Carnival Corp Ltd. Q1 FY2025 earnings call

• Strong first quarter results: revenue, EBITDA, operating income, and customer deposits all set records. Yield increased 7.3% and outperformed guidance.
• Marketing campaigns: Costa at San Ramo Music Festival, Carnival at Oscars, Super Bowl, etc., drove strong demand. Flip, Lost in Paradise campaign was a hit.
• Portfolio optimization: Sunsetting P&O Cruises Australia, selling Seaborn Sojourn, Aida evolution program ongoing with Aida Diva updated.
• Destination projects: Celebration Key on track for July opening, Denali Lodge expansion, Relax Away, Half Moon Cay renovation in progress.

Carnival Corporation & plc delivered a strong first quarter with revenue, EBITDA, operating income, and customer deposits hitting high watermarks. Yield increased 7.3%, outperforming guidance. Net income was more than $170 million better than guidance. EBITDA reached $1.2 billion, approaching a 40% year-over-year increase. Operating margins and EBITDA margins improved over 400 basis points year-over-year, surpassing 2019 levels.

• Raised full-year yield guidance by 0.5 point to 4.7% based on strong first quarter results.
• Increased earnings guidance for 2025 by $185 million due to strong execution and refinancing efforts.
• 2025 on track for strong results with yield growth outpacing unit cost growth. On track to reach 2026 SeaChange financial targets a year early.

• Macro and geopolitical volatility could impact performance.
• Dependence on consumer sentiment and economic conditions affecting booking pace and onboard spend.

Q: Ben Chacon asked about consumer demand trends and ALBD impact.

A: Josh Weinstein said Waves was successful with record bookings for future years and maintaining yield guidance. David Bernstein explained flow through of yield and cost to the year.

Q: Robin Farley asked about yield outlook for the rest of the year and structural cost reductions.

A: Josh Weinstein said close-in demand and onboard spend remained strong, David Bernstein mentioned about 1/3 of first quarter cost savings were permanent and ongoing cost savings efforts.

Q: Steve Wiesinski asked about bookings for 2026 and back half year guidance.

A: Josh Weinstein said no material differences by brand and if consumer stays status quo, there could be upside to back half guidance.

Q: Brandt Montour asked about consumer behavior differences by region and industry willingness to hold price.

A: Josh Weinstein said portfolio approach works, and they are in a strong position with good visibility and no capacity growth.

Q: James Hardiman asked about forward indicators and 12% ROIC.

A: Josh Weinstein said no significant forward indicators, and they expect to talk about next long-term outlook in early 2026.

Q: Patrick Scholes asked about impact of macro volatility on booking pace.

A: Josh Weinstein said saw ups and downs but set up well with strong bookings last week.

Q: Jaime Katz asked about cost cadence and booking curve.

A: David Bernstein said cost cadence unchanged and they are above top end of historical booking ranges for the rest of the year.

Q: Conor Cunningham asked about cost levers and marketing strategy.

A: Josh Weinstein said natural hedge in commodities and strategic marketing spend is working with yields up 24% over two years.

Q: David Katz asked about Seaborn ship sale and follow-up.

A: Josh Weinstein said it was in best interest of shareholders as they got a good cash offer.

Q: Matthew Boss asked about new customer acquisition and capital allocation.

A: Josh Weinstein said ramping up first-timers and David Bernstein said debt pay down is priority with plans for other priorities in 2026.

Q: Lizzie Dove asked about luxury trend and Celebration Key.

A: Josh Weinstein said no issues with luxury brands and Celebration Key on track for July opening.

Q: Vince Cpl asked about land portfolio and inbound interest.

A: Josh Weinstein said Celebration Key impact and plans to increase guest count, and inbound interest not a huge part of business but strategically positioned ships.

Q: Chris Staphylopoulos asked about consumer demand health.

A: Josh Weinstein said no material differences, people value vacations and they are resilient despite macro volatility