01—Abstract
Summary
Summary of the 10-Q filed March 31, 2016. Cited figures are marked; the original filing is the authoritative source.
Carnival Corporation & plc reported improved financial performance for the three months ended February 29, 2016, compared to the same period in the prior year.
Revenues increased by 3.3% to $3.65 billiona, driven by higher passenger ticket revenues and onboard spending, supported by a 3.8% increase in capacity (ALBDs). This growth was observed across both North America and EAA brands, with the EAA segment showing a particularly strong rebound in operating income due to increased capacity and pricing improvements. Despite a revenue increase, the company's net income saw a significant jump from $49 million to $142 million, primarily due to a substantial reduction in losses from fuel derivatives, which fell from $169 million to $236 million.
This, coupled with lower overall operating costs and expenses primarily attributed to reduced fuel prices, led to a significant improvement in profitability. The company also reaffirmed its full-year 2016 earnings guidance and highlighted strong liquidity, demonstrating a positive outlook.
02—Key points
Key Highlights
- Total revenues increased by 3.3% to $3.65 billion, driven by a 3.8% increase in capacity (ALBDs) and higher passenger ticket and onboard revenues.
- Net income significantly improved, rising from $49 million to $142 million, largely due to a reduction in losses from fuel derivatives.
- Operating income grew substantially by 63% to $434 million, with the EAA segment experiencing a 265% increase.
- Fuel costs decreased by 41% to $187 million due to lower fuel prices, a key driver in the reduction of overall operating expenses.
- The company generated $798 million in net cash from operating activities, a slight increase from the prior year.
- Carnival Corporation repurchased $916 million of its common stock during the quarter, signaling a commitment to returning capital to shareholders.
- The company reaffirmed its full-year 2016 adjusted diluted earnings per share guidance of $3.20 to $3.40.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2016, Carnival Corp kept $0.04.
- Revenue$3.65B100.0%
- Cost of revenue−$2.24B61.4%
- Gross profit$1.41B38.6%
- Operating costs−$974.0M26.7%
- Operating income$434.0M11.9%
- Interest, other & tax−$292.0M8.0%
- Net income$142.0M3.9%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2016filed March 31, 2016Financial Statements
Q1 FY2016 against Q1 FY2015
| Line item | Q1 FY2016Q1 FY2015 | Change |
|---|---|---|
| Revenue | $3.65B— | — |
| Cost of Revenue | $2.24B$2.33B | −3.9% |
| Gross Profit | $1.41B— | — |
| SG&A Expenses | $551.00M$529.00M | +4.2% |
| Operating Expenses | $3.22B$3.27B | −1.5% |
| Operating Income | $434.00M$266.00M | +63.2% |
| Interest Expense | $52.00M$57.00M | −8.8% |
| Net Income | $142.00M$49.00M | +189.8% |
| EPS (Basic) | $0.18$0.06 | +200.0% |
| EPS (Diluted) | $0.18$0.06 | +200.0% |
| Shares Outstanding (Basic) | 766.00M777.00M | −1.4% |
| Shares Outstanding (Diluted) | 769.00M779.00M | −1.3% |
05—Questions
Frequently Asked Questions
What was the primary driver of the significant increase in net income?
The primary driver of the significant increase in net income was the substantial reduction in losses related to fuel derivatives, which decreased from $169 million in the prior year period to $236 million in the current period. Additionally, lower fuel prices directly reduced operating costs.
How did the company's capacity and revenue performance change year-over-year?
Capacity, measured by available lower berth days (ALBDs), increased by 3.8%. This, combined with improved pricing and onboard spending, led to a 3.3% increase in total revenues to $3.65 billion. Both North America and EAA brands contributed to this revenue growth.
What is the company's outlook for the remainder of fiscal year 2016?
Carnival Corporation & plc reaffirmed its full-year 2016 adjusted diluted earnings per share guidance to be in the range of $3.20 to $3.40. The company also provided guidance for the second quarter of 2016, expecting adjusted diluted earnings per share between $0.34 and $0.38.
How has the company managed its fuel price exposure?
The company utilizes a fuel derivatives program, primarily consisting of zero cost collars on Brent crude oil, to mitigate a portion of the risk associated with fuel price increases. The decline in actual fuel prices significantly benefited the company's results in this period.
06—Continue