Company Profile

Carnival Corp is the largest leisure company in the world with a combined fleet of over 100 vessels. A British-American corporation headquartered in Miami, Florida, USA. The company was founded by Ted Arison and incorporated in 1972 in Panama and Carnival Plc was incorporated in England and Wales in 2000. Carnival Corporation and Carnival PLC operate in a dual-listed company (DLC) under the New York Stock Exchange (NYSE) and London Stock Exchange (LSE) under the stock symbol CCL. In 2003 it became Carnival Corporation plc Further, in 2013, the company had established its headquarter in Asia located in Singapore and followed by headquartersCounsel in China.

CCL Brands

1. Carnival Cruise Line is the most popular cruise in North America and operates 27 ships.
2. Princess is the world’s third-largest cruise line as per guest capacity.
3. Holland America Line has a premium fleet of 15 spacious, elegant mid-sized ships.
4. Cunard is the British essence of cleansing for travelers with White Star Service, fine dining, and a worldly-wise adventure.
5. Seaboard is an ultra-luxury cruising vacation
6. Aida Cruises is a fast-growing and most famous tourism business in Germany.
7. Costa Cruises provides Italian style in cuisine.
8. P&O Cruises (Australia) provide a classic holiday experience.
9. P&O Cruises (UK) has a fleet of seven ships with its new ship Britannia.

Source: Carnival Corp website

Carnival Corporation (CCL) Extended Graph Analysis

 

2. CCL CASH FLOW

	2015	2016	2017	2018	2019	2020
Net cash flow provided by operating activitIes	4,545,000,000	5,134,000,000	5,322,000,000	5,549,000,000	5,475,000,000	502,000,000
Net cash used for investing activities	-2,478,000,000	-3,323,000,000	-3,089,000,000	-3,502,000,000	-5,277,000,000	-3,615,000,000
Net cash provided by (used for) financing activities	-942,000,000	2,591,000,000	-2,452,000,000	-1,460,000,000	-655,000,000	8,796,000,000
Capital expenditure	-2,294,000,000	-3,062,000,000	-2,944,000,000	-3,749,000,000	-5,429,000,000	-4,076,000,000
Free cash flow	2,251,000,000	2,072,000,000	2,378,000,000	1,800,000,000	46,000,000	-3,574,000,000
Working Capital	-4,505,000,000	-5,373,000,000	-7,204,000,000	-6,979,000,000	-7,068,000,000	-3,636,000,000

Facts:

• Cash provided by operating activities was $502 million in 2020 trailing twelve months.
• Cash used in investing activities was -$3.6 billion in the trailing twelve months.
• Net cash provided by (used for ) financing activities was $8.796 billion in the trailing twelve months.
• Capital expenditures were -$4.1 billion in the trailing twelve months.
• Free Cash Flow was -$3.574 billion in the trailing twelve months.
• Working capital was -$3.636 billion in the trailing twelve months.

Explanation

• Cash provided by operating activities has suddenly dropped 91 percent from 2019 to the trailing twelve months due to the Covid-19 pandemic.
• Cash used in investing activities was an investment in property, plant, and equipment.
• Cash provided by (used for) financing activities were debt issued and repayment, dividends payment, and common stock repurchased.
• Capital expenditures were purchased of property, plant, and equipment.
• Free cash flow dropped 97 and 7870 percent in 2019 and 2020 respectively.
• Working capital was negative in the last five years due to current liabilities being higher than the current assets.

Interpretation

The cash flows of CCL show that the company is not liquid because free cash flow and the working capital were unfavorable due to higher liabilities than current assets. Although the company has managed to generate positive cash from operations in the last five years, the company suffered a downturn in 2020.

 

2. CCL BALANCE SHEET

	2015	2016	2017	2018	2019
Total cash	1,395,000,000	603,000,000	395,000,000	982,000,000	518,000,000
Current Assets	2,451,000,000	1,689,000,000	1,596,000,000	2,225,000,000	2,059,000,000
Net property, plant and equipment	31,888,000,000	32,429,000,000	34,430,000,000	35,336,000,000	38,131,000,000
Total non-current assets	36,786,000,000	37,247,000,000	39,182,000,000	40,175,000,000	43,000,000,000
Total assets	39,237,000,000	38,936,000,000	40,778,000,000	42,400,000,000	45,059,000,000
Current liabilities	6,956,000,000	7,072,000,000	8,800,000,000	9,204,000,000	9,127,000,000
Non-current liabilities	8,510,000,000	9,267,000,000	7,762,000,000	8,754,000,000	10,566,000,000
Total liabilities	15,466,000,000	16,339,000,000	16,562,000,000	17,958,000,000	19,693,000,000
Retained earnings	20,060,000,000	21,843,000,000	23,292,000,000	25,066,000,000	26,653,000,000
Stockholders equity	23,771,000,000	22,597,000,000	24,216,000,000	24,443,000,000	25,365,000,000

