REG-Carnival PLC: Carnival Corp & plc First Quarter Results
22/03/2018 13:15
CARNIVAL CORPORATION & PLC REPORTS RECORD FIRST QUARTER EARNINGS
Record first quarter earnings and revenues
Carnival Corporation & plc today reported its results for the first quarter
ended February 28, 2018. The results of Carnival Corporation and Carnival plc
have been consolidated and include results on a U.S. GAAP and adjusted basis.
1Q Highlights
• 1Q U.S. GAAP net income of $391 million, or $0.54 diluted EPS, higher than
$352 million, or $0.48 diluted EPS for the prior year
• 1Q adjusted net income of $375 million, or $0.52 EPS, higher than adjusted
net income of $279 million, or $0.38 EPS for the prior year (adjusted net
income excludes unrealized gains and losses on fuel derivatives and other net
charges, totaling $16 million in net gains for 1Q 2018 and $73 million in net
gains for 1Q 2017)
• 1Q net revenue yields in constant currency increased 3.9% compared to
prior year, better than December guidance of up 1.5 to 2.5%
• 1Q net cruise costs excluding fuel per available lower berth day
(“ALBD”) in constant currency increased 1.0% from prior year, better than
December guidance of up 2.0 to 3.0% principally due to the timing of expenses
between quarters
• Changes in fuel prices (including realized fuel derivatives) decreased
earnings by $0.04 per share, offset by an increase in earnings due to changes
in currency exchange rates of $0.04 per share
Outlook
• At this time, cumulative advanced bookings for the remainder of 2018 are
in line with the prior year at higher prices
• FY 2018 net revenue yields in constant currency are expected to be up
approximately 2.5% compared to the prior year, in line with December guidance
• FY 2018 net cruise costs excluding fuel per ALBD in constant currency are
expected to be up approximately 1.0% compared to the prior year, also in line
with December guidance
• Changes in fuel prices (including realized fuel derivatives) and currency
exchange rates are expected to increase earnings by 0.10 per share compared to
December guidance
• FY 2018 adjusted EPS is expected to be in the range of $4.20 to $4.40,
compared to FY 2017 adjusted EPS of $3.82
• 2Q 2018 adjusted EPS is expected to be in the range of $0.56 to $0.60,
compared to $0.52 in 2Q 2017
President and Chief Executive Officer Arnold Donald commenting on these
results:
“We are off to a strong start to the year achieving another quarter of
record earnings on record revenues and exceeding the high end of guidance.
This strong operational execution affirms our efforts to create demand in
excess of measured capacity growth and exceed guest expectations once onboard.
Our guest experience efforts, coupled with our ongoing marketing and public
relations programs are clearly accelerating cruise demand across the board to
drive cruise ticket prices higher.”
“The booking strength achieved during this year’s wave season, outpacing
even last year’s record levels, demonstrates sustained strong demand for our
world’s leading cruise brands and delivers further confidence in our raised
earnings guidance. We remain on track to achieve double-digit return on
invested capital while continuing to return cash to shareholders through
ongoing share repurchases and dividend growth.”
MEDIA CONTACT INVESTOR RELATIONS CONTACT
Roger Frizzell Beth Roberts
+1 (305) 406 7862 +1 (305) 406 4832
Conference Call
The company has scheduled a conference call with analysts at 10:00 a.m. EDT
(2:00 p.m. GMT) today to discuss its 2018 first quarter results. This call can
be listened to live, and additional information can be obtained, via Carnival
Corporation & plc’s website at www.carnivalcorp.com and www.carnivalplc.com.
Carnival Corporation & plc is the world’s largest leisure travel company
and among the most profitable and financially strong in the cruise and
vacation industries, with a portfolio of 10 dynamic brands that include nine
of the world’s leading cruise lines. With operations in North
America, Australia, Europe and Asia, its portfolio features Carnival Cruise
Line, Princess Cruises, Holland America Line, Seabourn, P&O
Cruises (Australia), Costa Cruises, AIDA Cruises, P&O Cruises (UK) and
Cunard, as well as Fathom, the corporation’s immersion and enrichment
experience brand.
