01—Abstract
Summary
Summary of the 10-Q filed March 22, 2018. Cited figures are marked; the original filing is the authoritative source.
Carnival Corporation & plc reported strong financial results for the three months ended February 28, 2018, showcasing a significant increase in both revenues and net income compared to the prior year.
Total revenues grew by 12%, driven by a robust performance in passenger ticket sales and onboard spending, supported by a 2.2% increase in capacity (Available Lower Berth Days). Net income rose by approximately 11% to $391 milliona, translating to diluted earnings per share of $0.54, up from $0.48 in the comparable period of 2017. This performance indicates healthy demand for its cruise offerings and effective operational management.
Operationally, the company saw growth across its segments, particularly in Europe and Asia (EA), which experienced a substantial increase in operating income. While costs also rose, driven by higher fuel prices and capacity expansion, the revenue growth outpaced these increases, leading to improved profitability. The company also demonstrated strong cash flow generation from operations, which was utilized for capital expenditures, debt repayments, and returning value to shareholders through dividends and share repurchases, highlighting a balanced approach to growth and capital allocation.
02—Key points
Key Highlights
- Revenue increased by 12% to $4.2 billion for the three months ended February 28, 2018, compared to $3.8 billion in the prior year.
- Net income grew by 11% to $391 million ($0.54 diluted EPS) from $352 million ($0.48 diluted EPS) in the same period last year.
- Capacity, measured by Available Lower Berth Days (ALBDs), increased by 2.2%.
- Onboard and other cruise revenues grew by 9.5% to $1.1 billion.
- Operating income increased by 14% to $419 million, with the EA segment showing a significant 97% increase in operating income.
- Net cash provided by operating activities increased by 14% to $1.1 billion.
- The company paid a dividend of $0.45 per share, an increase from $0.35 per share in the prior year.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2018, Carnival Corp kept $0.09.
- Revenue$4.23B100.0%
- Cost of revenue−$2.71B64.0%
- Gross profit$1.52B36.0%
- Operating costs−$1.10B26.1%
- Operating income$419.0M9.9%
- Interest, other & tax−$28.0M0.7%
- Net income$391.0M9.2%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2018filed March 22, 2018Financial Statements
Q1 FY2018 against Q1 FY2017
| Line item | Q1 FY2018Q1 FY2017 | Change |
|---|---|---|
| Revenue | $4.23B$3.79B | +11.6% |
| Cost of Revenue | $2.71B$2.44B | +11.3% |
| Gross Profit | $1.52B$1.36B | +12.3% |
| SG&A Expenses | $616.00M$549.00M | +12.2% |
| Operating Expenses | $3.81B$3.42B | +11.4% |
| Operating Income | $419.00M$368.00M | +13.9% |
| Interest Expense | $48.00M$51.00M | −5.9% |
| Net Income | $391.00M$352.00M | +11.1% |
| EPS (Basic) | $0.54$0.48 | +12.5% |
| EPS (Diluted) | $0.54$0.48 | +12.5% |
| Shares Outstanding (Basic) | 717.00M725.00M | −1.1% |
| Shares Outstanding (Diluted) | 719.00M728.00M | −1.2% |
05—Questions
Frequently Asked Questions
What was the primary driver of revenue growth in the first quarter?
Revenue growth was primarily driven by a 12% increase in cruise passenger ticket revenues and a 9.5% increase in onboard and other revenues. This was supported by a 2.2% capacity increase and price improvements across various cruise programs.
How did the company manage its costs during the period?
Operating costs and expenses increased by 11%, largely due to a 2.2% capacity increase, higher fuel prices, and foreign currency impacts. While costs rose, revenue growth outpaced cost increases, leading to improved operating income.
What is the company's approach to capital allocation and shareholder returns?
Carnival Corporation & plc is focused on profitable growth while maintaining a strong balance sheet. They fund capital investments through operating cash flow and plan to return free cash flow to shareholders via dividends and share repurchases. The company also increased its dividend payment to $0.45 per share in this period.
How is the company managing foreign currency exchange rate risks?
The company manages foreign currency risks through its operations and the use of derivative instruments. They specifically hedge certain ship commitments and net investments in foreign operations. The weaker U.S. dollar against functional currencies positively impacted reported revenues in this period.
06—Continue