Carnival Corp Ltd. Q3 FY2024 earnings call

• Third quarter was phenomenal with record revenues, EBITDA, and net income. High-margin same-ship yield growth across brands drove improvements.
• 2025 has historical highs in occupancy and price, with all core deployments at higher prices than prior year. 2026 has record booking volumes in the last three months.
• New destinations: Celebration Key in the Bahamas opens in July 2025, and Half Moon Cay will have a two-berth pier expanded in 2026.
• Marketing efforts increased with year-to-date web visits up over 40% vs 2019, paid search up over 60%, natural search up over 70%. New-to-cruise and repeat guests up double-digit percentages.
• Balance sheet: Focus on investment grade, limited order book through 2028, with debt prepayments and free cash flow contributing to leverage improvement.

Third quarter revenues hit an all-time high of nearly $8 billion, a $1 billion increase from last year's record levels. Record EBITDA exceeded $2.8 billion, up $600 million over last year and $160 million over guidance. Net income was over 60% more than the prior year. Revenues for the full year 2024 are 99% booked, and EBITDA is expected to reach a record $6 billion. ROIC is expected to end the year at 10.5%.

• Fourth quarter yield guidance is 5% growth over prior year. Full year 2024 net income guidance revised to $1.76 billion, a $210 million improvement over June guidance.
• 2025 capacity increase is 7%, Celebration Key's operating expenses expected to impact cost comparison by about 0.5 point, and 688 dry dock days in 2025 (up 17% vs 2024) expected to impact cost comparison by about 0.75.
• Expected better than a two-turn improvement in net debt-to-EBITDA leverage in 2024, approaching 4.5 times, moving towards investment-grade metrics.

• Potential impact of the Middle East situation, but company's business is not majorly contingent on the region as it's not a major source market and ships are mobile with strong source markets elsewhere.

Q: Great. Thanks. And congrats on another really nice quarter.

A: Thanks, Matt.

Q: So Josh, on the continued momentum, maybe could you elaborate on the stronger base of business for 2025 and the record start to 2026 that you cited?

A: The book position is higher for both North America and European brands. We're about two-thirds booked for the next 12 months. For 2026, we just achieved record booking volumes in the last three months.

Q: On the cost side, EBITDA flow-through has been stronger than expected. Can you talk about some of the cost saves, margin opportunities you're finding?

A: It's hundreds of small items across the board, like crew travel savings, port savings, sourcing savings, and better leveraging scale across brands.

Q: Hi guys. Good morning everyone. My first question, you talked about dry docks increasing next year. Can you give us a little more possible granularity on dry dock increases or decreases for perhaps some quarters by quarter for next year modeling purposes?

A: I don't have all that detailed handy, but you can call Beth for that.

Q: Good morning. I'm curious if you have any update on, I guess, the Chinese consumer?

A: It wasn't very meaningful for us prior to the pandemic. Japan, Taiwan and other regions are going well.

Q: Hi, guys. Thanks for taking my question. On the demand question, as we think about global travel and tourism, how does cruise demand compare?

A: We are a remarkable value to land-based alternatives. We're driving new-to-cruise with marketing and brand efforts.

Q: Good morning guys. Congratulations on a great quarter. And I'll just delve into the few quick questions that I have. Occupancy is still not fully caught up relative to fiscal 2019. Isn't that by itself already a yield opportunity?

A: Yes, there's opportunity to push occupancy a bit more, but it's not the biggest driver of revenue improvement going forward.

Q: Good morning. I'm curious if you have any update on, I guess, the Chinese consumer?

A: It wasn't very meaningful for us prior to the pandemic. Japan, Taiwan and other regions are going well.

Q: Hi, guys. Thanks for taking my question. So Josh, I'm going to ask the demand question here in a different way. As we think about global travel and tourism and think about different segments, if you will, within the ecosystem, so lodging, airlines, hearing is sort of a different dynamic here as we think about demand, certainly within lodging, lower to middle income consumer, some concerns around price sensitivity little bit of a mixed bag in airlines. In Cruise Lines, this is unique here with what feels like this sort of persistent demand and just kind of ongoing momentum, if you if you will. Now I was wondering could rank order or think about the moving pieces as to the why.

A: It's not pent-up demand anymore. It's a combination of better advertising, trade efforts, and better usability of websites.

Q: Hi, guys. Thanks for squeezing me in. I just wanted to come back to new-to-cruise, Josh. I think you said that was up 17% this quarter. Last quarter, that was up 10%. So it's a pretty big acceleration per brand that's as big as you guys are. Can you touch on -- what drove that?

A: It's a combination of better advertising, trade doing a great job, better usability of websites, and examples like Alaska being off the charts.