OREANDA-NEWS. Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK) announced U.S. GAAP net income of $1.4 billion, or $1.93 diluted EPS, for the third quarter of 2016 compared to U.S. GAAP net income for the third quarter of 2015 of $1.2 billion, or $1.56 diluted EPS. Third quarter 2016 adjusted net income of $1.4 billion, or $1.92 adjusted EPS, was higher than adjusted net income of $1.4 billion, or $1.75 adjusted EPS, for the third quarter of 2015. Adjusted net income excludes unrealized gains and losses on fuel derivatives and other net charges, totaling $7 million in gains for the third quarter 2016 and $149 million of losses for the third quarter 2015. Revenues for the third quarter of 2016 were $5.1 billion, $0.2 billion higher than the $4.9 billion in the prior year.

Carnival Corporation & plc President and Chief Executive Officer Arnold Donald noted, "We delivered the strongest quarterly earnings in our company's history affirming our ongoing efforts to expand consumer demand in excess of measured capacity increases and leverage our industry leading scale. Revenues during the peak summer season were bolstered by strong performances from both our North American and European brands and across all major deployments including the Caribbean, Alaska and Europe," Donald added.

Key metrics for the third quarter 2016 compared to the prior year were as follows:

  • Gross revenue yields (revenue per available lower berth day or "ALBD") increased 0.6 percent. Net revenue yields on a constant currency basis increased 2.7 percent for 3Q 2016, toward the top end of the June guidance range of up 2 to 3 percent.
  • Gross cruise costs including fuel per ALBD decreased 0.2 percent. Net cruise costs excluding fuel per ALBD on a constant currency basis increased 5.5 percent, better than June guidance of up 6 to 7 percent, due to the timing of certain expenses.
  • Changes in fuel prices (including realized fuel derivatives) and changes in currency exchange rates increased earnings by $0.02 per share.

Highlights during the third quarter included the grand opening of the Arison Maritime Center in Almere, Netherlands, named for Carnival Corporation & plc Chairman Micky Arison and his father, the late Ted Arison, who founded the company.  The 110,000-square-foot purpose built facility is a major expansion from the existing training center that opened in 2009. The center will provide comprehensive safety and skills training for bridge and engineering officers. The facility includes four bridge and engine room simulators and is expected to train over 6,500 officers annually across the company's 10 brands.

The company also signed a memorandum of agreement with shipbuilders Meyer Werft and Meyer Turku for the construction of three new 180,000-ton cruise ships.  Two of the ships, to be built in Finland, will be added to the Carnival Cruise Line fleet in 2020 and 2022. The third ship, to be constructed in Germany, will join the P&O Cruises UK fleet in 2020.  All three vessels will be fully powered by Liquefied Natural Gas, the world's cleanest burning fossil fuel.  In conjunction with these new ship orders, the delivery dates for two previously contracted ships, one for AIDA Cruises and one for Costa Cruises, will shift from 2020 to 2021 to ensure a measured pace of capacity growth over the coming years.

Outlook

At this time, cumulative advance bookings for the first half of next year are ahead of the prior year at considerably higher prices. Since June, booking volumes for the first half of next year are lower than the prior year, as there is less inventory remaining for sale, at significantly higher prices.

The company continues to expect full year 2016 net revenue yields to be up approximately 3.5 percent compared to the prior year, on a constant currency basis. The company continues to expect full year net cruise costs excluding fuel per ALBD to be up approximately 1.5 percent compared to the prior year, on a constant currency basis.

Taking the above factors into consideration, the company has increased its full year 2016 adjusted earnings per share guidance to be in the range of $3.33 to $3.37, compared to the June guidance range of $3.25 to $3.35 and 2015 adjusted earnings per share of $2.70.

Donald commented, "We are well on track to deliver nearly 25 percent earnings growth in 2016. With cash from operations expected to reach a record $5 billion this year, we continue to fund our growth and return cash to shareholders. During the third quarter we repurchased $700 million of Carnival Corporation shares bringing the cumulative total to $2.5 billion in share repurchases over the past year."

Donald added, "Looking forward, we are well positioned for continued earnings growth given the current strength of our booking and pricing trends in 2017."

Fourth Quarter 2016 Outlook

Fourth quarter constant currency net revenue yields are expected to be up approximately 3 percent compared to the prior year. Fourth quarter constant currency net cruise costs excluding fuel per ALBD are expected to be higher by approximately 1 percent compared to the prior year. Based on the above factors, the company expects adjusted earnings per share for the fourth quarter 2016 to be in the range of $0.55 to $0.59 versus 2015 adjusted earnings per share of $0.50.

