01—Abstract
Summary
Summary of the 10-Q filed July 2, 2014. Cited figures are marked; the original filing is the authoritative source.
Carnival Corporation & plc reported a net income of $106 milliona 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 billionb, 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 millionc, 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.
02—Key points
Key Highlights
- Net income for the three months ended May 31, 2014, increased to $106 million from $41 million in the prior year.
- Total revenues for the three months increased by 3.3% to $3.63 billion, driven by higher passenger ticket and onboard revenues.
- Available lower berth days (ALBDs) increased by 4.9% year-over-year for the quarter, indicating capacity growth.
- The EAA (Europe, Australia & Asia) cruise segment showed significant operating income growth, increasing by $79 million to $130 million.
- Despite revenue growth, the North America segment's operating income decreased by $71 million due to pricing pressures and lower occupancy.
- The company recognized a gain on the sale of the ship 'Costa Voyager' and incurred an impairment charge for 'Grand Celebration'.
- Diluted earnings per share improved to $0.14 for the quarter, from $0.05 in the prior year.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2014filed July 2, 2014Financial Statements
Q2 FY2014 against Q2 FY2013
| Line item | Q2 FY2014Q2 FY2013 | Change |
|---|---|---|
| Cost of Revenue | $2.57B$2.49B | +3.4% |
| SG&A Expenses | $504.00M$449.00M | +12.2% |
| Operating Expenses | $3.49B$3.33B | +4.8% |
| Operating Income | $147.00M$152.00M | −3.3% |
| Interest Expense | $72.00M$78.00M | −7.7% |
| Net Income | $98.00M$41.00M | +139.0% |
| EPS (Basic) | $0.13$0.05 | +160.0% |
| EPS (Diluted) | $0.13$0.05 | +160.0% |
| Shares Outstanding (Basic) | 776.00M775.00M | +0.1% |
| Shares Outstanding (Diluted) | 778.00M777.00M | +0.1% |
05—Questions
Frequently Asked Questions
What was the primary driver for the increase in revenue during the second quarter of 2014?
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.
How did the company's different geographical segments perform?
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.
What is the company's outlook for the remainder of 2014?
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.
What significant events impacted the company's costs and expenses during the period?
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.
06—Continue