10-QPeriod: Q3 FY2015

CARNIVAL CORP Quarterly Report for Q3 Ended Aug 31, 2015

Filed October 2, 2015For Securities:CCL

Summary

Carnival Corporation & PLC reported revenues of $4.88 billion 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 billion 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 billion, 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 billion 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.

Financial Highlights

51 data points
Beta

Revenue

$4.88B

49.0% Gross Margin

Net Income

$1.22B

24.9% Net Margin

EPS (Diluted)

$1.56

Total Assets

$38.80B

Cash & Equivalents

$539.00M

Free Cash Flow

$958.00M

Financial Statements
Beta
Revenue$4.88B
Cost of Revenue$2.49B
Gross Profit$2.39B
SG&A Expenses$484.00M
Operating Expenses$3.37B
Operating Income$1.51B
Interest Expense$53.00M
Net Income$1.22B
EPS (Basic)$1.56
EPS (Diluted)$1.56
Shares Outstanding (Basic)778.00M
Shares Outstanding (Diluted)781.00M

Key Highlights

  • 1For 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.
  • 2Operating 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.
  • 3Net 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.
  • 4For 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.
  • 5Net 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.
  • 6Cash 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.
  • 7The 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.

Frequently Asked Questions

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.

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.

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.

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.