REG-Carnival PLC: Carnival Reports Record Third Quarter Earnings
26/09/2019 14:20
Carnival Corporation & plc Reports Record Third Quarter Earnings
Record third quarter revenues and earnings
MIAMI, Sept. 26, 2019 /PRNewswire/ -- Carnival Corporation & plc (NYSE/LSE:
CCL; NYSE: CUK) announced financial results for the third quarter ended
August 31, 2019 and provided an outlook for the full year, fourth quarter
2019 and 2020.
Key Highlights
*
U.S. GAAP net income of $1.8 billion, or $2.58 diluted EPS, for the third
quarter of 2019, higher than U.S. GAAP net income for the third quarter of
2018 of $1.7 billion, or $2.41 diluted EPS.
*
Third quarter 2019 adjusted net income of $1.8 billion, or $2.63 adjusted EPS,
higher than adjusted net income of $1.7 billion, or $2.36 adjusted EPS, for
the third quarter of 2018.
*
Adjusted net income excludes net charges of $39 million for the third quarter
of 2019 and net gains of $34 million for the third quarter of 2018.
*
Total revenues for the third quarter of 2019 were $6.5 billion, higher than
the $5.8 billion in the prior year.
*
Gross cruise revenues of $6.3 billion compared to $5.7 billion for the prior
year.
*
In constant currency, net cruise revenues of $5.0 billion compared to $4.7
billion for the prior year, an increase of 5.3 percent.
*
The company expects full year 2019 adjusted earnings per share to be in the
range of $4.23 to $4.27, reflecting recent fuel price increases, compared to
June guidance of $4.25 to $4.35 and 2018 adjusted earnings per share of $4.26.
Third Quarter 2019 Results
Key information for the third quarter of 2019 compared to the third quarter of
2018:
*
Gross revenue yields (revenue per available lower berth day or "ALBD")
increased 5.6 percent. In constant currency, net revenue yields decreased 0.5
percent, in line with June guidance of down slightly to flat.
*
Gross cruise costs including fuel per ALBD increased 9.4 percent. In constant
currency, net cruise costs excluding fuel per ALBD decreased 3.2 percent,
better than June guidance of up 0.5 to 1.5 percent, due to the timing of
expenses between quarters and cost improvements realized during the quarter.
*
Changes in fuel prices increased earnings by $0.07 per share, offset by a
decrease in earnings due to changes in currency exchange rates of $0.07 per
share compared to the prior year. Compared to June guidance, changes in fuel
prices and currency exchange rates decreased earnings by $0.03 per share.
Highlights from the third quarter included Carnival Cruise Line's partnership
with Thrillist to create Island Hoppers, the first-ever comedy competition
show at sea. Princess Cruises announced Phantom Bridge, a first-of-its-kind
game combining digital and physical elements for the ultimate immersive escape
room, which will launch onboard Sky Princess and Enchanted Princess. AIDAnova
was the first-ever cruise ship to be awarded the prestigious Blue Angel
certification for excellence in environmentally friendly ship design by
Germany's Federal Ministry for the Environment. Additionally, during the
quarter, the company released its 2018 Sustainability Report, detailing the
key initiatives and progress made in 2018 toward its 2020 sustainability
performance goals.
2019 Outlook
Carnival Corporation & plc President and Chief Executive Officer Arnold Donald
stated, "I thank our 150,000 global employees for their efforts to deliver a
record quarter in an otherwise challenging year. We achieved additional cost
improvements largely driven by leveraging our scale, offsetting the earnings
impact due to voyage disruptions from the combined impact of Hurricane Dorian,
the tensions in the Arabian Gulf and the delayed delivery of Costa Smeralda. A
further reduction in guidance for ticket and onboard revenue worth $0.06 per
share in part contributed to by the high level of close-in voyage disruptions
was also offset. However, due to an $0.08 impact from the recent spike in fuel
prices caused by geopolitical events, we are reducing our full year guidance
for 2019 by $0.05 per share."
Based on current booking trends, the company expects full year 2019 constant
currency net cruise revenues to be up approximately 4.0 percent, with capacity
growth of 4.2 percent. The company continues to expect its North America &
Australia segment yields to be up for the year, but slightly less than
previous guidance while its Europe & Asia segment is still expected to be down
for the year but slightly more than previous guidance. The company expects
full year net cruise costs excluding fuel per ALBD in constant currency to be
up approximately 0.3 percent versus the prior year compared to June guidance
of up approximately 0.7 percent.