Together, the corporation’s cruise lines operate 102 ships with 231,000
lower berths visiting over 700 ports around the world, with 20 new ships
scheduled to be delivered between 2018 and 2023. 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 S&P 500 and the FTSE 100 indices.
In 2017, Fast Company recognized Carnival Corporation as being among the
“Top 10 Most Innovative Companies” in both the design and travel
categories. Fast Company specifically recognized Carnival Corporation for its
work in developing Ocean Medallion™, a high-tech wearable device that
enables the world’s first interactive guest experience platform capable of
transforming vacation travel into a highly personalized and elevated level of
customized service.
Additional information can be found on
www.carnival.com, www.princess.com, www.hollandamerica.com, www.seabourn.com,
www.pocruises.com.au, www.costacruise.com, www.aida.de, www.pocruises.com,
www.cunard.com, and www.fathom.org.
Exhibit 99.1
Carnival Corporation & plc Reports Record First Quarter Earnings
Record first quarter earnings and revenues
MIAMI, March 22, 2018 -- Carnival Corporation & plc (NYSE/LSE: CCL; NYSE:
CUK) announced U.S. GAAP net income of $391 million, or $0.54 diluted EPS, for
the first quarter of 2018, higher than U.S. GAAP net income for the first
quarter of 2017 of $352 million, or $0.48 diluted EPS. First quarter 2018
adjusted net income of $375 million, or $0.52 adjusted EPS, was higher than
adjusted net income of $279 million, or $0.38 adjusted EPS, for the first
quarter of 2017. Adjusted net income excludes unrealized gains and losses on
fuel derivatives and other net charges, totaling $16 million in net gains for
the first quarter of 2018 and $73 million in net gains for the first quarter
of 2017. Revenues for the first quarter of 2018 of $4.2 billion were higher
than the $3.8 billion in the prior year.
Carnival Corporation & plc President and Chief Executive Officer Arnold Donald
stated, "We are off to a strong start to the year achieving another quarter of
record earnings on record revenues and exceeding the high end of guidance.
This strong operational execution affirms our efforts to create demand in
excess of measured capacity growth and exceed guest expectations once onboard.
Our guest experience efforts, coupled with our ongoing marketing and public
relations programs are clearly accelerating cruise demand across the board to
drive cruise ticket prices higher."
Key information for the first quarter 2018 compared to the prior year:
* Gross revenue yields (revenue per available lower berth day or "ALBD")
increased 9.2 percent. In constant currency, net revenue yields increased 3.9
percent for 1Q 2018, better than December guidance of up 1.5 to 2.5 percent.
* Gross cruise costs including fuel per ALBD increased 9.0 percent. In
constant currency, net cruise costs excluding fuel per ALBD increased 1.0
percent, better than December guidance of up 2.0 to 3.0 percent, principally
due to the timing of expenses between quarters.
* Changes in fuel prices (including realized fuel derivatives) decreased
earnings by $0.04 per share, offset by an increase in earnings due to changes
in currency exchange rates of $0.04 per share.
Highlights from the first quarter include the signing of agreements with
German shipbuilder Meyer Werft GmbH to build two new cruise ships that will be
powered by liquefied natural gas ("LNG"). The first is designated for P&O
Cruises (UK) to be delivered in 2022 with the second for AIDA Cruises in 2023.
Also during the quarter, we continued to drive demand and cruise awareness
with successful new marketing efforts: Carnival Cruise Line appointed
Shaquille O'Neal as their new "CFO," Chief Fun Officer; Cunard hosted the
world premiere of "The Greatest Showman," broadcasting the red carpet event
live on Flagship Queen Mary 2; Costa Cruises launched a new international ad
campaign featuring Shakira that will be aired in Southern Europe and P&O
Cruises launched a new marketing campaign featuring UK celebrity Rob Brydon.
Additionally, we launched the new prime time series La Gran Sorpresa on
Univision and extended our original TV programming to Telemundo, which will
now be featuring our popular Ocean Originals TV program, "The Voyager with
Josh Garcia."
