REG-Carnival PLC: Carnival Corp & plc Fourth Quarter Results
20/12/2019 14:20
Carnival Corporation & plc Reports Fourth Quarter And Full Year Earnings
Record fourth quarter and full year revenues
MIAMI, Dec. 20, 2019 /PRNewswire/ -- Carnival Corporation & plc (NYSE/LSE:
CCL; NYSE: CUK) announced financial results for the full year and fourth
quarter ended November 30, 2019 and provided an outlook for the full year and
first quarter 2020.
Key Highlights
Full Year 2019
* U.S. GAAP net income of $3.0 billion, or $4.32 diluted EPS, for the full
year 2019, compared to U.S. GAAP net income for the full year 2018 of $3.2
billion, or $4.44 diluted EPS.
* Record full year 2019 adjusted net income of $3.0 billion, or $4.40 adjusted
EPS, compared to adjusted net income of $3.0 billion, or $4.26 adjusted EPS,
for the full year 2018.
* Adjusted net income excludes net charges of $52 million for the full year
2019 and net gains of $123 million for the full year 2018.
* Record total revenues for the full year 2019 were $20.8 billion, higher than
$18.9 billion for the full year 2018. * Gross cruise revenues of $20.4
billion, higher than $18.6 billion for the prior year.
* In constant currency, net cruise revenues of $16.0 billion, higher than
$15.4 billion for the prior year, an increase of 4.0 percent.
Fourth Quarter 2019
* U.S. GAAP net income of $423 million, or $0.61 diluted EPS, for the fourth
quarter of 2019, compared to U.S. GAAP net income for the fourth quarter of
2018 of $494 million, or $0.71 diluted EPS.
* Fourth quarter 2019 adjusted net income of $427 million, or $0.62 adjusted
EPS, compared to adjusted net income of $492 million, or $0.70 adjusted EPS,
for the fourth quarter of 2018.
* Adjusted net income excludes net charges of $5 million for the fourth
quarter of 2019 and net gains of $2 million for the fourth quarter of 2018.
* Record total revenues for the fourth quarter of 2019 were $4.8 billion,
higher than $4.5 billion for the fourth quarter of 2018. * Gross cruise
revenues of $4.7 billion for the fourth quarter of 2019, higher than $4.4
billion for the fourth quarter of 2018.
* In constant currency, net cruise revenues of $3.7 billion compared to $3.7
billion for the fourth quarter of 2018, an increase of 0.5 percent.
Fourth Quarter 2019 Results
Carnival Corporation & plc President and Chief Executive Officer Arnold Donald
noted, "Exceeding our fourth quarter guidance enabled us to have strong full
year earnings per share and another year of record adjusted earnings. We
overcame a high number of unusual events compounded by a significant downturn
in leisure travel demand for our large source markets in Continental Europe.
In that environment, to achieve record revenues and adjusted earnings is an
accomplishment for any consumer company, a credit to our 150,000 team
members and demonstrates the robustness of our business model."
Key financial information for the fourth quarter of 2019 compared to the
fourth quarter of 2018:
* Gross revenue yields (revenue per available lower berth day or "ALBD")
increased 4.0 percent. In constant currency, net revenue yields decreased 1.8
percent, better than September guidance of down 2.0 to 3.0 percent.
* Gross cruise costs including fuel per ALBD increased 6.9 percent. In
constant currency, net cruise costs excluding fuel per ALBD increased 2.6
percent, better than September guidance of up 4.0 to 5.0 percent, due to cost
improvements realized during the quarter and timing of expenses between
quarters.
* Changes in fuel prices and currency exchange rates increased earnings by
$0.11 per share.
Highlights during the fourth quarter:
* Princess Cruises' Sky Princess and Carnival Cruise Line's Carnival Panorama
were both delivered in October 2019.
* P&O Cruises (Australia) entered into an agreement to sell Pacific Dawn and
Pacific Aria, which will both leave the fleet in 2021.
* The company was honored with the Skift Design Award for Best Cruise
Experience for its OceanCompass™, within the Princess MedallionClass
Experience.
* Seabourn received 14 top travel awards and distinctions from highly regarded
magazines including: TIME, Cruise International, American Airlines Celebrated
Living and Travel Weekly (U.S.).
* The company began construction of the cruise industry's first cruise
terminal in Japan, located at the port of Sasebo.
