Carnival Corporation & plc Reports Third Quarter Earnings
Key information for the third quarter 2017 compared to the prior year:
- Gross revenue yields (revenue per available lower berth day or "ALBD") increased 5.5 percent. In constant currency, net revenue yields increased 5.1 percent for 3Q 2017, better than June guidance of up approximately 4.0 percent.
- Gross cruise costs including fuel per ALBD increased 12.4 percent (including ship impairment charges). In constant currency, net cruise costs excluding fuel per ALBD increased 0.2 percent, in line with June guidance of approximately flat.
- Changes in fuel prices (including realized fuel derivatives) and currency exchange rates decreased earnings by
$0.03 per share. - Noncash impairment charges for ships, trademark and goodwill of
$392 million driven by the company's decision to strategically realign its business inAustralia .
Highlights from the third quarter include the official naming ceremonies for
Outlook
Donald commented, "After the earthquakes in
At this time, cumulative bookings for the first half of next year are well ahead of the prior year on both price and occupancy. Since June, booking volumes for the first half of next year have been running ahead of last year at prices that are well ahead.
Donald added, "Our record results, coupled with strong booking trends, have more than offset the anticipated earnings impact from these weather disruptions, enabling us to raise the mid-point of our guidance and positioning us to achieve the higher end of our previous earnings guidance range. Our performance affirms conviction in our company's inherent ability to deliver sustained double digit return on invested capital in 2018 and beyond. We remain on track to achieve record cash from operations of
The company expects full year 2017 net revenue yields in constant currency to be up approximately 4.0 percent compared to the prior year, better than June guidance of up approximately 3.5 percent. The company expects full year net cruise costs excluding fuel per ALBD in constant currency compared to the prior year to be up approximately 2.5 percent versus June guidance of up approximately 1.5 percent. The cumulative impact of the recent weather related voyage disruptions reduced forecasted full year net revenue yields by 0.4 percent and increased full year net cruise cost guidance by 0.3 percent.
Changes in fuel prices (including realized fuel derivatives) and currency exchange rates compared to the prior year are expected to decrease earnings by
Fourth Quarter 2017 Outlook
Fourth quarter constant currency net revenue yields are expected to be up approximately 1.5 to 2.5 percent compared to the prior year. Excluding the estimated impact from recent weather related voyage disruptions, fourth quarter constant currency revenue yields would have been expected to increase approximately 3.5 percent, 1.5 percent higher than the mid-point of September guidance. Net cruise costs excluding fuel per ALBD in constant currency for the fourth quarter of 2017 are expected to increase by approximately 6 to 7 percent compared to the prior year of which approximately 1.5 percent was due to the impact of the recent weather related voyage disruptions and nearly 3 percent will be due to higher dry-dock costs as previously anticipated. Changes in fuel prices (including realized fuel derivatives) and currency exchange rates compared to the prior year are expected to decrease earnings by
Selected Key Metrics
Full Year 2017 |
Fourth Quarter 2017 |
|||||||
Year over year change: |
Current Dollars |
Constant Currency |
Current Dollars |
Constant Currency |
||||
Net revenue yields |
Approx 3.5% |
Approx 4.0% |
4.0 to 5.0% |
1.5 to 2.5% |
||||
Net cruise costs excl. fuel / ALBD |
Approx 2.5% |
Approx 2.5% |
8.0 to 9.0% |
6.0 to 7.0% |
Full Year 2017 |
Fourth Quarter 2017 |
||
Fuel price per metric ton |
$378 |
$397 |
|
Fuel consumption (metric tons in thousands) |
3,305 |
840 |
|
Currency: Euro |
$1.13 to €1 |
$1.19 to €1 |
|
Sterling |
$1.28 to £1 |
$1.35 to £1 |
|
Australian dollar |
$0.77 to A$1 |
$0.80 to A$1 |
Three Months Ended |
Nine Months Ended |
||||||||||||||
2017 |
2016 |
2017 |
2016 |
||||||||||||
Net income (in millions) |
$ |
1,329 |
$ |
1,424 |
$ |
2,060 |
$ |
2,171 |
|||||||
Adjusted net income (in millions) (a) |
$ |
1,659 |
$ |
1,417 |
$ |
2,318 |
$ |
2,089 |
|||||||
Earnings per share-diluted |
$ |
1.83 |
$ |
1.93 |
$ |
2.84 |
$ |
2.88 |
|||||||
Adjusted earnings per share-diluted (a) |
$ |
2.29 |
$ |
1.92 |
$ |
3.19 |
$ |
2.77 |
|||||||
(a) See the net income to adjusted net income and EPS to adjusted EPS reconciliations in the Non-GAAP Financial Measures included herein. |
Conference Call
The company has scheduled a conference call with analysts at
Together, the corporation's cruise lines operate 103 ships with 231,000 lower berths visiting over 700 ports around the world, with 18 new ships scheduled to be delivered between 2018 and 2022. Carnival Corporation & plc also operates Holland America Princess Alaska Tours, the leading tour company in Alaska and the Canadian Yukon. Traded on both the New York and London Stock Exchanges, Carnival Corporation & plc is the only group in the world to be included in both the
In 2017,
Additional information can be found on www.carnival.com, www.fathom.org, www.hollandamerica.com, www.princess.com, www.seabourn.com, www.aida.de, www.costacruise.com, www.cunard.com, www.pocruises.com.au and www.pocruises.com.