2018 Outlook
At this time, cumulative advanced bookings for the remainder of 2018 are in
line with the prior year at higher prices. Since January, booking volumes for
all future periods have been running ahead of prior year at higher prices.
Donald added, "The booking strength achieved during this year's wave season,
outpacing even last year's record levels, demonstrates sustained strong demand
for our world's leading cruise brands and delivers further confidence in our
raised earnings guidance. We remain on track to achieve double-digit return on
invested capital while continuing to return cash to shareholders through
ongoing share repurchases and dividend growth." The company invested more than
$250 million in share repurchases since the beginning of the quarter, bringing
the cumulative total of repurchases to date to over $3.4 billion since late
2015.
Based on current booking trends, the company expects full year 2018 net
revenue yields in constant currency to be up approximately 2.5 percent
compared to the prior year, in line with December guidance. The company
expects full year net cruise costs excluding fuel per ALBD in constant
currency compared to the prior year to be up approximately 1.0 percent, also
in line with December guidance. Changes in fuel prices (including realized
fuel derivatives) and currency exchange rates are expected to increase
earnings by 0.10 per share compared to December guidance.
Taking the above factors into consideration, the company expects full year
2018 adjusted earnings per share to be in the range of $4.20 to $4.40 compared
to December guidance of $4.00 to $4.30 and 2017 adjusted earnings per share of
$3.82.
Second Quarter 2018 Outlook
Second quarter constant currency net revenue yields are expected to be up
approximately 2.5 to 3.5 percent compared to the prior year. Net cruise costs
excluding fuel per ALBD in constant currency for the second quarter of 2018
are expected to increase by approximately 4.0 to 5.0 percent compared to the
prior year. Based on the above factors, the company expects adjusted earnings
per share for the second quarter 2018 to be in the range of $0.56 to $0.60
versus 2017 adjusted earnings per share of $0.52.
Selected Key Metrics
Full Year 2018 Second Quarter 2018
Year over year change: Current Dollars Constant Currency Current Dollars Constant Currency
Net revenue yields Approx 6.0% Approx 2.5% 7.0 to 8.0% 2.5 to 3.5%
Net cruise costs excl. fuel / ALBD Approx 4.0% Approx 1.0% 8.5 to 9.5% 4.0 to 5.0%
Full Year 2018 Second Quarter 2018
Fuel cost per metric ton consumed $443 $436
Fuel consumption (metric tons in thousands) 3,315 830
Currencies (USD to 1)
AUD $0.77 $0.77
CAD $0.77 $0.76
EUR $1.22 $1.23
GBP $1.40 $1.40
RMB $0.16 $0.16
Three Months Ended
February 28,
2018 2017
Net income (in millions) $ 391 $ 352
Adjusted net income (in millions) (a) $ 375 $ 279
Earnings per share-diluted $ 0.54 $ 0.48
Adjusted earnings per share-diluted (a) $ 0.52 $ 0.38
(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 10:00 a.m. EDT
(2:00 p.m. GMT) today to discuss its 2018 first quarter results. This call can
be listened to live, and additional information can be obtained, via Carnival
Corporation & plc's website at www.carnivalcorp.com and www.carnivalplc.com.
Carnival Corporation & plc is the world's largest leisure travel company and
among the most profitable and financially strong in the cruise and vacation
industries, with a portfolio of 10 dynamic brands that include nine of the
world's leading cruise lines. With operations in North America, Australia,
Europe and Asia, its portfolio features Carnival Cruise Line, Princess
Cruises, Holland America Line, Seabourn, P&O Cruises (Australia), Costa
Cruises, AIDA Cruises, P&O Cruises (UK) and Cunard, as well as Fathom, the
corporation's immersion and enrichment experience brand.
Together, the corporation's cruise lines operate 102 ships with 231,000 lower
berths visiting over 700 ports around the world, with 20 new ships scheduled
to be delivered between 2018 and 2023. 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 S&P 500 and the FTSE 100 indices.
