Carnival reports 27.3% CAPEX growth in 2018 and 7.8% Revenue growth
20 Dec 2018 • About Carnival (
$CCL) • By InTwits
Carnival reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- Carnival has high CAPEX intensity: 5 year average CAPEX/Revenue was 17.2%. At the same time it's a lot of higher than industry average of 75.1%.
- CAPEX is quite volatile: £102m in 2018, £75m in 2017, £97m in 2016, £29m in 2015, £55m in 2014
- The company has business model with low profitability: ROIC is 9.8%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.7x while industry average is 1.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Carnival's Revenue increased on 7.8%. During the last 5 years Revenue growth bottomed in FY2015 at -1.1% and was accelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.9 pp from 29.9% to 32.8% in 2018.
Gross Margin increased slightly on 1.2 pp from 40.0% to 41.3% in FY2018. SG&A as a % of Revenue showed almost no change in FY2018.
Net Income margin increased slightly on 1.8 pp from 14.9% to 16.7% in FY2018.
Investments (CAPEX, working capital and M&A)
In FY2018 Carnival had CAPEX/Revenue of 19.9%. CAPEX/Revenue increased on 5.3 pp from 14.6% in FY2015 to 19.9% in FY2018. It's average level of CAPEX/Revenue for the last three years was 18.5%. Carnival invested a large share of EBITDA (70.2%) to CAPEX.
Return on investment
The company operates at good ROE (13.0%) while ROIC is low (9.8%). ROIC increased slightly on 1.2 pp from 8.6% to 9.8% in FY2018. ROE increased slightly on 1.8 pp from 11.1% to 13.0% in FY2018. ROE followed a growing trend at 2.0 pp per annum in the last 5 years.
Leverage (Debt)
Debt level is 1.7x Net Debt / EBITDA and 1.9x Debt / EBITDA. Net Debt / EBITDA dropped on 0.1x from 1.9x to 1.7x in FY2018. Debt surged on 12.3% while cash jumped on 149%.
Carnival has short term refinancing risk: cash is only 40.5% of short term debt.
Valuation and dividends
Carnival's trades at EV/EBITDA 2.9x and P/E 1.9x.
Management team
The company's CEO is Arnold W Donald. Arnold W Donald is a founder and has 6 years tenure with the company. The company's CFO is David Bernstein. David Bernstein has 13 years tenure at the company.
Financial and operational results
FY ended 30 Nov 2018
Carnival ($CCL) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 15,884 | 15,714 | 16,389 | 17,510 | 18,881 | 7.8% |
| Gross Profit | 5,463 | 6,267 | 7,006 | 7,009 | 7,792 | 11.2% |
| SG&A | 2,054 | 2,067 | 2,197 | 2,265 | 2,450 | 8.2% |
| EBITDA | 3,409 | 4,200 | 4,809 | 4,655 | 5,342 | 14.8% |
| Net Income | 1,216 | 1,757 | 2,779 | 2,606 | 3,152 | 21.0% |
Balance Sheet
|
|---|
| Cash | 331 | 1,395 | 603 | 395 | 982 | 148.6% |
| Short Term Debt | 1,725 | 1,374 | 1,097 | 2,202 | 2,426 | 10.2% |
| Long Term Debt | 7,363 | 7,413 | 8,357 | 6,993 | 7,897 | 12.9% |
Cash flow
|
|---|
| Capex | 2,583 | 2,294 | 3,062 | 2,944 | 3,749 | 27.3% |
Ratios
|
|---|
| Revenue growth | 2.8% | -1.1% | 4.3% | 6.8% | 7.8% | |
| EBITDA growth | 16.0% | 23.2% | 14.5% | -3.2% | 14.8% | |
|
|---|
| Gross Margin | 34.4% | 39.9% | 42.7% | 40.0% | 41.3% | 1.2% |
| EBITDA Margin | 21.5% | 26.7% | 29.3% | 26.6% | 28.3% | 1.7% |
| SG&A, % of revenue | 12.9% | 13.2% | 13.4% | 12.9% | 13.0% | 0.0% |
| Net Income Margin | 7.7% | 11.2% | 17.0% | 14.9% | 16.7% | 1.8% |