Cautionary Note Concerning Factors That May Affect Future Results
Forward-looking statements include those statements that relate to our outlook and financial position including, but not limited to, statements regarding:
• Net revenue yields |
• Net cruise costs, excluding fuel per available lower berth day |
• Booking levels |
• Estimates of ship depreciable lives and residual values |
• Pricing and occupancy |
• Goodwill, ship and trademark fair values |
• Interest, tax and fuel expenses |
• Liquidity |
• Currency exchange rates |
• Adjusted earnings per share |
Because forward-looking statements involve risks and uncertainties, there are many factors that could cause our actual results, performance or achievements to differ materially from those expressed or implied by our forward-looking statements. This note contains important cautionary statements of the known factors that we consider could materially affect the accuracy of our forward-looking statements and adversely affect our business, results of operations and financial position. It is not possible to predict or identify all such risks. There may be additional risks that we consider immaterial or which are unknown. These factors include, but are not limited to, the following:
- Incidents, such as ship incidents, security incidents, the spread of contagious diseases and threats thereof, adverse weather conditions or other natural disasters and the related adverse publicity affecting our reputation and the health, safety, security and satisfaction of guests and crew
- Economic conditions and adverse world events affecting the safety and security of travel, such as civil unrest, armed conflicts and terrorist attacks
- Changes in and compliance with laws and regulations relating to the environment, health, safety, security, tax and anti-corruption under which we operate
- Disruptions and other damages to our information technology and other networks and operations, and breaches in data security
- Ability to recruit, develop and retain qualified personnel
- Increases in fuel prices
- Fluctuations in foreign currency exchange rates
- Misallocation of capital among our ship, joint venture and other strategic investments
- Future operating cash flow may not be sufficient to fund future obligations and we may be unable to obtain financing
- Overcapacity in the cruise ship and land-based vacation industry
- Deterioration of our cruise brands' strengths and our inability to implement our strategies
- Continuing financial viability of our travel agent distribution system, air service providers and other key vendors in our supply chain and reductions in the availability of, and increases in the prices for, the services and products provided by these vendors
- Inability to implement our shipbuilding programs and ship repairs, maintenance and refurbishments on terms that are favorable or consistent with our expectations and increases to our repairs and maintenance expenses and refurbishment costs as our fleet ages
- Failure to keep pace with developments in technology
- Geographic regions in which we try to expand our business may be slow to develop and ultimately not develop how we expect and our international operations are subject to additional risks not generally applicable to our U.S. operations
- Competition from the cruise ship and land-based vacation industry
- Economic, market and political factors that are beyond our control
- Litigation, enforcement actions, fines or penalties
- Lack of continuing availability of attractive, convenient and safe port destinations on terms that are favorable or consistent with our expectations
- Union disputes and other employee relationship issues
- Decisions to self-insure against various risks or the inability to obtain insurance for certain risks at reasonable rates
- Reliance on third-party providers of various services integral to the operations of our business
- Business activities that involve our co-investment with third parties
- Disruptions in the global financial markets or other events that may negatively affect the ability of our counterparties and others to perform their obligations to us
- Our shareholders may be subject to the uncertainties of a foreign legal system since
Carnival Corporation andCarnival plc are not U.S. corporations - Small group of shareholders may be able to effectively control the outcome of shareholder voting
- Provisions in
Carnival Corporation's andCarnival plc's constitutional documents may prevent or discourage takeovers and business combinations that our shareholders might consider to be in their best interests - The dual listed company arrangement involves risks not associated with the more common ways of combining the operations of two companies
The ordering of the risk factors set forth above is not intended to reflect our indication of priority or likelihood.