Weather related voyage disruptions, the tensions in the Arabian Gulf and a
ship delivery delay are expected to have a financial impact of $0.04 to $0.06
per share compared to June guidance. Changes in fuel prices and currency
exchange rates are expected to decrease earnings by $0.08 per share also
compared to June guidance. Taking the above factors into consideration, the
company expects full year 2019 adjusted earnings per share to be in the range
of $4.23 to $4.27, reflecting recent fuel price increases, compared to June
guidance of $4.25 to $4.35 and 2018 adjusted earnings per share of $4.26.
Fourth Quarter 2019 Outlook
Fourth quarter constant currency net revenue yields are expected to be down
2.0 to 3.0 percent compared to the prior year. Net cruise costs excluding fuel
per ALBD in constant currency for the fourth quarter are expected to be up 4.0
to 5.0 percent compared to the prior year. Changes in fuel prices and currency
exchange rates are expected to increase earnings by $0.06 per share compared
to the prior year. Voyage disruptions due to weather, a ship delivery delay
and the previously announced U.S. government's policy change on travel to Cuba
are expected to have a financial impact of approximately $0.07 to $0.09 per
share. Based on the above factors, the company expects adjusted earnings per
share for the fourth quarter 2019 to be in the range of $0.46 to $0.50 versus
2018 adjusted earnings per share of $0.70.
2020 Outlook
Cumulative advanced bookings for the first half of 2020 are ahead of the prior
year at prices that are in line compared to 2019 on a comparable basis. Since
June, both booking volumes and prices for the first half of next year have
been running lower than the prior year.
For full year 2020, the company expects capacity growth of approximately 7
percent. As previously indicated, in 2020 the company will increase its usage
of MGO as a percent of total fuel consumption as a result of the IMO sulfur
emission regulations. MGO is currently anticipated to represent approximately
40 percent of fuel consumption for full year 2020 compared to approximately 20
percent for full year 2019. Using fourth quarter September guidance fuel
prices, fuel expense for full year 2020 is expected to be $1.8 billion
compared to $1.6 billion expected for full year 2019. The company currently
expects depreciation to be approximately $2.4 billion for full year 2020
compared to $2.2 billion for full year 2019.
Donald added, "As a truly global cruise company, with nearly 50 percent of our
guests sourced outside of the U.S., we are facing a number of current
headwinds, including weakening economies affecting our Europe & Asia segment,
a strong dollar and of course, the IMO 2020 regulations, and we are working to
mitigate them. We have taken actions to bring capacity in Southern Europe more
in line with demand, reflecting the current conditions which have been heavily
influenced by ongoing economic malaise, the uncertain geopolitical environment
and recent trends in consumer confidence. We have also made close-in
deployment changes, including those made to address the recent situation in
the Arabian Gulf, which has had an impact on recent booking trends and ticket
prices. While we are subject to uneven economies in the short run, the global
aspect of our business has proven to be a strength over time, producing our
industry leading position with over $5 billion in cash from operations,
attractive returns on capital and the strongest balance sheet in the
industry."
Selected Key Forecast Metrics
Full Year 2019 Fourth Quarter 2019
Year over year change: Current Dollars Constant Currency Current Dollars Constant Currency
Net revenue yields Approx (3.0)% Approx (0.5)% (5.0) to (4.0)% (3.0) to (2.0)%
Net cruise costs excl. fuel / ALBD Approx (2.0)% Approx 0.3% 2.5% to 3.5% 4.0 to 5.0%
Full Year 2019 Fourth Quarter 2019
Fuel cost per metric ton consumed $479 $462
Fuel consumption (metric tons in thousands) 3,305 820
Currencies (USD to 1)
AUD $0.70 $0.68
CAD $0.75 $0.75
EUR $1.12 $1.10
GBP $1.27 $1.25
RMB $0.14 $0.14
Three Months Ended Nine Months Ended
August 31, August 31,
2019 2018 2019 2018
Net income (in millions) $ 1,780 $ 1,707 $ 2,567 $ 2,659
Adjusted net income (in millions) (a) $ 1,819 $ 1,673 $ 2,614 $ 2,537
Earnings per share-diluted $ 2.58 $ 2.41 $ 3.71 $ 3.72
Adjusted earnings per share-diluted (a) $ 2.63 $ 2.36 $ 3.77 $ 3.55
(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
(3:00 p.m. BST) today to discuss its 2019 third 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 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 102 ships with 241,000 lower
