Carnival (CCL -3.75%) (CUK -3.72%), the leading global cruise line operator, reported its fiscal third-quarter earnings on Sept. 30. The results, which included record net income and revenue, significantly surpassed management's expectations. For the quarter, which ended Aug. 31, Carnival posted net income of $1.74 billion ($1.26 in diluted earnings per share), compared to an expected $1.58 billion. Adjusted net income stood at $1.75 billion ($1.27 in adjusted EPS), again exceeding guidance. The company's overall performance was bolstered by robust demand, strategic cost management, and record-setting metrics for several key financial areas.
| Metric | Fiscal Q3 2024 Result | Fiscal Q3 2024 Guidance | Fiscal Q3 2023 Result | % Change (YoY) |
|---|---|---|---|---|
| Net income | $1.74 billion | $1.58 billion | $1.07 billion | 62.6% |
| Adjusted net income | $1.75 billion | $1.58 billion | $1.18 billion | 48.3% |
| Revenue | $7.90 billion | -- | $6.85 billion | 15.3% |
| Adjusted EBITDA | $2.82 billion | $2.66 billion | $2.22 billion | 27.0% |
| Customer deposits | $6.82 billion | -- | $6.35 billion | 7.4% |
Source: Management's guidance from fiscal Q2 earnings report published June 25.
Overview of Carnival
Carnival operates a fleet of cruise ships under various brands, including Carnival Cruise Line, Princess Cruises, and Holland America Line. Each brand offers unique experiences and targets different customer demographics. The company focuses on providing exceptional vacation experiences with a commitment to sustainability and compliance. It's the largest player in the global cruise industry, which affords it economies of scale and strong brand recognition.
Notable Developments During the Quarter
The fiscal third quarter of 2024 was marked by several significant achievements for Carnival. Notably, it reported record revenues of $7.90 billion. Strong demand and effective pricing strategies led to an 8.7% year-over-year increase in net yield, surpassing management's guidance for an 8.0% increase.
Operating income reached $2.18 billion, up 34.6% from $1.62 billion in fiscal Q3 2023, reflecting high operational efficiency. Adjusted EBITDA hit a record $2.82 billion, exceeding the company's guidance of $2.66 billion. Such results underscore Carnival's effective cost controls and its ability to capitalize on economies of scale.
Customer deposits, a key indicator of future revenue, reached $6.82 billion, setting a new third-quarter record.
From an expense perspective, cruise costs per available lower berth day (ALBD) increased to $196.98, compared to $190.58 in Q3 2023, a 3.4% rise. Adjusted cruise costs, excluding fuel, decreased by 0.4% to $103.97 per ALBD from $104.42 in the prior year. These metrics highlight the company's efficient cost management and ability to offset higher operating expenses.
Looking Ahead
Carnival is optimistic about its financial outlook. It raised its full-year 2024 adjusted EBITDA guidance to approximately $6.0 billion, an increase from the previous estimate of $5.83 billion. Additionally, full-year net yields are now anticipated to grow by approximately 10.4%, compared to the 10.25% it previously guided for.
Investors should keep an eye on Carnival's debt management and cost-structure adjustments, specifically related to fuel prices, which can have a significant impact on its operational costs. The company's longer-range efforts to modernize its fleet and expand passenger capacity through new ship deliveries will also be critical factors for its growth. Overall, Carnival is well positioned to capitalize on the robust demand for cruises and deliver sustained financial performance.