Forward-looking statements should not be relied upon as a prediction of actual results. Subject to any continuing obligations under applicable law or any relevant stock exchange rules, we expressly disclaim any obligation to disseminate, after the date of this document, any updates or revisions to any such forward-looking statements to reflect any change in expectations or events, conditions or circumstances on which any such statements are based.
CARNIVAL CORPORATION & PLC CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (in millions, except per share data) |
|||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||
2017 |
2016 |
2017 |
2016 |
||||||||||||
Revenues |
|||||||||||||||
Cruise |
|||||||||||||||
Passenger ticket |
$ |
4,138 |
$ |
3,803 |
$ |
9,814 |
$ |
9,217 |
|||||||
Onboard and other |
1,223 |
1,146 |
3,237 |
3,047 |
|||||||||||
Tour and other |
154 |
148 |
200 |
190 |
|||||||||||
5,515 |
5,097 |
13,251 |
12,454 |
||||||||||||
Operating Costs and Expenses |
|||||||||||||||
Cruise |
|||||||||||||||
Commissions, transportation and other |
699 |
646 |
1,781 |
1,723 |
|||||||||||
Onboard and other |
184 |
171 |
438 |
411 |
|||||||||||
Payroll and related |
520 |
494 |
1,552 |
1,488 |
|||||||||||
Fuel |
307 |
265 |
914 |
648 |
|||||||||||
Food |
270 |
260 |
774 |
755 |
|||||||||||
Other ship operating (a) |
947 |
643 |
2,293 |
1,914 |
|||||||||||
Tour and other |
86 |
84 |
132 |
125 |
|||||||||||
3,013 |
2,563 |
7,884 |
7,064 |
||||||||||||
Selling and administrative |
547 |
529 |
1,649 |
1,613 |
|||||||||||
Depreciation and amortization |
473 |
443 |
1,368 |
1,303 |
|||||||||||
Goodwill and trademark impairment |
89 |
— |
89 |
— |
|||||||||||
4,122 |
3,535 |
10,990 |
9,980 |
||||||||||||
Operating Income |
1,393 |
1,562 |
2,261 |
2,474 |
|||||||||||
Nonoperating Income (Expense) |
|||||||||||||||
Interest income |
3 |
2 |
7 |
5 |
|||||||||||
Interest expense, net of capitalized interest |
(49) |
(61) |
(150) |
(168) |
|||||||||||
Gains (losses) on fuel derivatives, net (b) |
7 |
(36) |
(19) |
(102) |
|||||||||||
Other income (expense), net |
14 |
(2) |
7 |
6 |
|||||||||||
(25) |
(97) |
(155) |
(259) |
||||||||||||
Income Before Income Taxes |
1,368 |
1,465 |
2,106 |
2,215 |
|||||||||||
Income Tax Expense, Net |
(39) |
(41) |
(46) |
(44) |
|||||||||||
Net Income |
$ |
1,329 |
$ |
1,424 |
$ |
2,060 |
$ |
2,171 |
|||||||
Earnings Per Share |
|||||||||||||||
Basic |
$ |
1.84 |
$ |
1.93 |
$ |
2.85 |
$ |
2.89 |
|||||||
Diluted |
$ |
1.83 |
$ |
1.93 |
$ |
2.84 |
$ |
2.88 |
|||||||
Dividends Declared Per Share |
$ |
0.40 |
$ |
0.35 |
$ |
1.15 |
$ |
1.00 |
|||||||
Weighted-Average Shares Outstanding - Basic |
723 |
737 |
724 |
751 |
|||||||||||
Weighted-Average Shares Outstanding - Diluted |
726 |
739 |
727 |
754 |
|||||||||||
(a) Includes $304 million of ship impairment charges in the three and nine months ended August 31, 2017. |
|||||||||||||||
(b) During the three months ended August 31, 2017 and 2016, our gains (losses) on fuel derivatives, net include net unrealized gains of $65 million and $25 million and realized (losses) of $(57) million and $(61) million, respectively. During the nine months ended August 31, 2017 and 2016, our gains (losses) on fuel derivatives, net include net unrealized gains of $134 million and $121 million and realized (losses) of $(153) million and $(223) million, respectively. |
CARNIVAL CORPORATION & PLC |
||||||||
