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LIGHTHOUSE TRAVEL
800-719-9917 or 805-566-3905
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Carnival Corporation & Plc Reports First Quarter Earnings
MIAMI, March 16
Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK) reported net
income of $283 million, or $0.35 diluted EPS, on revenues of $2.69
billion for its first quarter ended February 28, 2007. Net income for
the first quarter of 2006 was $251 million, or $0.31 diluted EPS, on
revenues of $2.46 billion.
First quarter revenues increased by 9.1 percent driven by a 7.4
percent increase in cruise capacity and a 1.7 percent increase in
gross cruise revenue yields (revenue per available lower berth day).
Net revenue yields for the first quarter of 2007 increased 0.3 percent
compared to the prior year. Adjusting for the effect of movement in
currency exchange rates, net revenue yields as measured on a local
currency basis ("constant dollar basis") decreased 2.1 percent
compared to the same period last year.
Net cruise costs per available lower berth day ("ALBD") for the first
quarter of 2007 increased 1.3 percent compared to costs for the same
period last year. On a constant dollar basis, net cruise costs per
ALBD decreased 1.3 percent from the same period last year. Gross
cruise costs per ALBD increased 2.9 percent compared to the prior
year.
Carnival Corporation & plc Chairman and CEO Micky Arison noted the
first quarter continued the trend seen in recent quarters of strong
growth in cruise revenue yields from the company's European cruise
brands offsetting pricing weakness in the Caribbean.
"The Caribbean remains the world's top cruising region, with excellent
year-round weather, beautiful beaches, great shopping and a welcome
hospitality -- all within easy reach of millions of North American
vacationers," Arison noted. "Despite a soft pricing environment in
this segment, we'll carry a record number of guests to the Caribbean
this year," he added.
Arison further noted, "Booking trends for the Caribbean over the past
few weeks indicate that consumers are recognizing the extraordinary
value of warm water cruises." In mid-February, the company indicated
that bookings since the beginning of January through February 4 were
up over last year but less than its 2007 capacity increase. Since that
time, the company has noted a significant increase in booking volumes
over the prior year with the increase well above the 2007 capacity
increase, especially for Carnival Cruise Lines' Caribbean programs,
although pricing is below last year's levels.
Outlook for 2007
On a cumulative basis, occupancy on a capacity adjusted basis for
advance bookings taken for the last nine months of 2007 is slightly
ahead of last year. Pricing on a cumulative basis is down slightly
compared to last year (down 2 percent in constant dollars).
Based on current internal forecasts, the company continues to expect
net revenue yields for full year 2007 to be flat to up slightly (down
1 to 2 percent on a constant dollar basis), compared to last year. Net
cruise costs per ALBD for 2007 are expected to be flat to up slightly
(down 1 to 2 percent on a constant dollar basis), compared to 2006.
The company's cost guidance for fuel is based on the current forward
curve for the last nine months of 2007 of $318 per metric ton,
compared to an average price of $341 per metric ton for the last nine
months of 2006. The company's guidance is also based on currency
exchange rates of $1.32 to the euro and $1.94 to sterling. The company
continues to expect earnings in 2007 to be in the range of $2.90 to
$3.10 per share, compared to $2.77 per share in 2006.
For the second quarter of 2007, the company expects net revenue yields
to be down slightly (down approximately 2 to 3 percent on a constant
dollar basis), compared to last year. Net cruise costs per ALBD in the
second quarter of 2007 are expected to be approximately the same as
2006 (down 1 to 2 percent on a constant dollar basis). Based on these
estimates, the company expects that diluted earnings per share for the
second quarter of 2007 will be in the range of $0.45 to $0.47,
compared to $0.46 in the second quarter of 2006. The 2007 guidance
includes the impact of the previously announced cancelled voyages,
which are expected to reduce second quarter earnings by approximately
$0.02 per share.
In recent months Carnival has embarked on a number of initiatives to
increase its presence globally. In Spain, the company has signed a
letter of intent to form a joint venture with Iberojet, Spain's
largest travel company, which is expected to be completed in 2007. The
joint venture, which will be 75 percent owned by Carnival, will
operate Iberojet's current fleet of two modern cruise ships under the
Ibero Cruise brand. The joint venture plans to grow that fleet over
the next several years through the acquisition of existing tonnage
from Carnival Corporation & plc's current fleet.
