Carnival Corp & plc Q4 2020 Business Update Call

[music].

Good morning, everyone and welcome to our business up Day Conference call I Am Arnold Donald President and CEO of Carnival Corporation and plc.

Today, I'm joined Telephonically by our chairman Micky Arison, as well as David Bernstein, Our Chief Financial Officer, and Beth Roberts Senior Vice President Investor Relations. Thank.

Thank you all for joining us this morning.

Before I begin please note that some of our remarks on this call will be forward looking therefore, I must refer you to the cautionary statement in today's press release.

Hey, I know I'm, certainly not alone what I'd say I am glad to put 2020 behind us.

Clearly 2020 with unprecedented.

On the other hand, it also proved to be a true testament to the resilience of our company.

I am really proud of how well we weathered the storm.

And I'm very grateful to all of those who helped make it happen, particularly our carnival family, both shipboard and shore side and.

Believe me it took all hands on day two.

For return over 260000 guess home to repatriate 90000 crew members.

The process billions of dollars euros and pounds of guests refunds and billions in future cruise credits.

To accelerate the exit of 19 vessels.

And negotiate the delay in 16 ships on order.

To move our entire fleet, so full cost status.

To develop new cruise protocols and put them to the test as we resumed cruise operations in both Italy and in Germany.

To extend debt maturities and amount agreements with over 20 lenders and for many different agreements.

All while completing over a dozen financing transactions for cumulative $19 billion of new capital.

We ended the year with nine and a half a billion dollars in cash and we have the liquidity in place to sustain ourselves through out 2021.

Even in a zero revenue environment.

And we are emerging from a pause a more efficient and even better operating company.

Now we executed a significant rationalization of our fleet we.

Reducing capacity by 13%.

As a result, we're less reliant on new to cruise thanks recurring base of repeat guests that.

That represents a source of nearly 8 million guests each year, which will now be spread over a smaller fleet.

Our strategic capacity reduction also delivers a structurally lower cost base.

Just by the fact that the 19 ships, leaving the fleet are smaller and less efficient ships, we benefit by a 2% reduction in unit costs and a 1% reduction in unit fuel consumption going forward.

Our efforts to right size, our shore side operations reduces our costs further as well as our continued focus on finding efficiencies across our ship operations.

And of course over time, we will achieve an additional structural benefit to unit cost as we deliver new larger more efficient ships and this includes the recent delivery of Princess cruises and chanted Princess piano Ukase Iona.

Cost for EMS day, and the highly anticipated Carnival moneygram.

Both the first roller coaster assay onboard moneygram has already generated significant media attention for Carnival cruise line, garnering hundreds of millions of media impressions, Jeff in the last few months.

As has the Queen Mary two for $2, which was the focal point in the recent star studded, Phil let them all tall, capturing over 7 billion medium for us.

We further strengthened our board of directors, adding to an already experienced and strong board with the addition of a new independent board member with a comprehensive background and compliance.

We strengthened our management team promoting Josh Weinstein to Chief operations Officer.

Josh is uniquely suited for this role having previously led carnival UK and prior to that serving as our corporate treasurer and prior to that serving in a role in our legal department.

And together with the rest of the leadership team, who will serve a key role as we continue to aggressively streamline our operations for effectiveness and efficiency.

We are honoring our commitment to diversity and inclusion and in fact half of our operating companies are now led by women executives.

We once again continued to make advancements in our sustainability efforts.

Reducing food waste and accelerating the reduction in single use plastics amongst other goals.

One of the most rewarding aspects of 2020 clearly was the strong fundamental demand for our brands.

The forward booking trends, we have consistently experienced throughout this period.

Bite of the extended pause in our operations in spite of our minimal advertising efforts and even us via the abundance of negative global news affirmed the underlying demand that will facilitate our staggered resumption and support the long term growth of our company.

And we have not only seen tremendous support for our brands from our loyal guests. It is also very encouraging to see demand from new guest upon.

Upon resuming service, we believe we are well positioned to optimize that pent up demand for leading brands around the world.

Now as we mentioned on our last couple of updates our company is uniquely position for a phase resumption and cruise travel given our multiple national brands, which can each be restarted independently. Now this has already proven to be instrumental and enabling us to resume cruising a limited basis both for cost.

For Europe, which is nearly 80% continental European source and for our EBITDA, which is roughly 95% German source.

Our other brands like piano, UK, which is 98% British source piano, Australia, which is more than 99%, Australia, New Zealand source and Carnival cruise line, which is a 2% usource.

All present for other opportunities.

Additionally, the fact that these brands are characterized by ready access with drive to markets and a prevalence of shorter duration cruises strength as the potential for success in today's environment.

Of course, we will continue to utilize the six destinations we own and operate including it out too highly regarded private status in the Caribbean.

Princess key and half Moon.

Half Moon key.

For the Twentyth consecutive year was rated by Port whole magazine. It is free to choice awards as the best Private Island.

We continue to work diligently to resume operations in the us.

Including of course ongoing discussions with the CDC.

At the same time, we're working toward resuming operations for many other parts of the world, including Asia, Australia and of course the UK.

And we're working hard to do so in a way that serves the best interest of public health.

Our highest responsibilities and therefore, our top priorities are always compliance environmental protection, and the health safety and well being of our GAAP.

The people in the communities, we touch and serve add.

Add of our Carnival family, our team members shipboard and shore side.

We dealt with many types of viruses previously and already have effective protocols in place on board, our ships, including screening measures medical centers and enhance sanitation procedures, which prevent and reduce spread was brought on board from land.

Clearly however, this virus is unique.

And as you know, we've been working with leading medical and science experts around the globe to develop new and enhanced protocols and procedures based on the best available for clients to specifically address the risk.

Associated with cold at 19.

We expect these protocols to continue to evolve as societies understanding of COVID-19 strength us.

And as we are demonstrating with both Costa and Aida, which have received high satisfaction scores from our valued guests who have appreciated the changes we have implemented we.

We intend to initially resume operations with a small percentage of the fleet.

So for our initial voyages, we've chosen a sale with low occupancy levels, enabling us to gain valuable experience with our enhanced safety protocols.

Now, we're working toward having all of our ships back in service by the end of the year.

