Carnival Corporation & plc Reports Second Quarter Earnings

MIAMI, June 20, 2019 /PRNewswire/ -- Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK) announced financial results for the second quarter ended May 31, 2019 and provided guidance for the third quarter and full year 2019.

Key Highlights

• U.S. GAAP net income of $451 million, or $0.65 diluted EPS, for the second quarter of 2019, compared to U.S. GAAP net income for the second quarter of 2018 of $561 million, or $0.78 diluted EPS.
• Second quarter 2019 adjusted net income of $457 million, or $0.66 adjusted EPS, compared to adjusted net income of $489 million, or $0.68 adjusted EPS, for the second quarter of 2018.
• Adjusted net income excludes net charges of $6 million for the second quarter of 2019 and net gains of $72 million for the second quarter of 2018 relating to unrealized gains on fuel derivatives and other net gains.
• Total revenues for the second quarter of 2019 were $4.8 billion, higher than the $4.4 billion in the prior year.
• Gross cruise revenues of $4.8 billion compared to $4.3 billion for the prior year.
• In constant currency, net cruise revenues of $3.8 billion compared to $3.6 billion, an increase of 5.2 percent.
• The company expects full year 2019 adjusted earnings per share to be in the range of $4.25 to $4.35, compared to March guidance of $4.35 to $4.55, due to:
• $0.08 to $0.10 per share unfavorable impact resulting from voyage disruptions related to Carnival Vista,
• $0.04 to $0.06 per share unfavorable impact resulting from the U.S. government's policy change on travel to Cuba,
• $0.10 to $0.12 per share unfavorable impact resulting from lower net revenue yields in the second half of the year,
• partially offset by lower fuel consumption and the net favorable impact from changes in fuel prices and currency exchange rates compared to March guidance.

Second Quarter 2019 Results

Carnival Corporation & plc President and Chief Executive Officer Arnold Donald stated, "Second quarter earnings included revenue growth from higher capacity and improved onboard spending, more than offset by a drag from fuel and currency compared to the prior year. Second quarter adjusted earnings were better than March guidance by $0.08 per share substantially due to the timing of expenses between quarters."

Key information for the second quarter of 2019 compared to the second quarter of 2018:

• Gross revenue yields (revenue per available lower berth day or "ALBD") increased 5.6 percent. In constant currency, net revenue yields increased 0.6 percent, better than March guidance of approximately flat.
• Gross cruise costs including fuel per ALBD increased 9.6 percent. In constant currency, net cruise costs excluding fuel per ALBD decreased 1.3 percent, better than March guidance of up approximately 1.0 percent, substantially due to the timing of expenses between quarters.
• Changes in fuel prices and currency exchange rates decreased earnings by $0.09 per share.

Highlights from the second quarter included Princess Cruises' announcement that MedallionNet™, its fast and reliable Wi-Fi at sea, will be enjoyed by guests sailing on more than half of its fleet by the end of 2019. Carnival Sunrise and Carnival Freedom underwent multi-million-dollar renovations which added a variety of exciting experiences, including enhanced dining options, expanded retail spaces and more. Carnival Cruise Line partnered with world-renowned chef and restaurateur Emeril Legasse on his first-ever seagoing restaurant aboard Carnival Cruise Line's most innovative ship, Mardi Gras. Additionally, AIDA was named Germany's most trustworthy cruise company by Readers Digest Trusted Brands consumer survey and Carnival Corporation was named one of America's Best Large Employers by Forbes Media.

Outlook

At this time, cumulative advanced bookings for the remainder of the year are slightly ahead of the prior year at prices that are in line with the prior year on a comparable basis. Pricing on bookings taken since March have been running behind the prior year on lower booking volumes in part because the company had less inventory remaining for sale. Cumulative advanced bookings for the full year 2020 are well ahead at prices that are in line compared to 2019.

Donald added, "Recent booking trends have been impacted by ongoing geopolitical and macroeconomic headwinds affecting our Continental European brands. We continue to expect higher yields in our North America and Australia brands offset by lower yields in our Europe and Asia brands for the remainder of the year."

Voyage disruptions related to Carnival Vista are expected to have a financial impact of approximately $0.08 to $0.10 per share.

The U.S government's policy change on travel to Cuba has a financial impact of approximately $0.04 to $0.06 per share. While the company was able to quickly adjust its itineraries to provide guests with attractive alternative vacation experiences, the suddenness of the regulatory change to this high yielding destination has led to a near-term impact on revenue yields.

In addition, the company is adjusting its full year net revenue yield guidance by 50 basis points mainly due to lower ticket prices forecasted in the second half of the year, resulting primarily from ongoing headwinds faced by the company's Continental European brands. The decline in revenue yields is mostly offset by $0.02 per share impact from lower fuel consumption and a net favorable $0.08 per share impact from changes in fuel prices and currency exchange rates since the time of March guidance.

