01—Abstract
Summary
Summary of the 10-Q filed April 2, 2014. Cited figures are marked; the original filing is the authoritative source.
Carnival Corporation & plc (CCL) reported a net loss of $15 milliona ($0.02 per diluted share) for the three months ended February 28, 2014, a significant decrease from a net income of $37 million ($0.05 per diluted share) in the same period of the prior year.
This decline was primarily driven by an increase in selling and administrative expenses, particularly higher advertising spend, and an increase in depreciation and amortization. Despite the bottom-line loss, total revenues remained stable at approximately $3.6 billionb. The company saw a slight decrease in cruise passenger ticket revenues, offset by a modest increase in onboard and other cruise revenues.
Capacity, measured in Available Lower Berth Days (ALBDs), increased by 1.7%c, but this was partially negated by a 1.1 percentage point decrease in occupancy and a decrease in cruise ticket pricing. The company is actively managing its fuel costs, which decreased due to lower consumption and prices, and is utilizing hedging strategies for fuel and currency risks.
02—Key points
Key Highlights
- Net loss of $15 million ($0.02 EPS) for Q1 2014, compared to net income of $37 million ($0.05 EPS) in Q1 2013.
- Total revenues remained relatively flat at $3.6 billion for the quarter.
- Capacity (ALBDs) increased by 1.7%, but occupancy decreased by 1.1 percentage points.
- Selling and administrative expenses increased by 13% to $521 million, largely due to higher advertising spend.
- Depreciation and amortization expenses increased by 3.8% to $404 million.
- Fuel costs decreased by 6.4% to $523 million due to lower consumption and prices.
- The company's cash position strengthened, with net cash provided by operating activities increasing to $477 million from $399 million in the prior year.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2014filed April 2, 2014Financial Statements
Q1 FY2014 against Q1 FY2013
| Line item | Q1 FY2014Q1 FY2013 | Change |
|---|---|---|
| Cost of Revenue | $2.59B$2.60B | −0.3% |
| SG&A Expenses | $521.00M$460.00M | +13.3% |
| Operating Expenses | $3.52B$3.45B | +2.0% |
| Operating Income | $67.00M$145.00M | −53.8% |
| Interest Expense | $72.00M$83.00M | −13.3% |
| Net Income | -$20.00M$37.00M | −154.1% |
| EPS (Basic) | $-0.03$0.05 | −160.0% |
| EPS (Diluted) | $-0.03$0.05 | −160.0% |
| Shares Outstanding (Basic) | 776.00M776.00M | 0.0% |
| Shares Outstanding (Diluted) | 776.00M778.00M | −0.3% |
05—Questions
Frequently Asked Questions
What was the primary reason for the year-over-year decline in net income?
The primary reason for the decline in net income was a significant increase in selling and administrative expenses, particularly higher advertising spend, and an increase in depreciation and amortization expenses, which more than offset a slight increase in revenues and a decrease in fuel costs.
How did the company's revenues perform during the quarter?
Total revenues remained stable at approximately $3.6 billion. While cruise passenger ticket revenues saw a slight decrease, this was balanced by an increase in onboard and other cruise revenues. The company experienced a 1.7% increase in capacity (ALBDs) but a 1.1 percentage point decrease in occupancy and lower cruise ticket pricing.
What is the company's outlook for the upcoming quarters?
For the 2014 second quarter, the company expected non-GAAP diluted earnings per share to be in the range of $(0.02) to $0.02. For the full year 2014, the guidance was $1.50 to $1.70 per share. These projections were based on assumptions about fuel prices and currency exchange rates.
How is Carnival managing fuel price volatility?
Carnival utilizes a fuel derivatives program, primarily consisting of zero-cost collars on Brent crude oil, to mitigate a portion of its economic risk from potential fuel price increases. For the quarter, fuel costs decreased due to lower consumption per ALBD and lower overall fuel prices.
06—Continue