August 31, |
November 30, |
|||||||
ASSETS |
||||||||
Current Assets |
||||||||
Cash and cash equivalents |
$ |
489 |
$ |
603 |
||||
Trade and other receivables, net |
324 |
298 |
||||||
Inventories |
357 |
322 |
||||||
Prepaid expenses and other |
491 |
466 |
||||||
Total current assets |
1,661 |
1,689 |
||||||
Property and Equipment, Net |
34,172 |
32,429 |
||||||
Goodwill |
2,957 |
2,910 |
||||||
Other Intangibles |
1,247 |
1,275 |
||||||
Other Assets |
606 |
578 |
(a) |
|||||
$ |
40,643 |
$ |
38,881 |
|||||
LIABILITIES AND SHAREHOLDERS' EQUITY |
||||||||
Current Liabilities |
||||||||
Short-term borrowings |
$ |
182 |
$ |
457 |
||||
Current portion of long-term debt |
1,265 |
640 |
||||||
Accounts payable |
639 |
713 |
||||||
Accrued liabilities and other |
1,845 |
1,740 |
||||||
Customer deposits |
4,038 |
3,522 |
||||||
Total current liabilities |
7,969 |
7,072 |
||||||
Long-Term Debt |
7,723 |
8,302 |
(a) |
|||||
Other Long-Term Liabilities |
779 |
910 |
||||||
Shareholders' Equity |
||||||||
Common stock of Carnival Corporation, $0.01 par value; 1,960 shares authorized; 655 shares at 2017 and 654 shares at 2016 issued |
7 |
7 |
||||||
Ordinary shares of Carnival plc, $1.66 par value; 217 shares at 2017 and 2016 issued |
358 |
358 |
||||||
Additional paid-in capital |
8,690 |
8,632 |
||||||
Retained earnings |
23,066 |
21,843 |
||||||
Accumulated other comprehensive loss |
(1,845) |
(2,454) |
||||||
Treasury stock, 121 shares at 2017 and 118 shares at 2016 of Carnival Corporation and 30 shares at 2017 and 27 shares at 2016 of Carnival plc, at cost |
(6,104) |
(5,789) |
||||||
Total shareholders' equity |
24,172 |
22,597 |
||||||
$ |
40,643 |
$ |
38,881 |
|||||
(a) On December 1, 2016, we adopted the Financial Accounting Standards Board's Interest - Imputation of Interest and reclassified $55 million from Other Assets to Long-Term Debt on our November 30, 2016 Consolidated Balance Sheet. |
CARNIVAL CORPORATION & PLC |
|||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||
2017 |
2016 |
2017 |
2016 |
||||||||||||
STATISTICAL INFORMATION |
|||||||||||||||
ALBDs (in thousands) (a) |
$ |
21,120 |
20,572 |
$ |
61,541 |
59,555 |
|||||||||
Occupancy percentage (b) |
111.3 |
% |
111.4 |
% |
106.7 |
% |
106.6 |
% |
|||||||
Passengers carried (in thousands) |
3,441 |
3,265 |
9,116 |
8,606 |
|||||||||||
Fuel consumption in metric tons (in thousands) |
814 |
793 |
2,463 |
2,417 |
|||||||||||
Fuel consumption in metric tons per thousand ALBDs |
38.5 |
38.6 |
40.0 |
40.6 |
|||||||||||
Fuel cost per metric ton consumed |
$ |
378 |
$ |
335 |
$ |
371 |
$ |
268 |
|||||||
Currencies |
|||||||||||||||
U.S. dollar to euro |
$ |
1.15 |
$ |
1.12 |
$ |
1.11 |
$ |
1.11 |
|||||||
U.S. dollar to sterling |
$ |
1.29 |
$ |
1.34 |
$ |
1.27 |
$ |
1.41 |
|||||||
U.S. dollar to Australian dollar |
$ |
0.78 |
$ |
0.75 |
$ |
0.76 |
$ |
0.74 |
|||||||
CASH FLOW INFORMATION (in millions) |
|||||||||||||||
Cash from operations |
$ |
1,449 |
$ |
1,429 |
$ |
4,298 |
$ |
4,110 |
|||||||
Capital expenditures |
$ |
437 |
$ |
450 |
$ |
2,296 |
$ |
2,416 |
|||||||
Dividends paid |
$ |
290 |
$ |
262 |
$ |
797 |
$ |
721 |
Notes to Statistical Information |
|
(a) |