| CAPEX, % of revenue | 16.3% | 14.6% | 18.7% | 16.8% | 19.9% | 3.0% |
|
|---|
| ROIC | 5.3% | 7.8% | 9.5% | 8.6% | 9.8% | 1.2% |
| ROE | 5.0% | 7.3% | 12.0% | 11.1% | 13.0% | 1.8% |
| Net Debt/EBITDA | 2.6x | 1.8x | 1.8x | 1.9x | 1.7x | -0.1x |
Peers in Travel & Leisure
Below we provide Carnival benchmarking against other companies in Travel & Leisure industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Nektan ($NKTN) | 75.8% | -71.7% | 995.3% | 129.1% | |
| Celtic ($CCP) | | -21.1% | 1.8% | 74.3% | 12.1% |
| Webis Holdings ($WEB) | | 29.7% | 45.3% | 65.8% | 24.0% |
| Easyhotel ($EZH) | | 56.4% | 8.7% | 39.7% | 33.7% |
| Eclectic Bar Grp ($BAR) | | -1.9% | 1.4% | 38.6% | 1.2% |
| |
|---|
| Median (26 companies) | 9.3% | 7.6% | 8.7% | 7.9% | 7.6% |
|---|
| Carnival ($CCL) | | -1.1% | 4.3% | 6.8% | 7.8% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Intercontinental Hotels Group ($IHG) | 60.1% | 64.5% | 86.0% | 86.0% | |
| Eclectic Bar Grp ($BAR) | 79.0% | 79.4% | 80.7% | 82.3% | 82.9% |
| Paddy Power ($PAP) | 81.0% | 74.7% | 76.9% | 76.8% | |
| Action Hotels ($AHCG) | 73.3% | 74.0% | 70.7% | 69.8% | |
| Nektan ($NKTN) | 57.6% | 42.6% | 67.9% | 64.1% | |
| |
|---|
| Median (17 companies) | 56.6% | 41.5% | 47.3% | 36.2% | 24.8% |
|---|
| Carnival ($CCL) | 34.4% | 39.9% | 42.7% | 40.0% | 41.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Irish Continental Group ($ICGC) | 27.3% | 23.6% | 25.7% | 32.8% | |
| Ryanair Hldgs ($RYA) | 20.1% | 25.1% | 28.9% | 30.6% | 31.2% |
| Dalata Hotel Group ($DAL) | 7.7% | 20.8% | 24.5% | 29.5% | |
| Heavitree Brewery ($HVT) | 22.7% | 23.7% | 25.0% | 27.8% | |
| Paddy Power ($PAP) | 29.8% | 20.4% | 17.0% | 26.7% | |
| |
|---|
| Median (26 companies) | 12.3% | 12.5% | 15.9% | 16.7% | 15.7% |
|---|
| Carnival ($CCL) | 21.5% | 26.7% | 29.3% | 26.6% | 28.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Easyhotel ($EZH) | 209.8% | 46.8% | 153.2% | 269.8% | 412.1% |
| Action Hotels ($AHCG) | 90.0% | 172.4% | 120.1% | 139.5% | |
| Dalata Hotel Group ($DAL) | 26.7% | 12.7% | 37.4% | 39.0% | |
| Everyman Media Group ($EMAN) | 25.9% | 56.4% | 64.2% | 38.4% | |
| Richoux Group ($RIC) | 14.3% | 10.0% | 17.0% | 34.3% | |
| |
|---|
| Median (26 companies) | 5.1% | 5.7% | 8.1% | 5.7% | 8.7% |
|---|
| Carnival ($CCL) | 16.3% | 14.6% | 18.7% | 16.8% | 19.9% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Intercontinental Hotels Group ($IHG) | 56.3% | 96.6% | 51.2% | 92.2% | |
| Irish Continental Group ($ICGC) | 40.0% | 33.9% | 30.1% | 35.4% | |
| Air Partner ($AIP) | 21.2% | 20.0% | 20.4% | 24.6% | 34.6% |
| Ryanair Hldgs ($RYA) | 9.5% | 13.3% | 17.2% | 17.7% | 18.4% |
| Hanatour Service Inc ($TOUR) | 19.6% | 19.4% | 8.6% | 15.7% | |
| |
|---|
| Median (27 companies) | 4.9% | 5.9% | 5.3% | 6.5% | 8.1% |
|---|
| Carnival ($CCL) | 5.3% | 7.8% | 9.5% | 8.6% | 9.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Action Hotels ($AHCG) | 9.6x | 12.3x | 14.4x | 23.9x | |
| Marston'S ($MARS) | 14.0x | 8.2x | 6.2x | 6.9x | 8.7x |
| Rotala ($ROL) | 2.8x | 3.6x | 3.6x | 3.9x | |
| Heavitree Brewery ($HVT) | 2.9x | 4.6x | 4.1x | 3.7x | |
| Fuller Smith & Turner ($BA80) | 2.7x | 2.8x | 3.2x | 3.1x | 3.0x |
| |
|---|
| Median (23 companies) | 1.1x | 0.8x | 2.3x | 2.0x | 1.6x |
|---|
| Carnival ($CCL) | 2.6x | 1.8x | 1.8x | 1.9x | 1.7x |
