01—Abstract
Summary
Summary of the 10-Q filed September 29, 2017. Cited figures are marked; the original filing is the authoritative source.
Carnival Corporation & plc's third quarter 2017 results show a decline in net income and operating income compared to the prior year, largely driven by significant ship and trademark impairment charges totaling $89 milliona related to a strategic realignment in Australia.
While revenues saw a healthy increase of 8.8% for the quarter, driven by higher ticket prices and a 2.7% capacity increase, operating expenses rose substantially, particularly due to the aforementioned impairment charges and increased fuel costs. Despite the profit dip, the company demonstrated strong operational execution with increased net revenue yields and higher passenger volumes. Management's outlook for the full year 2017 remained positive, with adjusted earnings per share guidance in the range of $3.64 to $3.70b.
The company continues to invest in its fleet, with significant capital expenditures planned for new shipbuilding and improvements. Liquidity remains strong, supported by operating cash flows and committed future financing.
02—Key points
Key Highlights
- Total revenues increased by 8.8% to $5.5 billion for the third quarter of 2017, driven by higher passenger ticket revenues and onboard spending.
- Significant impairment charges of $89 million (goodwill and trademark) and $304 million (ships) impacted the third quarter results, primarily due to a strategic business realignment in Australia.
- Operating income decreased by 11% to $1.4 billion for the third quarter, largely due to the impairment charges and increased operating expenses.
- Net income for the third quarter decreased to $1.33 billion from $1.42 billion in the prior year.
- Net revenue yields increased by 5.5% in the third quarter compared to the prior year, indicating improved pricing and demand.
- Capacity, measured by Available Lower Berth Days (ALBDs), increased by 2.7% in the third quarter.
- The company's liquidity remained strong, with $13.5 billion in liquidity as of August 31, 2017, comprising cash, available credit facilities, and committed future financings.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2017, Carnival Corp kept $0.24.
- Revenue$5.51B100.0%
- Cost of revenue−$3.01B54.6%
- Gross profit$2.50B45.4%
- Operating costs−$1.11B20.1%
- Operating income$1.39B25.3%
- Interest, other & tax−$64.0M1.2%
- Net income$1.33B24.1%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2017filed September 29, 2017Financial Statements
Q3 FY2017 against Q3 FY2016
| Line item | Q3 FY2017Q3 FY2016 | Change |
|---|---|---|
| Revenue | $5.51B$5.10B | +8.2% |
| Cost of Revenue | $3.01B$2.56B | +17.6% |
| Gross Profit | $2.50B$2.53B | −1.3% |
| SG&A Expenses | $547.00M$529.00M | +3.4% |
| Operating Expenses | $4.12B$3.54B | +16.6% |
| Operating Income | $1.39B$1.56B | −10.8% |
| Interest Expense | $49.00M$61.00M | −19.7% |
| Net Income | $1.33B$1.42B | −6.7% |
| EPS (Basic) | $1.84$1.93 | −4.7% |
| EPS (Diluted) | $1.83$1.93 | −5.2% |
| Shares Outstanding (Basic) | 723.00M737.00M | −1.9% |
| Shares Outstanding (Diluted) | 726.00M739.00M | −1.8% |
05—Questions
Frequently Asked Questions
What caused the decrease in net income and operating income compared to the previous year?
The decrease was primarily driven by significant impairment charges totaling $89 million for goodwill and trademarks, and $304 million for ships. These charges resulted from a strategic decision to realign business operations in Australia.
How did the company's revenue performance in the third quarter compare to the prior year?
Revenue showed strong growth, increasing by 8.8% to $5.5 billion. This was fueled by an 8.8% rise in passenger ticket revenue, driven by price improvements and a 2.7% increase in capacity (ALBDs), alongside a 6.7% increase in onboard and other revenues due to higher guest spending.
What is the company's outlook for the remainder of 2017?
Carnival provided guidance for full-year 2017 adjusted earnings per share in the range of $3.64 to $3.70, indicating continued confidence in its operational performance despite the recent impairment charges.
How is the company managing its capital expenditures and fleet development?
Carnival continues to invest significantly in its future, with total annual capital expenditures projected to be $3.1 billion in 2017, $4.1 billion in 2018, and $5.0 billion in 2019, primarily for new shipbuilding and ship improvements. This investment is expected to support capacity growth in the coming years.
06—Continue