Carnival Corp. Reports Record Second Quarter Earnings And Additional $1 Billion Share Repurchase Authorization

MIAMI, June 28, 2016 /PRNewswire/ — 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’s Koningsdam, and Carnival Cruise Line’s Carnival 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

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 2016 second 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 is the largest leisure travel company in the world, and among the most profitable and financially strong in the industry.  With a portfolio of 10 cruise brands in North America, Europe, Australia and Asia, comprised of Carnival Cruise Line, Fathom, Holland America Line, Princess Cruises, Seabourn, AIDA Cruises, Costa Cruises, Cunard,  P&O Cruises (Australia) and P&O Cruises (UK).

Together, these brands operate 101 ships visiting over 700 ports around the world and totaling 225,000 lower berths with 15 new ships scheduled to be delivered between 2016 and 2020. 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&P500 and the FTSE 100 indices.

Additional information can be found on www.carnival.com, www.fathom.org, www.hollandamerica.com, www.princess.com, www.seabourn.com, www.aida.de, www.costacruise.com, www.cunard.com, www.pocruises.com.au and 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 our outlook including, among other things, the forecasting of our net revenue yields; booking levels; pricing; occupancy; operating, financing and tax costs, including fuel expenses; currency exchange rates; net cruise costs excluding fuel per available lower berth day; estimates of ship depreciable lives and residual values; liquidity; goodwill, ship and trademark fair values and adjusted earnings per share. 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. This note contains important cautionary statements of the known factors that we consider could materially affect the accuracy of our forward-looking statements and adversely affect our business, results of operations and financial position. It is not possible to predict or identify all such risks. There may be additional risks that we consider immaterial or which are unknown. These factors include, but are not limited to, the following:

• Incidents, such as ship incidents, security incidents, the spread of contagious diseases and threats thereof, adverse weather conditions or other natural disasters and the related adverse publicity affecting our reputation and the health, safety, security and satisfaction of guests and crew;
• Economic conditions and adverse world events affecting the safety and security of travel, such as civil unrest, armed conflicts and terrorist attacks;
• Changes in and compliance with laws and regulations relating to environment, health, safety, security, tax and anti-corruption under which we operate;
• Disruptions and other damages to our information technology and other networks and operations, and breaches in data security;
• Ability to recruit, develop and retain qualified personnel;
• Increases in fuel prices;
• Fluctuations in foreign currency exchange rates;
• Misallocation of capital among our ship, joint venture and other strategic investments;
• Future operating cash flow may not be sufficient to fund future obligations and we may be unable to obtain financing;
• Deterioration of our cruise brands’ strengths and our inability to implement our strategies;
• 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;
• Inability to implement our shipbuilding programs and ship repairs, maintenance and refurbishments on terms that are favorable or consistent with our expectations and increases to our repairs and maintenance expenses and refurbishment costs as our fleet ages;
• Failure to keep pace with developments in technology;
• Geographic regions in which we try to expand our business may be slow to develop and ultimately not develop how we expect and our international operations are subject to additional risks not generally applicable to our U.S. operations;
• Competition from and overcapacity in the cruise ship and land-based vacation industry;
• Economic, market and political factors that are beyond our control, which could increase our operating, financing and other costs;
• Changes in global consumer confidence and impacts to various foreign currency exchange rates as a result of the vote in the UK to withdraw from the European Union (“EU”);
• Friction in travel, changes to international tax treaties and changes to laws and regulations that could result from the exit of the UK from the EU;
• Litigation, enforcement actions, fines or penalties;
• Lack of continuing availability of attractive, convenient and safe port destinations on terms that are favorable or consistent with our expectations;
• Union disputes and other employee relationship issues;
• Decisions to self-insure against various risks or the inability to obtain insurance for certain risks at reasonable rates;
• Reliance on third-party providers of various services integral to the operations of our business;
• Business activities that involve our co-investment with third parties;
• 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;
• Our shareholders may be subject to the uncertainties of a foreign legal system since Carnival Corporation and Carnival plc are not U.S. corporations;
• Small group of shareholders may be able to effectively control the outcome of shareholder voting;
• Provisions in Carnival Corporation’s and Carnival plc’s constitutional documents may prevent or discourage takeovers and business combinations that our shareholders might consider to be in their best interests and
• The DLC arrangement involves risks not associated with the more common ways of combining the operations of two companies.

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.

SOURCE; Carnival Corporation & p