Carnival Corporation (CCL) Extended Graph Analysis
September 21st, 2020 Posted by criseldar Extended Analysis No Comment yetCompany 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
- Carnival Cruise Line is the most popular cruise in North America and operates 27 ships.
- Princess is the world’s third-largest cruise line as per guest capacity.
- Holland America Line has a premium fleet of 15 spacious, elegant mid-sized ships.
- Cunard is the British essence of cleansing for travelers with White Star Service, fine dining, and a worldly-wise adventure.
- Seaboard is an ultra-luxury cruising vacation
- Aida Cruises is a fast-growing and most famous tourism business in Germany.
- Costa Cruises provides Italian style in cuisine.
- P&O Cruises (Australia) provide a classic holiday experience.
- 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.morningstar.com/stocks/xnys/ccl/quote
Researched and written by Criselda