* The company's CSMART Academy was recognized for excellence in maritime
safety training by SAFETY4SEA for a second consecutive year.
* The company's efforts in corporate governance and in social and
environmental responsibility were recognized by Newsweek Magazine and included
in their list of America's Most Responsible Companies.
Other highlights include the delivery of Costa Smeralda, the second of the 11
ordered LNG ships. In addition, the company continues to lead the industry in
the development of environmentally friendly fuel solutions and carbon
emissions reduction. AIDA announced it will be the world's first cruise
company to test the use of fuel cells, which will be powered by hydrogen
derived from methanol and enable the power supply onboard. This is in addition
to its recently announced innovation, the first lithium-ion battery storage
system ever to be deployed on a cruise ship, AIDAperla.
The company has also formalized a collaborative partnership with The Bahamas
to fund and support flood damage repairs and basic restoration efforts at Rand
Memorial Hospital, the primary hospital in Freeport, Grand Bahama Island. This
partnership builds on the company's previously announced financial aid, supply
donations and other relief efforts aiding the recovery from Hurricane Dorian.
The company also remains fully committed to its new developments on Grand
Bahama Island and Half Moon Cay.
Full Year 2020 Outlook
The company is entering fiscal year 2020 with a record booked occupancy
position. At this time, cumulative advanced bookings for the full year 2020
are slightly ahead of the prior year at prices that are slightly lower
compared to 2019 on a comparable basis, which does not include the net revenue
yields brand mix headwind of approximately 0.5 percent for the full year 2020.
Booking volumes at the beginning of the fourth quarter were impacted by
Hurricane Dorian. During the last eight weeks, booking volumes have been
running higher with prices that are in line for the full year 2020 compared to
2019 on a comparable basis.
Based on current booking trends, the company expects full year 2020 constant
currency net cruise revenues to be up approximately 5.0 percent, with capacity
growth of 6.6 percent, and net revenue yields in constant currency expected to
be down approximately 1.5 percent compared to the prior year. Net revenue
yields for the full year 2020 include a brand mix headwind of approximately
0.5 percent and an additional headwind of approximately 0.5 percent, primarily
due to ship delivery delays, including today's Mardi Gras announcement. The
company expects full year net cruise costs excluding fuel per ALBD in constant
currency to be in line compared to the prior year, which also includes an
impact of over 0.5 percent caused by ship delivery delays and an accounting
difference.
As previously indicated, in 2020 the company will increase its usage of Marine
Gasoil ("MGO") as a percent of total fuel consumption as a result of the
International Maritime Organization ("IMO") sulfur emission regulations. MGO
is currently anticipated to represent 40 percent to 45 percent of fuel
consumption for full year 2020 compared to 21 percent for full year 2019. The
company's usage of Heavy Fuel Oil ("HFO") is expected to be 55 percent to 50
percent of fuel consumption for full year 2020 and all other fuel types is
expected to be approximately 5.0 percent.
The impact of changes in fuel mix, fuel prices and currency exchange rates are
expected to increase earnings by $0.17 to $0.24 per share compared to the
prior year. Full year 2020 earnings are expected to include $0.12 to $0.17 per
share incremental impact from prior year events and previously announced
voyage disruptions, including ship delivery delays. Based on the above
factors, the company expects full year 2020 adjusted earnings per share to be
in the range of $4.30 to $4.60 compared to 2019 adjusted earnings per share of
$4.40.
Donald added, "Despite the negative impacts from the tail effect of the high
number of unusual events in 2019, as well as a continuation of the negative
headwinds facing our Continental European source markets, our brands continue
to perform and we are at record booked occupancy levels for 2020 on peak
capacity growth. Given the evolution of conditions in Continental Europe, and
recognizing the timing of significant capacity increases we have in our
European portfolio, we are taking a number of actions to adapt over time.
Globally, we are also taking actions to further stimulate demand and increase
our cost efficiencies in 2020 and beyond. With annual cash from operations of
$5.5 billion, our balance sheet is strong as are our brands and we believe we
are well positioned to return to double-digit earnings growth and elevated
ROIC over time."
First Quarter 2020 Outlook
First quarter constant currency net cruise revenues are expected to be up
approximately 4.0 percent, with capacity growth of 6.0 percent, and net
revenue yields in constant currency expected to be down 1.0 to 2.0 percent
compared to the prior year. Net cruise costs excluding fuel per ALBD in
constant currency for the first quarter of 2020 are expected to be down 2.0 to
3.0 percent compared to the prior year, the majority of which is driven by
lower dry-dock days during the quarter.
