OREANDA-NEWS. Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK) announced adjusted net income of $370 million, or $0.49 diluted EPS for the second quarter of 2016 compared to adjusted net income for the second quarter of 2015 of $193 million, or $0.25 diluted EPS. For the second quarter of 2016, U.S. GAAP net income, which included unrealized gains on fuel derivatives of $242 million and $7 million of other expenses, was $605 million, or $0.80 diluted EPS. For the second quarter of 2015, U.S. GAAP net income was $222 million, or $0.29 diluted EPS. Revenues for the second quarter of 2016 were $3.7 billion compared to $3.6 billion for the prior year.

Carnival Corporation & plc President and CEO Arnold Donald stated, "Our strong second quarter demonstrates continued momentum as we again achieved a near doubling of adjusted earnings per share.  Our ongoing effort to drive demand for our brands in excess of our measured capacity growth has led to increased revenues and helped maintain the mid-point of our full year earnings guidance despite the recent currency movements and rises in fuel prices that combined represent a negative $0.17 per share."

Donald also noted several major milestones that will contribute to the future of the company including the re-mastering of Queen Mary 2, the opening of Holland America's Denali square complex in Alaska and the introduction of AIDA Cruises'AIDAprima, Holland America Line'sKoningsdam, and Carnival Cruise Line'sCarnival Vista. In addition, building on a legacy of pioneering achievements, Carnival Corporation became the first cruise company to begin operating voyages from the US to Cuba in more than four decades through its Fathom brand -- a historic moment that captured worldwide media coverage.

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

  • On a constant currency basis, net revenue yields (net revenue per available lower berth day or "ALBD") increased 3.6 percent for the 2Q 2016, which was better than the company's guidance of up 1.5 to 2.5 percent. Gross revenue yields increased 1.3 percent.
  • Net cruise costs excluding fuel per ALBD decreased 1.9 percent in constant currency, compared to March guidance, up 0.5 to 1.5 percent due to the timing of expenses between quarters. Gross cruise costs including fuel per ALBD in current dollars decreased 5.4 percent.
  • Changes in fuel prices (including fuel derivatives) and currency exchange rates contributed $0.04 per share to second quarter earnings.

2016 Outlook 

At this time, cumulative advance bookings for the remainder of the year are well ahead of the prior year at slightly higher prices. Since March, bookings for the remainder of the year are at higher prices with volumes running lower than last year because there is less inventory remaining for sale than at this time in 2015.

The company expects full year 2016 net revenue yields on a constant currency basis to be up approximately 3.5 percent versus the prior year, compared to March guidance of approximately 3 percent. The company now expects full year 2016 net cruise costs excluding fuel per ALBD to be up approximately 1.5 percent compared to the prior year on a constant currency basis, better than March guidance of approximately 2.0 percent.  Changes in fuel prices (including fuel derivatives) and currency exchange rates are expected to reduce full year earnings by $0.17 per share compared to March guidance. 

Taking the above factors into consideration, the company expects full year 2016 adjusted earnings per share guidance to be in the range of $3.25 to $3.35, compared to March guidance of $3.20 to $3.40 and 2015 adjusted earnings of $2.70 per share.

Donald noted, "This is shaping up to be another strong year for our company as we expect over 20 percent earnings growth and are approaching a nine percent return on invested capital. We have accelerated progress toward our stated goal of achieving the double digit return threshold and have accelerated distributions to shareholders. We recently raised our dividend by 17 percent to over $1 billion per year. Since October, we have repurchased nearly $1.9 billion in shares under our stock repurchase program. Yesterday, our Board of Directors approved our third $1 billion share repurchase authorization demonstrating confidence in our outlook and reinforcing our commitment to return value to shareholders."

Third Quarter 2016 Outlook

Third quarter constant currency net revenue yields are expected to be up 2 to 3 percent compared to the prior year. Net cruise costs excluding fuel per ALBD for the third quarter are expected to be 6 to 7 percent higher on a constant currency basis compared to the prior year driven by the timing of advertising expense and the re-mastering of Queen Mary 2 in dry-dock. Changes in fuel prices (including fuel derivatives) and currency exchange rates are expected to increase third quarter earnings by $0.01 per share compared to the prior year.  

Based on the above factors, the company expects adjusted earnings for the third quarter 2016 to be in the range of $1.83 to $1.87 per share versus 2015 adjusted earnings of $1.75 per share.

