10-QPeriod: Q1 FY2011

CARNIVAL CORP Quarterly Report for Q1 Ended Feb 28, 2011

Filed April 1, 2011For Securities:CCL

Summary

Carnival Corporation & plc reported its quarterly results for the period ending February 28, 2011. Net income for the quarter was $152 million, 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 billion 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 $2.65.

Financial Highlights

49 data points
Beta

Net Income

$152.00M

EPS (Diluted)

$0.19

Total Assets

$37.97B

Cash & Equivalents

$465.00M

Free Cash Flow

$240.00M

Financial Statements
Beta
Cost of Revenue$2.40B
SG&A Expenses$422.00M
Operating Expenses$3.18B
Operating Income$235.00M
Interest Expense$86.00M
Net Income$152.00M
EPS (Basic)$0.19
EPS (Diluted)$0.19
Shares Outstanding (Basic)790.00M
Shares Outstanding (Diluted)794.00M

Key Highlights

  • 1Net 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.
  • 2Total 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.
  • 3Operating 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.
  • 4Fuel costs increased by 13.3% to $450 million, reflecting higher fuel prices and increased capacity.
  • 5The company maintained strong liquidity, with $5.7 billion available in cash, cash equivalents, and committed credit facilities.
  • 6Shareholders' equity increased to $23.435 billion, supported by a significant positive adjustment in accumulated other comprehensive income, largely due to foreign currency translation gains.
  • 7Carnival declared a dividend of $0.25 per share, up from $0.10 per share in the prior year's comparable period.

Frequently Asked Questions

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.

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%.

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.

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.