MGO is currently anticipated to represent 40 percent to 45 percent of fuel
consumption for the first quarter 2020 compared to approximately 14 percent
for the first quarter 2019. The company's usage of HFO is expected to be 55
percent to 50 percent of fuel consumption for first quarter 2020 and all other
fuel types is expected to be approximately 5.0 percent.
The impact of changes in fuel mix, fuel prices and currency exchange rates are
expected to increase earnings by approximately $0.01 per share compared to the
prior year. Based on the above factors, the company expects first quarter
2020 adjusted earnings per share to be in the range of $0.47 to $0.51 compared
to 2019 adjusted earnings per share of $0.49.
Sustainability Outlook
The company's reputation and success depends on having sustainable and
transparent operations. After more than a year of testing food waste digester
technology, the company committed to a multi-year plan to install food waste
digesters across its fleet. The company recently announced it became the first
cruise company to join the Getting to Zero Coalition, an alliance of
organizations across the maritime, energy, infrastructure and finance sectors
committed to accelerating the de-carbonization of the maritime shipping
industry. The coalition's goal aligns with the IMO's strategy to reduce
greenhouse gas emissions from shipping by at least 50 percent by 2050 as
compared to 2008.
Donald added, "We remain committed to being a leader in the development of
environmentally friendly fuel solutions as demonstrated by the introduction of
the first cruise ships with the ability to be solely powered by LNG. Our
significant investments in pilot programs for both fuel cell technology and
electrical energy storage capabilities using battery systems, help us innovate
as we move toward zero emissions. These efforts were further reinforced by
our commitment to the Getting to Zero Coalition."
Selected Key Forecast Metrics
Full Year 2020 First Quarter 2020
Year over year change: Current Dollars Constant Currency Current Dollars Constant Currency
Net revenue yields Approx (1.5)% Approx (1.5)% (3.0)% to (2.0)% (2.0)% to (1.0)%
Net cruise costs excl. fuel / ALBD Approx (0.5)% Approx Flat (4.0)% to (3.0)% (3.0)% to (2.0)%
Full Year 2020 First Quarter 2020
Fuel cost per metric ton consumed (a) $417 $435
Fuel consumption (metric tons in thousands) 3,405 842
Currencies (USD to 1) (a)
AUD $0.68 $0.68
CAD $0.75 $0.75
EUR $1.11 $1.11
GBP $1.31 $1.31
RMB $0.14 $0.14
(a) As of December 6, 2019.
Fuel Price Risks
Based on a 10% change in HFO and MGO type fuel prices versus the current spot
prices that were used to calculate fuel expense in the company's guidance, the
company estimates that its adjusted diluted earnings per share would change by
the following:
HFO impact:
* $0.08 per share on an annualized basis for 2020
* $0.02 per share for the first quarter of 2020
MGO impact:
* $0.12 per share on an annualized basis for 2020
* $0.03 per share for the first quarter of 2020
Operational Foreign Currency Exchange Rate Risks
Based on a 10% change in all currency exchange rates that were used in the
company's guidance, the company estimates that its adjusted diluted earnings
per share guidance would change by the following:
* $0.21 per share on an annualized basis for 2020
* $0.02 per share for the first quarter of 2020
Summary of Fourth Quarter and Full Year Results
Three Months Ended November 30, Twelve Months Ended November 30,
2019 2018 2019 2018
Net income (in millions) $ 423 $ 494 $ 2,990 $ 3,152
Adjusted net income (in millions) (a) $ 427 $ 492 $ 3,041 $ 3,029
Earnings per share-diluted $ 0.61 $ 0.71 $ 4.32 $ 4.44
Adjusted earnings per share-diluted (a) $ 0.62 $ 0.70 $ 4.40 $ 4.26
(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. EST
(3:00 p.m. GMT) today to discuss its 2019 fourth quarter and full year
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 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.
Together, the corporation's cruise lines operate 105 ships with 254,000 lower
berths visiting over 700 ports around the world, with 16 new ships scheduled
to be delivered through 2025. 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.
