10-QPeriod: Q3 FY2018

CARNIVAL CORP Quarterly Report for Q3 Ended Aug 31, 2018

Filed September 27, 2018For Securities:CCL

Summary

Carnival Corporation & plc reported strong financial performance for the nine months ended August 31, 2018, with net income increasing to $2.66 billion from $2.06 billion in the prior year. This growth was driven by a significant increase in revenues, up 8.2% to $11.7 billion, primarily fueled by higher ticket prices and increased onboard spending across both their North America & Australia (NAA) and Europe & Asia (EA) segments. The company also benefited from a positive foreign currency translational impact, particularly in the EA segment. Despite a substantial increase in fuel costs ($252 million higher year-over-year), the company managed to improve its operating income significantly. Capital expenditures remain high, driven by new shipbuilding programs and ship improvements, with future commitments indicating continued investment. The company maintains a strong liquidity position and expects to remain in compliance with its debt covenants, reinforcing its financial stability and outlook.

Financial Highlights

51 data points
Beta

Revenue

$5.84B

49.3% Gross Margin

Net Income

$1.71B

29.2% Net Margin

EPS (Diluted)

$2.41

Total Assets

$41.75B

Cash & Equivalents

$541.00M

Free Cash Flow

$766.00M

Financial Statements
Beta
Revenue$5.84B
Cost of Revenue$2.96B
Gross Profit$2.88B
SG&A Expenses$573.00M
Operating Expenses$4.04B
Operating Income$1.79B
Interest Expense$49.00M
Net Income$1.71B
EPS (Basic)$2.42
EPS (Diluted)$2.41
Shares Outstanding (Basic)706.00M
Shares Outstanding (Diluted)707.00M

Key Highlights

  • 1Net income increased by 29% to $2.66 billion for the nine months ended August 31, 2018, compared to $2.06 billion for the same period in 2017.
  • 2Total revenues grew by 8.2% to $11.7 billion for the nine months ended August 31, 2018, driven by increased ticket revenues and onboard spending.
  • 3Operating income saw a substantial increase of 23% to $2.8 billion for the nine months ended August 31, 2018.
  • 4Capacity, measured in Available Lower Berth Days (ALBDs), increased by 1.8% for the nine months ended August 31, 2018.
  • 5Fuel costs increased significantly by $252 million, or 28%, primarily due to higher fuel prices.
  • 6The company continues to invest heavily in its fleet, with total annual capital expenditures projected to be between $4.8 billion and $5.6 billion from 2019 to 2022.
  • 7Carnival Corporation repurchased a significant number of shares, spending $1.2 billion on repurchases during the nine months ended August 31, 2018.

Frequently Asked Questions

Carnival's total revenues increased by 8.2% to $11.7 billion for the nine months ended August 31, 2018, compared to $10.8 billion in the same period of 2017. This growth was driven by a combination of a 1.8% increase in capacity, improved pricing across various programs, higher onboard spending, and a favorable foreign currency translational impact.

Fuel costs increased substantially by $252 million, or 28%, to $1.2 billion for the nine months ended August 31, 2018, primarily due to higher fuel prices. Despite this increase, the company was able to significantly grow its net income and operating income, indicating strong underlying operational performance and effective cost management in other areas.

Carnival has significant future capital commitments, with total annual capital expenditures expected to range from $5.6 billion in 2019-2020 to $4.8 billion in 2022, primarily for new shipbuilding and fleet improvements. An additional $3.3 billion is committed for ships under contract through 2025.

Carnival maintained a strong liquidity position of $14.5 billion at August 31, 2018, comprising cash, available credit facilities, and committed future financings. The company expects its operating cash flows to fund its capital investments and debt service requirements. They also continue to return cash to shareholders through dividends and share repurchases, while aiming to maintain strong credit ratings and investment grade credit.