ALBD is a standard measure of passenger capacity for the period that we use to approximate rate and capacity variances, based on consistently applied formulas that we use to perform analyses to determine the main non-capacity driven factors that cause our cruise revenues and expenses to vary. ALBDs assume that each cabin we offer for sale accommodates two passengers and is computed by multiplying passenger capacity by revenue-producing ship operating days in the period. |
(b) |
In accordance with cruise industry practice, occupancy is calculated using a denominator of ALBDs, which assumes two passengers per cabin even though some cabins can accommodate three or more passengers. Percentages in excess of 100% indicate that on average more than two passengers occupied some cabins. |
CARNIVAL CORPORATION & PLC |
|||||||||||||||||||||||
Consolidated gross and net revenue yields were computed by dividing the gross and net cruise revenues by ALBDs as follows (dollars in millions, except yields) (a): |
|||||||||||||||||||||||
Three Months Ended August 31, |
Nine Months Ended August 31, |
||||||||||||||||||||||
2017 |
2017 |
2016 |
2017 |
2017 |
2016 |
||||||||||||||||||
Passenger ticket revenues |
$ |
4,138 |
$ |
4,117 |
$ |
3,803 |
$ |
9,814 |
$ |
9,942 |
$ |
9,217 |
|||||||||||
Onboard and other revenues |
1,223 |
1,218 |
1,146 |
3,237 |
3,262 |
3,047 |
|||||||||||||||||
Gross cruise revenues |
5,361 |
5,335 |
4,949 |
13,051 |
13,204 |
12,264 |
|||||||||||||||||
Less cruise costs |
|||||||||||||||||||||||
Commissions, transportation and |
(699) |
(695) |
(646) |
(1,781) |
(1,809) |
(1,723) |
|||||||||||||||||
Onboard and other |
(184) |
(184) |
(171) |
(438) |
(442) |
(411) |
|||||||||||||||||
(883) |
(879) |
(817) |
(2,219) |
(2,251) |
(2,134) |
||||||||||||||||||
Net passenger ticket revenues |
3,439 |
3,422 |
3,157 |
8,033 |
8,133 |
7,494 |
|||||||||||||||||
Net onboard and other revenues |
1,039 |
1,034 |
975 |
2,799 |
2,820 |
2,636 |
|||||||||||||||||
Net cruise revenues |
$ |
4,478 |
$ |
4,456 |
$ |
4,132 |
$ |
10,832 |
$ |
10,953 |
$ |
10,130 |
|||||||||||
ALBDs |
21,120,155 |
21,120,155 |
20,572,112 |
61,540,974 |
61,540,974 |
59,555,384 |
|||||||||||||||||
Gross revenue yields |
$ |
253.82 |
$ |
252.63 |
$ |
240.60 |
$ |
212.07 |
$ |
214.57 |
$ |
205.94 |
|||||||||||
% increase vs. 2016 |
5.5 |
% |
5.0 |
% |
3.0 |
% |
4.2 |
% |
|||||||||||||||
Net revenue yields |
$ |
211.99 |
$ |
211.02 |
$ |
200.87 |
$ |
176.01 |
$ |
177.99 |
$ |
170.10 |
|||||||||||
% increase vs. 2016 |
5.5 |
% |
5.1 |
% |
3.5 |
% |
4.6 |
% |
|||||||||||||||
Net passenger ticket revenue |
$ |
162.82 |
$ |
162.05 |
$ |
153.47 |
$ |
130.52 |
$ |
132.17 |
$ |
125.84 |
|||||||||||
% increase vs. 2016 |
6.1 |
% |
5.6 |
% |
3.7 |
% |
5.0 |
% |
|||||||||||||||
Net onboard and other revenue |
$ |
49.17 |
$ |
48.97 |
$ |
47.39 |
$ |
45.49 |
$ |
45.83 |
$ |
44.26 |
|||||||||||
% increase vs. 2016 |
3.8 |
% |
3.3 |
% |
2.8 |
% |
3.5 |
% |
|||||||||||||||
Three Months Ended August 31, |
Nine Months Ended August 31, |
||||||||||||||||||||||
2017 |
2017 |
2016 |
2017 |
2017 |
2016 |
||||||||||||||||||
Net passenger ticket revenues |
$ |
3,439 |
$ |
3,424 |
$ |
3,157 |
$ |
8,033 |
$ |
8,140 |
$ |
7,494 |
|||||||||||
Net onboard and other revenues |
1,039 |
1,033 |
975 |
2,799 |
2,811 |
2,636 |
|||||||||||||||||
Net cruise revenues |
$ |
4,478 |
$ |
4,457 |
$ |
4,132 |
$ |
10,832 |
$ |
10,951 |
$ |
10,130 |
|||||||||||
ALBDs |
21,120,155 |
21,120,155 |
20,572,112 |
61,540,974 |
61,540,974 |
59,555,384 |
|||||||||||||||||
Net revenue yields |
$ |
211.99 |
$ |
211.05 |
$ |
200.87 |
$ |
176.01 |
$ |
177.95 |
$ |
170.10 |
