3rd Quarter Results
Carnival Corp & plc Third Quarter Results
Carnival Corporation & plc today reported its earnings for the third quarter
ended August 31, 2014. The results of Carnival Corporation and Carnival plc have
been consolidated and include results on a U.S. GAAP and non-U.S. GAAP basis.
3Q Highlights
* 3Q revenues were $4.9b, higher than $4.7b in the prior year
* 3Q net revenue yields increased 1.8% (constant dollars) compared to
the prior year, which was better than June guidance, flat to down 1%
* 3Q net cruise costs excluding fuel per available lower berth day
(“ALBDâ€) increased 0.5% (constant dollars) compared to the prior year,
which was better than June guidance, up 1 to 2%
* 3Q fuel consumption per ALBD decreased over 3% compared to the prior year
* 3Q non-GAAP (diluted) earnings per share of $1.58, compared to $1.38 for
the prior year
* 3Q U.S. GAAP (diluted) earnings per share of $1.60 included net unrealized
gains on fuel derivatives of $15m
Outlook
* At this time, cumulative advance bookings for the first half of 2015 are
ahead of the prior year at higher prices
* Net revenue yields are expected to be in line on a constant dollar basis
for full year 2014 compared to the prior year, which was better than June
guidance of down slightly
* Net cruise costs excluding fuel per ALBD are expected to be slightly higher
for full year 2014 compared to the prior year (constant dollars)
* Full year 2014 non-GAAP earnings per share (diluted) are expected to be in
the range of $1.84 to $1.88, compared to $1.58 for 2013, better than June
guidance of $1.60 to $1.75
* 4Q 2014 non-GAAP earnings per share (diluted) are expected to be in the range
of $0.15 to $0.19, compared to $0.04 in 4Q 2013
* For the full year 2015, the company expects continued yield growth, higher net
cruise costs excluding fuel due primarily to a significantly higher level of
dry-dock days and higher fuel costs as a result of stricter air emission standards
President and Chief Executive Officer Arnold Donald commenting on these results:
“Strong close-in demand and higher onboard spending helped drive significantly better
than expected third quarter results and 15 percent year-over-year earnings improvement.
Our Asia operations performed particularly well during the quarter, driven by a
double-digit yield increase in our China program, further solidifying our industry leading
presence in this important emerging cruise market. Our continental European operations
also enjoyed strong yield and profit improvement in the quarter, reflecting continued
progress for the Costa brand. In addition, our summer Caribbean product successfully
attracted nearly 20 percent more guests than the prior year, reinforcing the popularity
of the world’s largest cruising region.â€
“The sustained improvement in booking trends as we have progressed through the year
combined with yield increases in the second half of 2014 builds confidence that we
will see continued yield growth in 2015 and beyond.â€
“Our implementation of the air emissions technology is a sound investment in our company’s
future and more importantly it will benefit the environment for years to come. These
technology investments are laying a solid foundation towards sustainable earnings improvement.
Combined with our other strategic initiatives designed to foster revenue growth and contain
costs, we are gaining momentum towards our goal of achieving double digit returns on
investment over time.â€
MEDIA CONTACT INVESTOR RELATIONS CONTACT
Roger Frizzell Beth Roberts
001 305 406 7862 001 305 406 4832
Conference call
The company has scheduled a conference call with analysts at 3:00 p.m. BST (10:00 a.m. EDT)
today to discuss its 2014 third quarter results. This call can be listened to live, and
additional information can be obtained, via Carnival Corporation & plc’s Web site
at www.carnivalcorp.com and www.carnivalplc.com.
Carnival Corporation & plc
Carnival Corporation & plc is the largest cruise company in the world, with a portfolio of
cruise brands in North America, Europe, Australia and Asia, comprised of Carnival Cruise
Lines, Holland America Line, Princess Cruises, Seabourn, AIDA Cruises, Costa Cruises, Cunard,
Ibero Cruises, P&O Cruises (Australia) and P&O Cruises (UK).
Together, these brands operate 101 ships totaling 212,000 lower berths with eight new ships
scheduled to be delivered between 2014 and 2017. Carnival Corporation & plc also operates
Holland America Princess Alaska Tours, the leading tour companies 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.
Additional information can be found on www.carnival.com, www.hollandamerica.com,
www.princess.com, www.seabourn.com, www.aida.de, www.costacruise.com, www.cunard.com,
www.iberocruceros.com, www.pocruises.com.au and www.pocruises.com.