With a long history of innovation and providing guests with extraordinary
vacation experiences, Carnival Corporation has received thousands of industry
awards - including recognition by the Consumer Technology Association™ as a
CES® 2019 Innovation Awards Honoree for Ocean Medallion™. A revolutionary
wearable device that contains a proprietary blend of communication
technologies, Ocean Medallion enables the world's first interactive guest
experience platform transforming vacation travel on a large scale into a
highly personalized level of customized service. The prestigious CES
Innovation Awards honor outstanding design and engineering in consumer
technology products.
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, and www.cunard.com.
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:
* World events impacting the ability or desire of people to travel may lead to
a decline in demand for cruises
* Incidents concerning our ships, guests or the cruise vacation industry as
well as adverse weather conditions and other natural disasters may impact the
satisfaction of our guests and crew and lead to reputational damage
* Changes in and non-compliance with laws and regulations under which we
operate, such as those relating to health, environment, safety and security,
data privacy and protection, anti-corruption, economic sanctions, trade
protection and tax may lead to litigation, enforcement actions, fines,
penalties, and reputational damage
* Breaches in data security and lapses in data privacy as well as disruptions
and other damages to our principal offices, information technology operations
and system networks and failure to keep pace with developments in technology
may adversely impact our business operations, the satisfaction of our guests
and crew and lead to reputational damage
* Ability to recruit, develop and retain qualified shipboard personnel who
live away from home for extended periods of time may adversely impact our
business operations, guest services and satisfaction
* Increases in fuel prices, changes in the types of fuel consumed and
availability of fuel supply may adversely impact our scheduled itineraries and
costs
* Fluctuations in foreign currency exchange rates may adversely impact our
financial results
* Overcapacity and competition in the cruise and land-based vacation industry
may lead to a decline in our cruise sales, pricing and destination options
* Geographic regions in which we try to expand our business may be slow to
develop or ultimately not develop how we expect
* Inability to implement our shipbuilding programs and ship repairs,
maintenance and refurbishments may adversely impact our business operations
and the satisfaction of our guests
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 Twelve Months Ended
November 30, November 30,
2019 2018 2019 2018
Revenues
Cruise
Passenger ticket $ 3,171 $ 3,236 $ 14,104 $ 13,930
Onboard and other (a) 1,520 1,170 6,331 4,679
Tour and other 91 50 390 272
4,781 4,456 20,825 18,881
Operating Costs and Expenses
Cruise
Commissions, transportation and other 595 590 2,720 2,590
Onboard and other (a) 481 153 2,101 638
Payroll and related 578 552 2,249 2,190
Fuel 358 453 1,562 1,619
Food 262 261 1,083 1,066
Other ship operating 733 693 2,925 2,807
Tour and other 69 39 268 180
3,077 2,741 12,909 11,089
Selling and administrative 667 656 2,480 2,450
Depreciation and amortization 554 506 2,160 2,017
4,297 3,903 17,549 15,556
Operating Income 484 552 3,276 3,325
Nonoperating Income (Expense)
Interest income 7 4 23 14
Interest expense, net of capitalized interest (49) (47) (206) (194)
Gains on fuel derivatives, net (b) — (2) — 59
Other income (expense), net (5) 1 (32) 3
(48) (44) (215) (118)
Income Before Income Taxes 437 508 3,060 3,207
Income Tax Expense, Net (14) (14) (71) (54)
Net Income $ 423 $ 494 $ 2,990 $ 3,152
Earnings Per Share
Basic $ 0.62 $ 0.71 $ 4.34 $ 4.45
Diluted $ 0.61 $ 0.71 $ 4.32 $ 4.44
Dividends Declared Per Share $ 0.50 $ 0.50 $ 2.00 $ 1.95
Weighted-Average Shares Outstanding - Basic 686 698 690 709
Weighted-Average Shares Outstanding - Diluted 688 699 692 710
(a) Includes the effect of the adoption of new accounting guidance of $317 million and $1.4 billion for the three and twelve months ended November 30, 2019, respectively.
(b) During the three months ended November 30, 2018, our gains on fuel derivatives, net include net unrealized gains of $4 million and realized (losses) of $(6) million. During the twelve months ended November 30, 2018, our gains on fuel derivatives, net include net unrealized gains of $94 million and realized (losses) of $(35) million.