In 2017, Fast Company recognized Carnival Corporation as being among the "Top
10 Most Innovative Companies" in both the design and travel categories. Fast
Company specifically recognized Carnival Corporation for its work in
developing Ocean Medallion™, a high-tech wearable device that enables the
world's first interactive guest experience platform capable of transforming
vacation travel into a highly personalized and elevated level of customized
service.
Additional information can be found on www.carnival.com, www.princess.com,
www.hollandamerica.com, www.seabourn.com, www.pocruises.com.au,
www.costacruise.com, www.aida.de, www.pocruises.com, www.cunard.com, and
www.fathom.org.
Cautionary Note Concerning Factors That May Affect Future Results
Carnival Corporation and Carnival plc and their respective subsidiaries are
referred to collectively in this document as "Carnival Corporation & plc,"
"our," "us" and "we." Some of the statements, estimates or projections
contained in this document are "forward-looking statements" that involve
risks, uncertainties and assumptions with respect to us, including some
statements concerning future results, outlooks, plans, goals and other events
which have not yet occurred. These statements are intended to qualify for the
safe harbors from liability provided by Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934. All statements
other than statements of historical facts are statements that could be deemed
forward-looking. These statements are based on current expectations,
estimates, forecasts and projections about our business and the industry in
which we operate and the beliefs and assumptions of our management. We have
tried, whenever possible, to identify these statements by using words like
"will," "may," "could," "should," "would," "believe," "depends," "expect,"
"goal," "anticipate," "forecast," "project," "future," "intend," "plan,"
"estimate," "target," "indicate," "outlook," and similar expressions of future
intent or the negative of such terms.
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:
* The demand for cruises may decline due to adverse world events impacting the
ability or desire of people to travel, including conditions affecting the
safety and security of travel, government regulations and requirements, and
decline in consumer confidence
* 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
* Changes in and compliance with laws and regulations relating to environment,
health, safety, security, data privacy and protection, tax and anti-corruption
under which we operate may lead to litigations, enforcement actions, fines, or
penalties
* Disruptions and other damages to our information technology and other
networks and operations, breaches in data security, lapses in data privacy,
and failure to keep pace with developments in technology
* Ability to recruit, develop and retain qualified shipboard personnel who
live on ships away from home for extended periods of time
* Increases in fuel prices and availability of fuel supply
* Fluctuations in foreign currency exchange rates
* Overcapacity and competition in the cruise ship and land-based vacation
industry
* Continuing financial viability of our travel agent distribution system, air
service providers and other key vendors in our supply chain, as well as
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, as well as increases to our repairs and maintenance expenses
and refurbishment costs as our fleet ages
* Geographic regions in which we try to expand our business may be slow to
develop and ultimately not develop how we expect
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
February 28,
2018 2017
Revenues
Cruise
Passenger ticket $ 3,148 $ 2,804
Onboard and other 1,071 978
Tour and other 13 9
4,232 3,791
Operating Costs and Expenses
Cruise
Commissions, transportation and other 663 569
Onboard and other 140 125
Payroll and related 558 519
Fuel 359 297
Food 264 251
Other ship operating 711 661
Tour and other 14 13
2,709 2,435
Selling and administrative 616 549
Depreciation and amortization 488 439
3,813 3,423
Operating Income 419 368
Nonoperating Income (Expense)
Interest income 3 2
Interest expense, net of capitalized interest (48) (51)
Gains on fuel derivatives, net (a) 16 27
Other income, net 1 8
(28) (14)
Income Before Income Taxes 390 354
Income Tax Expense, Net — (2)
Net Income $ 391 $ 352
Earnings Per Share
Basic $ 0.54 $ 0.48
Diluted $ 0.54 $ 0.48
Dividends Declared Per Share $ 0.45 $ 0.35
Weighted-Average Shares Outstanding - Basic 717 725
Weighted-Average Shares Outstanding - Diluted 719 728
(a) During the three months ended February 28, 2018 and 2017, our gains on fuel derivatives, net include net unrealized gains of $32 million and $72 million and realized (losses) of $(16) million and $(45) million, respectively.