The development of low cost testing the continued advent of therapies and the pace of the distribution of vaccines was certainly influenced the pace of our recovery.

As the industry leader maintain a strong balance sheet as historically been a key strength for our company and a differentiator for our shareholders.

Accordingly, we secured the necessary funding in a balanced and responsible way.

Currently we have the lowest leverage in our industry and we retain the capacity to issue additional debt.

Moving secured the necessary financing to get through 2021, we will turn our attention to improving the balance sheet and reducing interest on our path back to investment grade credit.

We stretched out the delivery schedules pushing out new build capital and more importantly, we have just one ships for delivery in fiscal 2024, and Jeff one ship for delivery in fiscal 2025.

That will significantly reduce capital expenditures during those years, enabling us to pay down debt.

Now all of these efforts are in keeping with our primary financial objective going forward to.

To maximize cash generation.

As we return to full operations, our cash flow will be the primary driver to return to investment grade credit over time, creating greater shareholder value.

With the aggressive actions, we've taken managing the balance sheet and reducing capacity.

We are well positioned to capitalize on pent up demand and team merge a leaner more efficient company reinforcing our industry leading position.

Throughout these challenging times, we've received overwhelming support.

So again.

Thank you to our valued guests.

Thank you to our dedicated members of the Carnival family.

Thank you to our travel agent partners.

And thank you so other stake holders for their ongoing support.

And especially thank.

Thank you to our investors for their continued confidence in us and in our future.

With that I will turn the call over to David.

Thank you Arnold.

Ill start today with an update on booking trends.

And I'll provide our monthly average cash burn rate along with a summary of our fourth quarter cash flow and then finish up with some insight into our financial position.

Turning to booking trends.

For point in time, our cumulative advance bookings for the second half of 2021 for within the historical range.

Even better our cumulative advance bookings for the first half for 2022 are ahead as a very strong 2019, which was at the high end of the historical range.

Directionally comparable pricing on these bookings for the second half for 2021 and the first half of 2022 are down just one per cent versus pricing on bookings in the beginning of fiscal year 2019, if you exclude good day impact future.

Cruise credit.

For more commonly known as Cc.

Pricing on bookings in the beginning for fiscal year 2019 is a tough comparison and for that with high water Mark for historical yield.

However, I must say to some extent this is an apples and oranges comparison, given the increase in bundled packages that we have offered and that gets have chosen more recently, making the underlying comparison more favorable than indicated.

In the end, we expect to see the benefit of the bundled packages in onboard and other revenue.

I would also like to point out that our book position is very encouraging given it was achieved with minimal advertising and promotional activity.

Due to the price in gas cruise operation in 2020, the company's future booking trends will be compared to 29 team and not the prior year.

It is particularly reassuring to see that approximately 60% of bookings taken during the fourth quarter 2020 for fiscal year 2021.

New bookings with the remainder being FCC rebooking.

I am happy to report that this is a five percentage point improvement over the third quarter booking activity.

And it's also promising to see that approximately 45% of the 2021 book position, our GAAP setting new to brand with the remaining 55% GAAP being brand loyalists, which is just a little higher than the norm.

A continuation of the positive position, we had at the end of the third quarter.

Now, let's look at our monthly average cash burn rate for the fourth quarter, our cash burn rate with $500 million, which was slightly better than the previous expectation of $530 million due to the timing of capital expenditures.

For the first quarter, we expect our monthly average rate to be approximately 600 million, which includes restart expenditures.

The average rate expected in the first quarter is higher than the fourth quarter driven by higher capital expenditures due to the shifting of Capex from the fourth quarter to the first quarter.

And more first quarter dry dock days as previously indicated as we prepare for the resumption of guests cruise operation.

Next I'll provide a summary of our fourth quarter cash flow.

We are currently in a solid liquidity position with 9.5 billion net cash on our balance sheet at the end of our fiscal year.

I am happy to say that this is 1.3 billion more cash than we had on the balance sheet at the end of the third quarter.

During the fourth quarter, we added to our liquidity position by completing three very well received capital market transactions, we cumulative net proceeds of $4.5 billion.

The two aftermarket or ATM equity offering programs raised two and a half billion while other senior unsecured notes we completed in late November raised $2 billion.

This was partially offset by three things.

First our total cash burn for the quarter was $1.5 billion simply our monthly average cash burn rate of 500 million per month times three.

Second $1.5 billion, driven by scheduled debt maturities and third a slight decline in customer deposit point 2 billion from 2.4 billion at the end of the third quarter to $2.2 billion at the end of the fourth quarter, which was better than our.

Previous expectation.

Finally, I will finish up with some insight into our financial position.

Since the price in our gas cruise operations earlier. This year, we have raised 19 billion to a series of transactions. This series included three equity offerings, raising over $3 billion seasonal offerings, along with retiring $1.5 billion of our convertible note.

For the issuance of common stock considerably strengthened our balance sheet by reducing debt and bolstering shareholders' equity.

From a financial position perspective, 2020 could be characterized as attaining sufficient liquidity to get to the pausing guess cruise operation.

However, with $9.5 billion of cash on hand at year end, our focus for 2021 has now shifted to additional financial transaction that optimize our capital structure.

We will look to liability management with our banking partners to refinance existing debt at lower interest rates where possible we.

We still have the ability to issue more debt, if and when needed and gearing 2021, we may also opportunistically further enhance our liquidity position.

And now I'll turn the call back over to Arnold.

Thank you David operator, please open the call for questions.

Thank you for like the rest are a question for please press. The one followed by the for in your telephone you will hear a three tone prompt to acknowledge your request for your.

Question has been answered you would like to withdraw your registration. Please press. The one followed by the three if you are using a speaker phone. Please lift your handset before answering your question. Once again, that's one for to register for a question on briefly for the first question.

And we have a question from the line of Steve for Shinskie with Stifel. Please go ahead. Your line is open.

Hey, guys good morning.

So good morning, David I think Hey, Arnold you doing.

So David want to start with with your last comments there about your liquidity position I guess, I guess I'm a little confused.

Okay. Because you obviously you have wording in the release about how you expect to enter additional financial transactions, which you just talked about but Arnold you also indicated you expect to have all your ships operational by year end, which I think to some folks might seem a little aggressive so I guess the other questions around maybe.