CARNIVAL CORPORATION & PLC
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in millions, except par values)
November 30,
2019 2018
ASSETS
Current Assets
Cash and cash equivalents $ 518 $ 982
Trade and other receivables, net 444 358
Inventories 427 450
Prepaid expenses and other (a) 671 436
Total current assets 2,059 2,225
Property and Equipment, Net 38,131 35,336
Goodwill 2,912 2,925
Other Intangibles 1,174 1,176
Other Assets 783 738
$ 45,058 $ 42,401
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $ 231 $ 848
Current portion of long-term debt 1,596 1,578
Accounts payable 756 730
Accrued liabilities and other 1,809 1,654
Customer deposits (a) 4,735 4,395
Total current liabilities 9,127 9,204
Long-Term Debt 9,675 7,897
Other Long-Term Liabilities 890 856
Shareholders' Equity
Common stock of Carnival Corporation, $0.01 par value; 1,960 shares authorized; 657 shares at 2019 and 656 shares at 2018 issued 7 7
Ordinary shares of Carnival plc, $1.66 par value; 217 shares at 2019 and 2018 issued 358 358
Additional paid-in capital 8,807 8,756
Retained earnings 26,653 25,066
Accumulated other comprehensive income (loss) (2,066) (1,949)
Treasury stock, 130 shares at 2019 and 129 shares at 2018 of Carnival Corporation and 60 shares at 2019 and 48 shares at 2018 of Carnival plc, at cost (8,394) (7,795)
Total shareholders' equity 25,365 24,443
$ 45,058 $ 42,401
(a) Includes the effect of the adoption of new accounting guidance of $154 million as of November 30, 2019.
CARNIVAL CORPORATION & PLC
OTHER INFORMATION
Three Months Ended Twelve Months Ended
November 30, November 30,
2019 2018 2019 2018
STATISTICAL INFORMATION
ALBDs (in thousands) (a) (b) 21,753 21,246 87,424 83,872
Occupancy percentage (c) 104.0 % 104.5 % 106.8 % 106.9 %
Passengers carried (in thousands) 3,076 3,014 12,866 12,407
Fuel consumption in metric tons (in thousands) 825 837 3,312 3,296
Fuel consumption in metric tons per thousand ALBDs 37.9 39.4 37.9 39.3
Fuel cost per metric ton consumed $ 434 $ 541 $ 472 $ 491
Currencies (USD to 1)
AUD $ 0.68 $ 0.72 $ 0.70 $ 0.75
CAD $ 0.76 $ 0.77 $ 0.75 $ 0.78
EUR $ 1.10 $ 1.15 $ 1.12 $ 1.18
GBP $ 1.26 $ 1.30 $ 1.27 $ 1.34
RMB $ 0.14 $ 0.14 $ 0.14 $ 0.15
CASH FLOW INFORMATION (in millions)
Cash from operations $ 1,062 $ 1,113 $ 5,475 $ 5,549
Capital expenditures $ 1,981 $ 966 $ 5,429 $ 3,749
Dividends paid $ 346 $ 352 $ 1,387 $ 1,355
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) For the three months ended November 30, 2019, compared to the three months ended November 30, 2018, we had a 2.4% capacity increase in ALBDs comprised of a 0.1% capacity decrease in our North America and Australia ("NAA") segment and a 6.8% capacity increase in our Europe and Asia ("EA") segment.
Our NAA segment's capacity decrease was caused by:
• Full period impact from one P&O Cruises (Australia) 1,680-passenger capacity ship removed from service in March 2019
• Full period impact from one P&O Cruises (Australia) 1,260-passenger capacity ship removed from service in April 2019
• Full period impact from one Holland America Line 840-passenger capacity ship removed from service in July 2019
These decreases were partially offset by:
• Full period impact from one Holland America Line 2,670-passenger capacity ship that entered into service in December 2018
• Partial period impact from one Princess Cruises 3,660-passenger capacity ship that entered into service in October 2019
Our EA segment's capacity increase was caused by:
• Partial period impact from one AIDA 5,230-passenger capacity ship that entered into service in December 2018
• Full period impact from one Costa 4,200-passenger capacity ship that entered into service in March 2019
These increases in our EA segment's capacity were partially offset by the full period impact from one P&O Cruises (UK) 1,880-passenger capacity ship removed from service in August 2019.
For the twelve months ended November 30, 2019, compared to the twelve months ended November 30, 2018, we had a 4.2% capacity increase in ALBDs comprised of a 1.8% capacity increase in our NAA segment and a 8.6% capacity increase in our EA segment.