berths visiting over 700 ports around the world, with 19 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:
*
Adverse 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 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 and pricing
*
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 Nine Months Ended
August 31, August 31,
2019 2018 2019 2018
Revenues
Cruise
Passenger ticket $ 4,477 $ 4,353 $ 10,934 $ 10,694
Onboard and other (a) 1,855 1,316 4,811 3,509
Tour and other 200 167 299 222
6,533 5,836 16,043 14,425
Operating Costs and Expenses
Cruise
Commissions, transportation and other 803 760 2,125 2,000
Onboard and other (a) 668 207 1,620 485
Payroll and related 548 537 1,671 1,638
Fuel 401 434 1,204 1,166
Food 284 275 821 804
Other ship operating 719 655 2,192 2,115
Tour and other 109 90 198 140
3,532 2,958 9,833 8,348
Selling and administrative 563 573 1,813 1,794
Depreciation and amortization 548 511 1,607 1,510
4,643 4,042 13,252 11,653
Operating Income 1,890 1,794 2,791 2,772
Nonoperating Income (Expense)
Interest income 8 5 16 10
Interest expense, net of capitalized interest (52) (49) (157) (147)
Gains on fuel derivatives, net (b) — 4 — 61
Other income (expense), net (19) (9) (27) 2
(63) (50) (168) (74)
Income Before Income Taxes 1,827 1,744 2,624 2,699
Income Tax Expense, Net (47) (37) (56) (40)
Net Income $ 1,780 $ 1,707 $ 2,567 $ 2,659
Earnings Per Share
Basic $ 2.58 $ 2.42 $ 3.72 $ 3.73
Diluted $ 2.58 $ 2.41 $ 3.71 $ 3.72
Dividends Declared Per Share $ 0.50 $ 0.50 $ 1.50 $ 1.45
Weighted-Average Shares Outstanding - Basic 689 706 691 712
Weighted-Average Shares Outstanding - Diluted 691 707 693 714
(a) Includes the effect of the adoption of new accounting guidance of $449 million and $1.1 billion for the three and nine months ended August 31, 2019, respectively.
(b) During the three months ended August 31, 2018, our gains on fuel derivatives, net include net unrealized gains of $8 million and realized (losses) of $(4) million. During the nine months ended August 31, 2018, our gains on fuel derivatives, net include net unrealized gains of $90 million and realized (losses) of $(29) million.
CARNIVAL CORPORATION & PLC
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in millions, except par values)
August 31, November 30,
2019 2018
ASSETS
Current Assets
Cash and cash equivalents $ 1,153 $ 982
Trade and other receivables, net 441 358
Inventories 482 450
Prepaid expenses and other (a) 635 436
Total current assets 2,712 2,225
Property and Equipment, Net 36,466 35,336
Goodwill 2,886 2,925
Other Intangibles 1,166 1,176
Other Assets 771 738
$ 44,001 $ 42,401
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $ 238 $ 848
Current portion of long-term debt 1,607 1,578
Accounts payable 695 730
Accrued liabilities and other 1,718 1,654
Customer deposits (a) 4,674 4,395
Total current liabilities 8,932 9,204
Long-Term Debt 8,893 7,897
Other Long-Term Liabilities 882 856
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 8,798 8,756
Retained earnings 26,576 25,066
Accumulated other comprehensive loss (2,183) (1,949)
Treasury stock, 130 shares at 2019 and 129 shares at 2018 of Carnival Corporation and 57 shares at 2019 and 48 shares at 2018 of Carnival plc, at cost (8,261) (7,795)
Total shareholders' equity 25,295 24,443
$ 44,001 $ 42,401
(a) Includes the effect of the adoption of new accounting guidance of $147 million as of August 31, 2019.
CARNIVAL CORPORATION & PLC
OTHER INFORMATION
Three Months Ended Nine Months Ended August 31,
August 31,
2019 2018 2019 2018
STATISTICAL INFORMATION
ALBDs (in thousands) (a) (b) 22,727 21,475 65,671 62,626
Occupancy percentage (c) 113.0 % 112.6 % 107.8 % 107.8 %
Passengers carried (in thousands) 3,752 3,562 9,790 9,393
Fuel consumption in metric tons 822 818 2,487 2,458
(in thousands)
Fuel consumption in metric tons 36.2 38.1 37.9 39.3
per thousand ALBDs
Fuel cost per metric ton consumed $ 487 $ 531 $ 484 $ 474
Currencies (USD to 1)
AUD $ 0.69 $ 0.74 $ 0.70 $ 0.76
CAD $ 0.76 $ 0.76 $ 0.75 $ 0.78
EUR $ 1.12 $ 1.16 $ 1.13 $ 1.20
GBP $ 1.24 $ 1.31 $ 1.28 $ 1.36
RMB $ 0.14 $ 0.15 $ 0.15 $ 0.15
CASH FLOW INFORMATION (in
millions)
Cash from operations $ 1,245 $ 1,349 $ 4,414 $ 4,436
Capital expenditures $ 427 $ 583 $ 3,448 $ 2,784
Dividends paid $ 347 $ 356 $ 1,041 $ 1,003
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 August 31, 2019 compared to the three months ended August 31, 2018, we had a 5.8% capacity increase in ALBDs comprised of a 1.7% capacity increase in our North America and Australia ("NAA") segment and a 13% capacity increase in our Europe and Asia ("EA") segment.