Selected Key Forecast Metrics
         
         
   

Full Year 2016

  

Fourth Quarter 2016

Year over year change:

  

Current

Dollars

  

Constant

Currency

  

Current

Dollars

  

Constant

Currency

Net revenue yields

  

Approx 1.0%

  

Approx 3.5%

  

Approx 1.5%

  

Approx 3.0%

Net cruise costs excl. fuel / ALBD

  

Approx 0.5%

  

Approx 1.5%

  

Approx 0.5%

  

Approx 1.0%
                 
                 
   

Full Year 2016

  

Fourth Quarter 2016

Fuel price per metric ton

  

$285

  

$332

Fuel consumption (metric tons in thousands)

  

3,250

  

830

Currency:    Euro

  

$1.11 to €1

  

$1.11 to €1

                     Sterling

  

$1.38 to ?1

  

$1.30 to ?1

                     Australian dollar

  

$0.74 to A$1

  

$0.76 to A$1

                     Canadian dollar

  

$0.76 to C$1

  

$0.76 to C$1

 

CARNIVAL CORPORATION & PLC

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(in millions, except per share data)
     
 

Three Months Ended
August 31,

Nine Months Ended
August 31,
 

2016

  

2015

  

2016

  

2015

Revenues

              

Cruise

              

Passenger tickets

$

3,803

    

$

3,631

    

$

9,217

    

$

8,891

  

Onboard and other

1,146

    

1,102

    

3,047

    

2,918

  

Tour and other

148

    

150

    

190

    

194

  
 

5,097

    

4,883

    

12,454

    

12,003

  

Operating Costs and Expenses

              

Cruise

              

Commissions, transportation and other

646

    

603

    

1,723

    

1,671

  

Onboard and other

171

    

170

    

411

    

395

  

Payroll and related

494

    

453

    

1,488

    

1,388

  

Fuel

265

    

345

    

648

    

996

  

Food

260

    

255

    

755

    

737

  

Other ship operating

643

    

582

    

1,914

    

1,913

  

Tour and other

84

    

82

    

125

    

129

  
 

2,563

    

2,490

    

7,064

    

7,229

  

Selling and administrative

529

    

484

    

1,613

    

1,504

  

Depreciation and amortization

443

    

399

    

1,303

    

1,206

  
 

3,535

    

3,373

    

9,980

    

9,939

  

Operating Income

1,562

    

1,510

    

2,474

    

2,064

  

Nonoperating (Expense) Income

              

Interest income

2

    

2

    

5

    

6

  

Interest expense, net of capitalized interest

(61)

    

(53)

    

(168)

    

(167)

  

Losses on fuel derivatives, net (a)

(36)

    

(197)

    

(102)

    

(378)

  

Other (expense) income, net

(2)

    

(12)

    

6

    

3

  
 

(97)

    

(260)

    

(259)

    

(536)

  

Income Before Income Taxes

1,465

    

1,250

    

2,215

    

1,528

  

Income Tax Expense, Net

(41)

    

(34)

    

(44)

    

(41)

  

Net Income

$

1,424

    

$

1,216

    

$

2,171

    

$

1,487

  

Earnings Per Share

              

Basic

$

1.93

    

$

1.56

    

$

2.89

    

$

1.91

  

Diluted

$

1.93

    

$

1.56

    

$

2.88

    

$

1.91

  
               

Adjusted Earnings Per Share-Diluted (b)

$

1.92

    

$

1.75

    

$

2.77

    

$

2.20

  

Dividends Declared Per Share

$

0.35

    

$

0.30

    

$

1.00

    

$

0.80

  

Weighted-Average Shares Outstanding - Basic

737

    

778

    

751

    

778

  

Weighted-Average Shares Outstanding - Diluted

739

    

781

    

754

    

781

  

(a)   

During the three months ended August 31, 2016 and 2015, our (losses) on fuel derivatives, net include net unrealized gains (losses) of $25 million and $(137) million and realized (losses) of $(61) million and $(60) million, respectively. During the nine months ended August 31, 2016 and 2015, our (losses) on fuel derivatives, net include net unrealized gains (losses) of $121 million and $(215) million and realized (losses) of $(223) million and $(163) million, respectively.

(b)  

See the U.S. GAAP net income to adjusted net income reconciliations in the Non-GAAP Financial Measures included herein.