Our NAA segment's capacity increase was caused by:
• Partial period impact from one Carnival Cruise Line 3,960-passenger capacity ship that entered into service in April 2018
• Partial period impact from one Seabourn 600-passenger capacity ship that entered into service in May 2018
• Partial period impact from one Holland America Line 2,670-passenger capacity ship that entered into service in December 2018
• Partial period impact from one Princess Cruises 3,660-passenger capacity ship that entered into service in October 2019
These increases were partially offset by:
• Partial period impact from one P&O Cruises (Australia) 1,680-passenger capacity ship removed in March 2019
• Partial period impact from one P&O Cruises (Australia) 1,260-passenger capacity ship removed in April 2019
• Partial period impact from one Holland America Line 840-passenger capacity ship removed in July 2019
Our EA segment's capacity increase was caused by:
• Partial period impact from one AIDA 5,230-passenger capacity ship that entered into service in December 2018
• Partial period impact from one Costa 4,200-passenger capacity ship that entered into service in March 2019
These increases were partially offset by:
• Partial period impact from one P&O Cruises (UK) 700-passenger capacity ship removed from service in March 2018
• Partial period impact from one Costa 1,300-passenger capacity ship removed from service in April 2018
• Partial period impact from one P&O Cruises (UK) 1,880-passenger capacity ship removed from service in August 2019
(c) 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 November 30, Twelve Months Ended November 30,
(dollars in millions, except yields) 2019 2019 2018 2019 2019 2018
Constant Constant
Dollar Dollar
Passenger ticket revenues $ 3,171 $ 3,219 $ 3,236 $ 14,104 $ 14,409 $ 13,930
Onboard and other revenues (a) 1,520 1,534 1,170 6,331 6,420 4,679
Gross cruise revenues 4,691 4,753 4,406 20,435 20,828 18,609
Less cruise costs
Commissions, transportation and other (595) (604) (590) (2,720) (2,786) (2,590)
Onboard and other (a) (481) (485) (153) (2,101) (2,128) (638)
(1,076) (1,089) (743) (4,822) (4,914) (3,228)
Net passenger ticket revenues 2,575 2,615 2,646 11,384 11,623 11,340
Net onboard and other revenues 1,039 1,049 1,017 4,230 4,292 4,041
Net cruise revenues $ 3,614 $ 3,665 $ 3,663 $ 15,613 $ 15,915 $ 15,381
ALBDs 21,752,975 21,752,975 21,245,942 87,424,190 87,424,190 83,872,441
Gross revenue yields $ 215.63 $ 218.51 $ 207.38 $ 233.74 $ 238.25 $ 221.87
% increase (decrease) 4.0 % 5.4 % 5.4 % 7.4 %
Net revenue yields $ 166.16 $ 168.46 $ 172.42 $ 178.59 $ 182.04 $ 183.38
% increase (decrease) (3.6) % (2.3) % (2.6) % (0.7) %
Net passenger ticket revenue $ 118.40 $ 120.22 $ 124.55 $ 130.21 $ 132.95 $ 135.21
yields
% increase (decrease) (4.9) % (3.5) % (3.7) % (1.7) %
Net onboard and other revenue $ 47.76 $ 48.24 $ 47.87 $ 48.38 $ 49.09 $ 48.17
yields
% increase (decrease) (0.2) % 0.8 % 0.4 % 1.9 %
(a) Includes the effect of the adoption of new accounting guidance of $317 million ($320 million in constant dollar) and $1.4 billion ($1.4 billion in constant dollar) for the three and twelve months ended November 30, 2019, respectively.
