10-QPeriod: Q3 FY2019

CARNIVAL CORP Quarterly Report for Q3 Ended Aug 31, 2019

Filed September 26, 2019For Securities:CCL

Summary

Carnival Corporation & plc's (CCL) third-quarter 2019 report (ending August 31, 2019) shows continued revenue growth, driven primarily by a significant increase in onboard and other revenues, partly due to the adoption of new accounting standards (ASC 606) that led to a gross presentation of certain revenues and costs. Net income for the quarter rose to $1.78 billion, up from $1.71 billion in the prior year period, with diluted EPS at $2.58, a slight increase from $2.41. The company experienced a capacity increase of 5.8%, mainly in its European segment, which contributed to higher passenger ticket revenues. Despite a slight decrease in net revenue yields on a constant currency basis, overall financial performance indicates a robust operational period.

Financial Highlights

53 data points
Beta

Revenue

$6.53B

45.9% Gross Margin

Net Income

$1.78B

27.2% Net Margin

EPS (Diluted)

$2.58

Total Assets

$44.00B

Cash & Equivalents

$1.15B

Free Cash Flow

$818.00M

Financial Statements
Beta
Revenue$6.53B
Cost of Revenue$3.53B
Gross Profit$3.00B
SG&A Expenses$563.00M
Operating Expenses$4.64B
Operating Income$1.89B
Interest Expense$52.00M
Net Income$1.78B
EPS (Basic)$2.58
EPS (Diluted)$2.58
Shares Outstanding (Basic)689.00M
Shares Outstanding (Diluted)691.00M

Key Highlights

  • 1Total revenues for the three months ended August 31, 2019, increased by 12.1% to $6.5 billion compared to $5.8 billion in the prior year.
  • 2Net income for the quarter rose to $1.78 billion ($2.58 diluted EPS) from $1.71 billion ($2.41 diluted EPS) in the same period last year.
  • 3Onboard and other cruise revenues saw a substantial 41% increase, largely attributed to the adoption of ASC 606 for gross revenue presentation.
  • 4Capacity, measured by Available Lower Berth Days (ALBDs), increased by 5.8% year-over-year, with the European segment seeing a significant 13% rise.
  • 5Net cruise costs excluding fuel per ALBD decreased by 3.2% on a constant dollar basis, indicating improved cost management.
  • 6The company reported strong operating cash flow of $4.4 billion for the nine months ended August 31, 2019.
  • 7Shareholder equity increased to $25.3 billion from $24.4 billion in the prior year, supported by retained earnings.

Frequently Asked Questions

The significant increase in 'Onboard and other revenues' was primarily driven by the adoption of new revenue accounting guidance (ASC 606), which led to a gross presentation of shore excursions and other onboard revenues, rather than the previous net presentation. This accounting change also impacted operating costs and expenses.

Carnival experienced a 5.8% increase in capacity (Available Lower Berth Days or ALBDs) compared to the prior year, with the European segment showing a notable 13% increase. Occupancy percentage remained strong at 113.0%, indicating efficient utilization of capacity.

The company forecasts significant capital expenditures, with an annual forecast of $6.6 billion for 2019, $5.8 billion for 2020, and $5.9 billion for 2021. Capacity is expected to increase by 4.2% in 2019, followed by projected increases of 7.0% in 2020 and 5.3% in 2021.

Carnival manages fuel price risk through fuel consumption management, efficiency improvements, and strategic fleet additions/disposals. For foreign currency risks, the company uses a combination of operational activities and derivative instruments, focusing on hedging certain ship commitments and net investments in foreign operations. They also highlighted specific hedging activities for newbuild currency risks.