Why would you need to really raise anything additional at this point. If you think you would be fully operational by by year end and I hope that makes sense.

First of all just to reach.

Restate for me.

We hope to have all of our ships operational by year end obviously.

Yes.

Hoping will happen so far early 21 here is Jeff hang over from 2020.

But you know we're still navigating this day as low.

As the planet.

This whole thing so hopefully we'll have we'll all.

Operating about a year and then I'll, let David response for the rest of your question go ahead, David Yes, [laughter] [noise] income.

Some of the.

Uncertainty relate to the resumption of cruise operations in the various brands around the world exactly when and how soon.

And so we're just trying to keep.

People are aware of the fact that we do have.

Multiple billions of dollars of debt capacity.

And we can utilize that if and when needed.

So we have choices and we'll monitor the situation very carefully.

And some of it also depends on just take except before and the timing of the restart of the operation, which at this point in time is a little bit uncertain.

Okay got you and then I guess, a bigger question would be just around the vaccines themselves and I.

I assume you guys have put some thought into are there going to be requirements for whether it's the crew whether its passengers whether it's both the day to day would have to be vaccinated before they even.

Before they are allowed to sales.

Well you know as you can vary.

Very well aware the book.

Vaccine thing is that the very beginning here and so.

Youre monitoring you were in dialogue.

With not only.

CDC, but lots of other.

Equipment organizations around the world while the destinations.

And so we'll let that evolve over time and.

We'll make the most prudent decision when the time comes but at this point distribution.

Moving to a bit of an issue and so we'll we'll make a determination as is as things evolve.

Okay can I ask one real quick housekeeping question for you know for David David can you help us maybe just thinking about what you guys are thinking from a from an interest perspective for for 21.

So interest expense on the existing debt that we have [noise].

At the end of 2020, I would be about 130 million a month or call. It a billion six for the year. So.

So depending on like.

Liability management.

And other things that could be a little bit up plus or minus from that number.

Okay, great. Thanks, guys appreciate it.

Okay. Thank you.

We have a question from Robin Farley with CBS. Please go ahead. Your line is open.

Great. Thanks, I wondered if you could give us any sense of the timing or kind of the gating issue for your first your initial tests cruise.

Yeah, Hi, Rob and happy new year sales.

That award.

Our work in process phase one were in.

What's been.

Communicated by the CDC the additional guide.

Guidelines for future phases have.

I have not yet been issued but by CDC.

We have.

We called our gross off as we need with them.

So you know that that remains to the same for what I can tell you is that.

We're on track to.

The April.

To do whatever we need to do in a bear.

Very timely manner.

To be able to resume cruise ultimately.

So it sounds like you're waiting specifically for the CDC to share some specific guidance around the tests cruise timing.

Well to answer your question about specific timing nonsense cruise, yes, we would be waiting, but obviously, we're doing a lot of things we've started to bring ships back into the U.S.

We have a.

Bringing those ships back yard meeting the criteria that you know is currently put out there to be in a position for then subsequently details cruises, but to give you a specific timing on the test cruise, we would need additional guidance from CDC.

Great. Thank you for that kind of.

Okay and then just one other question maybe this is thinking that maybe this one's for David.

How should we think about day.

Expense.

As for restart and I guess, what I'm, asking specifically as you've talked about how.

Even when the ship is in warm lay up you have some crew onboard you're running the system at all is that.

Actual cost us when that ship goes from being in warm lay up Q2 operating and is it just sort of increasing the staffing levels or is there. Some other incremental expense I mean, obviously as a ship sales will start to burn fuel, you'll you'll start to have to provision for.

For people that I'm talking about is there any sort of one time costs or is it just you know that you staff up and you go from these lower levels to being what a typical expense per passenger cruise day would have been.

Higher.

Yeah. So I can tell you what our experience has been with [laughter] either.

Because Wisconsin I eat as the capital expenditure was for Minimis. The cruise they brought the crew back which is an expense.

You know playing flights and.

Testing and other protocols you've got to.

Spend some money for food and other inventory for the share, but while this will be a cash outflow as you would expect during this period.

If you're ramping up the share apps, you're also have a cash inflow from the customer deposits because you're getting final payments in association with codes for wages.

So you know and I think I have said before that the ongoing expenses that we experienced relating to protocols in Europe is a few hundred thousand euros per month per share.

You know.

You asked for the CDC as Arnold indicated before we're still waiting for a lot of the technical guidance that was not included.

In their original conditional sales or whatever and so it's very difficult to estimate.

You know if there will be anything different for the U.S. <unk>.

At the time, we restart operations.

Okay, great. Thank you very much.

And our next question is from the line of James Hardiman with Wedbush Securities. Please go ahead. Your line is open.

Hi, Good morning, Thanks for taking my call. David You gave us the interest expense could you just help us out maybe with.

The share count where it stands today and what you expect it to be what's your what's your making money again on the <unk> on a diluted basis yeah.

Yes, so today the outstanding share count at the end of 2020 was.

1.087 billion shares.

And the only other thing with that I'll add is with the conversion.

The remaining hum couldn't hurt.

It would total billing and when 140 net.

Got it and.

And then as we think about.

Presidential transition here in the net.

A couple of weeks, maybe how you're thinking about.

Potential risk or maybe opportunities do you think that changes the conversation with the CDC at all and obviously what was a nice benefit for you guys. During your bottling Ministration was was the.

Availability of Cuba have you had any conversations on that front seems like it could be maybe an opportunity going forward.

You know I think first of all loans. Thanks for your question and happy New year I think.

First of all look low.

We all stand together and trying to mitigate the spread of this virus and.

Whatever.

The administration is in place, obviously, we're going to be totally other players, but we just want to be an ongoing part of the solution regardless.

So in terms of incremental risks associated with one administration versus another you know.

Not not thinking that way at all.

Either way, we have to do the right thing you know to sort of the best interest public health and I think the size ultimately well.

What got us all so there our regard to other matters.

You know obviously.

Cuba.

No. It was a focal point for the Obama administration opening up to the et cetera, we'll see what happens with the incoming administration.

We obviously will be well prepared we were.

Very active we were the first ones to sales for Q, and we'll be well prepared.

To be able to operate and whatever.

For the guidelines and rooms and other regulate.

Regulations are but but we'll be prepared to again help.

