01—Abstract
Summary
Summary of the 10-Q filed July 1, 2016. Cited figures are marked; the original filing is the authoritative source.
Carnival Corporation & plc reported strong financial results for the second quarter and first half of fiscal year 2016, driven by increased revenues and a significant reduction in operating costs, primarily due to lower fuel prices.
For the three months ended May 31, 2016, revenues rose by 3.1% year-over-year, reaching $3.7 billion, while net income more than doubled to $605 milliona from $222 million in the prior year's quarter. Diluted Earnings Per Share (EPS) improved to $0.80 from $0.29. The company also saw substantial improvements in its six-month performance.
Revenues for the six months ended May 31, 2016, increased by 3.5% to $7.357 billion, and net income more than doubled to $747 millionb from $271 million in the same period of 2015, with diluted EPS rising to $0.98 from $0.35. This improved profitability was largely attributable to a 6.1% decrease in consolidated operating costs and expenses for the quarter, aided by a 41% reduction in fuel costs. The company also demonstrated effective management of its capacity, with a 2.0% increase in Available Lower Berth Days (ALBDs) and improved occupancy rates.
02—Key points
Key Highlights
- Revenue for the three months ended May 31, 2016, increased by 3.1% to $3.7 billion compared to the prior year period.
- Net income for the quarter more than doubled to $605 million, up from $222 million in the same period of 2015.
- Diluted Earnings Per Share (EPS) for the quarter improved significantly to $0.80 from $0.29 year-over-year.
- Total operating costs and expenses decreased by 6.1% to $2.26 billion for the quarter, primarily due to a substantial reduction in fuel costs.
- For the six months ended May 31, 2016, net income reached $747 million, a significant increase from $271 million in the prior year.
- The company's capacity, measured by ALBDs, increased by 2.0% for the quarter, accompanied by a rise in occupancy percentage to 104.1%.
- Carnival Corporation & plc maintained a strong liquidity position, with $10.7 billion in liquidity at May 31, 2016.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2016, Carnival Corp kept $0.16.
- Revenue$3.71B100.0%
- Cost of revenue−$2.26B60.9%
- Gross profit$1.45B39.1%
- Operating costs−$969.0M26.2%
- Operating income$478.0M12.9%
- Interest, other & tax$127.0M3.4%
- Net income$605.0M16.3%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2016filed July 1, 2016Financial Statements
Q2 FY2016 against Q2 FY2015
| Line item | Q2 FY2016Q2 FY2015 | Change |
|---|---|---|
| Revenue | $3.71B— | — |
| Cost of Revenue | $2.26B$2.40B | −6.1% |
| Gross Profit | $1.45B— | — |
| SG&A Expenses | $532.00M$491.00M | +8.4% |
| Operating Expenses | $3.23B$3.30B | −2.2% |
| Operating Income | $478.00M$289.00M | +65.4% |
| Interest Expense | $57.00M$57.00M | 0.0% |
| Net Income | $605.00M$222.00M | +172.5% |
| EPS (Basic) | $0.81$0.29 | +179.3% |
| EPS (Diluted) | $0.80$0.29 | +175.9% |
| Shares Outstanding (Basic) | 751.00M778.00M | −3.5% |
| Shares Outstanding (Diluted) | 753.00M780.00M | −3.5% |
05—Questions
Frequently Asked Questions
What were the primary drivers of Carnival Corporation's improved financial performance in the second quarter of 2016?
The primary drivers for Carnival Corporation's improved financial performance in the second quarter of 2016 were an increase in total revenues, a significant decrease in operating costs and expenses (notably lower fuel prices), and improved occupancy and capacity utilization.
How did fuel prices impact Carnival Corporation's financial results?
Lower fuel prices had a substantial positive impact on Carnival Corporation's results. For the three months ended May 31, 2016, fuel costs decreased by $136 million, or 41%, compared to the same period in 2015. This reduction in fuel expenses directly contributed to higher operating income and net income.
What is the company's outlook for the remainder of fiscal year 2016, based on the provided guidance?
Carnival Corporation & plc expected its adjusted diluted earnings per share for the 2016 third quarter to be in the range of $1.83 to $1.87 and for the full 2016 year to be between $3.25 and $3.35. This guidance was based on specific assumptions regarding fuel costs and currency exchange rates.
How is Carnival Corporation managing its debt and liquidity?
The company aims to grow profitably while maintaining a strong balance sheet and investment grade credit ratings. They plan to use operating cash flows to fund capital investments and return free cash flows to shareholders. At May 31, 2016, Carnival had $10.7 billion in liquidity, comprised of cash, available borrowing under credit facilities, and committed future financings, indicating a strong ability to meet financial obligations.
06—Continue