Facts:

• The total cash was $518 million in 2019.
• Current assets were $2 billion in 2019.
• Net property, plant, and equipment were $38 billion in 2019.
• Total non-current assets were $43 billion in 2019.
• Total assets were $45 billion in 2019.
• Current liabilities were $9 billion in 2019.
• Non-current liabilities were $10.6 billion in 2019.
• Total liabilities were $19.7 billion in 2019.
• Retained earnings were $26.7 billion in 2019.
• Stockholders’ equity was $25.4 billion in 2019.

Explanation

• Total cash represents 25 percent of current assets.
• Current assets represent 5 percent of total assets.
• Net property, plant, and equipment represent 85 percent of total assets.
• Total non-current assets represent 95 percent of the total assets.
• Total assets grew 15 percent in five years.
• Current liabilities represent 46 percent of total liabilities.
• Non-current liabilities represent 54 percent of total liabilities.
• Total liabilities represent 44 percent of the total liabilities and stockholders’ equity.
• Retained earnings were 108 percent of total stockholders’ equity.
• Stockholders’ equity represents 56 percent of total liabilities and stockholders’ equity.

Interpretation

The balance sheet of the company was stable although the debt was higher than that of the current assets. The company may have a hard time meeting its current obligations in due time. The shareholders have a little higher stake in the company than the creditors.

 

3. CCL INCOME AND MARKET

	2015	2016	2017	2018	2019	2020
Revenue	15,714,000,000	16,389,000,000	17,510,000,000	18,881,000,000	20,825,000,000	16,844,000,000
EBIT	2,574,000,000	3,071,000,000	2,898,000,000	3,325,000,000	3,276,000,000	-419,000,000
Net Income	1,757,000,000	2,779,000,000	2,606,000,000	3,152,000,000	2,990,000,000	-2,952,000,000
EBITDA	3,642,000,000	4,789,000,000	4,710,000,000	5,418,000,000	5,426,000,000	-306,000,000
Market Capitalization	42,059,000,000	37,796,000,000	47,654,000,000	34,313,000,000	34,768,000,000	14,451,000,000
Intrinsic Value	72,052,000,000	67,935,000,000	78,446,000,000	58,760,000,000	52,913,000,000	74,805,000,000

Facts:

• Revenue was $16.8 billion in the trailing twelve months.
• EBIT was -$419 million in the trailing twelve months.
• Net income was -$3.0 billion in the trailing twelve months.
• EBITDA was -$306 million in the trailing twelve months.
• Market capitalization was $14.451 billion in the trailing twelve months.
• The intrinsic value was $74.80 twelve months.

Explanation

• Revenue grew 7 percent in five years.
• EBIT represents -2 percent of the revenue.
• Net income was -18 percent of the revenue.
• Net income fell nearly 200 percent from 2019 to the trailing twelve months.
• EBITDA was a negative 2 percent of the revenue.
• Market capitalization declined 66 percent in five years.
• Intrinsic value increased by 4 percent in five years.
• The intrinsic value was higher by over 400 percent against market capitalization.

Interpretation

The income statement of the company was not impressive in 2019 and 2020 due to a decreased in revenue and net earnings. The company’s earnings were impacted by the issue of the Covid-19 pandemic.

 

4. CCL FINANCIAL RATIOS

	2015	2016	2017	2018	2019	2020
Asset turnover (average)	0.40	0.42	0.44	0.45	0.48	0.36
Return on assets %	4.46	7.11	6.54	7.58	6.84	-6.26
Return on equity %	7.31	11.99	11.13	12.96	12.01	-13.14
Return on invested capital %	5.95	9.26	8.53	9.77	8.85	-6.95
Debt/Equity	0.31	0.37	0.29	0.32	0.38	0.78

Facts:

• Asset turnover was averaging 0.36 ratio in the trailing twelve months.
• Return on assets was -6.26 percent in the trailing twelve months.
• Return on equity was -13.14 percent in the trailing twelve months.
• The return on invested capital was -6.95 percent in the trailing twelve months.
• The debt/Equity ratio was 0.78 in the trailing twelve months.