Selected Key Forecast Metrics

     

Full Year 2016

  

Third Quarter 2016

Year over year change:

    

Current

Dollars

  

Constant Currency

  

Current

Dollars

  

Constant Currency

Net revenue yields

    

Up slightly

  

Approx 3.5%

  

(1.0) to 0.0%

  

2.0 to 3.0%

Net cruise costs excl. fuel / ALBD  

    

Up slightly

  

Approx 1.5%

  

4.0 to 5.0%

  

6.0 to 7.0%
                   
   

  Full Year 2016

  

Third Quarter 2016

Fuel price per metric ton

  

$280

  

$339

Fuel consumption (metric tons in thousands)

  

3,270

  

810

Currency:  Euro

  

$1.10 to €1

  

$1.10 to €1

                  Sterling

  

$1.38 to ?1

  

$1.32 to ?1

                  Australian dollar

  

$0.74 to A$1

  

$0.74 to A$1

                  Canadian dollar

  

$0.76 to C$1

  

$0.77 to C$1

 

 

CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(in millions, except per share data) 

  
   
     

Three Months Ended

  

Six Months Ended

  
     

May 31,

  

May 31,

  
     

2016

  

2015

  

2016

  

2015

  

Revenues

                    

     Cruise

                    

          Passenger tickets

    

$   2,696

  

$   2,628

  

$     5,414

  

$     5,260

  

          Onboard and other

    

978

  

927

  

1,901

  

1,816

  

     Tour and other

    

31

  

35

  

42

  

44

  
     

3,705

  

3,590

  

7,357

  

7,120

  

Operating Costs and Expenses

                    

     Cruise

                    

           Commissions, transportation and other

    

495

  

481

  

1,077

  

1,067

  

           Onboard and other

    

123

  

114

  

240

  

225

  

           Payroll and related

    

502

  

469

  

994

  

936

  

           Fuel

    

196

  

333

  

383

  

650

  

           Food

    

248

  

242

  

495

  

482

  

           Other ship operating

    

667

  

734

  

1,271

  

1,332

  

     Tour and other

    

27

  

31

  

41

  

47

  
     

2,258

  

2,404

  

4,501

  

4,739

  

     Selling and administrative

    

532

  

491

  

1,083

  

1,020

  

     Depreciation and amortization

    

437

  

406

  

861

  

807

  
     

3,227

  

3,301

  

6,445

  

6,566

  

Operating Income

    

478

  

289

  

912

  

554

  
                     

Nonoperating (Expense) Income

                    

     Interest income

    

2

  

2

  

3

  

4

  

     Interest expense, net of capitalized interest

    

(57)

  

(57)

  

(108)

  

(114)

  

     Gains (losses) on fuel derivatives, net (a)

    

171

  

(13)

  

(65)

  

(181)

  

     Other income, net

    

13

  

5

  

8

  

15

  
     

129

  

(63)

  

(162)

  

(276)

  
                     

Income Before Income Taxes

    

607

  

226

  

750

  

278

  
                     

Income Tax Expense, Net

    

(2)

  

(4)

  

(3)

  

(7)

  
                     

Net Income

    

$      605

  

$      222

  

$        747

  

$        271

  
                     

Earnings Per Share

                    

     Basic

    

$     0.81

  

$     0.29

  

$      0.99

  

$       0.35

  

     Diluted

    

$     0.80

  

$     0.29

  

$      0.98

  

$       0.35

  
                     

Adjusted Earnings Per Share-Diluted (b)

    

$     0.49

  

$     0.25

  

$       0.88

  

$       0.45

  
                     

Dividends Declared Per Share

    

$     0.35

  

$     0.25

  

$       0.65

  

$       0.50

  
                     

Weighted-Average Shares Outstanding – Basic

    

751

  

778

  

758

  

777

  

Weighted-Average Shares Outstanding – Diluted

    

753

  

780

  

761

  

780

  
     

(a) During the three months ended May 31, 2016 and 2015, our gains (losses) on fuel derivatives, net include net unrealized gains of $242 million and $34 million and realized (losses) of $(71) million and $(47) million, respectively. During the six months ended May 31, 2016 and 2015, our (losses) on fuel derivatives, net include net unrealized gains (losses) of $96 million and $(78) million and realized (losses) of $(161) million and $(103) 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)
 
 

May 31,

  

November 30,
 

2016

  

2015

ASSETS

      

Current Assets

      

    Cash and cash equivalents

$             519

  

$             1,395

    Trade and other receivables, net

334

  

303

    Insurance recoverables

108

  

109

    Inventories

315

  

330

    Prepaid expenses and other

324

  

314

        Total current assets

1,600

  

2,451
       

Property and Equipment, Net

33,244

  

             31,818 (a)
       

Goodwill

3,019

  

3,010
       

Other Intangibles

1,305

  

               1,308 (a)
       

Other Assets

683

  

