Carnival Cruise Lines, Having a Blast

Carnival Cruise Lines ($CCL) is one of our favorite businesses to follow because it reports so many fascinating non-GAAP disclosures. Today Carnival filed a gangbusters earnings report for its quarter ending Aug. 31 — like, stupendous results on just about every financial performance metric you could imagine. 

So let’s chart a course for analysis adventure, shall we? 

First are the primary financial disclosures on the income statement. Revenue was up 3.25 percent from the year-earlier period, while operating expenses were up only 1.91 percent, largely thanks to a steep decline in fuel expenses. That ultimately led to pretax income up 6.54 percent, and net income up 6.74 percent. See Figure 1, below.

OK, but that’s all just the usual stuff you can pull from anywhere. Calcbench subscribers can also pull a trove of non-GAAP data about Carnival too, including:

• Passenger cruise days (PCDs), which is the number of cruise passengers on a voyage multiplied by the number of revenue-producing ship operating days for that voyage.

• Available lower berth days (ALBDs), which measures the potential capacity of a ship. It’s somewhat analogous to available seat miles in the airline industry, and revenue per ALBD is akin to revenue per available room (“revpar”) in the hotel business.

• Occupancy rate, which can often be above 100 percent on cruise lines when more than two people share a berth (say, a family with children sleeping on a cot).

• Passengers carried, which should be self-explanatory.

Carnival reports all those non-GAAP metrics and more; and Calcbench tracks all those non-GAAP metrics too. This allows for some fun calculations when comparing GAAP and non-GAAP disclosures. 

For example, Carnival reports two types of revenue from customers: ticket sales, and onboard spending. So we compared onboard spending with passengers carried, to derive average onboard spending per passenger. See Figure 2, below.

Carnival’s fiscal Q3 is June through August, so maybe passengers double up on spa treatments or arcade games to beat the summer heat. But as the trend-line in red shows, passengers haven’t been pinching pennies yet for onboard expenses. Consumer spending on the high seas is alive and well.

You can also track cruise costs per ALBD, which is a non-GAAP metric Carnival reports directly; no complex Excel formulas required. See Figure 3, below.

But the figure above does include a number of highly volatile factors — above all, fuel. So Carnival also reports “adjusted cruise costs per ALDB excluding fuel” to give analysts a better sense of recurring costs. See Figure 4, below.

   

These costs are increasing somewhat more sharply than the unadjusted costs from Figure 3, but amid the brisk revenue growth, nothing is amiss in the overall picture. Plus we can see that fuel is a highly volatile part of the overall cruise cost picture, given how jagged the quarter-to-quarter fluctuations are in Figure 4 compared to Figure 3.

Oddly enough, Carnival’s share price is down today after its stellar earnings report. More specifically, the share price popped at the open, as everyone digested the excellent report; then tumbled as soon as management gave its earnings call at 10 a.m. ET. See Figure 5, below.

We don’t know why that happened, but we do know that Carnival offers reams of data to help analysts understand the company’s performance. All of it is there for the taking — especially with easy data extraction and analysis tools like Calcbench.