs outpacing revenue gains.
- Total revenues increased by 7.7% to $3.419 billion, driven by a 5.0% increase in passenger capacity (ALBDs) and improved ticket pricing, especially in the EAA segment.
- Operating income declined by 7.8% to $235 million, with the North America segment showing a significant decrease, while the EAA segment saw a modest increase.
- Fuel costs increased by 13.3% to $450 million, reflecting higher fuel prices and increased capacity.
- The company maintained strong liquidity, with $5.7 billion available in cash, cash equivalents, and committed credit facilities.
- Shareholders' equity increased to $23.435 billion, supported by a significant positive adjustment in accumulated other comprehensive income, largely due to foreign currency translation gains.
- Carnival declared a dividend of $0.25 per share, up from $0.10 per share in the prior year's comparable period.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2011filed April 1, 2011Financial Statements
Q1 FY2011 against Q1 FY2010
| Line item | Q1 FY2011Q1 FY2010 | Change |
|---|---|---|
| Cost of Revenue | $2.40B$2.18B | +9.8% |
| SG&A Expenses | $422.00M$396.00M | +6.6% |
| Operating Expenses | $3.18B$2.92B | +8.9% |
| Operating Income | $235.00M$255.00M | −7.8% |
| Interest Expense | $86.00M$96.00M | −10.4% |
| Net Income | $152.00M$175.00M | −13.1% |
| EPS (Basic) | $0.19$0.22 | −13.6% |
| EPS (Diluted) | $0.19$0.22 | −13.6% |
| Shares Outstanding (Basic) | 790.00M787.00M | +0.4% |
| Shares Outstanding (Diluted) | 794.00M805.00M | −1.4% |
05—Questions
Frequently Asked Questions
What was the primary driver for the decrease in net income compared to the prior year's quarter?
The primary driver for the decrease in net income was the increase in operating costs and expenses, which rose faster than revenues. This was influenced by a 5.0% increase in capacity (ALBDs), higher fuel prices ($38 million increase), and the non-recurrence of a gain from a ship sale in the prior year, which together outpaced the revenue growth.
How did the company's revenue performance vary across its segments?
Consolidated revenues increased primarily due to growth in both North America and EAA segments. The EAA segment showed particularly strong performance with a 16.9% increase in cruise passenger ticket revenues, driven by a 10.7% capacity increase and improved pricing, especially in South America. The North America segment saw a more modest revenue increase of 2.5%.
What is the company's liquidity position and outlook?
Carnival Corporation & plc maintains a strong liquidity position with $5.7 billion available, consisting of cash, cash equivalents, and committed credit facilities. The company believes its existing liquidity and cash flow from operations will be sufficient to cover expected capital projects, debt service, and working capital needs for the next several years. They also anticipate increasing free cash flows from 2011 onwards due to a moderated newbuilding program.
Are there any significant risks or contingencies mentioned in the filing?
The company highlights potential risks including general economic conditions, fluctuations in foreign currency exchange rates, geopolitical events, competition, and the spread of contagious diseases. Contingent obligations related to Lease Out and Lease Back (LILO) transactions are noted, with an estimated termination payment of $106 million if Carnival defaults, though options exist to terminate these at no cost in 2017. Management believes the ultimate outcome of existing litigation will not materially adversely impact the financial statements.
06—Continue