10-QPeriod: Q1 FY2015

CARNIVAL CORP Quarterly Report for Q1 Ended Feb 28, 2015

Filed April 2, 2015For Securities:CCL

Summary

Carnival Corporation & PLC reported a net income of $49 million, or $0.06 per diluted share, for the three months ended February 28, 2015. This marks a significant improvement from the net loss of $20 million, or $(0.03) per diluted share, reported in the same period of the prior year. The turnaround was driven by a substantial increase in operating income, which rose to $266 million from $67 million year-over-year. This improvement was largely attributable to lower fuel costs and favorable currency impacts, which offset a slight decline in total revenues. While cruise ticket revenues saw a modest decrease primarily due to a stronger U.S. dollar, onboard and other revenue streams demonstrated resilience, increasing by 4.6%. The company also managed its costs effectively, with operating expenses decreasing by 9.9%, largely due to reduced fuel prices. Despite ongoing investments in new ships and improvements, Carnival Corp. maintained a strong liquidity position and reaffirmed its commitment to returning capital to shareholders through dividends. Investors should note the significant impact of foreign currency fluctuations and fuel price volatility on the company's financial results.

Financial Highlights

49 data points
Beta

Net Income

$49.00M

EPS (Diluted)

$0.06

Total Assets

$38.71B

Cash & Equivalents

$280.00M

Free Cash Flow

-$171.00M

Financial Statements
Beta
Cost of Revenue$2.33B
SG&A Expenses$529.00M
Operating Expenses$3.27B
Operating Income$266.00M
Interest Expense$57.00M
Net Income$49.00M
EPS (Basic)$0.06
EPS (Diluted)$0.06
Shares Outstanding (Basic)777.00M
Shares Outstanding (Diluted)779.00M

Key Highlights

  • 1Reported a net income of $49 million for the quarter, a significant turnaround from a net loss of $20 million in the prior year.
  • 2Diluted earnings per share improved to $0.06 from $(0.03) year-over-year.
  • 3Operating income surged to $266 million from $67 million, driven by cost efficiencies and lower fuel prices.
  • 4Total revenues slightly decreased by 1.3% to $3.53 billion, primarily impacted by foreign currency translation effects from a stronger U.S. dollar.
  • 5Onboard and other cruise revenues increased by 4.6% to $889 million, indicating strong guest spending.
  • 6Operating costs and expenses decreased by 9.9% to $2.34 billion, largely due to a $194 million reduction in fuel costs.
  • 7The company maintained a strong liquidity position with $4.5 billion available at the end of the quarter.

Frequently Asked Questions

The primary driver for the improved profitability was a significant increase in operating income, which more than tripled year-over-year. This was achieved through a combination of substantial reductions in operating costs, particularly fuel expenses due to lower prices, and effective management of other operational expenses. Favorable currency impacts also contributed positively.

A stronger U.S. dollar negatively impacted reported revenues. The foreign currency translational impact was $142 million for cruise passenger ticket revenues and $33 million for onboard and other revenues, leading to a slight decrease in total consolidated revenues. However, currency impacts also helped reduce costs for the EAA brands.

Fuel costs significantly decreased in this quarter due to lower market prices, contributing to improved profitability. The company utilizes a fuel derivatives program to mitigate a portion of the risk from potential fuel price increases, primarily through zero cost collars on Brent crude oil. They continue to evaluate various derivative products and strategies to manage this exposure.

The company maintains a strong balance sheet and a focus on investment-grade credit ratings. They generated $771 million in cash from operations during the quarter, which, along with available revolving credit facilities and committed future financings, provides sufficient liquidity for operations and capital expenditures. They also manage their debt maturity profile and aim to return excess free cash flow to shareholders through dividends and share buybacks.