People, who really want to go to Cuba.

See it the best way, so we feel which is no oh come a rather than be a cruise.

And then experiencing what Cuba has to offer when it opens.

Got it and then just maybe lastly for me.

The different brands that you employ as we think about sort of a post vaccine environment are you seeing major differences in terms of demand for those different brands obviously, depending.

Depending on the punch free and their their state in terms of of.

Of the.

The virus itself, that's going to change demand, but maybe just more broadly.

Are there some brands that are there better position than others as we look to second half 21 and its 22.

Yeah. It is.

Stay them opening remarks, obviously overall.

Demand has been very robust and we find that you know.

Very affirming cloud business.

We do not see major differences across Brian's.

Obviously, one would be cost Asia, where.

For the booking is much closer in.

Other than any of our other brands, but absent that there's no big dramatic differences across the brands in terms of.

Booking patterns or trends and and there was a lot of pent up demand, so cruise, which is evidenced by the booking patterns.

And so we're going to have smaller fleets first of all we're going to reintroduce on a staggered basis.

The fact, we have national brands as we pointed out before you know plays well for us in that regard and the fact that we we have a number of brands that will drive two markets easier to get to the sauna. So for this is another benefit and that's around the world and so.

Given that you know, we don't see dramatic losses across the brands and.

And we see genuine strength, then what should be a robust.

Opportunity once cruise reasons.

Got it thanks, Arnold and thanks, David.

Thank you.

Bookings were a robust free vaccine and and have been you know post vaccine. So we haven't seen any dramatic shift and that again, we haven't experienced a demand challenge.

For cruise for all the reasons, we pointed out including the large base of previous cruise scores, you know repeat cruise et cetera.

For the demand is really getting pent up because they've been many months without being able to satisfy their craving for for a cruise experience, but I'll, let David comment more granularly on on some of the book interest David.

Yeah, now why Yamuna.

That's correct, what you're saying.

And the thing that I would add to that [noise].

Seen good demand and all of the various cruise markets, whether it be the Caribbean Itineraries Europe itineraries, we're seeing good demand for Australia for World cruise is et cetera. So it's it's broad based.

And across as Arnold said, all the brands.

Thanks for that that's helpful. And then one more for me is on the CDC I was I was hoping that you could help us understand the relationship between maybe yeah potentially as we move to the summer.

Summer season, and ships tend to sell more abroad is it at.

It'll likely that you might look to look to get fewer shifts.

Outfitted in certified under the CDC guidelines since you know there's not a whole lot of point to get certified for for one month in the spring and then and then go.

And then go sell elsewhere, where there's not going to be the same restrictions.

Yeah, we want the freedom to operate area and so we'll be focused on again being in compliance with whatever C.D.C. I regulates obviously, you know we give our inputs and.

Well for you know other.

Like science medical experts their inputs and whatnot, but the CDC will make those determinations and and we want the freedom to operate help having said that as we mentioned earlier you know the fact that we are global that you know a large number of our selling is normally our outside the U.S. and so on.

As you know gives us additional degrees of freedom, but we also have two secured freedom to operate in other places that we've been doing.

Doing a really good job so for in Europe with.

You know the limited startups of Carsten and I, either but you're right as you look around the world and different targeted markets, but obviously the summers you know I'm also an active time for the U.S. sailings with you know holidays and vacations.

Of course, all of that feels a little different now, but but nonetheless.

You know it is.

Inactive period so.

You know, we're well positioned with differentiated way of nine world, leading cruise line brands with National brands.

Things open up and staggered ways around the world. We can take full advantage of that but we'd like to have the free them operate everywhere.

And I'll just add that if you look at the CDC website, you'll see that we brought 30 ships back into U.S. waters.

Wanting more is expected to come back it's in transit down Carnival Mardi Gras and those are the share that we expect to sell.

In U.S. waters through the balance of the conditional sales for whatever Hod, that's a CDC issued this year and the remainder of the ships would sales outside U.S. orders.

Perfect. Thank you.

And our next question is from a share Georgieva with Infinity Research. Please go ahead. Your line is open.

Good morning happy either.

Couple of quick questions David.

[laughter].

Thank you.

It is.

Condemnation or ability to possibly restarts and most of the ships that are currently scheduled to start let's say may and June as opposed to again to watch how easy is that or is that something that is not going to change.

If if it made sense then first of all we're always going to act in the best interest a public health. That's number one number two is oh, we have the for you.

Top rate sooner and they're watching it varies it made sense.

Oh, we would not rule out here in January or introducing.

Customized itineraries, you know price of those periods for Brian's if it if it made sense and and we were able to do so.

So yes, there is the possibility even with brands that have announced a pause through a certain period of time that if the opportunities present itself and it made sense, especially for this is now January for here, how many no absolutely we could introduce you know some customized.

For example to reintroduce it could make.

And I know you mentioned a shorter.

Sort of quizzes, which of course make more sense Ah, but some of the old no longer voyages are over seven nights of for the higher end brands again or do you think the C.D.C. might be open to reconsidering their position and possibly allow for a longer voyages the for November.

And we'll have to see where the ball's and again you know with the advent of the vaccines with the acceleration of low cost more rapid testing.

With advancements in treatment and so on I think all of this is potentially influx that would definitely be the cdcs call to make and.

But again, you know things change all the time and we'd have to see so I wouldn't say, it's impossible you know.

I think again, everyone wants Bakken and the best interest based on science and that the science and conditions. You know made it possible then they may change their position and then there's other places in the world and and whatnot and and they have their own the regulations and so that.

There will definitely be no opportunity in some places in the world you know they have longer.

On a cruise.

Itineraries for certain then possibly here in the U.S. you know prior to that they will have to see.

And lastly, given your very active communications with the T.D.C.D. have any sort of other than expected timeline as to when you might be receiving for their technical orders in guidance or are you just.

Weighting in the day, they come out that for all the people find out.

Yeah. Thank.

You know I learned a long time ago and different themselves never try to protect regulatory anything <unk> because by its nature is not that predictable. So you know we provide the information we're in active dialogue and they'll make their determination than the time frame that that you know are the.

Obviously, they feel comfortable doing so and we'll respond to that so no. We don't have a good.

Ah day definite no for future.

