10-QPeriod: Q2 FY2013

CARNIVAL CORP Quarterly Report for Q2 Ended May 31, 2013

Filed July 2, 2013For Securities:CCL

Summary

Carnival Corporation & PLC's Q2 2013 filing reveals a mixed financial performance. For the three months ended May 31, 2013, the company reported a net income of $41 million, a significant increase from $14 million in the prior year's quarter. However, revenues saw a slight decline, with consolidated cruise passenger ticket revenues decreasing by 2.3% year-over-year, primarily due to lower cruise ticket pricing and a stronger U.S. dollar. Operating costs also saw a modest increase, impacting operating income, which fell to $152 million from $253 million in Q2 2012. The six-month period ending May 31, 2013, showed a shift from a net loss of $125 million in the prior year to a net income of $78 million. This improvement was driven by several factors including lower fuel costs, reduced operating expenses (partially due to the non-recurrence of certain charges), and increased capacity. Despite the year-over-year improvement in net income and the return to profitability for the six-month period, investors should note the continued pressure on ticket pricing, particularly in the EAA brands due to the European economic environment, and the increased net cruise costs excluding fuel.

Financial Highlights

51 data points
Beta

Net Income

$41.00M

EPS (Diluted)

$0.05

Total Assets

$39.98B

Cash & Equivalents

$711.00M

Free Cash Flow

-$49.00M

Financial Statements
Beta
Cost of Revenue$2.49B
SG&A Expenses$449.00M
Operating Expenses$3.33B
Operating Income$152.00M
Interest Expense$78.00M
Net Income$41.00M
EPS (Basic)$0.05
EPS (Diluted)$0.05
Shares Outstanding (Basic)775.00M
Shares Outstanding (Diluted)777.00M

Key Highlights

  • 1For the three months ended May 31, 2013, net income was $41 million, up from $14 million in the prior year, indicating a recovery in profitability for the quarter.
  • 2Consolidated revenues for the three months ended May 31, 2013, decreased by 1.7% to $3.48 billion, primarily due to a 2.3% decline in cruise passenger ticket revenues.
  • 3Operating income for the three months ended May 31, 2013, decreased significantly by 39.9% to $152 million, impacted by increased operating costs and expenses.
  • 4For the six months ended May 31, 2013, the company reported a net income of $78 million, a substantial improvement from a net loss of $125 million in the same period of 2012.
  • 5Total operating costs and expenses for the six-month period decreased by 1.6% to $5.09 billion, aided by lower fuel prices and the non-recurrence of certain prior-year charges.
  • 6Net cruise costs excluding fuel increased by 9.3% for the three-month period and 5.0% for the six-month period, primarily driven by increased expenses related to the 2013 Carnival Triumph voyage disruptions and higher dry-dock and insurance costs.
  • 7The company maintained a strong liquidity position with $6.3 billion in liquidity at May 31, 2013, including cash, cash equivalents, and available credit facilities.

Frequently Asked Questions

For the three months ended May 31, 2013, Carnival reported a net income of $41 million, a significant increase from $14 million in the same period of 2012. For the six months ended May 31, 2013, the company achieved a net income of $78 million, a substantial improvement compared to a net loss of $125 million in the prior year's comparable period.

Consolidated revenues saw a slight decrease in the reported periods. For the three months ended May 31, 2013, total revenues were $3.48 billion, down from $3.54 billion in the prior year. The primary driver of this decline was a 2.3% decrease in cruise passenger ticket revenues, attributed to lower pricing and the impact of a stronger U.S. dollar on foreign currency translations.

Operating costs and expenses remained a significant factor. While consolidated operating costs were relatively flat year-over-year for the three-month period, net cruise costs excluding fuel saw substantial increases of 9.3% and 5.0% for the three- and six-month periods, respectively. These increases were driven by costs related to recent voyage disruptions, higher dry-docking expenses, and increased insurance premiums. Fuel costs, however, decreased significantly due to lower prices and consumption.

Carnival provided guidance for Q3 and full-year 2013, expecting non-GAAP diluted EPS between $1.25-$1.33 for Q3 and $1.45-$1.65 for the full year, based on projected fuel prices. The company highlighted a continued weakness in cruise ticket pricing, especially in Europe, impacting revenue yields. Despite these pressures, Carnival maintained a strong liquidity position with $6.3 billion in available funds and expressed confidence in its ability to fund future operations and capital expenditures.