Carnival Corporation & plc Reports Third Quarter Earnings
MIAMI, Sept. 23, 2014 -- Carnival Corporation & plc (NYSE/LSE:
CCL; NYSE: CUK) announced non-GAAP net income of $1.2 billion, or $1.58 diluted
EPS for the third quarter of 2014 compared to non-GAAP net income for the third
quarter of 2013 of $1.1 billion, or $1.38 diluted EPS. For the third quarter of
2014, U.S. GAAP net income, which included net unrealized gains on fuel
derivatives of $15 million, was $1.2 billion, or $1.60 diluted EPS. For the
third quarter of 2013, U.S. GAAP net income, which included impairments net of
unrealized gains on fuel derivatives of $139 million, was $934 million, or
$1.20 diluted EPS. Revenues for the third quarter of 2014 were $4.9 billion,
compared with $4.7 billion the prior year.
Carnival Corporation & plc President and Chief Executive Officer Arnold Donald
noted, "Strong close-in demand and higher onboard spending helped drive
significantly better than expected third quarter results and 15 percent
year-over-year earnings improvement. Our Asia operations performed particularly
well during the quarter, driven by a double-digit yield increase in our China
program, further solidifying our industry leading presence in this important
emerging cruise market. Our continental European operations also enjoyed strong
yield and profit improvement in the quarter, reflecting continued progress for
the Costa brand. In addition, our summer Caribbean product successfully
attracted nearly 20 percent more guests than the prior year, reinforcing the
popularity of the world's largest cruising region," Donald added.
Key metrics for the third quarter 2014 compared to the prior year were as
follows:
* On a constant dollar basis, net revenue yields (net revenue per available
lower berth day or "ALBD") increased 1.8 percent for 3Q 2014, better than
June guidance of flat to down 1 percent. Gross revenue yields increased 2.5
percent in current dollars.
* Net cruise costs excluding fuel per ALBD increased 0.5 percent in constant
dollars, better than June guidance of up 1 to 2 percent due to the timing
of certain expenses. Gross cruise costs including fuel per ALBD in current
dollars decreased 5.8 percent.
* Fuel prices declined 3.5 percent to $650 per metric ton for 3Q 2014 from
$674 per metric ton in 3Q 2013 and were less than June guidance of $673 per
metric ton.
* Fuel consumption per ALBD decreased over 3 percent in 3Q 2014 compared to
the prior year.
During the third quarter, YouGov's BrandIndex ranked Carnival Cruise Lines the
most-improved U.S. brand in consumer perception in its mid-year 2014 Buzz
Rankings Report. A number of initiatives introduced by Carnival Cruise Lines,
such as the Great Vacation Guarantee, Carnival LIVE Concert Series, Camp Ocean
and Seuss at Sea, appear to be resonating with consumers. In addition, Princess
Cruises recently announced an agreement with Italian shipbuilder Fincantieri to
construct a new 3,600-berth vessel, which will enter service in 2017 based on
the highly popular design platform introduced by sister ships Royal Princess
and Regal Princess. In keeping with the company's strategy for measured
capacity growth, this is the only newbuild scheduled to be delivered in 2017.
In June, Seabourn signed a multi-year agreement with UNESCO (United Nations
Educational Scientific and Cultural Organization) to support the organization's
mission of safeguarding unique cultural and natural features around the world.
That announcement came on the heels of a five year agreement to support The
Nature Conservancy's global marine protection priorities. These programs,
combined with the company's commitment to install exhaust gas cleaning
technology on more than 70 ships, are among many initiatives underway to
support the preservation of marine, environmental and cultural resources around
the globe.
Outlook
Based on the strength of third quarter net revenue yields and current booking
trends, the company has increased its expectations for full year 2014 net
revenue yields on a constant dollar basis to be in line with the prior year,
from its previous guidance of down slightly. Excluding fuel, the company
expects full year net cruise costs per ALBD to be slightly higher compared to
the prior year on a constant dollar basis. Taking the above factors into
consideration, the company has increased its forecast for full year 2014
non-GAAP diluted earnings per share to be in the range of $1.84 to $1.88,
better than both June guidance of $1.60 to $1.75 and 2013 non-GAAP diluted
earnings per share of $1.58.
At this time, cumulative advance bookings for the first half of 2015 are ahead
of the prior year at higher prices. Over the last quarter, fleetwide booking
volumes for the first half of 2015 have been running ahead of the prior year at
higher prices.