Explanation

• Asset turnover indicates that for every dollar invested in assets, the company generated 33 cents of sales.
• Return on assets indicates that the company generated a loss in net income of 6.26 cents for every dollar invested in assets. 
• Return on equity indicates that the company generated a net loss in net income of 13.14 cents per share in common equity for every dollar invested.
• Return on invested capital indicates that the company generated a loss of 6.95 cents for every dollar invested in its capital base.
• Debt/Equity indicates that the company has $0.78 debt for every dollar invested in equity. In other terms, the company’s assets are funded by nearly 80 percent of the creditor’s fund.

Interpretation

The financial ratios were not impressive because the company had incurred losses in the latter year. Hence, the company has tough financial situations in 2019 and 2020 due to the global issue of the COVID-19 crisis. 

 

5. CCL KEY EXECUTIVE COMPENSATION

	2015	2016	2017	2018	2019
Key Executive Compensation
Salary	3,309,000	3,302,000	4,588,480	4,648,698	4,588,480
Bonus	0	0	0	0	0
Annual Other Income	0	0	0	0	0
Restricted Stock Award	7,493,707	9,816,104	14,960,611	15,103,315	15,951,924
Securities Options	0	0	0	0	0
LTIP Payout	0	0	0	0	0
Non-Equity Compensation	8,988,800	8,198,345	9,502,592	10,524,731	4,377,670
Other Compensation	793,310	796,020	1,020,382	991,812	1,407,836
Total	20,584,817	22,112,469	30,072,065	31,268,556	26,325,910
Arnold W. Donald/ President and CEO
Salary	1,000,000	1,000,000	1,500,000	1,500,000	1,500,000
Bonus	0	0	0	0	0
Annual Other Income	0	0	0	0	0
Restricted Stock Award	3,527,949	4,598,986	6,821,713	7,028,094	7,111,120
Securities Options	0	0	0	0	0
LTIP Payout	0	0	0	0	0
Non-Equity Compensation	4,618,950	4,041,250	4,377,000	4,689,000	2,250,000
Other Compensation	227,009	241,584	347,362	289,790	288,394
Total	9,373,908	9,861,820	13,046,075	13,506,884	11,149,514
Michael Thamm/ CEO, Costa Group and Carnival Asia
Salary	784,000	777,000	963,480	1,023,698	963,480
Bonus	0	0	0	0	0
Annual Other Income	0	0	0	0	0
Restricted Stock Award	1,145,869	1,479,178	2,306,767	2,415,232	3,284,809
Securities Options	0	0	0	0	0
LTIP Payout	0	0	0	0	0
Non-Equity Compensation	1,204,000	1,053,945	912,442	1,760,981	474,970
Other Compensation	259,932	214,217	117,534	83,666	476,915
Total	3,393,801	3,524,340	4,300,223	5,283,577	5,200,174
Stern Kruse/ Group CEO of Holland America Group and Carnival UK
Salary	825,000	825,000	925,000	925,000	925,000
Bonus	0	0	0	0	0
Annual Other Income	0	0	0	0	0
Restricted Stock Award	1,586,417	2,096,489	2,713,268	2,704,688	2,559,153
Securities Options	0	0	0	0	0
LTIP Payout	0	0	0	0	0
Non-Equity Compensation	1,510,000	1,654,400	2,097,600	1,808,400	565,200
Other Compensation	80,308	83,270	95,117	78,305	84,039
Total	4,001,725	4,659,159	5,830,985	5,516,393	4,133,392
David Bernstein/ CFO and Chief Accounting Officer
Salary	700,000	700,000	750,000	750,000	750,000
Bonus	0	0	0	0	0
Annual Other Income	0	0	0	0	0
Restricted Stock Award	1,233,472	1,641,451	2,094,331	1,959,205	1,979,949
Securities Options	0	0	0	0	0
LTIP Payout	0	0	0	0	0
Non-Equity Compensation	1,655,850	1,448,750	1,459,000	1,563,000	750,000
Other Compensation	226,061	256,949	221,746	283,589	292,472
Total	3,815,383	4,047,150	4,525,077	4,555,794	3,772,421
Arnaldo Perez/ General counsel and Secretary
Salary			450,000	450,000	450,000
Bonus			0	0	0
Annual Other Income			0	0	0
Restricted Stock Award			1,024,532	996,096	1,016,893
Securities Options			0	0	0
LTIP Payout			0	0	0
Non-Equity Compensation			656,550	703,350	337,500
Other Compensation			238,623	286,462	266,016
Total			2,369,705	2,405,908	2,070,409

Facts:

• Total key executive compensation in 2015 was $20,584,817.
• Total key executive compensation in 2016 was $22,112,469.
• Executive compensation in 2017 was $30,072,065.
• Executive compensation in 2018 was $31,268,556.
• The total executive compensation in 2019 was $26,325,000.