Future guideline release from them and but but we'll be prepared to act on or whatever comes whenever it comes.

I think all of us will be waiting for you know for their guidance as soon as its available. Thank you so much Arnold.

Hey, Thank you so much and then a last comment it would be this that you know obviously, we're in this business for the for the long term and.

While we all want to resume cruise and as soon as possible because you know.

The cash generation and.

Cash maximization is created a day for us as a business at this point. The reality is we want to do it in a in the right way and and and make certain that you know, we're well prepared to be incompliance, whatever the rules and regulations are but.

You know, whether we start selling and in April or March or June or whenever you know the real value in this business, obviously makes sense for many years and and eventually we'll all be back to the great you know day so.

Gross in our industry and growth in earnings for broken cash generation et cetera, and I mean, you look at it all the time you know a matter of a month here a month. There are a couple of months here or there you know are not determining the future value of the industry or.

Thank you I agree, but other than falling.

Pricing for all the voyages so for close to two decades, now and that kind of Richard you know just started getting.

Actually getting for ships.

<unk>.

Pricing and [laughter], yeah, Okay, where wearable area [laughter] linking it for you.

We have a question from Patrick Scholes with Truest. Please go ahead. Your line is open.

Hi, good morning, everyone.

Credit more in line here for that.

There was an industry, leading early last week with the CDC and if that is correct. I'm wondering if you can share details for from that meeting.

Oh, no we wouldn't share any any details there are multiple meetings and with the CDC at different levels other.

Technical levels, there's medical levels, there's all kinds of.

Any sense. So I'm at this point what I can tell you is that you know we're in constant communication as are the other cruise lines and also our industry Association CLIA. It was also you know having a dialogue as appropriate and everybody's working together.

And focused on resumption of cruise and in a way that that fits with overall with CDC as determining is best you know for our society.

Okay Fair enough and then a second question on the 19 Shipsets a.

Are leaving or have left or some other have last year's here fleet can you give us a ballpark idea of what the net or cash income and cash flow from those are thank you.

Yeah, you bet.

Yeah, you're talking about the sales 19 chips, we plan to exit.

Yeah. So I know you said Oh.

They are the cash flow that was only 3% we had indicated before is 3% of operating income.

Right, Okay, 29, thinking I'm talking about the for I'm sorry, the proceeds the per lot was improved on the older files the yeah yeah.

So we we don't disclose.

The sales price of any share because you would imagine that would put us in a.

Disadvantage and future negotiations, but but I will say that you know prior to covert thinking in many cases, we were selling ships for 50 60 $70 million apiece, but obviously.

And and.

In these cases, we were selling chips are somewhat less than the historical standard.

You know post coli thank team.

So it was it wasn't it was a Rick diminimus in the Grand scheme of a company with them.

You know I for size.

Okay, Great that gives me for the rough ballpark idea. Thank you very much.

Thank you.

I have a question from Ben Chaiken with Credit Suisse. Please go ahead. Your line is open.

Hey, How's it going Hey, Ben you took <unk> you talked about lower cruise costs from ships, leaving the fleet not nothing incremental to that insinuated I believe some lower cost as a result of more efficient shore side can you touch on what those improvements are and then maybe any way to think of.

Sizing that opportunity and then just one more there's uh huh.

Yeah, as I mentioned with the chipsets name to fleet them. They were they were less efficient ships, we accelerated the exit given the fact that there was no opportunity for them to generate cash in the near term there given you know the pause where and so the the you know it gives us a 2% reduction.

<unk>.

And then kind of base cost.

Based on those ships exiting.

And or what percentage.

Fuel a advantage as well.

So that's on the Shipside onshore side and stuff like that.

Basically what this caused obviously weve for load and.

You know I had to make a number of changes from a cash conservation standpoint to get our burn rate, though and and it's also given us the opportunity to examine.

We continue to do so.

You know all of our operations I'm sure side to see where we can be more efficient you know where we can be more effective.

And that's in every aspect of the business. So you know when you say give you a few examples that they would be the normal things you would think about you know right now we're not advertising and all that but you are you looking at more eager for me to see how you're structured also what you're spending money on and and and what have you and we were on a path of continuous improvement before.

We have been very successful through our sourcing efforts, but beyond that you know even our operating.

Procedures, and so where we were you know I'm doing pretty good job.

Getting unnecessary costs out of the system and.

And so you know, we we continue to do that and and with this pause weve been able to take a hard look at every aspect of the business and continue to do that.

And I have found additional opportunities for.

For improved efficiency.

Gotcha. That's that's helpful. And then I think David in your in your pricing commentary you mentioned that I don't know if I caught this right that Howard pricing includes bundles, presumably I guess implications for lifting pricing. There. So Andy you mentioned that was not apples to apples. So is it possible to get an apples to apples pricing for what you're saying.

And your Howard box vs.

Okay, 19 comparison I think.

So the [noise].

When we do the bundle.

What we do is we.

We allocate a portion of the bundle product.

To the onboard and other revenues for the price that we're using in that comparison.

It is only a portion.

For the total price that was paid by the gas.

Overall.

So it says.

It's as close to half for an apples as we can get it but the problem that you get into it because of the allocation, we're going to see the benefit in onboard and other revenue.

So that's why I said that the comparison was probably more favorable.

Then indicated where I said, we were down 1%, excluding the future cruise credit.

That's about as close as I can get it because weve allocated how the onboard and other.

But you would expect to see a big increase in onboard and other as a result of the pre purchase.

So hopefully that clarifies it for you.

It does thank you.

And we have a question from Jamie Katz with Morningstar. Please go ahead. Your line is open.

Hi, good morning.

For more.

Any interesting insights or take away from the 45% music to that brand book or is that you guys are seeing are they even younger or they may be longer lifetime customer is that or if there's anything different.

On the net new that you create the net.

So no we have not seen any like dramatic trend difference and you know new.

A book or a new cruisers other than we have in the past the David its Mike you want to make a comment go ahead, yeah. No I was just going to add that you know overall, whether it be a 45% or the 55%, which or wrap brand loyalists, which by the way just a little you know just.

A slightly more than that no one.

We really haven't seen any significant change in the overall demographics of the people booking cruises.

We're seeing you know people in their twentys, and Thirtys and swell its people and their 50 60 seventies and eighties.