"The sustained improvement in booking trends as we have progressed through the
year combined with yield increases in the second half of 2014 builds confidence
that we will see continued yield growth in 2015 and beyond," said Donald. He
also noted that new product initiatives and innovative marketing campaigns
implemented across the brands over the past year are driving the improvement in
consumer demand and pricing trends.
For fiscal 2015, net cruise costs excluding fuel per ALBD are expected to
increase approximately three percent due primarily to a significantly higher
level of dry-dock days scheduled next year to install new air emissions
technology as well as other technology designed to improve fuel efficiency. The
company expects the exhaust gas cleaning system or scrubber technology will be
installed on approximately 70 percent of its fleet by 2016, thus enabling the
company to meet the 2015 stricter air emissions standards as well as mitigate
escalating fuel costs that will result from the new requirements. The company
anticipates the new regulations will result in higher fuel costs in 2015 of
approximately $0.10 per share with that increase expected to be reduced by half
in 2016 and mostly offset in 2017 based on the system roll-out. Also, in 2016,
the company will revert back to a more normalized dry-dock schedule, which will
offset approximately half of the increase in 2015 net cruise costs excluding
fuel.
"Our implementation of the air emissions technology is a sound investment in
our company's future and more importantly it will benefit the environment for
years to come," said Donald. "These technology investments are laying a solid
foundation towards sustainable earnings improvement. Combined with our other
strategic initiatives designed to foster revenue growth and contain costs, we
are gaining momentum towards our goal of achieving double digit returns on
investment over time," Donald added.
Fourth Quarter 2014 Outlook
Fourth quarter constant dollar net revenue yields are expected to be up 1.5 to
2.5 percent compared to the prior year. Net cruise costs excluding fuel per
ALBD for the fourth quarter are expected to be lower by 1.0 to 2.0 percent on a
constant dollar basis compared to the prior year.
Based on the above factors, the company expects non-GAAP diluted earnings for
the fourth quarter 2014 to be in the range of $0.15 to $0.19 per share versus
2013 non-GAAP earnings of $0.04 per share.
Selected Key Forecast Metrics
Fourth Quarter 2014
Current Constant
Year over year change: Dollars Dollars
Net revenue yields 0.5 to 1.5 % 1.5 to 2.5 %
Net cruise costs excl. fuel /ALBD (2.0) to (3.0)% (1.0) to (2.0)%
Full Year 2014 Fourth Quarter 2014
Fuel price per metric ton $ 650 $ 635
Fuel consumption (metric tons in 3,200 800
thousands)
Currency: Euro $1.35 to €1 $1.30 to €1
Sterling $1.66 to £1 $1.63 to £1
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 2014 third quarter results. This call can be
listened to live, and additional information can be obtained, via Carnival
Corporation & plc's Web site at http://www.carnivalcorp.com/ and http://
www.carnivalplc.com/.
Carnival Corporation & plc is the largest cruise company in the world, with a
portfolio of cruise brands in North America, Europe, Australia and Asia,
comprised of Carnival Cruise Lines, Holland America Line, Princess Cruises,
Seabourn, AIDA Cruises, Costa Cruises, Cunard, Ibero Cruises, P&O Cruises
(Australia) and P&O Cruises (UK).
Together, these brands operate 101 ships totaling 212,000 lower berths with
eight new ships scheduled to be delivered between 2014 and 2017. Carnival
Corporation & plc also operates Holland America Princess Alaska Tours, the
leading tour companies 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.
Additional information can be found on http://www.carnival.com/, http://
www.hollandamerica.com/, http://www.princess.com/, http://www.seabourn.com/,
http://www.aida.de/, http://www.costacruise.com/, http://www.cunard.com/, http:
//www.iberocruceros.com/, http://www.pocruises.com.au/ and http://
www.pocruises.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 release as "Carnival Corporation & plc,"
"our," "us" and "we." Some of the statements, estimates or projections
contained in this release 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" and similar expressions of future intent or the negative
of such terms.