Explanation

• The total key executive compensation was nearly one percent of the total net income loss.
• The total compensation of Arnold W. Donald/ President and CEO represents 42 percent of the total compensation in 2019.
• The total compensation of Michael Thamm/ CEO, Costa Group, and Carnival Asia represent 20 percent of the total compensation.
• The total compensation of Stern Kruse/ Group CEO of Holland America Group and Carnival UK represents 16 percent of the total compensation.
• The total compensation of David Bernstein/ CFO and Chief Accounting Officer represents 14 percent of the total compensation.
• Compensation of Arnaldo Perez/ General Counsel and Secretary represents 8 percent of the total compensation.

Interpretation

Total executive compensation includes salary, restricted stock award, securities options, non-equity compensation, and other compensation.

 

6. CCL LOBBYING AND CONTRIBUTIONS

PERIOD	AMOUNT
1990	$47,000
1992	$66,250
1994	$68,450
1996	$144,300
1998	$184,800
2000	$511,550
2002	$291,099
2004	$381,450
2006	$255,399
2008	$349,155
2010	$492,310
2011	$1,164,000
2012	$404,131
2013	$958,000
2014	$957,000
2015	$1,058,710
2016	$1,233,491
2017	$480,000
2018	$480,000
2019	$790,000
2020	$450,000

Facts:

The company is incurring lobbying and contributions from 1990 to the current date to politicians.

Explanation

A note from OpenSecret.org Center for Responsive Politics quoted below:

NOTE: Figures on this page are calculations by the Center for Responsive Politics based on data from the Senate Office of Public Records. Data for the most recent year was downloaded on July 23, 2020, and includes spending from January 1 – June 30. Prior years include spending from January through December.

Interpretation

A special interest’s lobbying activity may go up or down over time, depending on how much attention the federal government is giving their issues. Particularly active clients often retain multiple lobbying firms, each with a team of lobbyists, to press their case for them. Source: OpenSecret.org / Center for Responsive Politics

 

7. CCL FINANCIAL STRENGTH

DATA

Working Capital	-$3,636,000,000
Total Assets	$45,059,000,000
Sales	$16,844,000,000
EBIT	-$419,000,000
Market value of equity	$15,679,000,000
Book value of total liabilities	$19,693,000,000
Retained earnings	$26,653,000,000

CALCULATIONS

	Ratio	Score	Result
A – Working Capital / Total Assets	-0.08	1.20	-0.10
B – Retained Earnings / Total Assets	0.59	1.40	0.83
C – EBIT / Total Assets	-0.01	3.30	-0.03
D – Market Value of Equity / Book Value of Total Liabilities	0.80	0.60	0.48
E – Sales / Total Assets	0.37	1.00	0.37
Z-Score			1.55

Formula: Z-Score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E

 

Explanation:

Z-Score is a statistical measurement that compares data points from different sets of data to find correlations. This measurement by Dr. Edward Altman is a significant measure in determining the financial strength of the company because it relies on different weighted financial liquidity and profitability metrics to come up with the overall score. This measure indicates the probability of bankruptcy.

Interpretation

The Z-Score of Carnival Corporation was calculated at a 1.55 score. A score of 0 – 1.80 indicates that the company will declare bankruptcy in the future, according to Dr. Altman’s grading scale. The main factors of this statistical measurement are profitability, liquidity, leverage, and efficiency. The financial health of CCL is not satisfying. The company has poor cash flow and might not be able to pay its liabilities and as a result, will have to declare bankruptcy. 

OVERVIEW

Carnival Corporation’s financial records including its financial strength in 2020 suffered a downturn in its earnings because of the impact of the COVID-19 crisis. However, the company has adopted measures and strategies to augment its earnings. In this kind of global scenario, it needs to make big moves quickly, studies, and efforts to make an intelligent innovation that can save the company through productivity gains. The company is facing certain uncertainties as to when the situation will be back to its normal business operations. 

CITATION

https://www.carnivalcorp.com/corporate-information

https://www.sec.gov/cgi-bin/browse-edgar?company=CARNIVAL+CORP&match=&filenum=&State=&Country=&SIC=&myowner=exclude&action=getcompany

https://www.morningstar.com/stocks/xnys/ccl/quote

Researched and written by Criselda