CARNIVAL CORPORATION & PLC
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in millions, except par values)
February 28, November 30,
2018 2017
ASSETS
Current Assets
Cash and cash equivalents $ 453 $ 395
Trade and other receivables, net 345 312
Inventories 394 387
Prepaid expenses and other 475 502
Total current assets 1,667 1,596
Property and Equipment, Net 35,027 34,430
Goodwill 3,014 2,967
Other Intangibles 1,198 1,200
Other Assets 535 585
$ 41,441 $ 40,778
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $ 1,108 $ 485
Current portion of long-term debt 1,006 1,717
Accounts payable 795 762
Accrued liabilities and other 1,653 1,877
Customer deposits 4,288 3,958
Total current liabilities 8,851 8,800
Long-Term Debt 7,445 6,993
Other Long-Term Liabilities 764 769
Shareholders' Equity
Common stock of Carnival Corporation, $0.01 par value; 1,960 shares authorized; 656 shares at 2018 and 655 shares at 2017 issued 7 7
Ordinary shares of Carnival plc, $1.66 par value; 217 shares at 2018 and 2017 issued 358 358
Additional paid-in capital 8,708 8,690
Retained earnings 23,360 23,292
Accumulated other comprehensive loss (1,486) (1,782)
Treasury stock, 122 shares at 2018 and 2017 of Carnival Corporation and 35 shares at 2018 and 32 shares at 2017 of Carnival plc, at cost (6,565) (6,349)
Total shareholders' equity 24,382 24,216
$ 41,441 $ 40,778
CARNIVAL CORPORATION & PLC
OTHER INFORMATION
Three Months Ended
February 28,
2018 2017
STATISTICAL INFORMATION
ALBDs (in thousands) (a) 20,462 20,024
Occupancy percentage (b) 104.7 % 104.6 %
Passengers carried (in thousands) 2,860 2,769
Fuel consumption in metric tons (in thousands) 821 818
Fuel consumption in metric tons per thousand ALBDs 40.1 40.9
Fuel cost per metric ton consumed $ 437 $ 362
Currencies (USD to 1)
AUD $ 0.78 $ 0.75
CAD $ 0.79 $ 0.76
EUR $ 1.21 $ 1.06
GBP $ 1.37 $ 1.24
RMB $ 0.15 $ 0.15
CASH FLOW INFORMATION (in millions)
Cash from operations $ 1,064 $ 932
Capital expenditures $ 574 $ 412
Dividends paid $ 323 $ 254
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 and is 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
NON-GAAP FINANCIAL MEASURES
Consolidated gross and net revenue yields were computed by dividing the gross and net cruise revenues by ALBDs as follows:
Three Months Ended February 28,
(dollars in millions, except yields) 2018 2018 2017
Constant
Dollar
Passenger ticket revenues $ 3,148 $ 2,999 $ 2,804
Onboard and other revenues 1,071 1,038 978
Gross cruise revenues 4,219 4,037 3,782
Less cruise costs
Commissions, transportation and other (663) (621) (569)
Onboard and other (140) (135) (125)
(803) (756) (694)
Net passenger ticket revenues 2,485 2,378 2,235
Net onboard and other revenues 931 903 853
Net cruise revenues $ 3,416 $ 3,280 $ 3,088
ALBDs 20,461,582 20,461,582 20,024,045
Gross revenue yields $ 206.20 $ 197.29 $ 188.87
% increase 9.2 % 4.5 %
Net revenue yields $ 166.95 $ 160.32 $ 154.22
% increase 8.3 % 4.0 %
Net passenger ticket revenue yields $ 121.46 $ 116.21 $ 111.60
% increase 8.8 % 4.1 %
Net onboard and other revenue yields $ 45.50 $ 44.11 $ 42.62
% increase 6.8 % 3.5 %
Three Months Ended February 28,
(dollars in millions, except yields) 2018 2018 2017
Constant
Currency
Net passenger ticket revenues $ 2,485 $ 2,374 $ 2,235
Net onboard and other revenues 931 906 853
Net cruise revenues $ 3,416 $ 3,280 $ 3,088
ALBDs 20,461,582 20,461,582 20,024,045
Net revenue yields $ 166.95 $ 160.31 $ 154.22
% increase 8.3 % 3.9 %
Net passenger ticket revenue yields $ 121.46 $ 116.04 $ 111.60
% increase 8.8 % 4.0 %
Net onboard and other revenue yields $ 45.50 $ 44.27 $ 42.62
% increase 6.8 % 3.9 %
(See Explanations of Non-GAAP Financial Measures.)