Forward-looking statements include those statements that may impact, among
other things, the forecasting of our non-GAAP earnings per share; net revenue
yields; booking levels; pricing; occupancy; operating, financing and tax costs,
including fuel expenses; net cruise costs per available lower berth day;
estimates of ship depreciable lives and residual values; liquidity; goodwill,
ship and trademark fair values and outlook. 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 in this release. These factors include, but are not
limited to, the following:
* general economic and business conditions;
* increases in fuel prices;
* incidents, the spread of contagious diseases and threats thereof, adverse
weather conditions or other natural disasters and other incidents affecting
the health, safety, security and satisfaction of guests and crew;
* the international political climate, armed conflicts, terrorist and pirate
attacks, vessel seizures, and threats thereof, and other world events
affecting the safety and security of travel;
* negative publicity concerning the cruise industry in general or us in
particular, including any adverse environmental impacts of cruising;
* litigation, enforcement actions, fines or penalties;
* economic, market and political factors that are beyond our control, which
could increase our operating, financing and other costs;
* changes in and compliance with laws and regulations relating to the
protection of persons with disabilities, employment, environment, health,
safety, security, tax and other regulations under which we operate;
* our inability to implement our shipbuilding programs and ship repairs,
maintenance and refurbishments on terms that are favorable or consistent
with our expectations;
* increases to our repairs and maintenance expenses and refurbishment costs
as our fleet ages;
* lack of continuing availability of attractive, convenient and safe port
destinations on terms that are favorable or consistent with our
expectations;
* continuing financial viability of our travel agent distribution system, air
service providers and other key vendors in our supply chain and reductions
in the availability of, and increases in the prices for, the services and
products provided by these vendors;
* disruptions and other damages to our information technology and other
networks and operations, and breaches in data security;
* failure to keep pace with developments in technology;
* competition from and overcapacity in the cruise ship and land-based
vacation industry;
* loss of key personnel or our ability to recruit or retain qualified
personnel;
* union disputes and other employee relation issues;
* disruptions in the global financial markets or other events that may
negatively affect the ability of our counterparties and others to perform
their obligations to us;
* the continued strength of our cruise brands and our ability to implement
our brand strategies;
* additional risks to our international operations not generally applicable
to our U.S. operations;
* geographic regions in which we try to expand our business may be slow to
develop and ultimately not develop how we expect;
* our decisions to self-insure against various risks or our inability to
obtain insurance for certain risks at reasonable rates;
* fluctuations in foreign currency exchange rates;
* whether our future operating cash flow will be sufficient to fund future
obligations and whether we will be able to obtain financing, if necessary,
in sufficient amounts and on terms that are favorable or consistent with
our expectations;
* risks associated with the dual listed company arrangement and
* uncertainties of a foreign legal system as Carnival Corporation and
Carnival plc are not U.S. corporations.
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 release, 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,
2014 2013 2014 2013
Revenues
Cruise
Passenger tickets $ 3,719 $ 3,598 $ 9,144 $ 8,951
Onboard and other 1,084 987 2,839 2,670
Tour and other 144 141 182 177
4,947 4,726 12,165 11,798
Operating Costs and Expenses
Cruise
Commissions,
transportation and
other 638 654 1,779 1,777
Onboard and other 165 144 392 385
Fuel 518 544 1,569 1,659
Payroll and related 485 464 1,450 1,378
Food 265 259 761 740
Other ship operating 599 769 1,825 1,951
Tour and other 84 83 130 113
2,754 2,917 7,906 8,003
Selling and administrative 481 439 1,507 1,347
Depreciation and amortization 414 406 1,227 1,186
Ibero trademark impairment
charges - 13 - 13
3,649 3,775 10,640 10,549
Operating Income 1,298 951 1,525 1,249
Nonoperating (Expense) Income
Interest income 2 2 6 7
Interest expense, net of
capitalized interest (69) (76) (213) (237)
Gains on fuel derivatives,
net 15 64 10 5
Other income (expense), net 1 (6) 12 (9)
(51) (16) (185) (234)
Income Before Income Taxes 1,247 935 1,340 1,015
Income Tax Expense, Net - (1) (2) (3)
Net Income $ 1,247 $ 934 $ 1,338 $ 1,012
Earnings Per Share
Basic $ 1.61 $ 1.20 $ 1.72 $ 1.31
Diluted $ 1.60 $ 1.20 $ 1.72 $ 1.30
Non-GAAP Earnings Per
Share-Diluted (a) $ 1.58 $ 1.38 $ 1.69 $ 1.54
Dividends Declared
Per Share $ 0.25 $ 0.25 $ 0.75 $ 0.75
Weighted-Average Shares
Outstanding - Basic 776 775 776 775
Weighted-Average Shares
Outstanding - Diluted 778 777 778 777
(a) See the U.S. GAAP net income to non-GAAP net income reconciliation in the Non-GAAP Financial
Measures included herein.