CARNIVAL CORPORATION & PLC

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in millions, except par values)
         
 

August 31,
 2016

  

November 30,
 2015

  

ASSETS

        

Current Assets

        

Cash and cash equivalents

$

462

    

$

1,395

    

Trade and other receivables, net

321

    

303

    

Insurance recoverables

102

    

109

    

Inventories

314

    

330

    

Prepaid expenses and other

355

    

314

    

Total current assets

1,554

    

2,451

    

Property and Equipment, Net

32,864

    

31,818

  

(a)

Goodwill

2,964

    

3,010

    

Other Intangibles

1,290

    

1,308

  

(a)

Other Assets

660

    

650

    
 

$

39,332

    

$

39,237

    

LIABILITIES AND SHAREHOLDERS' EQUITY

        

Current Liabilities

        

Short-term borrowings

$

334

    

$

30

    

Current portion of long-term debt

739

    

1,344

    

Accounts payable

704

    

627

    

Accrued liabilities and other

1,738

    

1,683

    

Customer deposits

3,585

    

3,272

    

Total current liabilities

7,100

    

6,956

    

Long-Term Debt

8,320

    

7,413

    

Other Long-Term Liabilities

1,012

    

1,097

    
         

Shareholders' Equity

        

Common stock of Carnival Corporation, $0.01 par value; 1,960 shares authorized;

     654 shares at 2016 and 653 shares at 2015 issued

7

    

7

    

Ordinary shares of Carnival plc, $1.66 par value; 216 shares at 2016 and 2015

     issued

358

    

358

    

Additional paid-in capital

8,618

    

8,562

    

Retained earnings

21,488

    

20,060

    

Accumulated other comprehensive loss

(2,012)

    

(1,741)

    

Treasury stock, 114 shares at 2016 and 70 shares at 2015 of Carnival Corporation

     and 26 shares at 2016 and 27 shares at 2015 of Carnival plc, at cost

(5,559)

    

(3,475)

    

Total shareholders' equity

22,900

    

23,771

    
 

$

39,332

    

$

39,237

    

(a)  

On December 1, 2015, we adopted the Financial Accounting Standards Board's Service Concession Arrangements amended guidance and, accordingly, reclassified $70 million from Property and Equipment, Net to Other Intangibles on our November 30, 2015 Consolidated Balance Sheet.

CARNIVAL CORPORATION & PLC

OTHER INFORMATION
       
 

Three Months Ended
August 31,

  

Nine Months Ended
August 31,
 

2016

  

2015

  

2016

  

2015

STATISTICAL INFORMATION

              

   ALBDs (in thousands) (a)

20,572

    

19,795

    

59,555

    

57,686

  

   Occupancy percentage (b)

111.4

%

  

110.9

%

  

106.6

%

  

105.6

%

   Passengers carried (in thousands)

3,265

    

3,068

    

8,606

    

8,138

  

   Fuel consumption in metric tons (in thousands)

793

    

786

    

2,417

    

2,379

  

   Fuel consumption in metric tons per thousand ALBDs

38.6

    

39.7

    

40.6

    

41.2

  

   Fuel cost per metric ton consumed

$

335

    

$

439

    

$

268

    

$

418

  

   Currencies

              

      U.S. dollar to euro

$

1.12

    

$

1.11

    

$

1.11

    

$

1.13

  

      U.S. dollar to sterling

$

1.34

    

$

1.56

    

$

1.41

    

$

1.54

  

      U.S. dollar to Australian dollar

$

0.75

    

$

0.75

    

$

0.74

    

$

0.78

  

      U.S. dollar to Canadian dollar

$

0.77

    

$

0.78

    

$

0.76

    

$

0.80

  
               

CASH FLOW INFORMATION (in millions)

              

Cash from operations

$

1,429

    

$

1,281

    

$

4,110

    

$

3,567

  

Capital expenditures

$

450

    

$

324

    

$

2,416

    

$

1,704

  

Dividends paid

$

262

    

$

195

    

$

721

    

$

584

  

Notes to Statistical Information
   

(a)   

ALBD is a standard measure of passenger capacity for the period that we use to approximate rate and capacity variances, based on consistently applied formulas that we use to perform analyses to determine the main non-capacity driven factors that cause our cruise revenues and expenses to vary. ALBDs assume that each cabin we offer for sale accommodates two passengers and is computed by multiplying passenger capacity by revenue-producing ship operating days in the period.

(b) 

In accordance with cruise industry practice, occupancy is calculated using a denominator of ALBDs, which assumes two passengers per cabin even though some cabins can accommodate three or more passengers. Percentages in excess of 100% indicate that on average more than two passengers occupied some cabins.