Based on current booking trends, the regulatory change and voyage disruptions, the company now expects full year 2019 constant currency net cruise revenues to be up approximately 4.5 percent, with capacity growth of approximately 4.5 percent. Net revenue yields in constant currency are expected to be in line with the prior year compared to March guidance of up approximately 1.0 percent. Net revenue yields in constant currency are expected to be flat to down slightly for the third quarter and lower for the fourth quarter when compared to the prior year. The company now expects full year net cruise costs excluding fuel per ALBD in constant currency to be up approximately 0.7 percent compared to the prior year. The 0.2 percent increase compared to March guidance is due to the aforementioned voyage disruptions.

Taking the above factors into consideration, the company expects full year 2019 adjusted earnings per share to be in the range of $4.25 to $4.35, compared to March guidance of $4.35 to $4.55 and 2018 adjusted earnings per share of $4.26.

Donald commented, "Over the past five years we have demonstrated our ability to overcome multiple headwinds and deliver strong operational improvement. This year our growth has been hampered by a confluence of events, which we are focused on mitigating. Generating over $5 billion of cash flow and with a robust business model, our business is strong and we remain confident over time we will deliver double-digit earnings growth and growth in return on invested capital."

Third Quarter 2019 Outlook

Third quarter constant currency net revenue yields are expected to be flat to down slightly (flat to up slightly excluding the impact of voyage disruptions and regulatory change) compared to the prior year. Net cruise costs excluding fuel per ALBD in constant currency for the third quarter are expected to be up 0.5 to 1.5 percent compared to the prior year. Changes in fuel prices and currency exchange rates are expected to increase earnings by $0.03 per share compared to the prior year. Based on the above factors, the company expects adjusted earnings per share for the third quarter 2019 to be in the range of $2.50 to $2.54 versus 2018 adjusted earnings per share of $2.36.

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 2019 second quarter results. This call can be listened to live, and additional information can be obtained, via Carnival Corporation & plc's website at www.carnivalcorp.com and www.carnivalplc.com.

Carnival Corporation & plc is the world's largest leisure travel company and among the most profitable and financially strong in the cruise and vacation industries, with a portfolio of nine of the world's leading cruise lines. With operations in North America, Australia, Europe and Asia, its portfolio features Carnival Cruise Line, Princess Cruises, Holland America Line, Seabourn, P&O Cruises (Australia), Costa Cruises, AIDA Cruises, P&O Cruises (UK) and Cunard.

Together, the corporation's cruise lines operate 104 ships with 243,000 lower berths visiting over 700 ports around the world, with 19 new ships scheduled to be delivered through 2025. Carnival Corporation & plc also operates Holland America Princess Alaska Tours, the leading tour company 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.

With a long history of innovation and providing guests with extraordinary vacation experiences, Carnival Corporation has received thousands of industry awards - including recognition by the Consumer Technology Association™ as a CES^® 2019 Innovation Awards Honoree for Ocean Medallion™. A revolutionary wearable device that contains a proprietary blend of communication technologies. Ocean Medallion enables the world's first interactive guest experience platform transforming vacation travel on a large scale into a highly personalized level of customized service. The prestigious CES Innovation Awards honor outstanding design and engineering in consumer technology products.

Additional information can be found on www.carnival.com, www.princess.com, www.hollandamerica.com, www.seabourn.com, www.pocruises.com.au, www.costacruise.com, www.aida.de, www.pocruises.com and www.cunard.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 document as "Carnival Corporation & plc," "our," "us" and "we." Some of the statements, estimates or projections contained in this document 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," "outlook," and similar expressions of future intent or the negative of such terms.

Forward-looking statements include those statements that relate to our outlook and financial position including, but not limited to, statements regarding:

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 by our forward-looking statements. 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:

• Adverse world events impacting the ability or desire of people to travel may lead to a decline in demand for cruises
• Incidents concerning our ships, guests or the cruise vacation industry as well as adverse weather conditions and other natural disasters may impact the satisfaction of our guests and crew and lead to reputational damage
• Changes in and non-compliance with laws and regulations under which we operate, such as those relating to health, environment, safety and security, data privacy and protection, anti-corruption, economic sanctions, trade protection and tax may lead to litigation, enforcement actions, fines, penalties and reputational damage
• Breaches in data security and lapses in data privacy as well as disruptions and other damages to our principal offices, information technology operations and system networks and failure to keep pace with developments in technology may adversely impact our business operations, the satisfaction of our guests and crew and lead to reputational damage
• Ability to recruit, develop and retain qualified shipboard personnel who live away from home for extended periods of time may adversely impact our business operations, guest services and satisfaction
• Increases in fuel prices and availability of fuel supply may adversely impact our scheduled itineraries and costs
• Fluctuations in foreign currency exchange rates may adversely impact our financial results
• Overcapacity and competition in the cruise and land-based vacation industry may lead to a decline in our cruise sales and pricing
• Geographic regions in which we try to expand our business may be slow to develop or ultimately not develop how we expect
• Inability to implement our shipbuilding programs and ship repairs, maintenance and refurbishments may adversely impact our business operations and the satisfaction of our guests

The ordering of the risk factors set forth above is not intended to reflect our indication of priority or likelihood.

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 document, 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.