|||||||||||
% increase vs. 2016 |
5.5 |
% |
5.1 |
% |
3.5 |
% |
4.6 |
% |
|||||||||||||||
Net passenger ticket revenue |
$ |
162.82 |
$ |
162.13 |
$ |
153.47 |
$ |
130.52 |
$ |
132.28 |
$ |
125.84 |
|||||||||||
% increase vs. 2016 |
6.1 |
% |
5.6 |
% |
3.7 |
% |
5.1 |
% |
|||||||||||||||
Net onboard and other revenue |
$ |
49.17 |
$ |
48.92 |
$ |
47.39 |
$ |
45.49 |
$ |
45.67 |
$ |
44.26 |
|||||||||||
% increase vs. 2016 |
3.8 |
% |
3.2 |
% |
2.8 |
% |
3.2 |
% |
|||||||||||||||
(See Notes to Non-GAAP Financial Measures.) |
CARNIVAL CORPORATION & PLC |
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Consolidated gross and net cruise costs and net cruise costs excluding fuel per ALBD were computed by dividing the gross and net cruise costs and net cruise costs excluding fuel by ALBDs as follows (dollars in millions, except costs per ALBD) (a): |
|||||||||||||||||||||||
Three Months Ended August 31, |
Nine Months Ended August 31, |
||||||||||||||||||||||
2017 |
2017 |
2016 |
2017 |
2017 |
2016 |
||||||||||||||||||
Cruise operating expenses |
$ |
2,927 |
$ |
2,908 |
$ |
2,479 |
$ |
7,752 |
$ |
7,837 |
$ |
6,939 |
|||||||||||
Cruise selling and administrative expenses |
543 |
542 |
527 |
1,637 |
1,658 |
1,606 |
|||||||||||||||||
Gross cruise costs |
3,470 |
3,450 |
3,006 |
9,389 |
9,495 |
8,545 |
|||||||||||||||||
Less cruise costs included above |
|||||||||||||||||||||||
Commissions, transportation and |
(699) |
(695) |
(646) |
(1,781) |
(1,809) |
||||||||||||||||||
Onboard and other |
(184) |
(184) |
(171) |
(438) |
(442) |
(411) |
|||||||||||||||||
(Losses) gains on ship sales and impairments (c) |
(304) |
(294) |
— |
(300) |
(290) |
2 |
|||||||||||||||||
Restructuring expenses (c) |
(3) |
(3) |
— |
(3) |
(3) |
(2) |
|||||||||||||||||
Other (c) |
— |
— |
(18) |
— |
— |
(39) |
|||||||||||||||||
Net cruise costs |
2,280 |
2,274 |
2,171 |
6,867 |
6,951 |
6,372 |
|||||||||||||||||
Less fuel |
(307) |
(307) |
(265) |
(914) |
(914) |
(648) |
|||||||||||||||||
Net cruise costs excluding fuel |
$ |
1,973 |
$ |
1,967 |
$ |
1,906 |
$ |
5,953 |
$ |
6,037 |
$ |
5,724 |
|||||||||||
ALBDs |
21,120,155 |
21,120,155 |
20,572,112 |
61,540,974 |
61,540,974 |
59,555,384 |
|||||||||||||||||
Gross cruise costs per ALBD |
$ |
164.32 |
$ |
163.32 |
$ |
146.18 |
$ |
152.56 |
$ |
154.29 |
$ |
143.50 |
|||||||||||
% increase vs. 2016 |
12.4 |
% |
11.7 |
% |
6.3 |
% |
7.5 |
% |
|||||||||||||||
Net cruise costs excluding fuel per |
$ |
93.39 |
$ |
93.08 |
$ |
92.63 |
$ |
96.72 |
$ |
98.09 |
$ |
96.10 |
|||||||||||
% increase vs. 2016 |
0.8 |
% |
0.5 |
% |
0.6 |
% |
2.1 |
% |
|||||||||||||||
Three Months Ended August 31, |
Nine Months Ended August 31, |
||||||||||||||||||||||
2017 |
2017 |
2016 |
2017 |
2017 |
2016 |
||||||||||||||||||
Net cruise costs excluding fuel |
$ |
1,973 |
$ |
1,960 |
$ |
1,906 |
$ |
5,953 |
$ |
6,011 |
$ |
5,724 |
|||||||||||
ALBDs |
21,120,155 |
21,120,155 |
20,572,112 |
61,540,974 |
61,540,974 |
59,555,384 |
|||||||||||||||||
Net cruise costs excluding fuel |
$ |
93.39 |
$ |
92.78 |
$ |
92.63 |
$ |
96.72 |
$ |
97.67 |
$ |
96.10 |
|||||||||||
% increase vs. 2016 |
0.8 |
% |
0.2 |
% |
0.6 |
% |
1.6 |
% |
|||||||||||||||
(See Notes to Non-GAAP Financial Measures.) |
CARNIVAL CORPORATION & PLC |
|||||||||||||||
Adjusted fully diluted earnings per share was computed as follows (in millions, except per share data) (a): |
|||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||