CARNIVAL CORPORATION & PLC
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,
 

2016

  

2016
Constant
Dollar

  

2015

  

2016

  

2016
 Constant 
Dollar

  

2015

Passenger ticket revenues

$

3,803

    

$

3,866

    

$

3,631

    

$

9,217

    

$

9,362

    

$

8,891

  

Onboard and other revenues

1,146

    

1,158

    

1,102

    

3,047

    

3,080

    

2,918

  

Gross cruise revenues

4,949

    

5,024

    

4,733

    

12,264

    

12,442

    

11,809

  

Less cruise costs

                      

     Commissions, transportation

          and other

(646)

    

(654)

    

(603)

    

(1,723)

    

(1,751)

    

(1,671)

  

     Onboard and other

(171)

    

(173)

    

(170)

    

(411)

    

(416)

    

(395)

  
 

(817)

    

(827)

    

(773)

    

(2,134)

    

(2,167)

    

(2,066)

  

Net passenger ticket revenues

3,157

    

3,212

    

3,028

    

7,494

    

7,611

    

7,220

  

Net onboard and other revenues

975

    

985

    

932

    

2,636

    

2,664

    

2,523

  

Net cruise revenues

$

4,132

    

$

4,197

    

$

3,960

    

$

10,130

    

$

10,275

    

$

9,743

  

ALBDs

20,572,112

    

20,572,112

    

19,794,882

    

59,555,384

    

59,555,384

    

57,685,594

  

Gross revenue yields

$

240.60

    

$

244.22

    

$

239.10

    

$

205.94

    

$

208.91

    

$

204.72

  

% increase vs. 2015

0.6

%

  

2.1

%

      

0.6

%

  

2.0

%

    

   Net revenue yields

$

200.87

    

$

204.03

    

$

200.04

    

$

170.10

    

$

172.52

    

$

168.91

  

   % increase vs. 2015

0.4

%

  

2.0

%

      

0.7

%

  

2.1

%

    

   Net passenger ticket revenue

        yields

$

153.47

    

$

156.14

    

$

152.96

    

$

125.84

    

$

127.80

    

$

125.17

  

   % increase vs. 2015

0.3

%

  

2.1

%

      

0.5

%

  

2.1

%

    

Net onboard and other revenue  
    yields

$

47.39

    

$

47.89

    

$

47.09

    

$

44.26

    

$

44.72

    

$

43.74

  

   % increase vs. 2015

0.7

%

  

1.7

%

      

1.2

%

  

2.2

%

    
                               
       
       
 

Three Months Ended August 31,

  

Nine Months Ended August 31,
 

2016

  

2016
Constant
Currency

  

2015

  

2016

  

2016
Constant
Currency

  

2015

Net passenger ticket revenues

$

3,157

    

$

3,246

    

$

3,028

    

$

7,494

    

$

7,778

    

$

7,220

  

Net onboard and other revenues

975

    

981

    

932

    

2,636

    

2,672

    

2,523

  

Net cruise revenues

$

4,132

    

$

4,227

    

$

3,960

    

$

10,130

    

$

10,450

    

$

9,743

  

ALBDs

20,572,112

    

20,572,112

    

19,794,882

    

59,555,384

    

59,555,384

    

57,685,594

  
                       

   Net revenue yields

$

200.87

    

$

205.46

    

$

200.04

    

$

170.10

    

$

175.46

    

$

168.91

  

   % increase vs. 2015

0.4

%

  

2.7

%

      

0.7

%

  

3.9

%

    

   Net passenger ticket revenue

        yields

$

153.47

    

$

157.76

    

$

152.96

    

$

125.84

    

$

130.60

    

$

125.17

  

   % increase vs. 2015

0.3

%

  

3.1

%

      

0.5

%

  

4.3

%

    

   Net onboard and other revenue

        yields

$

47.39

    

$

47.69

    

$

47.09

    

$

44.26

    

$

44.86

    

$

43.74

  

   % increase vs. 2015

0.7

%

  

1.3

%

      

1.2

%

  

2.6

%

    
                               

(See Notes to 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 (dollars in millions, except costs per ALBD) (a) (b):

 

Three Months Ended August 31,

  

Nine Months Ended August 31,
 

2016

  

2016
Constant
Dollar

  

2015

  

2016

  

2016
Constant
Dollar

  

2015

Cruise operating expenses

$

2,479

    

$

2,513

    

$

2,408

    

$

6,939

    

$

7,034

    

$

7,100

  

Cruise selling and administrative

     expenses

527

    

534

    

482

    

