Carnival Corp. Announces Q2 2018 Earnings

Carnival Vista Class

Carnival Corporation & plc announced U.S. GAAP net income of $561 million, or $0.78 diluted EPS, for the second quarter of 2018, higher than U.S. GAAP net income for the second quarter of 2017 of $379 million, or $0.52 diluted EPS. Second quarter 2018 adjusted net income of $489 million, or $0.68 adjusted EPS, was higher than adjusted net income of $378 million, or $0.52 adjusted EPS, for the second quarter of 2017. Adjusted net income excludes unrealized gains and losses on fuel derivatives and other net charges, totaling $72 million in net gains for the second quarter of 2018 and $1 million in net gains for the second quarter of 2017. Revenues for the second quarter of 2018 were $4.4 billion, higher than the $3.9 billion in the prior year.

Carnival Corporation & plc President and Chief Executive Officer Arnold Donald stated, “We delivered another strong quarter, again achieving record adjusted earnings on record revenues and exceeding the high end of our guidance range. Strong operational execution drove a 30 percent increase in adjusted earnings affirming the strength of our core strategy to create demand that outpaces measured capacity growth through outstanding guest experience efforts coupled with innovative actions to increase consideration for cruising across all global markets.”

Key information for the second quarter of 2018 compared to the second quarter of 2017:

Holland America Logo. ©CruiseInd

Holland America Logo on Nieuw Amsterdam. 11/6/2016

Gross revenue yields (revenue per available lower berth day or “ALBD”) increased 8.8 percent. In constant currency, net revenue yields increased 4.8 percent exceeding March guidance of up 2.5 to 3.5 percent.
Gross cruise costs including fuel per ALBD increased 8.2 percent. In constant currency, net cruise costs excluding fuel per ALBD increased 3.6 percent, better than March guidance of up 4.0 to 5.0 percent, principally due to the timing of expenses between quarters.
Changes in fuel prices (including realized fuel derivatives) and currency exchange rates increased earnings by $0.01 per share.
Highlights from the second quarter include the delivery of Carnival Cruise Line’s 26th ship in its fleet, Carnival Horizon in March 2018. Additionally, in April 2018 Seabourn took delivery of the 5th all-suite ship in its ultra luxury fleet, Seabourn Ovation. As a result of the strong guest response to sailings to Cuba, Carnival Cruise Line received approval for more than 20 additional calls, bringing the total to 40 calls to Cuba in 2019, departing from home-ports in Miami, Fort Lauderdale, Tampa, and Charleston. Also during the quarter, Carnival Cruise Line unveiled the largest, most technologically advanced operations center in the cruise industry. Carnival Corporation & plc increased its quarterly dividend from $0.45 to $0.50 and replenished the share repurchase program to $1 billion.

2018 Outlook

At this time, cumulative advanced bookings for the next three quarters are in line with the prior year at higher prices. Since March, booking volumes for the next three quarters have been running slightly ahead of prior year at prices that are in line with the prior year.

Donald added, “Strong operational results coupled with sustained strength in booking trends have mitigated the unfavorable $0.19 per share impact of fuel and currency moving against us since our last update. We remain on track to deliver double digit return on invested capital in 2018. In addition, we have accelerated returns to shareholders through our recent dividend increase, with annual dividend distributions now over $1.4 billion and the reauthorization of up to $1 billion in share repurchases.” The company invested over $375 million in share repurchases since the beginning of the quarter, bringing the cumulative total of repurchases to date to over $3.7 billion since late 2015.

Based on current booking trends, the company now expects full year 2018 net revenue yields in constant currency to be up approximately 3.0 percent compared to the prior year, better than March guidance of up approximately 2.5 percent. The company still expects full year net cruise costs excluding fuel per ALBD in constant currency compared to the prior year to be up approximately 1.0 percent, in line with March guidance. Changes in fuel prices (including realized fuel derivatives) and currency exchange rates are expected to decrease earnings by $0.19 per share compared to March guidance and $0.13 per share compared to the prior year.

Taking the above factors into consideration, the company expects full year 2018 adjusted earnings per share to be in the range of $4.15 to $4.25 compared to 2017 adjusted earnings per share of $3.82.