01—Abstract
Summary
Summary of the 10-Q filed September 27, 2018. Cited figures are marked; the original filing is the authoritative source.
Carnival Corporation & plc reported strong financial performance for the nine months ended August 31, 2018, with net income increasing to $2.66 billiona from $2.06 billion in the prior year.
This growth was driven by a significant increase in revenues, up 8.2% to $11.7 billionb, 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.
02—Key points
Key Highlights
- Net 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.
- Total 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.
- Operating income saw a substantial increase of 23% to $2.8 billion for the nine months ended August 31, 2018.
- Capacity, measured in Available Lower Berth Days (ALBDs), increased by 1.8% for the nine months ended August 31, 2018.
- Fuel costs increased significantly by $252 million, or 28%, primarily due to higher fuel prices.
- The 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.
- Carnival Corporation repurchased a significant number of shares, spending $1.2 billion on repurchases during the nine months ended August 31, 2018.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2018, Carnival Corp kept $0.29.
- Revenue$5.84B100.0%
- Cost of revenue−$2.96B50.7%
- Gross profit$2.88B49.3%
- Operating costs−$1.08B18.6%
- Operating income$1.79B30.7%
- Interest, other & tax−$87.0M1.5%
- Net income$1.71B29.2%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2018filed September 27, 2018Financial Statements
Q3 FY2018 against Q3 FY2017
| Line item | Q3 FY2018Q3 FY2017 | Change |
|---|---|---|
| Revenue | $5.84B$5.51B | +5.8% |
| Cost of Revenue | $2.96B$3.01B | −1.8% |
| Gross Profit | $2.88B$2.50B | +15.0% |
| SG&A Expenses | $573.00M$547.00M | +4.8% |
| Operating Expenses | $4.04B$4.12B | −1.9% |
| Operating Income | $1.79B$1.39B | +28.8% |
| Interest Expense | $49.00M$49.00M | 0.0% |
| Net Income | $1.71B$1.33B | +28.4% |
| EPS (Basic) | $2.42$1.84 | +31.5% |
| EPS (Diluted) | $2.41$1.83 | +31.7% |
| Shares Outstanding (Basic) | 706.00M723.00M | −2.4% |
| Shares Outstanding (Diluted) | 707.00M726.00M | −2.6% |
05—Questions
Frequently Asked Questions
How did Carnival's revenue performance compare to the previous year?
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.
What is the impact of fuel costs on Carnival's profitability?
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.
What are Carnival's future capital investment plans?
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.
How is Carnival managing its liquidity and debt?
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.
06—Continue