01—Abstract
Summary
Summary of the 10-Q filed June 25, 2018. Cited figures are marked; the original filing is the authoritative source.
Carnival Corporation & plc reported strong financial performance for the three and six months ended May 31, 2018.
Total revenues saw a significant increase driven by higher passenger ticket revenues and onboard spending, supported by price improvements and increased occupancy across key markets, particularly in Europe and Alaska. Despite rising operating costs, notably higher fuel prices and dry-dock expenses, the company managed to improve its operating income, largely due to substantial growth in the Europe and Asia segment, which more than offset a slight decrease in the North America and Australia segment. The company also demonstrated robust cash flow generation from operations, which was utilized to fund its extensive new shipbuilding program and fleet enhancements.
Carnival successfully managed its debt, issuing new debt while repaying existing obligations, and continued its commitment to shareholder returns through dividends and share repurchases. The company maintains a strong liquidity position and anticipates sufficient cash flows to meet its future capital commitments and operational needs, reinforcing investor confidence in its ongoing financial health and growth strategy.
02—Key points
Key Highlights
- Total revenues increased by 10% to $4.36 billion for the three months ended May 31, 2018, compared to $3.95 billion in the prior year, driven by higher ticket prices and increased occupancy.
- Net income for the three months ended May 31, 2018, rose to $561 million ($0.78 per diluted share) from $379 million ($0.52 per diluted share) in the same period last year, reflecting improved profitability.
- Operating costs and expenses increased by 10% to $2.7 billion, primarily due to higher fuel prices, dry-dock expenses, and capacity increases.
- Operating income grew by 12% to $559 million for the quarter, showcasing the company's ability to manage costs and leverage revenue growth.
- Cash flow from operating activities for the six months ended May 31, 2018, increased by 8.4% to $3.1 billion, providing strong internal funding for investments.
- Capital expenditures for the six months ended May 31, 2018, totaled $2.2 billion, primarily for new shipbuilding and ship improvements, indicating continued investment in fleet expansion and modernization.
- Customer deposits increased significantly to $5.3 billion, reflecting strong future booking trends and providing a stable source of working capital.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2018, Carnival Corp kept $0.13.
- Revenue$4.36B100.0%
- Cost of revenue−$2.68B61.5%
- Gross profit$1.68B38.5%
- Operating costs−$1.12B25.6%
- Operating income$559.0M12.8%
- Interest, other & tax$2.0M0.0%
- Net income$561.0M12.9%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2018filed June 25, 2018Financial Statements
Q2 FY2018 against Q2 FY2017
| Line item | Q2 FY2018Q2 FY2017 | Change |
|---|---|---|
| Revenue | $4.36B$3.94B | +10.4% |
| Cost of Revenue | $2.68B$2.44B | +10.1% |
| Gross Profit | $1.68B$1.51B | +11.1% |
| SG&A Expenses | $605.00M$553.00M | +9.4% |
| Operating Expenses | $3.80B$3.44B | +10.2% |
| Operating Income | $559.00M$500.00M | +11.8% |
| Interest Expense | $49.00M$50.00M | −2.0% |
| Net Income | $561.00M$379.00M | +48.0% |
| EPS (Basic) | $0.79$0.52 | +51.9% |
| EPS (Diluted) | $0.78$0.52 | +50.0% |
| Shares Outstanding (Basic) | 714.00M724.00M | −1.4% |
| Shares Outstanding (Diluted) | 715.00M727.00M | −1.7% |
05—Questions
Frequently Asked Questions
How did Carnival Corporation & plc's revenue performance change in the second quarter of 2018 compared to the prior year?
Carnival Corporation & plc reported a 10% increase in total revenues for the three months ended May 31, 2018, reaching $4.36 billion compared to $3.95 billion in the same period of 2017. This growth was primarily driven by a 11% increase in passenger ticket revenues, fueled by price improvements, higher occupancy rates, and a 1.4% capacity increase in Available Lower Berth Days (ALBDs).
What was the impact of fuel prices and other operating costs on Carnival's profitability?
Operating costs and expenses rose by 10% to $2.7 billion for the quarter. Key drivers included an $82 million increase attributed to foreign currency translation, $67 million for higher fuel prices, and $48 million for increased dry-dock and repair expenses. Despite these cost pressures, the company successfully improved its operating income by 12% to $559 million, demonstrating effective cost management and revenue generation strategies.
How is Carnival Corporation & plc managing its capital expenditures and funding its growth?
Carnival is actively investing in its future, with capital expenditures of $2.2 billion for the six months ended May 31, 2018, largely allocated to its new shipbuilding program and ship improvements. The company generated $3.1 billion in cash flow from operations during the same period, supplemented by debt issuances, allowing it to fund these investments while also returning capital to shareholders through dividends and share repurchases.
What is the company's outlook on liquidity and its ability to meet financial obligations?
Carnival Corporation & plc maintains a strong liquidity position, with $13.7 billion in available liquidity at May 31, 2018, including cash and cash equivalents, available borrowing capacity, and committed future financings. The company expects its operating cash flows and liquidity to be sufficient to cover anticipated capital projects, debt service, and other commitments. They also confirmed compliance with debt covenants.
06—Continue