650
 

$           39,851

  

$           39,237
       

LIABILITIES AND SHAREHOLDERS' EQUITY

      

Current Liabilities

      

    Short-term borrowings

$                410

  

$                   30

    Current portion of long-term debt

836

  

1,344

    Accounts payable

667

  

627

    Accrued liabilities and other

1,653

  

1,683

    Customer deposits

4,275

  

3,272

        Total current liabilities

7,841

  

6,956
       

Long-Term Debt

8,183

  

7,413
       

Other Long-Term Liabilities

1,036

  

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

8,605

  

8,562

    Retained earnings

20,320

  

20,060

    Accumulated other comprehensive loss

(1,648)

  

(1,741)

    Treasury stock, 99 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

(4,851)

  

(3,475)

              Total shareholders' equity

22,791

  

23,771
 

$           39,851

  

$           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

Six Months Ended
     

                 May 31,               

              May 31,            

     

2016

  

2015

2016

2015

STATISTICAL INFORMATION

              

   ALBDs (in thousands) (a)

    

19,693

  

19,307

38,983

37,891

   Occupancy percentage (b)

    

104.1%

  

102.8%

104.1%

102.9%

   Passengers carried (in thousands)

    

2,781

  

2,608

5,340

5,071

   Fuel consumption in metric tons (in thousands)

    

808

  

810

1,623

1,593

   Fuel consumption in metric tons per thousand ALBDs

    

41.0

  

41.9

41.6

42.0

   Fuel cost per metric ton consumed

    

$       243

  

$       411

$      236

$      408

   Currencies

              

           U.S. dollar to euro

    

$      1.13

  

$      1.10

$     1.11

$     1.13

           U.S. dollar to sterling

    

$      1.44

  

$      1.52

$     1.44

$     1.53

           U.S. dollar to Australian dollar

    

$      0.75

  

$      0.78

$     0.73

$     0.79

           U.S. dollar to Canadian dollar

    

$      0.78

  

$      0.81

$     0.75

$     0.81
               

CASH FLOW INFORMATION (in millions)

              

Cash from operations

    

$    1,883

  

$    1,515

$    2,681

$   2,286

Capital expenditures

    

$    1,636

  

$       439

$    1,966

$   1,381

Dividends paid

    

$       227

  

$       194

$      459

$      388
               

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 May 31,

Six Months Ended May 31,
   

2016

    

2016

  
   

Constant

    

Constant

 
 

2016

Dollar

2015

2016

Dollar

2015

Passenger ticket revenues

$         2,696

$       2,699

$        2,628

$       5,414

$        5,496

$       5,260

Onboard and other revenues

978

979

927

1,901

1,921

1,816

Gross cruise revenues

3,674

3,678

3,555

7,315

7,417

7,076

Less cruise costs

            

   Commissions, transportation and other

(495)

(493)

(481)

(1,077)

(1,097)

(1,067)

   Onboard and other

(123)

(123)

(114)

(240)

(243)

(225)
 

(618)

(616)

(595)

(1,317)

(1,340)

(1,292)
             

Net passenger ticket revenues

2,201

2,206

2,147

4,337

4,399

4,193

Net onboard and other revenues

855

856

813

1,661

1,678

1,591

Net cruise revenues

$        3,056

$       3,062

$        2,960

$       5,998

$        6,077

$       5,784
             

ALBDs

19,693,362

19,693,362

19,306,832

38,983,272

38,983,272

37,890,712
             

Gross revenue yields

$      186.55

$     186.78

$      184.15

$     187.65

$     190.27

$     186.76

% increase vs. 2015

1.3%

1.4%

  

0.5%

1.9%

  
             

Net revenue yields

$     155.21

$       155.50

$       153.29

$     153.87

$     155.90

$     152.65

% increase vs. 2015

1.2%

1.4%

  

0.8%

2.1%

  
             

Net passenger ticket revenue yields

$      111.78

$       112.03

$      111.20

$     111.25

$      112.85

$     110.66

% increase vs. 2015

0.5%

0.7%

  

0.5%

2.0%

  
             

Net onboard and other revenue yields

$        43.43

$      43.48

$        42.09

$         42.61

$        43.05

$       41.99

% increase vs. 2015

3.2%

3.3%

  

1.5%

2.5%

  
     
     
 

Three Months Ended May 31,

Six Months Ended May 31, 
   

2016

    

2016

  
   

Constant

   

Constant

  
 