And you know anecdotally I was talking to a couple of other brands asking them about areas wages and things and.

They were telling me that some of the longer voyages in early twenties 22 are they were seeing quite a few people 70 billion up booking those wages.

And we would just speculating that maybe those were retired people that didn't have to worry about a work schedule. So they could plan you know considerably further ahead than most people. So we're not seeing any significant changes or trends and demographics around the globe I'm seeing all ages booking.

All products in all brands.

Excellent and then just a quick housekeeping follow up for depreciation for 2021, I know a lot of the ship out.

Out of the fleet are probably largely free depreciated, but can you give us an idea of like what the delta year over year might be figure.

So 2021, we're looking at roughly a 2.2 billion, which is similar to.

What we saw and Ah 2020, but it.

It is a preliminary number the difficulty and that is you know trying to estimate our capex for 2021, we obviously haven't made all of our decisions for 2021, yet it some of it depends on the timing of the restart so that is a preliminary net.

Number but at this point that that that's a good ballpark ish figure.

Thank you that's helpful. Thanks.

And we have a question from Vince Shapiro with Cleveland Research Company. Please go ahead. Your line is open.

Great. Thanks, I wanted to come back to the Fccs I think there's a for the last call roughly two thirds were still outstanding. So curious if that kind of roughly how old and what do you think it's going to take for more of those to start to convert and then you know the next part of that is I think you previously alluded.

For two a mid single digit type of a negative impact from the FCC just coming in on the pricing side and I'm curious if that impacts kind of has held and should continue to hold as a more of those convert.

So the the last time when I was talking about mid single digits I was talking about the back half.

2021.

When you start looking at you know that the time period that we're talking about the back half for 21 in the front half of 'em 22, you're still in the same ballpark in terms of.

You know, including the Fccs in terms of the pricing.

And as far as the Fccs, probably <unk>, it's about 45 per cent of our customer deposits. At this point are still on applied Fccs. So we still have quite a few fccs that have yet to walk to rebook.

But that's not really very very surprising you know a lot of times you get families that are booking a multiple families with kids and and you've got to coordinate 'em vacations with supervisors at work and timeframe. So we would expect these fccs too.

Now turning to our bookings over the next six or 12 months as people plan their vacation opportunities.

Great. That's that's really helpful and maybe I wanted to think a little bit about the longer term margin opportunity you've talked about sales less efficient ships, probably kicking out some overhead oh the arrival of newer more efficient ships, just curious what type of EBITDA margin opportunity.

Do you think is how to for you as a is revenue.

We're fully recovers probably in 22 23.

Yeah, I I'd be reluctant at this point kinda give you that margin opportunity that would be you know providing guidance and were non into position yet I think by Arnold comments, indicating the efficiencies that we expect is alluding to.

Do you know when improvement, but you know give us some time to resume guess cruise operations get back in service and we'll be in a much better position later this year, perhaps to take give you more guidance and details and.

But at this point you know.

All of the cost metrics would lead you to a better margin opportunity in the future.

Great. The Hopper it will take one more question. Please thank you.

And we have a question from Stuart coordinate with Berenberg. Please go ahead. Your line is open.

Yeah. Good afternoon, and I was wondering if you could.

Good day, it's been a per <unk> net net debt number.

At the end of Twentytwenty and ideally calendar. So I think there was some export credit facilities drawn down in December.

And on the specifics day.

And thanks.

So so.

That is at the end of 2020 and November Thirtyth, 2020, which will balance sheet date will be $27 billion and you're correct. We did shortly thereafter, we took delivery of two additional share.

And true on the export credits associated with them that was probably an additional call. It filling in a half if I remember correctly in December on the Carnival MYDICAR and a cost for friends Huh.

Okay. Thanks, and just just stand for.

Well I mean, you've obviously given us some visibility on the delivery schedule and Twentytwenty, one and have you given any thought and whether you could 10, so any future shit ship deliveries I know so what would be your anticipated fleet size in Twentytwenty, two basetwenty 19, given the changes with.

The ships, leaving.

Okay. So in terms of the young for ship deliveries I mean, you know we've said this many times before I mean, we did renegotiate hum delivery dates as Arnold indicated and we got a delay in all of the ship deliveries, but there are no cancellation clauses.

In our Newbuilding contracts. So as a result of that I wouldn't expect any cancellation of any of the of the new build trying to wonder we started the year with 14 on order we took delivery of two so we have 12 for in the ensuing years.

[noise] and as far as capacity is concerned if you look at the end of 2022 you.

You'll see that and we tried to do this on a inhale bds or capacity at the end to 2022 would be about 5.6 percentage points higher than 2019, So you're really just talking about less than two per cent per year capacity growth from 19 to 22.

Because of the new builds they came in but remember the acceleration.

For the 19 chipset left for <unk>.

So it nets out to less than two per cent here.

[noise] <unk> and with that I. Thank you yeah.

Thank you everyone. We really appreciate.

I appreciate your interest happy new year. These say be responsible I'm sure you all are and together we look for it so what hopefully will.

It will be you know.

Very nice 2021.

Lead to many future years. So soon so thank you. Thank you so much.

[noise] that concludes the call for today, we thank you for your participation and I say please disconnect your line.

[music].

[music].

Good morning, everyone and welcome to day.

The conference call.

Carnival Corporation and plc.

Today, I'm joined Telephonically by our chairman Micky Arison, as well as David Bernstein, Our Chief Financial Officer, and Beth Roberts Senior Vice President Investor Relations.

Thank you all for joining us this morning.

For I began please note that some of our remarks on this call will be forward looking therefore, I must refer you to the cautionary statement in today's press release.

Hey, I know I'm, certainly not alone what I'd say I'm glad to put 2020 behind us.

Clearly 2020 with unprecedented.

On the other hand, it also proved to be a true testament to the resilience of our company.

I am really proud of how well, we weathered the storm and.

And I'm very grateful to all of those who help make it happen, particularly our carnival family, both shipboard and shore side and.

Believe me it took all hands on day two.

For return over 260000 guess home to repatriate 90000 crew members to process billions of dollars euros and pounds of guess refunds.

And billions in future cruise credits.

To accelerate the exit of 19 vessels and negotiate the delay of 16 ships on order.

The move our entire fleet for low cost status for.