CARNIVAL CORPORATION & PLC
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in millions, except par values)
August 31, November 30,
2014 2013
ASSETS
Current Assets
Cash and cash equivalents $ 436 $ 462
Trade and other receivables, net 355 405
Insurance recoverables 123 381
Inventories 358 374
Prepaid expenses and other 330 315
Total current assets 1,602 1,937
Property and Equipment, Net 33,073 32,905
Goodwill 3,199 3,210
Other Intangibles 1,292 1,292
Other Assets 831 760
$ 39,997 $ 40,104
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $ 146 $ 60
Current portion of long-term debt 1,754 1,408
Accounts payable 610 639
Claims reserve 225 456
Accrued liabilities and other 1,191 1,126
Customer deposits 3,130 3,031
Total current liabilities 7,056 6,720
Long-Term Debt 6,967 8,092
Other Long-Term Liabilities 817 736
Shareholders' Equity
Common stock of Carnival
Corporation, $0.01 par value;
1,960 shares authorized;
652 shares at 2014 and
651 shares at 2013 issued 7 7
Ordinary shares of Carnival plc,
$1.66 par value; 216 shares at 2014
and 2013 issued 358 358
Additional paid-in capital 8,369 8,325
Retained earnings 19,538 18,782
Accumulated other comprehensive
(loss) income (28) 161
Treasury stock, 59 shares at 2014
and 2013 of Carnival Corporation
and 32 shares at 2014 and 2013 of
Carnival plc, at cost (3,087) (3,077)
Total shareholders' equity 25,157 24,556
$ 39,997 $ 40,104
CARNIVAL CORPORATION & PLC
OTHER INFORMATION
Three Months Ended Nine Months Ended
August 31, August 31,
2014 2013 2014 2013
STATISTICAL INFORMATION
ALBDs (in thousands) (a) 19,671 19,248 56,830 55,220
Occupancy percentage (b) 109.1% 110.7% 104.8% 106.1%
Passengers carried (in thousands) 2,983 2,881 7,943 7,550
Fuel consumption in metric tons (in thousands) 797 807 2,400 2,447
Fuel consumption in metric tons per ALBD 0.041 0.042 0.042 0.044
Fuel cost per metric ton consumed $ 650 $ 674 $ 654 $ 678
Currencies
U.S. dollar to €1 $ 1.35 $ 1.32 $ 1.36 $ 1.32
U.S. dollar to £1 $ 1.69 $ 1.54 $ 1.67 $ 1.55
U.S. dollar to Australian dollar $ 0.94 $ 0.92 $ 0.92 $ 1.00
CASH FLOW INFORMATION
Cash from operations $ 1,120 $ 803 $ 2,793 $ 2,359
Capital expenditures $ 348 $ 364 $ 1,677 $ 1,812
Dividends paid $ 194 $ 193 $ 582 $ 970
(a) ALBDs is a standard measure of passenger capacity for the period, which we
use to perform rate and capacity variance 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 (dollars in millions,
except yields) (a)(b):
Three Months Ended August 31, Nine Months Ended August 31,
2014 2014
Constant Constant
2014 Dollar 2013 2014 Dollar 2013
Passenger ticket
revenues $ 3,719 $ 3,659 $ 3,598 $ 9,144 $ 8,992 $ 8,951
Onboard and other
revenues 1,084 1,072 987 2,839 2,812 2,670
Gross cruise revenues 4,803 4,731 4,585 11,983 11,804 11,621
Less cruise costs
Commissions,
transportation
and other (638) (628) (654) (1,779) (1,745) (1,777)
Onboard and other (165) (163) (144) (392) (388) (385)
(803) (791) (798) (2,171) (2,133) (2,162)
Net passenger ticket
revenues 3,081 3,031 2,944 7,365 7,247 7,174
Net onboard and
other revenues 919 909 843 2,447 2,424 2,285
Net cruise
revenues $ 4,000 $ 3,940 $ 3,787 $ 9,812 $ 9,671 $ 9,459
ALBDs 19,671,265 19,671,265 19,248,129 56,829,605 56,829,605 55,220,366
Gross revenue
yields $ 244.14 $ 240.52 $ 238.20 $ 210.85 $ 207.70 $ 210.44
% increase
(decrease) vs.