Three Months Ended November 30, Twelve Months Ended November 30,
(dollars in millions, except yields) 2019 2019 2018 2019 2019 2018
Constant Constant
Currency Currency
Net passenger ticket revenues $ 2,575 $ 2,631 $ 2,646 $ 11,384 $ 11,702 $ 11,340
Net onboard and other revenues 1,039 1,050 1,017 4,230 4,294 4,041
Net cruise revenues $ 3,614 $ 3,682 $ 3,663 $ 15,613 $ 15,996 $ 15,381
ALBDs 21,752,975 21,752,975 21,245,942 87,424,190 87,424,190 83,872,441
Net revenue yields $ 166.16 $ 169.25 $ 172.42 $ 178.59 $ 182.98 $ 183.38
% increase (decrease) (3.6) % (1.8) % (2.6) % (0.2) %
Net passenger ticket revenue $ 118.40 $ 120.97 $ 124.55 $ 130.21 $ 133.86 $ 135.21
yields
% increase (decrease) (4.9) % (2.9) % (3.7) % (1.0) %
Net onboard and other revenue $ 47.76 $ 48.28 $ 47.87 $ 48.38 $ 49.12 $ 48.17
yields
% increase (decrease) (0.2) % 0.9 % 0.4 % 2.0 %
(See Explanations 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 November 30, Twelve Months Ended November 30,
(dollars in millions, except costs per 2019 2019 2018 2019 2019 2018
ALBD) Constant Constant
Dollar Dollar
Cruise operating expenses (a) $ 3,007 $ 3,042 $ 2,702 $ 12,641 $ 12,862 $ 10,910
Cruise selling and administrative expenses 660 668 650 2,452 2,496 2,422
Gross cruise costs 3,667 3,710 3,352 15,093 15,359 13,332
Less cruise costs included above
Commissions, transportation and other (595) (604) (590) (2,720) (2,786) (2,590)
Onboard and other (a) (481) (485) (153) (2,101) (2,128) (638)
Gains (losses) on ship sales and impairments 5 5 — 16 17 38
Restructuring expenses (10) (10) (1) (10) (10) (1)
Other — — (1) (43) (43) (2)
Net cruise costs 2,586 2,616 2,607 10,234 10,409 10,139
Less fuel (358) (358) (453) (1,562) (1,562) (1,619)
Net cruise costs excluding fuel $ 2,228 $ 2,259 $ 2,154 $ 8,672 $ 8,847 $ 8,521
ALBDs 21,752,975 21,752,975 21,245,942 87,424,190 87,424,190 83,872,441
Gross cruise costs per ALBD $ 168.58 $ 170.55 $ 157.76 $ 172.64 $ 175.68 $ 158.96
% increase (decrease) 6.9 % 8.1 % 8.6 % 10.5 %
Net cruise costs excluding fuel per $ 102.44 $ 103.83 $ 101.39 $ 99.20 $ 101.20 $ 101.59
ALBD
% increase (decrease) 1.0 % 2.4 % (2.4) % (0.4) %
(a) Includes the effect of the adoption of new accounting guidance of $317 million ($320 million in constant dollar) and $1.4 billion ($1.4 billion in constant dollar) for the three and twelve months ended November 30, 2019, respectively.
Three Months Ended November 30, Twelve Months Ended November 30,
(dollars in millions, except costs per 2019 2019 2018 2019 2019 2018
ALBD) Constant Constant
Currency Currency
Net cruise costs excluding fuel $ 2,228 $ 2,262 $ 2,154 $ 8,672 $ 8,858 $ 8,521
ALBDs 21,752,975 21,752,975 21,245,942 87,424,190 87,424,190 83,872,441
Net cruise costs excluding fuel per $ 102.44 $ 103.98 $ 101.39 $ 99.20 $ 101.32 $ 101.59
ALBD
% increase (decrease) 1.0 % 2.6 % (2.4) % (0.3) %
(See Explanations of Non-GAAP Financial Measures.)
CARNIVAL CORPORATION & PLC
NON-GAAP FINANCIAL MEASURES (CONTINUED)
Three Months Ended Twelve Months Ended
November 30, November 30,
(in millions, except per share data) 2019 2018 2019 2018
Net income
U.S. GAAP net income $ 423 $ 494 $ 2,990 $ 3,152
Unrealized (gains) losses on fuel derivatives, net — (4) — (94)
(Gains) losses on ship sales and impairments (5) — (6) (38)
Restructuring expenses 10 1 10 1
Other — 1 47 8
Adjusted net income $ 427 $ 492 $ 3,041 $ 3,029
Weighted-average shares outstanding 688 699 692 710
Earnings per share
U.S. GAAP earnings per share $ 0.61 $ 0.71 $ 4.32 $ 4.44
Unrealized (gains) losses on fuel derivatives, net — (0.01) — (0.13)
(Gains) losses on ship sales and impairments (0.01) — (0.01) (0.05)
Restructuring expenses 0.01 — 0.01 —
Other — — 0.07 0.01
Adjusted earnings per share $ 0.62 $ 0.70 $ 4.40 $ 4.26
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. 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 2019 periods'
currency exchange rates have remained constant with the 2018 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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