2017 |
2016 |
2017 |
2016 |
||||||||||||
Net income |
|||||||||||||||
U.S. GAAP net income |
$ |
1,329 |
$ |
1,424 |
$ |
2,060 |
$ |
2,171 |
|||||||
Unrealized (gains) losses on fuel derivatives, net (b) |
(65) |
(25) |
(134) |
(121) |
|||||||||||
Losses (Gains) on ship sales and impairments (c) |
392 |
— |
389 |
(2) |
|||||||||||
Restructuring expenses (c) |
3 |
— |
3 |
2 |
|||||||||||
Other (c) |
— |
18 |
— |
39 |
|||||||||||
Adjusted net income |
$ |
1,659 |
$ |
1,417 |
$ |
2,318 |
$ |
2,089 |
|||||||
Weighted-average shares outstanding |
726 |
739 |
727 |
754 |
|||||||||||
Earnings per share |
|||||||||||||||
U.S. GAAP earnings per share |
$ |
1.83 |
$ |
1.93 |
$ |
2.84 |
$ |
2.88 |
|||||||
Unrealized (gains) losses on fuel derivatives, net (b) |
(0.09) |
(0.03) |
(0.18) |
(0.16) |
|||||||||||
Losses (Gains) on ship sales and impairments (c) |
0.55 |
— |
0.53 |
— |
|||||||||||
Restructuring expenses (c) |
— |
— |
— |
— |
|||||||||||
Other (c) |
— |
0.02 |
— |
0.05 |
|||||||||||
Adjusted earnings per share |
$ |
2.29 |
$ |
1.92 |
$ |
3.19 |
$ |
2.77 |
|||||||
Notes to Non-GAAP Financial Measures
(a) Non-GAAP Financial Measures
We use net cruise revenues per ALBD ("net revenue yields"), net cruise costs excluding fuel per ALBD, adjusted net income and adjusted earnings per share as non-GAAP financial measures of our cruise segments' and the company's financial performance. These non-GAAP financial measures are provided along with U.S. GAAP gross cruise revenues per ALBD ("gross revenue yields"), gross cruise costs per ALBD and U.S. GAAP net income and U.S. GAAP earnings per share.
We believe that gains and losses on ship sales, impairment charges and restructuring and certain other expenses are not part of our core operating business and, therefore, are not an indication of our future earnings performance. As such, we exclude these items from non-GAAP measures. Net revenue yields and net cruise costs excluding fuel per ALBD enable us to separate the impact of predictable capacity or ALBD changes from price and other changes that affect our business. We believe these non-GAAP measures provide useful information to investors and expanded insight to measure our revenue and cost performance as a supplement to our U.S. GAAP consolidated financial statements.
The presentation of our non-GAAP financial information is not intended to be considered in isolation from, as a substitute for, or superior to the financial information prepared in accordance with U.S. GAAP. It is possible that our non-GAAP financial measures may not be exactly comparable to the like-kind information presented by other companies, which is a potential risk associated with using these measures to compare us to other companies.
Net revenue yields are commonly used in the cruise industry to measure a company's cruise segment revenue performance and for revenue management purposes. We use "net cruise revenues" rather than "gross cruise revenues" to calculate net revenue yields. We believe that net cruise revenues is a more meaningful measure in determining revenue yield than gross cruise revenues because it reflects the cruise revenues earned net of our most significant variable costs, which are travel agent commissions, cost of air and other transportation, certain other costs that are directly associated with onboard and other revenues and credit and debit card fees.