2013 2.5% 1.0% 0.2% (1.3)%
Net revenue
yields $ 203.35 $ 200.30 $ 196.79 $ 172.65 $ 170.17 $ 171.28
% increase
(decrease) vs.
2013 3.3% 1.8% 0.8% (0.6)%
Net passenger
ticket revenue
yields $ 156.62 $ 154.08 $ 152.96 $ 129.6 $ 127.53 $ 129.91
% increase
(decrease) vs.
2013 2.4% 0.7% (0.2)% (1.8)%
Net onboard
and other
revenue yields $ 46.74 $ 46.23 $ 43.83 $ 43.05 $ 42.65 $ 41.37
% increase vs.
2013 6.6% 5.5% 4.1% 3.1%
Consolidated gross and net cruise costs and net cruise costs excluding fuel per
ALBD were computed by dividing the gross and net cruise costs and net cruise
costs excluding fuel by ALBDs as follows (dollars in millions, except costs per
ALBD) (a)(b):
Three Months Ended August 31, Nine Months Ended August 31,
2014 2014
Constant Constant
2014 Dollar 2013 2014 Dollar 2013
Cruise operating
expenses $ 2,670 $ 2,637 $ 2,834 $ 7,776 $ 7,681 $ 7,890
Cruise selling
and administrative
expenses 479 473 436 1,501 1,481 1,341
Gross cruise costs 3,149 3,110 3,270 9,277 9,162 9,231
Less cruise costs
included above
Commissions,
transportation
and other (638) (628) (654) (1,779) (1,745) (1,777)
Onboard and other (165) (163) (144) (392) (388) (385)
(Losses) gains on
ship sales and ship
impairments, net - (176) 15 14 (178) -
Net cruise costs 2,346 2,319 2,296 7,121 7,043 6,891
Less fuel (518) (518) (544) (1,569) (1,569) (1,659)
Net cruise costs
excluding fuel $ 1,828 $ 1,801 $ 1,752 $ 5,552 $ 5,474 $ 5,232
ALBDs 19,671,265 19,671,265 19,248,129 56,829,605 56,829,605 55,220,366
Gross cruise
costs per ALBD $ 160.11 $ 158.08 $ 169.89 $ 163.24 $ 161.21 $ 167.17
% decrease vs. 2013 (5.8)% (7.0)% (2.4)% (3.6)%
Net cruise costs
per ALBD $ 119.32 $ 117.86 $ 119.34 $ 125.29 $ 123.93 $ 124.79
% (decrease)
increase vs.
2013 0.0% (1.2)% 0.4% (0.7)%
Net cruise costs
excluding fuel per
ALBD $ 92.97 $ 91.51 $ 91.09 $ 97.69 $ 96.32 $ 94.76
% increase vs. 2013 2.1% 0.5% 3.1% 1.6%
(See next page for Notes to Non-GAAP Financial Measures.)
CARNIVAL CORPORATION & PLC
NON-GAAP FINANCIAL MEASURES (CONTINUED)
Non-GAAP fully diluted earnings per share was computed as follows
(in millions, except per share data (b):
Three Months Ended Nine Months Ended
August 31, August 31,
2014 2013 2014 2013
Net income - diluted
U.S. GAAP net income $ 1,247 $ 934 $ 1,338 $ 1,012
Losses (gains) on ship sales and ship
impairments, net (c) - 176 (15) 163
Trademark and other impairment charges (d) - 27 - 27
Unrealized gains on fuel derivatives, net (e) (15) (64) (8) (5)
Non-GAAP net income $ 1,232 $ 1,073 $ 1,315 $ 1,197
Weighted-average shares outstanding - diluted 778 777 778 777
Earnings per share - diluted
U.S. GAAP earnings per share $ 1.60 $ 1.20 $ 1.72 $ 1.30
Losses (gains) on ship sales and ship
impairments, net (c) - 0.23 (0.02) 0.21
Trademark and other impairment charges (d) - 0.03 - 0.03
Unrealized gains on fuel derivatives, net (e) (0.02) (0.08) (0.01) -
Non-GAAP earnings per share $ 1.58 $ 1.38 $ 1.69 $ 1.54
Notes to Non-GAAP Financial Measures
(a) We use net cruise revenues per ALBD ("net revenue yields"), net cruise
costs per ALBD and net cruise costs excluding fuel per ALBD as significant
non-GAAP financial measures of our cruise segments' financial performance.
