01—Abstract
Summary
Summary of the 10-Q filed October 2, 2015. Cited figures are marked; the original filing is the authoritative source.
Carnival Corporation & PLC reported revenues of $4.88 billiona for the three months ended August 31, 2015, a slight decrease from $4.95 billion in the prior year period.
Despite this revenue dip, operating income saw a significant increase to $1.51 billionb from $1.29 billion, driven by a substantial reduction in operating costs and expenses, largely due to lower fuel prices and favorable currency impacts. Net income for the quarter was $1.216 billion, down slightly from $1.241 billion in the prior year. Diluted earnings per share were $1.56, compared to $1.60 in the same period last year.
The company highlighted improvements in its North America segment, which saw strong growth in operating income, while the EAA segment's operating income saw a slight decrease. The nine-month period ended August 31, 2015, showed revenues of $12.00 billionc, a marginal decrease from $12.17 billion in the prior year. However, operating income surged to $2.06 billion from $1.51 billion, again benefiting from lower operating costs, particularly fuel expenses and currency translation effects.
Net income for the nine months rose to $1.487 billiond from $1.319 billion, with diluted EPS increasing to $1.91 from $1.70. The company also reported a strong increase in cash flow from operating activities.
02—Key points
Key Highlights
- For the three months ended August 31, 2015, total revenues were $4.88 billion, a slight decrease of 1.5% compared to $4.95 billion in the prior year, primarily due to currency impacts outweighing improved pricing and occupancy.
- Operating income for the quarter significantly increased by 17% to $1.51 billion from $1.29 billion, driven by a 9.8% reduction in operating costs and expenses, largely attributed to lower fuel prices and favorable foreign currency translational impacts.
- Net income for the three months ended August 31, 2015, was $1.216 billion, a slight decrease from $1.241 billion in the prior year. Diluted earnings per share were $1.56, down from $1.60.
- For the nine months ended August 31, 2015, revenues were $12.00 billion, a decrease of 1.4% from $12.17 billion in the prior year. However, operating income rose substantially by 37% to $2.06 billion from $1.51 billion.
- Net income for the nine months increased by 13% to $1.487 billion from $1.319 billion, with diluted earnings per share improving to $1.91 from $1.70.
- Cash flow from operating activities for the nine months ended August 31, 2015, showed a significant increase of 28% to $3.57 billion from $2.79 billion in the prior year, bolstered by improved operating results and increased customer deposits.
- The company declared a 20% dividend increase, raising the quarterly dividend from $0.25 to $0.30 per share, indicating confidence in future performance and a commitment to shareholder returns.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2015, Carnival Corp kept $0.25.
- Revenue$4.88B100.0%
- Cost of revenue−$2.49B51.0%
- Gross profit$2.39B49.0%
- Operating costs−$883.0M18.1%
- Operating income$1.51B30.9%
- Interest, other & tax−$294.0M6.0%
- Net income$1.22B24.9%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2015filed October 2, 2015Financial Statements
Q3 FY2015 against Q3 FY2014
| Line item | Q3 FY2015Q3 FY2014 | Change |
|---|---|---|
| Revenue | $4.88B— | — |
| Cost of Revenue | $2.49B$2.76B | −9.8% |
| Gross Profit | $2.39B— | — |
| SG&A Expenses | $484.00M$481.00M | +0.6% |
| Operating Expenses | $3.37B$3.65B | −7.7% |
| Operating Income | $1.51B$1.29B | +16.9% |
| Interest Expense | $53.00M$69.00M | −23.2% |
| Net Income | $1.22B$1.24B | −2.0% |
| EPS (Basic) | $1.56$1.60 | −2.5% |
| EPS (Diluted) | $1.56$1.60 | −2.5% |
| Shares Outstanding (Basic) | 778.00M776.00M | +0.3% |
| Shares Outstanding (Diluted) | 781.00M778.00M | +0.4% |
05—Questions
Frequently Asked Questions
What was the primary driver behind the increase in operating income despite a slight decrease in revenue for the quarter?
The significant increase in operating income for the three months ended August 31, 2015, was primarily driven by a substantial reduction in operating costs and expenses. This reduction was largely due to lower fuel prices and favorable foreign currency translational impacts, which offset the slight dip in revenues.
How did the company manage its fuel costs?
Carnival utilized its fuel derivatives program to mitigate a portion of the risk from potential fuel price increases. The report indicates that lower fuel prices significantly contributed to the decrease in operating costs and expenses for both the three and nine-month periods.
What is the company's outlook for future capacity and revenue growth?
For the full year 2016, the company expects constant currency net revenue yield improvement. Fleetwide booking volumes for the first half of 2016 were running nearly 20 percent higher than the prior year, albeit at lower constant dollar prices. The company anticipates a modest capacity increase through new ship deliveries.
What is the company's capital allocation strategy regarding shareholder returns?
Carnival's primary financial goals include growing its business and increasing return on invested capital. The company aims to return excess free cash flows to shareholders through additional dividends and/or share buybacks. They also declared a 20% dividend increase for the quarter, demonstrating a commitment to returning capital.
06—Continue