10-QPeriod: Q1 FY2014

CARNIVAL CORP Quarterly Report for Q1 Ended Feb 28, 2014

Filed April 2, 2014For Securities:CCL

Summary

Carnival Corporation & plc (CCL) reported a net loss of $15 million ($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 billion. 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%, 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.

Financial Highlights

49 data points
Beta

Net Income

-$20.00M

EPS (Diluted)

$-0.03

Total Assets

$39.91B

Cash & Equivalents

$421.00M

Free Cash Flow

$124.00M

Financial Statements
Beta
Cost of Revenue$2.59B
SG&A Expenses$521.00M
Operating Expenses$3.52B
Operating Income$67.00M
Interest Expense$72.00M
Net Income-$20.00M
EPS (Basic)$-0.03
EPS (Diluted)$-0.03
Shares Outstanding (Basic)776.00M
Shares Outstanding (Diluted)776.00M

Key Highlights

  • 1Net loss of $15 million ($0.02 EPS) for Q1 2014, compared to net income of $37 million ($0.05 EPS) in Q1 2013.
  • 2Total revenues remained relatively flat at $3.6 billion for the quarter.
  • 3Capacity (ALBDs) increased by 1.7%, but occupancy decreased by 1.1 percentage points.
  • 4Selling and administrative expenses increased by 13% to $521 million, largely due to higher advertising spend.
  • 5Depreciation and amortization expenses increased by 3.8% to $404 million.
  • 6Fuel costs decreased by 6.4% to $523 million due to lower consumption and prices.
  • 7The company's cash position strengthened, with net cash provided by operating activities increasing to $477 million from $399 million in the prior year.

Frequently Asked Questions

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.

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.

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.

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.