Carnival Corporation has announced non-GAAP net income of $1.4 billion, or $1.75 diluted EPS for the third quarter of 2015 compared to non-GAAP net income for the third quarter of 2014 of $1.2 billion, or $1.58 diluted EPS.
For the third quarter of 2015, U.S. GAAP net income, which included unrealized losses on fuel derivatives of $137 million, was $1.2 billion, or $1.56 diluted EPS down slightly from the prior year.
For the third quarter of 2014, U.S. GAAP net income, which included net unrealized gains on fuel derivatives of $15 million, was $1.2 billion, or $1.60 diluted EPS. Revenues for the third quarter of 2015 were $4.9 billion, in line with the prior year.
Carnival Corporation & plc President and Chief Executive Officer Arnold Donald noted, “Our third quarter non-GAAP performance was the strongest of any quarter on record with earnings $0.17 per share higher than the prior year despite a slight drag from the net impact of fuel prices and currency. Non-GAAP earnings for the quarter were also $0.17 higher than the mid-point of prior guidance. Net revenue yields improved 5 percent (constant currency) from the prior year benefiting from strong demand which led to higher occupancy levels, increased ticket prices and increased onboard spending. Clearly our ongoing investments in the guest experience, combined with our global marketing and public relations efforts along with our initiatives to leverage our scale are having a positive impact.”
Key metrics for the third quarter 2015 compared to the prior year were as follows:
On a constant dollar basis, net revenue yields (net revenue per available lower berth day or “ALBD”) increased 4.3 percent for 3Q 2015, better than June guidance of up 2 to 3 percent. Gross revenue yields decreased 2.1 percent in current dollars.
Net cruise costs excluding fuel per ALBD increased 1.0 percent in constant dollars, better than June guidance of up 2 to 3 percent due to the timing of certain expenses. Gross cruise costs including fuel per ALBD in current dollars decreased 9 percent.
Fuel prices declined 33 percent to $439 per metric ton for 3Q 2015 from $650 per metric ton in 3Q 2014 and were less than June guidance of $492 per metric ton.
Fuel consumption per ALBD decreased 2 percent in 3Q 2015 compared to the prior year.
Based on the strength in third quarter net revenue yields and current booking trends, the company has increased its expectations for full year 2015 net revenue yields. The company now expects revenue yields to be up approximately 4 percent compared to the prior year versus previous guidance of up 3 to 4 percent on a constant currency basis, which excludes translational and transactional currency impacts (up approximately 3 percent on a constant dollar basis). The company continues to expect full year 2015 net cruise costs excluding fuel per ALBD to be up approximately 3.5 percent compared to the prior year on a constant currency basis (up approximately 3 percent on a constant dollar basis).
Taking the above factors into consideration, the company has increased its full year 2015 non-GAAP diluted earnings per share guidance to be in the range of $2.56 to $2.60, better than both the June guidance range of $2.35 to $2.50 and 2014 non-GAAP diluted earnings of $1.93 per share.
Donald stated, “In 2015, we are on track to achieve a nearly 35 percent earnings improvement and we are accelerating progress toward achieving double digit return on invested capital in the next three to four years. Our improved performance has driven even stronger operating cash, which is expected to exceed $4 billion this year. We remain committed to further enhancing shareholder returns as demonstrated by our recent 20 percent increase in quarterly dividends.”
During the last quarter, fleetwide booking volumes for the first half of 2016 were running nearly 20 percent higher than the prior year relative to a capacity increase of less than 3 percent, at lower constant dollar prices. At this time, cumulative advance bookings for the first half of 2016 are well ahead of last year at lower constant dollar prices.
Donald added, “Looking forward to 2016, we have driven a significant lengthening of the booking curve and have less inventory remaining for the first half of 2016 than at this time last year, which bodes well for continued year-over-year revenue yield improvement. Although we already have a solid base of business for next year, we are working hard to maintain the momentum through our ongoing initiatives to create additional demand.”
Fourth Quarter 2015 Outlook
Fourth quarter constant currency net revenue yields are expected to be up approximately 3 percent compared to the prior year (up approximately 1 percent in constant dollars). Net cruise costs excluding fuel per ALBD for the fourth quarter are expected to be higher by approximately 3 percent on a constant currency basis compared to the prior year (up approximately 2 percent in constant dollars).
Based on the above factors, the company expects non-GAAP diluted earnings for the fourth quarter 2015 to be in the range of $0.36 to $0.40 per share versus 2014 non-GAAP earnings of $0.27 per share.