To develop new cruise protocols and put them to the test as we resumed cruise operations in both Italy and Germany.

To extend debt maturities and amount agreements with over 20 lenders and Audi different agreements.

All while completing over a dozen financing transactions for cumulative $19 billion of new capital.

We ended the year with nine and a half thousand cash and we have the liquidity in place to sustain ourselves through out 2021.

Even in a zero revenue environment.

And we are emerging from a pause a more efficient and even better operating company.

Now, we executed a significant rationalization of our fleet reducing capacity by 13%.

As a result, we're less reliant on new to cruise thanks recurring base of repeat Jeff.

That represents a source of nearly 8 million guests each year, which will now be spread over a smaller fleet.

Our strategic capacity reduction also delivers a structurally lower cost base.

Just by the fact that the 19 ships, leaving the fleet are smaller and less efficient ships, we benefit by a 2% reduction in unit costs and a 1% reduction in unit fuel consumption going forward.

Our efforts to right size, our shore side operations reduces our costs further as well as our continued focus on finding efficiencies across our ship operations.

And of course over time, we will achieve an additional structural benefit to unit cost as we deliver new larger more efficient ships and this includes the recent delivery of Princess cruises and chanted Princess.

UK Iona.

Cost of forensic day, and the highly anticipated Carnival Motty gross.

For the first roller coaster FC onboard Moneygram has already generated significant media attention for Carnival cruise line, garnering hundreds of millions of media impressions Jeff.

For the last few months.

As has the Queen Mary two for $2, which was the focal point in the recent star studded, Phil let them all tall, capturing over 7 billion media impressions.

We further strengthened our board of directors, adding to an already experienced a strong board with the addition of a new independent board member with a comprehensive background and compliance.

We strengthened our management team promoting Josh Weinstein to Chief operations Officer, Josh.

Josh is uniquely suited for this role having previously led carnival UK and prior to that serving as our corporate treasurer and prior to that serving in a role that our legal department.

And together with the rest of the leadership team, who will serve a key role as we continue to aggressively streamline our operations for effectiveness and efficiency.

We are honoring our commitment to diversity and inclusion and in fact half of our operating companies are now led by women executives.

We once again continued to make advancements in our sustainability efforts.

Do seen food waste in accelerating the reductions single use plastics amongst other goals.

One of the most rewarding aspects of 2020 clearly was the strong fundamental demand for our brands.

The forward booking trends, we have consistently experienced throughout this period.

Right.

Extended pause in our operations in spite of our minimal advertising efforts and even in spite of the abundance of negative global news from.

From the underlying demand that will facilitate our staggered resumption and support the long term growth of our company.

And we have not only seen tremendous support for our brands from our loyal guests. It is also very encouraging to see demand from new guests.

Upon resuming service, we believe we are well positioned to optimize that pent up demand for leading brands around the world.

Now as we mentioned on our last couple of updates our company is uniquely position for our phase resumption and cruise travel.

Our multiple national brands, which can each be restarted independently.

Now this has already proven to be instrumental in enabling us to resume cruising a limited basis, both for Casa Europe, which is nearly 80% continental European source and for Aida, which is roughly 95% German source.

Our other brands like PNR, UK, which is 98% British source piano, Australia, which is more than 99%, Australia, New Zealand source and Carnival cruise line, which is a 2% usource.

All present for other opportunities.

Additionally, the fact that these brands are characterized by ready access with drive to markets and a prevalence of shorter duration cruises strengthens the potential for success in today's environment.

Of course, we will continue to utilize the six destinations we own and operate including out too highly regarded private items in the Caribbean.

Princess key.

And half Moon.

Half Moon key.

For the Twentyth consecutive year was rated by Port whole magazine and its readers choice awards as the Beth Private island.

We continue to work diligently to resume operations in the us.

I mean of course ongoing discussions with the CDC.

At the same time, we're working toward resuming operations in many other parts of the world.

Including Asia, Australia and of course the UK.

And we're working hard to do so and other way that serves the Beth interest the public health.

Our highest responsibilities and therefore, our top priorities are always compliance environmental protection, and the health safety and well being of our GAAP.

The people in the communities, we touch and serve.

And of our Carnival family, our team members shipboard and shore side.

We dealt with many types of viruses previously and already have effective protocols in place on board, our ships, including screening measures medical centers and enhance sanitation procedures, which prevent and reduce spread was brought on board from land.

Clearly however, this virus is unique.

And as you know, we've been working with leading medical and science experts around the globe to develop new and enhanced protocols and procedures based on the best available for us to specifically address the risk associated with cold at 19.

We expect these protocols to continue to evolve as societies understanding of COVID-19 strengthens.

And as we are demonstrating with both cost and Aida, which have received high satisfaction scores from our valued guests who have appreciated the changes we've implemented.

We intend to initially resume operations with a small percentage of the fleet.

So for our initial voyages, we've chosen a sale with low occupancy levels, enabling us to gain valuable experience with our enhanced safety protocols.

Now, we're working toward having all of our ships back in service by the end of the year.

The development of low cost testing the continued advent of therapies and the pace of the distribution of vaccines will certainly influenced the pace of our recovery.

As the industry leader maintain a strong balance sheet as historically been a key strength for our company and a differentiator for our shareholders.

Accordingly, we secured the necessary funding in a balanced and responsible way.

Currently we have the lowest leverage in our industry and we retain the capacity to issue additional debt.

Being secured the necessary financing to get through 2021, we will turn our attention to improving the balance sheet and reducing interest on our path back to investment grade credit.

We stretch out the delivery schedule pushing out new build capital and more importantly, we have just one ship for delivery in fiscal 2024, and Jeff one ship for delivery in fiscal 2025.

That will significantly reduce capital expenditures during those years, enabling us to pay down debt.

Now all of these efforts are in keeping with our primary financial objective going forward.

Maximize cash generation.

As we return to full operations, our cash flow will be the primary driver to return to investment grade credit over time, creating greater shareholder value.

With the aggressive actions, we've taken managing the balance sheet and reducing capacity.

We are well positioned to capitalize on pent up demand and team merge a leaner more efficient company reinforcing our industry leading position.

Throughout these challenging times, we received overwhelming support.

So again.

Thank you to our valued guests.

