Carnival Plc Q1 FY2025 earnings call

• Strong first quarter results: Revenue, EBITDA, operating income, and customer deposits all hit highs. Yield increased 7.3% and outperformed guidance.
• Marketing campaigns: Costa at San Ramo Music Festival, Carnival Cruise Line at Oscars, Super Bowl, and with 'Flip, Lost in Paradise' campaign. Aida Diva completed evolution with added features.
• Portfolio optimization: Sunsetting P&O Cruises Australia, selling Seaborn Sojourn.
• Alaska expansion: Renovation of Denali Lodge with new guest rooms, remodelings, etc.
• Financial fortress: Closing in on investment grade leverage, refinanced $5.5 billion of debt, low near-term maturities.

Carnival Corporation & plc had a strong first quarter with revenue, EBITDA, operating income, and customer deposits reaching first quarter high watermarks. EBITDA was $1.2 billion, approaching a 40% year-over-year increase. Yield increased 7.3%, outperforming guidance. Ticket and onboard spending were strong. Unit costs were better than expected due to timing, leading to near doubling of operating income. Revenue contribution wasn't broken down by specific product segments in detail, but overall financials were robust.

• Raised full-year net income guidance by $185 million.
• Maintained yield guidance for the year at 4.7% based on strong first quarter results.
• Refinancing efforts saved $100 million in full-year interest expense.
• 2025 on track for strong results with yield growth outpacing unit cost growth, delivering approximately $600 million incrementally to the bottom line.

• Macroeconomic and geopolitical volatility could impact bookings and consumer spending.
• Potential unforeseen dry docks or other operational issues could affect cost and ALBD metrics.

Q: Ben Chacon from Mizuho Securities asked about consumer demand trends since 4Q and color on changes.

A: Josh Weinstein said Waves was a success with record bookings for further out years, came into wave with historic occupancy and price, and is well set up for the rest of the year.

Q: Robin Farley with UBS asked about yield and if there's upside to back half guidance.

A: Josh Weinstein said strength of Q1 was driven by close-in demand and onboard spending, and they feel good about guidance but note macro volatility.

Q: Steve Wiesinski with Stifel asked about 2026 bookings by brand and back half guidance.

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

Q: Brandt Montour with Barclays asked about differences in consumer behavior between Europe and America and industry willingness to hold price.

A: Josh Weinstein said European brands outperformed, portfolio approach works, and industry is on good ground, and Carnival is well positioned.

Q: James Hardiman with Citigroup asked about forward indicators of consumer sentiment and 12% ROIC target.

A: Josh Weinstein said no significant flags in cancellations, and 12% ROIC is a step towards mid-teens, with investments in Celebration Key, etc., driving returns.

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

A: Josh Weinstein said saw ups and downs but ended in good position with strong close-in bookings last week.

Q: Jaime Katz with Morningstar asked about cadence of costs and booking curve visibility.

A: David Bernstein said costs in Q2 and Q3 higher than full year, and booking curve is above historical ranges with 80% booked for remainder of 2025.

Q: Conor Cunningham with Melius Research asked about cost levers if things weaken and marketing strategy.

A: Josh Weinstein said natural hedge in commodities, and marketing spend is working with strong yield growth.

Q: David Katz with Jefferies asked about trading down and sale of Seaborn ship.

A: Josh Weinstein said price-to-experience ratio is a strength, and sale of Seaborn was in best interest of shareholders.

Q: Matthew Boss with JPMorgan asked about new customer acquisition and structural improvement.

A: Josh Weinstein said focus on first-timers and brand strengths, and brands have runway for ROIC growth.

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

A: Josh Weinstein said no issues with luxury brands, and Celebration Key is on track with positive consumer reception.

Q: Vince Cpl with Cleveland Research asked about Celebration Key impact and land portfolio.

A: Josh Weinstein said Celebration Key will drive guest count growth, and Alaska land sea packages are strategic.

Q: Chris Staphylopoulos with SIG asked about consumer demand health and regional travel shifts.

A: Josh Weinstein said no unique weakness seen, people value vacations, and unemployment is low.