CARNIVAL CORPORATION & PLC
NON-GAAP FINANCIAL MEASURES (CONTINUED)
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:
Three Months Ended February 28,
(dollars in millions, except costs per ALBD) 2018 2018 2017
Constant
Dollar
Cruise operating expenses $ 2,695 $ 2,587 $ 2,422
Cruise selling and administrative expenses 610 587 546
Gross cruise costs 3,305 3,175 2,968
Less cruise costs included above
Commissions, transportation and other (663) (621) (569)
Onboard and other (140) (135) (125)
(Losses) gains on ship sales and impairments (16) (16) —
Restructuring expenses — — —
Other — — 1
Net cruise costs 2,485 2,402 2,275
Less fuel (359) (359) (297)
Net cruise costs excluding fuel $ 2,127 $ 2,044 $ 1,978
ALBDs 20,461,582 20,461,582 20,024,045
Gross cruise costs per ALBD $ 161.51 $ 155.16 $ 148.24
% increase 9.0 % 4.7 %
Net cruise costs excluding fuel per ALBD $ 103.92 $ 99.84 $ 98.81
% increase 5.2 % 1.0 %
Three Months Ended February 28,
(dollars in millions, except costs per ALBD) 2018 2018 2017
Constant
Currency
Net cruise costs excluding fuel $ 2,127 $ 2,042 $ 1,978
ALBDs 20,461,582 20,461,582 20,024,045
Net cruise costs excluding fuel per ALBD $ 103.92 $ 99.81 $ 98.81
% increase 5.2 % 1.0 %
(See Explanations of Non-GAAP Financial Measures.)
CARNIVAL CORPORATION & PLC
NON-GAAP FINANCIAL MEASURES (CONTINUED)
Three Months Ended
February 28,
(in millions, except per share data) 2018 2017
Net income
U.S. GAAP net income $ 391 $ 352
Unrealized (gains) losses on fuel derivatives, net (32) (72)
(Gains) losses on ship sales and impairments 16 —
Restructuring expenses — —
Other — (1)
Adjusted net income $ 375 $ 279
Weighted-average shares outstanding 719 728
Earnings per share
U.S. GAAP earnings per share $ 0.54 $ 0.48
Unrealized (gains) losses on fuel derivatives, net (0.05) (0.10)
(Gains) losses on ship sales and impairments 0.02 —
Restructuring expenses — —
Other — —
Adjusted earnings per share $ 0.52 $ 0.38
Explanations of Non-GAAP Financial Measures
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.
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.
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.
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.
The presentation of our non-GAAP financial information is not intended to be
considered in isolation from, as 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.
Reconciliation of Forecasted Data
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 operations primarily utilize the U.S. dollar, Australian dollar, euro and
sterling as functional currencies to measure results and financial condition.
Functional currencies other than the U.S. dollar subject us to foreign
currency translational risk. Our operations also have revenues and expenses
that are in currencies other than their functional currency, which subject us
to foreign currency transactional risk.
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 2018 periods'
currency exchange rates have remained constant with the 2017 periods' rates.
These metrics facilitate a comparative view for the changes in our business in
an environment with fluctuating exchange rates.
Constant dollar reporting removes only the impact of changes in exchange
rates on the translation of our operations.
Constant currency reporting removes the impact of changes in exchange rates
on the translation of our 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.
Examples:
* The translation of our operations with functional currencies other than U.S.
dollar 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 operations 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.
CONTACT: MEDIA CONTACT: Roger Frizzell, +1 (305) 406 7862; INVESTOR
RELATIONS CONTACT: Beth Roberts, +1 (305) 406 4832
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