These measures enable us to separate the impact of predictable capacity
changes from the more unpredictable rate changes that affect our business
and gains and losses on ship sales and ship impairments, net that are not
part of our core operating 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. generally accepted
accounting principles ("U.S. GAAP") consolidated financial statements.
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 card fees. Substantially all of
our remaining cruise costs are largely fixed, except for the impact of
changing prices and food expenses, once our ship capacity levels have been
determined.
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 passenger ticket revenue yields and net onboard and
other revenue yields are computed by dividing net passenger ticket revenues
and net onboard and other revenues by ALBDs.
Net cruise costs per ALBD and net cruise costs excluding fuel per ALBD are
the most significant measures 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 to calculate net cruise costs with and without fuel to avoid
duplicating these variable costs in our non-GAAP financial measures. In
addition, we exclude gains and losses on ship sales and ship impairments,
net from our calculation of net cruise costs with and without fuel as they
are not considered part of our core operating business.
We have not provided estimates of future gross revenue yields or future
gross cruise costs per ALBD because the quantitative reconciliations of
forecasted gross cruise revenues to forecasted net cruise revenues or
forecasted gross cruise costs to forecasted net cruise costs would include
a significant amount of uncertainty in projecting the costs deducted to
arrive at these measures. As such, management does not believe that this
reconciling information would be meaningful.
CARNIVAL CORPORATION & PLC
NON-GAAP FINANCIAL MEASURES (CONTINUED)
In addition, because our Europe, Australia & Asia ("EAA") cruise brands
utilize the euro, sterling and Australian dollar to measure their results
and financial condition, the translation of those operations to our U.S.
dollar reporting currency results in decreases in reported U.S. dollar
revenues and expenses if the U.S. dollar strengthens against these foreign
currencies and increases in reported U.S. dollar revenues and expenses if
the U.S. dollar weakens against these foreign currencies. Accordingly, we
also monitor and report these non-GAAP financial measures assuming the 2014
periods currency exchange rates have remained constant with the 2013 period
rates, or on a "constant dollar basis," in order to remove the impact of
changes in exchange rates on the translation of our EAA brands. We believe
that this is a useful measure since it facilitates a comparative view of
the changes in our business in a fluctuating currency exchange rate
environment.
(b) Our consolidated financial statements are prepared in accordance with U.S.
GAAP. The presentation of our non-GAAP financial information is not
intended to be considered in isolation from, as a substitute for, or
superior to the financial information prepared in accordance with U.S.
GAAP. There are no specific rules for determining our non-GAAP current and
constant dollar financial measures and, accordingly, they are susceptible
to varying calculations, and it is possible that they 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.
(c) We believe that the gains and losses on ship sales and ship impairments,
net recognized in the three and nine months ended August 31, 2014 and 2013
are not part of our core operating business and, therefore, are not an
indication of our future earnings performance. As such, we believe it is
more meaningful for gains and losses on ship sales and ship impairments,
net to be excluded from our net income and earnings per share and,
accordingly, we present non-GAAP net income and non-GAAP earnings per share
excluding these items.
(d) We believe that the trademark and other impairment charges recognized in
the three and nine months ended August 31, 2013 are special charges and,
therefore, are also not an indication of our future earnings performance.
As such, we also believe it is more meaningful for these impairment charges
to be excluded from our net income and earnings per share and, accordingly,
we present non-GAAP net income and non-GAAP earnings per share excluding
these impairment charges.
(e) 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 non-GAAP net income and non-GAAP
earnings per share excluding these unrealized gains and losses.
We have not included in our earnings guidance the impact of unrealized
gains and losses on fuel derivatives because these unrealized amounts
involve a significant amount of uncertainty, and we do not believe they are
an indication of our future earnings performance. Accordingly, our
earnings guidance is presented on a non-GAAP basis only. As a result, we
did not present a reconciliation between forecasted non-GAAP diluted
earnings per share guidance and forecasted U.S. GAAP diluted earnings per
share guidance, since we do not believe that the reconciliation information
would be meaningful. However, we do forecast gains and losses on fuel
derivatives by applying Brent crude oil prices to the derivatives that
settle in the forecast period.
CONTACT: MEDIA CONTACT: Roger Frizzell, 1 305 406 7862; INVESTOR RELATIONS
CONTACT: Beth Roberts, 1 305 406 4832
Friday, 31st May 2024
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