2016

Currency

2015

2016

Currency

2015

Net passenger ticket revenues

$        2,201

$      2,267

$        2,147

$       4,337

$        4,532

$       4,193

Net onboard and other revenues

855

860

813

1,661

1,691

1,591

Net cruise revenues

3,056

3,127

2,960

5,998

6,223

5,784

ALBDs

19,693,362

19,693,362

19,306,832

38,983,272

38,983,272

37,890,712
             
             

Net revenue yields

$     155.21

$     158.80

$       153.29

$     153.87

$     159.63

$     152.65

% increase vs. 2015

1.2%

3.6%

  

0.8%

4.6%

  
             

Net passenger ticket revenue yields

$       111.78

$     115.12

$      111.20

$     111.25

$      116.26

$     110.66

% increase vs. 2015

0.5%

3.5%

  

0.5%

5.1%

  
             

Net onboard and other revenue yields

$         43.43

$       43.68

$        42.09

$       42.61

$        43.37

$       41.99

% increase vs. 2015

3.2%

3.8%

  

1.5%

3.3%

  
 

(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 May 31,

Six Months Ended May 31,
   

2016

    

2016

  
   

Constant

    

Constant

  
 

2016

Dollar

2015

2016

Dollar

2015

Cruise operating expenses

$        2,231

$        2,232

$        2,373

$       4,460

$        4,522

$          4,692

Cruise selling and administrative expenses

530

530

489

1,079

1,092

1,016

Gross cruise costs

2,761

2,762

2,862

5,539

5,614

5,708

Less cruise costs included above

            

      Commissions, transportation and other

(495)

(493)

(481)

(1,077)

(1,097)

(1,067)

      Onboard and other

(123)

(123)

(114)

(240)

(243)

(225)

      Gain on ship sale                 

-

-

2

2

2

4

     Restructuring expenses

(2)

(2)

(7)

(2)

(2)

(7)

        Other (c)

(5)

(5)

-

(21)

(21)

-

Net cruise costs

2,136

2,139

2,262

4,201

4,253

4,413

Less fuel

(196)

(196)

(333)

(383)

(383)

(650)

Net cruise costs excluding fuel

$          1,940

$       1,943

$        1,929

$        3,818

$          3,870

$        3,763
             

ALBDs

19,693,362

19,693,362

19,306,832

38,983,272

38,983,272

37,890,712
             

Gross cruise costs per ALBD

$      140.18

$     140.28

$      148.22

$      142.08

$        144.01

$       150.64

% decrease vs. 2015

(5.4)%

(5.4)%

  

(5.7)%

(4.4)%

  
             

Net cruise costs per ALBD

$      108.46

$     108.63

$      117.11

$     107.75

$        109.10

$     116.45

% decrease  vs. 2015

(7.4)%

(7.2)%

  

(7.5)%

(6.3)%

  
             

Net cruise costs excluding fuel per ALBD

$         98.49

$       98.67

$        99.88

$       97.93

$          99.27

$       99.28

% decrease vs. 2015

(1.4)%

(1.2)%

  

(1.4)%

0.0%

  
     
     
 

Three Months Ended May 31,

Six Months Ended May 31,
   

2016

    

2016

  
   

Constant

    

Constant

  
 

2016

Currency

2015

2016

Currency

2015

Net cruise costs excluding fuel

$        1,940

$      1,930

$        1,929

$       3,818

$        3,864

$       3,763

ALBDs

19,693,362

19,693,362

19,306,832

38,983,272

38,983,272

37,890,712
             
             

Net cruise costs excluding fuel per ALBD 

$       98.49

$       98.01

$         99.88

$       97.93

$       99.12

$       99.28

% decrease vs. 2015

(1.4)%

(1.9)%

  

(1.4)%

(0.2)%

  
             
 

(See next page for 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

  

Six Months Ended
 

May 31, 

  

May 31, 

Net income

2016

2015

  

2016

2015

    U.S. GAAP net income

$     605

$        222

  

$    747

$      271

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

(242)

(34)

  

(96)

78

    Gain on ship sale (e)

-

(2)

  

(2)

(4)

    Restructuring expenses (e)

2

7

  

2

7

    Other (c) (e)

5

-

  

21

-

    Adjusted net income

$       370

$       193

  

$      672

$      352
           

Weighted-average shares outstanding

753

780

  

761

780
           

Earnings per share

         

    U.S. GAAP earnings per share

$     0.80

$       0.29

  

$      0.98

$     0.35

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

(0.32)

(0.05)

  

(0.13)

0.10

    Gain on ship sale (e)

-

-

  

-

(0.01)

    Restructuring expenses (e)

-

0.01

  

-

0.01

    Other (c) (e)

0.01

-

  

0.03

-

    Adjusted earnings per share

$      0.49

$       0.25

  

$      0.88

$   0.45