10-QPeriod: Q2 FY2014

CARNIVAL CORP Quarterly Report for Q2 Ended May 31, 2014

Filed July 2, 2014For Securities:CCL

Summary

Carnival Corporation & plc reported a net income of $106 million for the three months ended May 31, 2014, a significant increase from $41 million in the same period of the previous year. This improvement was driven by a 3.3% rise in total revenues to $3.63 billion, primarily from increased passenger ticket revenues and onboard spending. The company saw a 4.9% increase in available lower berth days (ALBDs) due to fleet expansion and reduced dry-dock days. Despite higher operating costs and administrative expenses, a notable gain from the sale of a ship and lower fuel derivative losses contributed to the enhanced profitability. For the six-month period, net income was $91 million, up from $78 million in the prior year, with revenues also showing a modest increase. While the North America segment experienced a decline in operating income due to pricing pressures and lower occupancy, the Europe, Australia & Asia (EAA) segment saw substantial growth. The company is focused on managing its capital structure, returning value to shareholders, and maintaining investment-grade credit ratings, with sufficient liquidity to fund its operations and capital projects.

Financial Highlights

49 data points
Beta

Net Income

$98.00M

EPS (Diluted)

$0.13

Total Assets

$40.53B

Cash & Equivalents

$343.00M

Free Cash Flow

$220.00M

Financial Statements
Beta
Cost of Revenue$2.57B
SG&A Expenses$504.00M
Operating Expenses$3.49B
Operating Income$147.00M
Interest Expense$72.00M
Net Income$98.00M
EPS (Basic)$0.13
EPS (Diluted)$0.13
Shares Outstanding (Basic)776.00M
Shares Outstanding (Diluted)778.00M

Key Highlights

  • 1Net income for the three months ended May 31, 2014, increased to $106 million from $41 million in the prior year.
  • 2Total revenues for the three months increased by 3.3% to $3.63 billion, driven by higher passenger ticket and onboard revenues.
  • 3Available lower berth days (ALBDs) increased by 4.9% year-over-year for the quarter, indicating capacity growth.
  • 4The EAA (Europe, Australia & Asia) cruise segment showed significant operating income growth, increasing by $79 million to $130 million.
  • 5Despite revenue growth, the North America segment's operating income decreased by $71 million due to pricing pressures and lower occupancy.
  • 6The company recognized a gain on the sale of the ship 'Costa Voyager' and incurred an impairment charge for 'Grand Celebration'.
  • 7Diluted earnings per share improved to $0.14 for the quarter, from $0.05 in the prior year.

Frequently Asked Questions

The primary driver for the increase in revenue was a combination of a 4.9% increase in capacity (measured by available lower berth days) and higher onboard and other revenues, which benefited from increased guest spending. A weaker US dollar against the Euro and Sterling also contributed positively to revenue.

The Europe, Australia & Asia (EAA) segment performed strongly, with operating income increasing significantly due to favorable currency impacts and improved occupancy. However, the North America segment's operating income declined, primarily due to a decrease in cruise ticket pricing and lower occupancy, influenced by increased industry capacity in the Caribbean market.

Carnival Corporation & plc projected non-GAAP diluted earnings per share for the third quarter of 2014 to be in the range of $1.38 to $1.44 and for the full year to be between $1.60 and $1.75. These projections were based on specific fuel price and currency exchange rate assumptions.

Operating costs and expenses saw increases due to capacity growth and higher dry-dock and repair expenses. However, these were partially offset by a gain from the sale of the 'Costa Voyager' and a non-recurrence of certain costs associated with 2013 voyage disruptions. Fuel costs also decreased due to lower prices and consumption per ALBD.