Net passenger ticket revenues reflect gross passenger ticket revenues, net of commissions, transportation and other costs.
Net onboard and other revenues reflect gross onboard and other revenues, net of onboard and other cruise costs.
Net cruise costs excluding fuel per ALBD is the measure we use to monitor our ability to control our cruise segments' costs rather than gross cruise costs per ALBD. We exclude the same variable costs that are included in the calculation of net cruise revenues as well as fuel expense to calculate net cruise costs without fuel to avoid duplicating these variable costs in our non-GAAP financial measures. Substantially all of our net cruise costs excluding fuel are largely fixed, except for the impact of changing prices, once the number of ALBDs has been determined.
We have not provided a reconciliation of forecasted gross cruise revenues to forecasted net cruise revenues or forecasted gross cruise costs to forecasted net cruise costs without fuel or forecasted U.S. GAAP net income to forecasted adjusted net income or forecasted U.S. GAAP earnings per share to forecasted adjusted earnings per share because preparation of meaningful U.S. GAAP forecasts of gross cruise revenues, gross cruise costs, net income and earnings per share would require unreasonable effort. We are unable to predict, without unreasonable effort, the future movement of foreign exchange rates and fuel prices. While we forecast realized gains and losses on fuel derivatives by applying current Brent prices to the derivatives that settle in the forecast period, we do not forecast the impact of unrealized gains and losses on fuel derivatives because we do not believe they are an indication of our future earnings performance. We are unable to determine the future impact of gains or losses on ships sales, restructuring expenses and other non-core gains and charges.
Constant Dollar and Constant Currency
Our
We report net revenue yields, net passenger revenue yields, net onboard and other revenue yields and net cruise costs excluding fuel per ALBD on a "constant dollar" and "constant currency" basis assuming the 2017 periods' currency exchange rates have remained constant with the 2016 periods' rates. These metrics facilitate a comparative view for the changes in our business in an environment with fluctuating exchange rates.
Constant dollar reporting is a non-GAAP financial measure that removes only the impact of changes in exchange rates on the translation of our EAA segment and Cruise Support segment operations.
Constant currency reporting is a non-GAAP financial measure that removes the impact of changes in exchange rates on the translation of our EAA segment and Cruise Support segment operations (as in constant dollar) plus the transactional impact of changes in exchange rates from revenues and expenses that are denominated in a currency other than the functional currency for our
Examples:
- The translation of our EAA segment operations to our U.S. dollar reporting currency results in decreases in reported U.S. dollar revenues and expenses if the U.S. dollar strengthens against these foreign currencies and increases in reported U.S. dollar revenues and expenses if the U.S. dollar weakens against these foreign currencies.
- Our North American segment operations have a U.S. dollar functional currency but also have revenue and expense transactions in currencies other than the U.S. dollar. If the U.S. dollar strengthens against these other currencies, it reduces the U.S. dollar revenues and expenses. If the U.S. dollar weakens against these other currencies, it increases the U.S. dollar revenues and expenses.
- Our EAA segment operations have euro, sterling and Australian dollar functional currencies but also have revenue and expense transactions in currencies other than their functional currency. If their functional currency strengthens against these other currencies, it reduces the functional currency revenues and expenses. If the functional currency weakens against these other currencies, it increases the functional currency revenues and expenses.
(b) Under U.S. GAAP, the realized and unrealized gains and losses on fuel derivatives not qualifying as fuel hedges are recognized currently in earnings. We believe that unrealized gains and losses on fuel derivatives are not an indication of our earnings performance since they relate to future periods and may not ultimately be realized in our future earnings. Therefore, we believe it is more meaningful for the unrealized gains and losses on fuel derivatives to be excluded from our net income and earnings per share and, accordingly, we present adjusted net income and adjusted earnings per share excluding these unrealized gains and losses.
(c) We believe that gains and losses on ship sales, impairment charges, restructuring and other expenses are not part of our core operating business and are not an indication of our future earnings performance. Therefore, we believe it is more meaningful for gains and losses on ship sales, impairment charges, and restructuring and other non-core gains and charges to be excluded from our net income and earnings per share and, accordingly, we present adjusted net income and adjusted earnings per share excluding these items.
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MEDIA CONTACT - Roger Frizzell, +1 (305) 406 7862; INVESTOR RELATIONS CONTACT - Beth Roberts, +1 (305) 406 4832