Our NAA segment's capacity increase was caused by the full period impact from one Holland America Line 2,670-passenger capacity ship that entered into service in December 2018.
The increase in our NAA segment's capacity was partially offset 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
* Partial period impact from one Holland America Line 835-passenger capacity ship removed from service in July 2019
Our EA segment's capacity increase was caused by:
* Full period impact from one AIDA 5,230-passenger capacity ship that entered into service in December 2018
* Full period impact from one Costa Cruises 4,200-passenger capacity ship that entered into service in March 2019
The increase in our EA segment's capacity was partially offset by the partial period impact from one P&O UK 1,880-passenger capacity ship removed from service in August 2019.
For the nine months ended August 31, 2019 compared to the nine months ended August 31, 2018, we had a 4.9% capacity increase in ALBDs comprised of a 2.4% capacity increase in our NAA segment and a 9.2% 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
The increase in our NAA segment's capacity was partially offset by:
* Partial period impact from one P&O Cruises (Australia) 1,680-passenger capacity ship removed from service in March 2019
* Partial period impact from one P&O Cruises (Australia) 1,260-passenger capacity ship removed from service in April 2019
* Partial period impact from one Holland America Line 835-passenger capacity ship removed from service 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 Cruises 4,200-passenger capacity ship that entered into service in March 2019
The increase in our EA segment's capacity was 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 Cruises 1,300-passenger capacity ship removed from service in April 2018
* Partial period impact from one P&O 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 August 31, Nine Months Ended August 31,
(dollars in millions, except yields) 2019 2019 2018 2019 2019 2018
Constant Constant
Dollar Dollar
Passenger ticket revenues $ 4,477 $ 4,549 $ 4,353 $ 10,934 $ 11,190 $ 10,694
Onboard and other revenues (a) 1,855 1,875 1,316 4,811 4,885 3,509
Gross cruise revenues 6,333 6,424 5,669 15,744 16,075 14,203
Less cruise costs
Commissions, transportation and other (803) (814) (760) (2,125) (2,182) (2,000)
Onboard and other (a) (668) (674) (207) (1,620) (1,642) (485)
(1,471) (1,488) (967) (3,746) (3,825) (2,485)
Net passenger ticket revenues 3,674 3,734 3,593 8,808 9,008 8,694
Net onboard and other revenues 1,187 1,201 1,109 3,190 3,243 3,024
Net cruise revenues $ 4,862 $ 4,936 $ 4,702 $ 11,999 $ 12,250 $ 11,718
ALBDs 22,727,296 22,727,296 21,475,014 65,671,215 65,671,215 62,626,499
Gross revenue yields $ 278.64 $ 282.66 $ 263.98 $ 239.74 $ 244.78 $ 226.78
% increase (decrease) 5.6 % 7.1 % 5.7 % 7.9 %
Net revenue yields $ 213.91 $ 217.17 $ 218.96 $ 182.71 $ 186.54 $ 187.10
% increase (decrease) (2.3) % (0.8) % (2.3) % (0.3) %
Net passenger ticket revenue yields $ 161.66 $ 164.32 $ 167.31 $ 134.13 $ 137.16 $ 138.82
% increase (decrease) (3.4) % (1.8) % (3.4) % (1.2) %
Net onboard and other revenue yields $ 52.25 $ 52.85 $ 51.65 $ 48.58 $ 49.38 $ 48.28
% increase (decrease) 1.2 % 2.3 % 0.6 % 2.3 %
(a) Includes the effect of the adoption of new accounting guidance of $449 million ($453 million in constant dollar) and $1.1 billion ($1.1 billion in constant dollar) for the three and nine months ended August 31, 2019, respectively.