The previously announced letter of intent to form a joint venture with
TUI AG, the world's largest tour operator, is expected to close during
2007. The proposed joint venture will develop, market and operate two
cruise brands -- Carnival's existing AIDA Cruises and a new TUI
Cruises brand aimed at a more mature clientele -- both designed for
the German-speaking holiday market.
Also, the proposed sale of the Windstar Cruises brand, a unit of
Holland America Line, to Ambassadors International Inc., is expected
to close in the second quarter of 2007 for $100 million. The sale of
Windstar is a strategic move allowing the company to focus on its core
growth brands.
All of the above noted transactions are subject to regulatory
approvals, including approval by competition authorities.
Carnival has scheduled a conference call with analysts at 10:00 a.m.
EDT (14.00 London time) today to discuss its 2007 first quarter
earnings. 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 is the largest cruise vacation group in the
world, with a portfolio of cruise brands in North America, Europe and
Australia, comprised of Carnival Cruise Lines, Holland America Line,
Princess Cruises, Seabourn Cruise Line, Windstar Cruises, AIDA
Cruises, Costa Cruises, Cunard Line, Ocean Village, P&O Cruises and
P&O Cruises Australia.
Together, these brands operate 82 ships totaling 147,000 lower berths
with 19 new ships scheduled to enter service between April 2007 and
June 2011. Carnival Corporation & plc also operates Holland America
Tours and Princess 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.
Cautionary note concerning factors that may affect future results
Some of the statements contained in this earnings release are
"forward- looking statements" that involve risks, uncertainties and
assumptions with respect to Carnival Corporation & plc, including some
statements concerning future results, outlook, 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. We have tried, wherever possible, to identify these
statements by using words like "will," "may," "believes," "expects,"
"anticipates," "forecast," "future," "intends," "plans," and
"estimates" and similar expressions. Because forward-looking
statements involve risks and uncertainties, there are many factors
that could cause Carnival Corporation & plc's actual results,
performance or achievements to differ materially from those expressed
or implied in this earnings release. Forward-looking statements
include those statements which may impact the forecasting of earnings
per share, net revenue yields, booking levels, pricing, occupancy,
operating, financing and/or tax costs, fuel costs, costs per available
lower berth day, estimates of ship depreciable lives and residual
values, outlook or business prospects. These factors include, but are
not limited to, the following: general economic and business
conditions, which may adversely impact the levels of Carnival
Corporation & plc's potential vacationers' discretionary income and
this group's confidence in the U.S. economy, and thereby reduce the
net revenue yields for the cruise brands; the international political
and economic climate, armed conflicts, terrorist attacks and threats
thereof, availability of air service and other world events, and their
impact on the demand for cruises; accidents, unusual weather
conditions or natural disasters, such as hurricanes and earthquakes
and other incidents (including machinery and equipment failures or
improper operation thereof) which could cause the alteration of
itineraries or cancellation of a cruise or series of cruises, and the
impact of the spread of contagious diseases, affecting the health,
safety, security and vacation satisfaction of passengers; adverse
publicity concerning the cruise industry in general, or Carnival
Corporation & plc's in particular, could impact the demand for
Carnival Corporation & plc's cruises; conditions in the cruise and
land-based vacation industries, including competition from other
cruise ship operators and providers of vacation alternatives and
increases in capacity offered by cruise ship and land-based vacation
alternatives; changing consumer preferences, which may, among other
things, adversely impact the demand for cruises; changes in and
compliance with the environmental, health, safety, security, tax and
other regulatory regimes under which Carnival Corporation & plc
operates, including the implementation of U.S. regulations requiring
U.S. citizens to obtain passports for sea travel to or from additional
foreign destinations; the impact of changes in operating and financing
costs, including changes in foreign currency exchange rates and
interest rates and fuel, food, insurance, payroll and security costs;
