Carnival Corp. (CCL) Tops Q4 EPS by 11c, Offers Guidance

Carnival Corp. (NYSE: CCL) reported Q4 EPS of $0.62, $0.11 better than the analyst estimate of $0.51. Revenue for the quarter came in at $4.8 billion versus the consensus estimate of $4.59 billion.

GUIDANCE:

Carnival Corp. sees FY2020 EPS of $4.30-$4.60, versus the consensus of $4.39.

The company is entering fiscal year 2020 with a record booked occupancy position. At this time, cumulative advanced bookings for the full year 2020 are slightly ahead of the prior year at prices that are slightly lower compared to 2019 on a comparable basis, which does not include the net revenue yields brand mix headwind of approximately 0.5 percent for the full year 2020.

Booking volumes at the beginning of the fourth quarter were impacted by Hurricane Dorian. During the last eight weeks, booking volumes have been running higher with prices that are in line for the full year 2020 compared to 2019 on a comparable basis.

Based on current booking trends, the company expects full year 2020 constant currency net cruise revenues to be up approximately 5.0 percent, with capacity growth of 6.6 percent, and net revenue yields in constant currency expected to be down approximately 1.5 percent compared to the prior year. Net revenue yields for the full year 2020 include a brand mix headwind of approximately 0.5 percent and an additional headwind of approximately 0.5 percent, primarily due to ship delivery delays, including today's Mardi Gras announcement. The company expects full year net cruise costs excluding fuel per ALBD in constant currency to be in line compared to the prior year, which also includes an impact of over 0.5 percent caused by ship delivery delays and an accounting difference.

As previously indicated, in 2020 the company will increase its usage of Marine Gasoil ("MGO") as a percent of total fuel consumption as a result of the International Maritime Organization ("IMO") sulfur emission regulations. MGO is currently anticipated to represent 40 percent to 45 percent of fuel consumption for full year 2020 compared to 21 percent for full year 2019. The company's usage of Heavy Fuel Oil ("HFO") is expected to be 55 percent to 50 percent of fuel consumption for full year 2020 and all other fuel types is expected to be approximately 5.0 percent.

The impact of changes in fuel mix, fuel prices and currency exchange rates are expected to increase earnings by $0.17 to $0.24 per share compared to the prior year. Full year 2020 earnings are expected to include $0.12 to $0.17 per share incremental impact from prior year events and previously announced voyage disruptions, including ship delivery delays. Based on the above factors, the company expects full year 2020 adjusted earnings per share to be in the range of $4.30 to $4.60 compared to 2019 adjusted earnings per share of $4.40.

Donald added, "Despite the negative impacts from the tail effect of the high number of unusual events in 2019, as well as a continuation of the negative headwinds facing our Continental European source markets, our brands continue to perform and we are at record booked occupancy levels for 2020 on peak capacity growth. Given the evolution of conditions in Continental Europe, and recognizing the timing of significant capacity increases we have in our European portfolio, we are taking a number of actions to adapt over time. Globally, we are also taking actions to further stimulate demand and increase our cost efficiencies in 2020 and beyond. With annual cash from operations of $5.5 billion, our balance sheet is strong as are our brands and we believe we are well positioned to return to double-digit earnings growth and elevated ROIC over time."

First Quarter 2020 Outlook

First quarter constant currency net cruise revenues are expected to be up approximately 4.0 percent, with capacity growth of 6.0 percent, and net revenue yields in constant currency expected to be down 1.0 to 2.0 percent compared to the prior year. Net cruise costs excluding fuel per ALBD in constant currency for the first quarter of 2020 are expected to be down 2.0 to 3.0 percent compared to the prior year, the majority of which is driven by lower dry-dock days during the quarter.

MGO is currently anticipated to represent 40 percent to 45 percent of fuel consumption for the first quarter 2020 compared to approximately 14 percent for the first quarter 2019. The company's usage of HFO is expected to be 55 percent to 50 percent of fuel consumption for first quarter 2020 and all other fuel types is expected to be approximately 5.0 percent.

The impact of changes in fuel mix, fuel prices and currency exchange rates are expected to increase earnings by approximately $0.01 per share compared to the prior year. Based on the above factors, the company expects first quarter 2020 adjusted earnings per share to be in the range of $0.47 to $0.51 compared to 2019 adjusted earnings per share of $0.49.

(*Consensus sees Q1 EPS of $0.40)

For earnings history and earnings-related data on Carnival Corp. (CCL) click here.

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