1,606

    

1,626

    

1,497

  

Gross cruise costs

3,006

    

3,047

    

2,890

    

8,545

    

8,660

    

8,597

  

Less cruise costs included above

                      

     Commissions, transportation

          and other

(646)

    

(654)

    

(603)

    

(1,723)

    

(1,751)

    

(1,671)

  

     Onboard and other

(171)

    

(173)

    

(170)

    

(411)

    

(416)

    

(395)

  

     Gain on ship sale

—

    

—

    

2

    

2

    

2

    

6

  

     Restructuring expenses

—

    

—

    

(14)

    

(2)

    

(2)

    

(21)

  

     Other (c)

(18)

    

(18)

    

—

    

(39)

    

(39)

    

—

  

Net cruise costs

2,171

    

2,202

    

2,105

    

6,372

    

6,454

    

6,516

  

Less fuel

(265)

    

(265)

    

(345)

    

(648)

    

(648)

    

(996)

  

Net cruise costs excluding fuel

$

1,906

    

$

1,937

    

$

1,760

    

$

5,724

    

$

5,806

    

$

5,520

  

ALBDs

20,572,112

    

20,572,112

    

19,794,882

    

59,555,384

    

59,555,384

    

57,685,594

  

Gross cruise costs per ALBD

$

146.18

    

$

148.11

    

$

145.95

    

$

143.50

    

$

145.42

    

$

149.03

  

% increase vs. 2015

0.2

%

  

1.5

%

      

(3.7)%

    

(2.4)%

      

   Net cruise costs per ALBD

$

105.54

    

$

107.00

    

$

106.28

    

$

106.99

    

$

108.37

    

$

112.96

  

   % (decrease) increase vs. 2015

(0.7)%

    

0.7

%

      

(5.3)%

    

(4.1)%

      

   Net cruise costs excluding fuel

        per ALBD

$

92.63

    

$

94.10

    

$

88.84

    

$

96.10

    

$

97.48

    

$

95.70

  

   % increase vs. 2015

4.3

%

  

5.9

%

      

0.4

%

  

1.9

%

    
                               
       
       
 

Three Months Ended August 31,

  

Nine Months Ended August 31,
 

2016

  

2016
Constant
Currency

  

2015

  

2016

  

2016
Constant
Currency

  

2015

Net cruise costs excluding fuel

$

1,906

    

$

1,929

    

$

1,760

    

$

5,724

    

$

5,793

    

$

5,520

  

ALBDs

20,572,112

    

20,572,112

    

19,794,882

    

59,555,384

    

59,555,384

    

57,685,594

  
                       

Net cruise costs excluding fuel per

     ALBD

$

92.63

    

$

93.77

    

$

88.84

    

$

96.10

    

$

97.27

    

$

95.70

  

% increase vs. 2015

4.3

%

  

5.5

%

      

0.4

%

  

1.6

%

    
                               

(See Notes to Non-GAAP Financial Measures.)

CARNIVAL CORPORATION & PLC
NON-GAAP FINANCIAL MEASURES (CONTINUED)

Adjusted fully diluted earnings per share was computed as follows (in millions, except per share data) (b):

 

Three Months Ended
August 31,

  

Nine Months Ended
August 31,
 

2016

  

2015

  

2016

  

2015

Net income

              

     U.S. GAAP net income

$

1,424

    

$

1,216

    

$

2,171

    

$

1,487

  

     Unrealized (gains) losses on fuel derivatives, net (d)

(25)

    

137

    

(121)

    

215

  

     Gain on ship sale (e)

—

    

(2)

    

(2)

    

(6)

  

     Restructuring expenses (e)

—

    

14

    

2

    

21

  

     Other (c) (e)

18

    

—

    

39

    

—

  

     Adjusted net income

$

1,417

    

$

1,365

    

$

2,089

    

$

1,717

  

Weighted-average shares outstanding

739

    

781

    

754

    

781

  
               

Earnings per share

              

     U.S. GAAP earnings per share

$

1.93

    

$

1.56

    

$

2.88

    

$

1.91

  

     Unrealized (gains) losses on fuel derivatives, net (d)

(0.03)

    

0.17

    

(0.16)

    

0.27

  

     Gain on ship sale (e)

—

    

—

    

—

    

(0.01)

  

     Restructuring expenses (e)

—

    

0.02

    

—

    

0.03

  

     Other (c) (e)

0.02

    

—

    

0.05

    

—

  

     Adjusted earnings per share

$

1.92

    

$

1.75

    

$

2.77

    

$

2.20