the ability of Carnival Corporation & plc to implement its
shipbuilding programs and brand strategies and to continue to expand
its business worldwide; Carnival Corporation & plc's future operating
cash flow may not be sufficient to fund future obligations and
Carnival Corporation & plc may not be able to obtain financing, if
necessary, on terms that are favorable or consistent with its
expectations; lack of acceptance of new itineraries, products and
services by Carnival Corporation & plc's guests; Carnival Corporation
& plc's ability to attract and retain qualified shipboard crew and
maintain good relations with employee unions; the continuing financial
viability of Carnival Corporation & plc's travel agent distribution
system and air service providers; Carnival Corporation & plc's
decisions to self-insure against various risks or inability to obtain
insurance for certain risks; disruptions to Carnival Corporation &
plc's software and other information technology systems; continued
availability of attractive port destinations; risks associated with
the DLC structure, including the uncertainty of its tax status; risks
associated with operating internationally; the impact of pending or
threatened litigation; and Carnival Corporation & plc's ability to
successfully implement cost reduction plans. 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 listing rules, Carnival Corporation & plc expressly
disclaims 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 OPERATIONS
Three Months
Ended
February
28,
2007
2006 (1)
(in millions,
except
per share
data)
Revenues
Cruise
Passenger tickets $2,050
$1,910
Onboard and other 626
539
Other 12
14
-----
-----
2,688
2,463
-----
-----
Costs and Expenses
Operating
Cruise
Commissions, transportation and other 471
408
Onboard and other 111
97
Payroll and related 311
272
Fuel 220
214
Food 175
152
Other ship operating 386
357 (2)
Other 17
16
-----
-----
Total 1,691
1,516
Selling and administrative 384
366
Depreciation and amortization 260
232
-----
-----
2,335
2,114
-----
-----
Operating Income 353
349
-----
-----
Nonoperating (Expense) Income
Interest income 10
7
Interest expense, net of capitalized interest (84)
(76)
Other expense, net
(15) (3)
-----
-----
(74)
(84)
-----
-----
Income Before Income Taxes 279
265
Income Tax Benefit (Expense), Net 4
(14)
-----
-----
Net Income $283
$251
=====
=====
Earnings Per Share
Basic $0.36
$0.31
=====
=====
Diluted $0.35
$0.31
=====
=====
Dividends Per Share $0.275
$0.25
=====
=====
Weighted-Average Shares Outstanding - Basic 793
809
=====
=====
Weighted-Average Shares Outstanding - Diluted 829
838
=====
=====
(1) Reclassifications have been made to certain 2006 amounts to
conform
to the current period presentation as a result of adopting a
new
chart of accounts in connection with the initial
implementation of a
new worldwide accounting system.
(2) Retrospectively adjusted for the 2006 change in the
company's method
of accounting for dry-dock costs from the deferral method to
the
direct expense method, which resulted in a $29 million
increase in
other ship operating costs.
(3) Includes a $10 million expense for a non-cruise investment
write-down and $5 million for a litigation reserve.
CARNIVAL CORPORATION & PLC
SELECTED STATISTICAL AND SEGMENT INFORMATION
Three Months
Ended
February 28,
2007
2006
(in millions,
except
statistical
information)
STATISTICAL INFORMATION
Passengers carried (in thousands) 1,750
1,523 (1)
Available lower berth days (2) 12,818,818
11,936,438
Occupancy percentage 104.1%
104.2%(3)
Fuel cost per metric ton (4) $301
$319
SEGMENT INFORMATION
Revenues
Cruise $2,676
$2,449
Other 14
16
Intersegment elimination (2)
(2)
-----
-----
$2,688
$2,463
=====
=====
Operating expenses
Cruise $1,674
$1,500
Other 19
18
Intersegment elimination (2)
(2)
-----
-----
$1,691
$1,516
=====
=====
Selling and administrative expenses
Cruise $376
$355
Other 8
11
-----
-----
$384
$366
=====
=====
Depreciation and amortization $251
$224
Cruise 9
8
-----
-----
Other $260
$232
=====
=====
Operating income (loss)
Cruise $375
$370
Other (22)
(21)
-----
-----
$353
$349
=====
=====
(1) Passengers carried in 2006 does not include any passengers
for the
three ships chartered to the Military Sealift Command ("MSC")
in
connection with the Hurricane Katrina relief efforts.
(2) Available lower berth days is a standard measure of passenger
capacity for the period. It assumes that each cabin we offer
for
sale accommodates two passengers. ALBDs are computed by
multiplying
passenger capacity by revenue-producing ship operating days
in
the period.
(3) Occupancy percentage in 2006 includes the three ships
chartered to
the MSC at 100% occupancy.
(4) Fuel cost per metric ton is calculated by dividing the cost
of our
fuel by the number of metric tons consumed.
