Carnival Corp Ltd. Q4 FY2024 earnings call

• Josh thanked the team for a strong year, highlighting 7 consecutive quarters of record revenues and favorable forward indicators like record bookings and deposits. Full-year 2024 net income was up, with yields, per diems, EBITDA, and operating income all at new highs. 2025 is shaping up as a banner year with strong booking trends, North American and European segments at record advanced booking windows. New ships were welcomed in 2024. Marketing campaigns launched across brands, and a destination strategy with Celebration Key and Relax Away Half Moon Key was discussed. Sustainability progress included a 17.5% reduction in GHG emissions intensity vs 2019, on track for 20% by 2026. Debt was paid down over $8 billion since 2023 peak.
• David discussed 2024 Q4 results: net income exceeded guidance, with revenue favorability, cruise costs without fuel better than guidance, and favorable interest expense. Refinancing and deleveraging efforts saw over $5 billion in debt payments in 2024, ending 2024 with $27.5 billion in debt. 2025 guidance included net income over $2.3 billion, yield improvement, cruise costs without fuel per ALBD up ~3.7%, impact from Celebration Key and dry dock days, and fuel/currency impacts.

Fourth quarter net income improved by over $250 million year-over-year, with full-year 2024 revenues hitting an all-time high of $25 billion and cash from operations of almost $6 billion. Yields in 2024 increased by 11%, with prices up in all major brands by mid-single to mid-teen percentages. Onboard spending accelerated sequentially throughout the year. Cruise costs without fuel per available lower berth date (ALBD) were 100 basis points better than original guidance for the year. Revenue contribution was broad-based across major brands and trades.

• 2025 is expected to be a banner year with yield growth exceeding 4% and net income over $2.3 billion, an improvement of more than $400 million vs 2024. Cruise costs without fuel per ALBD are forecasted to be up approximately 3.7%. The launch of Celebration Key in July 2025 is anticipated to be a tailwind. 2025 net debt to EBITDA is expected to be 3.8 times, moving towards investment-grade leverage metrics in the coming years.

• Mexico passenger charge situation: Not settled, with no impact forecasted for 2025. Red Sea impact in 2024, with less springback in 2025 vs 2024. EUA regulation in 2025 increasing to 70% of carbon emissions from 40% in 2024, impacting fuel expense.

Q: Matthew Boss asked about the foundation that positioned the company to capitalize on current demand and initiatives for 2025 and beyond.

A: Josh mentioned restructuring, commercial focus including revenue management and marketing, portfolio management, and continued investment in people, tools, and destination strategy. David broke down cruise cost ex-fuel components and discussed the leverage between yields and cruise costs.

Q: Ben Chaiken asked about Celebration Key awareness and the enhanced destination strategy.

A: Josh stated Celebration Key is still ramping, and the enhanced destination strategy focuses on making Carnival-owned destinations more appealing to non-cruisers, with examples like Relax Away Half Moon Key and Celebration Key.

Q: Steve Wieczynski asked about yield guidance makeup and SeaChange targets.

A: Josh discussed that guidance is based on current knowledge, with 2025 expected to hit EBITDA per ALBD target early and ROIC targets potentially hit next year, with plans to set longer-term targets in the future.

Q: Robin Farley asked about Celebration Key's impact on yield and debt refinancing upside.

A: Josh said Celebration Key is in guidance but only 5% of sailings in 2025, with premium seen in bookings. David mentioned potential interest expense savings from debt refinancing, with opportunity for upside.

Q: James Hardiman asked about organic growth sustainability and per diems.

A: Josh said industry mainstreaming helps, but same-ship sales and self-help efforts are key, with potential for more growth vs land alternatives. Per diems guidance is based on current knowledge, with Wave season and promotions factored in.

Q: Patrick Scholes asked about Mexico tax and book direct vs commissions.

A: Josh said Mexico tax situation is fluid, no impact forecasted for 2025. David noted passenger ticket revenue and commissions growth are close, with minor variations due to currency and ARC mix.

Q: David Katz asked about cost variability and leverage targets.

A: David said cost variability depends on efficiency found, with hard-to-predict timing. Josh stated investment-grade leverage is the current target, not two-time leverage.

Q: Jaime Katz asked about wave season and long-term strategic costs.

A: Josh said brands optimize booking curves, with promotions part of the process. Josh discussed non-newbuild CapEx for Celebration Key, Relax Away Half Moon Key, and Aida Evolutions, with investments supporting improved returns.

Q: Brandt Montour asked about booking curve and Red Sea impact.

A: Josh said brands are optimizing booking curves, with tougher comps in 2025 vs 2024. Red Sea impact in 2024 had less springback in 2025 vs 2024.