01—Abstract
Summary
Summary of the 10-Q filed September 26, 2019. Cited figures are marked; the original filing is the authoritative source.
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 billiona, 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.
02—Key points
Key Highlights
- Total 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.
- Net 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.
- Onboard and other cruise revenues saw a substantial 41% increase, largely attributed to the adoption of ASC 606 for gross revenue presentation.
- Capacity, measured by Available Lower Berth Days (ALBDs), increased by 5.8% year-over-year, with the European segment seeing a significant 13% rise.
- Net cruise costs excluding fuel per ALBD decreased by 3.2% on a constant dollar basis, indicating improved cost management.
- The company reported strong operating cash flow of $4.4 billion for the nine months ended August 31, 2019.
- Shareholder equity increased to $25.3 billion from $24.4 billion in the prior year, supported by retained earnings.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2019, Carnival Corp kept $0.27.
- Revenue$6.53B100.0%
- Cost of revenue−$3.53B54.1%
- Gross profit$3.00B45.9%
- Operating costs−$1.11B17.0%
- Operating income$1.89B28.9%
- Interest, other & tax−$110.0M1.7%
- Net income$1.78B27.2%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2019filed September 26, 2019Financial Statements
Q3 FY2019 against Q3 FY2018
| Line item | Q3 FY2019Q3 FY2018 | Change |
|---|---|---|
| Revenue | $6.53B$5.84B | +11.9% |
| Cost of Revenue | $3.53B$2.96B | +19.4% |
| Gross Profit | $3.00B$2.88B | +4.3% |
| SG&A Expenses | $563.00M$573.00M | −1.7% |
| Operating Expenses | $4.64B$4.04B | +14.9% |
| Operating Income | $1.89B$1.79B | +5.4% |
| Interest Expense | $52.00M$49.00M | +6.1% |
| Net Income | $1.78B$1.71B | +4.3% |
| EPS (Basic) | $2.58$2.42 | +6.6% |
| EPS (Diluted) | $2.58$2.41 | +7.1% |
| Shares Outstanding (Basic) | 689.00M706.00M | −2.4% |
| Shares Outstanding (Diluted) | 691.00M707.00M | −2.3% |
05—Questions
Frequently Asked Questions
What was the primary driver of the increase in 'Onboard and other revenues'?
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.
How did the company's capacity and occupancy perform during the quarter?
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.
What is the company's outlook regarding future capital expenditures and capacity growth?
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.
How is Carnival managing its financial risks, particularly fuel and foreign currency?
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.
06—Continue