CARNIVAL CORPORATION & PLC
NON-GAAP FINANCIAL MEASURES
Gross and net revenue yields were computed by dividing the gross
or net
revenues, without rounding, by ALBDs as follows:
Three Months
Ended
February
28,
2007
2006
(in millions,
except
ALBDs and
yields)
Cruise revenues
Passenger tickets $2,050
$1,910
Onboard and other 626
539
------
------
Gross cruise revenues 2,676
2,449
Less cruise costs
Commissions, transportation and other (471)
(408)
Onboard and other (111)
(97)
------
------
Net cruise revenues (1) $2,094
$1,944
ALBDs 12,818,818
11,936,438
==========
==========
Gross revenue yields (1) $208.72
$205.15
=======
=======
Net revenue yields (1) $163.32
$162.81
=======
=======
Gross and net cruise costs per ALBD were computed by dividing the
gross or
net cruise costs, without rounding, by ALBDs as follows:
Three Months
Ended
February
28,
2007
2006
(in millions,
except
ALBDs and costs
per ALBD)
Cruise operating expenses $1,674
$1,500
Cruise selling and administrative expenses 376
355
------
------
Gross cruise costs 2,050
1,855
======
======
Less cruise costs included in net
cruise revenues
Commissions, transportation and other (471)
(408)
Onboard and other (111)
(97)
------
------
Net cruise costs (1) $1,468
$1,350
======
======
ALBDs 12,818,818
11,936,438
==========
==========
Gross cruise costs per ALBD (1) $159.91
$155.42
=======
=======
Net cruise costs per ALBD (1) $114.50
$113.08
=======
=======
NOTES TO NON-GAAP FINANCIAL MEASURES
(1) We use net cruise revenues per ALBD ("net revenue yields") and
net
cruise costs per ALBD as significant non-GAAP financial
measures of
our cruise segment financial performance. We believe that net
revenue
yields are commonly used in the cruise industry to measure a
company's
cruise segment revenue performance. This measure is also used
for
revenue management purposes. In calculating net revenue
yields, we
use "net cruise revenues" rather than "gross cruise revenues."
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 by us net of our most
significant
variable costs, which are travel agent commissions, cost of
air
transportation and certain other variable direct costs
associated with
onboard revenues. Substantially all of our remaining cruise
costs are
largely fixed once our ship capacity levels have been
determined,
except for the impact of changing prices.
Net cruise costs per ALBD is the most significant measure we
use to
monitor our cruise segment costs rather than gross cruise
costs per
ALBD. In calculating net cruise costs, we exclude the same
variable
costs that are included in the calculation of net cruise
revenues.
This is done to avoid duplicating these variable costs in
these two
non-GAAP financial measures.
We have not provided estimates of future gross revenue yields
or
future gross cruise costs per ALBD because the reconciliations
of
forecasted net cruise revenues to forecasted gross cruise
revenues or
forecasted net cruise costs to forecasted cruise operating
expenses
would require us to forecast, with reasonable accuracy, the
amount of
air and other transportation costs that our forecasted cruise
passengers would elect to purchase from us (the "air/sea
mix"). Since
the forecasting of future air/sea mix involves several
significant
variables that are relatively difficult to forecast and the
revenues
from the sale of air and other transportation approximate the
costs of
providing that transportation, management focuses primarily on
forecasts of net cruise revenues and costs rather than gross
cruise
revenues and costs. This does not impact, in any material
respect,
our ability to forecast our future results, as any variation
in the
air/sea mix has no material impact on our forecasted net
cruise
revenues or forecasted net cruise costs. As such, management
does not
believe that this reconciling information would be meaningful.
We also monitor these two non-GAAP financial measures assuming
the
2007 currency exchange rates have remained constant with the
2006
comparable period rates, or on a "constant dollar basis," in
order to
remove the impact of changes in exchange rates on our non-U.S.
dollar
cruise operations. We believe that this is a useful measure
indicating
the actual growth of our operations in a fluctuating currency
exchange
rate environment. On a constant dollar basis, net cruise
revenues and
net cruise costs would be $2.04 billion and $1.43 billion for
the
three months ended February 28, 2007, respectively. On a
constant
dollar basis, gross cruise revenues and gross cruise costs
would be
$2.60 billion and $1.99 billion for the three months ended
February 28, 2007, respectively. In addition, our non-U.S.
cruise
operations depreciation and net interest expense were impacted
by
changes in exchange rates for the three months ended
February 28, 2007, compared to the same period in 2006.
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