Three Months Ended August 31, Nine Months Ended August 31,
(dollars in millions, except yields) 2019 2019 2018 2019 2019 2018
Constant Constant
Currency Currency
Net passenger ticket revenues $ 3,674 $ 3,754 $ 3,593 $ 8,808 $ 9,071 $ 8,694
Net onboard and other revenues 1,187 1,199 1,109 3,190 3,244 3,024
Net cruise revenues $ 4,862 $ 4,953 $ 4,702 $ 11,999 $ 12,315 $ 11,718
ALBDs 22,727,296 22,727,296 21,475,014 65,671,215 65,671,215 62,626,499
Net revenue yields $ 213.91 $ 217.95 $ 218.96 $ 182.71 $ 187.52 $ 187.10
% increase (decrease) (2.3) % (0.5) % (2.3) % 0.2 %
Net passenger ticket revenue yields $ 161.66 $ 165.18 $ 167.31 $ 134.13 $ 138.13 $ 138.82
% increase (decrease) (3.4) % (1.3) % (3.4) % (0.5) %
Net onboard and other revenue yields $ 52.25 $ 52.77 $ 51.65 $ 48.58 $ 49.39 $ 48.28
% increase (decrease) 1.2 % 2.2 % 0.6 % 2.3 %
(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 August 31, Nine Months Ended August 31,
(dollars in millions, except costs per ALBD) 2019 2019 2018 2019 2019 2018
Constant Constant
Dollar Dollar
Cruise operating expenses (a) $ 3,423 $ 3,466 $ 2,867 $ 9,634 $ 9,820 $ 8,208
Cruise selling and administrative expenses 554 562 569 1,792 1,828 1,772
Gross cruise costs 3,978 4,028 3,436 11,426 11,649 9,980
Less cruise costs included above
Commissions, transportation and other (803) (814) (760) (2,125) (2,182) (2,000)
Onboard and other (a) (668) (674) (207) (1,620) (1,642) (485)
Gains (losses) on ship sales and impairments (3) (3) 27 11 12 39
Restructuring expenses — — — — — —
Other (23) (23) — (43) (43) (1)
Net cruise costs 2,480 2,513 2,496 7,648 7,793 7,532
Less fuel (401) (401) (434) (1,204) (1,204) (1,166)
Net cruise costs excluding fuel $ 2,079 $ 2,112 $ 2,062 $ 6,444 $ 6,588 $ 6,367
ALBDs 22,727,296 22,727,296 21,475,014 65,671,215 65,671,215 62,626,499
Gross cruise costs per ALBD $ 175.01 $ 177.23 $ 160.02 $ 173.98 $ 177.38 $ 159.36
% increase (decrease) 9.4 % 10.8 % 9.2 % 11.3 %
Net cruise costs excluding fuel per ALBD $ 91.49 $ 92.94 $ 96.03 $ 98.12 $ 100.32 $ 101.66
% increase (decrease) (4.7) % (3.2) % (3.5) % (1.3) %
(a) Includes the effect of the adoption of new accounting guidance of $449 million ($453 million in constant dollar) and $1.1 billion ($1.1 billion in constant dollar) for the three and nine months ended August 31, 2019, respectively.
Three Months Ended August 31, Nine Months Ended August 31,
(dollars in millions, except costs per ALBD) 2019 2019 2018 2019 2019 2018
Constant Constant
Currency Currency
Net cruise costs excluding fuel $ 2,079 $ 2,113 $ 2,062 $ 6,444 $ 6,596 $ 6,367
ALBDs 22,727,296 22,727,296 21,475,014 65,671,215 65,671,215 62,626,499
Net cruise costs excluding fuel per ALBD $ 91.49 $ 92.98 $ 96.03 $ 98.12 $ 100.44 $ 101.66
% increase (decrease) (4.7) % (3.2) % (3.5) % (1.2) %
(See Explanations of Non-GAAP Financial Measures.)
CARNIVAL CORPORATION & PLC
NON-GAAP FINANCIAL MEASURES (CONTINUED)
Three Months Ended Nine Months Ended
August 31, August 31,
(in millions, except per share data) 2019 2018 2019 2018
Net income
U.S. GAAP net income $ 1,780 $ 1,707 $ 2,567 $ 2,659
Unrealized (gains) losses on fuel derivatives, net — (8) — (90)
(Gains) losses on ship sales and impairments 14 (27) — (39)
Restructuring expenses — — — —
Other 25 — 47 7
Adjusted net income $ 1,819 $ 1,673 $ 2,614 $ 2,537
Weighted-average shares outstanding 691 707 693 714
Earnings per share
U.S. GAAP earnings per share $ 2.58 $ 2.41 $ 3.71 $ 3.72
Unrealized (gains) losses on fuel derivatives, net — (0.01) — (0.13)
(Gains) losses on ship sales and impairments 0.02 (0.04) — (0.05)
Restructuring expenses — — — —
Other 0.04 — 0.07 0.01
Adjusted earnings per share $ 2.63 $ 2.36 $ 3.77 $ 3.55
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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