Thank you to our dedicated members of the Carnival family.

Thank you to our travel agent partners.

And thank you.

Other stakeholders for their ongoing support.

And especially thank you to our investors for their continued confidence in us and in our future.

With that I will turn the call over to David.

Thank you Arnold.

I'll start today with an update on booking trends.

Then I'll provide our monthly average cash burn rate along with a summary of our fourth quarter cash flow and then finish up with some insight into our financial position.

Turning to booking trends.

The point in time, our cumulative advance bookings per day second half of 2021 within the historical range.

Even better our cumulative advance bookings for the first half of 2022 are ahead as a very strong 2019, which was at the high end of the historical range.

Directionally comparable pricing on these bookings for the second half for 2021 and the first half of 2022 are down just one per cent versus pricing on bookings in the beginning of fiscal year 2019.

Excluding the negative impact of future cruise credit.

For more commonly known as Cc.

Pricing on bookings in the beginning of fiscal year 2019 is a tough comparison exactly high water mark for historical yield.

However, I must say to some extent this isn't apples and oranges comparison, given the increase in bundled packages that we have offered and that cash have chosen more recently, making the underlying comparison more favorable than indicated.

In the end, we expect to see the benefit of these bundled packages in onboard and other revenue.

I would also like to point out that our book position is very encouraging given it was achieved with minimal advertising and promotional activity.

Due to the price in gas cruise operation in 2020, the company's future booking trend will be compared to 2019.

Not the prior year.

It is particularly reassuring to see that approximately 60% of bookings taken during the fourth quarter 2020 per day.

Fiscal year, 2021, where new bookings with the remainder being FCC rebooking.

I am happy to report that this is a five percentage point improvement over the third quarter booking activity.

And it's also promising to see that approximately 45% of the 2021 book position, our GAAP that are new to brand with the remaining 55% GAAP.

Brand loyalists, which is just a little higher than the norm.

A continuation of the positive position, we had at the end of the third quarter.

Now, let's look at our monthly average cash burn rate for the fourth quarter, our cash burn rate with $500 million, which was slightly better than the previous expectation of $530 million due to the timing of capital expenditures.

For the first quarter, we expect our monthly average rate to be approximately 600 million, which includes restart expenditures.

The average rate expected in the first quarter is higher than the fourth quarter driven by higher capital expenditures due to the shifting of Capex from the fourth quarter to the first quarter.

And more first quarter dry dock days as previously indicated as we prepare for the resumption of gas cruise operation.

Next I'll provide a summary of our fourth quarter cash flow.

We are currently any Howard liquidity position with 9.5 billion net cash on our balance sheet at the end of our fiscal year.

I am happy to say that this is $1.3 billion more cash than we had on the balance sheet at the end of the third quarter.

During the fourth quarter, we added to our liquidity position by completing three very well received capital market transactions, we cumulative net proceeds of 4.5 billion.

The two aftermarket or ATM equity offering program raised two and a half billion or other senior unsecured notes. We completed in late November raised $2 billion.

This was partially offset by three things.

First our total cash burn for the quarter was $1.5 billion simply our monthly average cash burn rate of 500 million per month times three.

Second 1.5 billion driven by scheduled debt maturities and third as price.

Decline in customer deposit point 2 billion from $2.4 billion at the end of the third quarter to $2.2 billion at the end of the fourth quarter, which was better than our previous expectations.

Finally, I will finish up with some insight into our financial position.

Since the price and our guests cruise operations earlier. This year, we have raised $19 billion through a series of transactions. This series included three equity offerings, raising over $3 billion seasonal offerings for wrong with retiring $1.5 billion of our convertible note.

For the issuance of common stock considerably strengthened our balance sheet by reducing debt and bolstering shareholders' equity.

From a financial position perspective, 2020 could be characterized as attaining sufficient liquidity to get through the pausing guess cruise operation.

However, with $9.5 billion of cash on hand at year end, our focus for 2021 has now shifted to additional financial transaction that optimize our capital structure.

We will look to liability management with our banking partners to refinance existing GAAP at lower interest rates where possible we.

We still have the ability to issue more debt, if and when needed and hearing 2021. We may also opportunistically further enhance our liquidity position.

And now I'll turn the call back over to Arnold.

Thank you David operator, please open the call for questions.

Thank you for like the rest are a question. Please press the waterfall, but for in your telephone you will hear a three time prompt to acknowledge your request you for your question has been answered and you would like to withdraw your registration. Please press. The one followed by the three if you are using a speaker phone. Please lift your handset before answering your question. Once again, that's one for to register for a question I'll briefly.

For the first question.

And we have a question from volume of Steve for Shinskie with Stifel. Please go ahead. Your line is open.

Hey, guys good morning.

So good morning, David I think Hey, Arnold.

So David want to start with your last comments there about your liquidity position I guess, I guess I'm a little confused.

Yes, because you obviously you have wording in the release about how you expect to enter additional financial transactions. What you just talked about but Arnold you also indicated you expect to have all your ships operational by year end, which I think to some folks might seem a little aggressive so I guess the questions around maybe.

Why would you need to really raise anything additional at this point. If you think you would be fully operational by by year end and I hope that makes sense.

For catalog.

The restate for me.

We hope to have all of our ships operational by year end obviously.

Sales.

I'm, hoping will happen. So for early 21 here is jessa hang over from 2020.

We're still navigating this day as low.

As the planet.

This whole thing so hopefully we'll have it all.

Operating by the year, and then I'll, let David response for the rest for your question go ahead David.

Thank you.

Some of the.

Uncertainty relate to stay for assumption that of cruise operations and the various brands around the world exactly when and how soon.

And so just trying to keep.

People are aware of the fact that we do have.

Multiple billions of dollars of debt capacity.

And we can utilize that if and when needed.

So we have choices.

And we'll monitor this situation very carefully.

And some of it also depends on just pick said before on the timing other restart of the operation, which at this point in time.

He is a little bit uncertain.

Okay got you and then I guess, a bigger question would be just around the vaccines themselves and I.

I assume you guys have put some thought into are there going to be requirements for whether it's the crew whether its passengers whether it's both for the day to day would have to be vaccinated before they.

Before they are allowed to sales.

Well you know as you can vary.

Very well aware the.

Vaccine thing is that the very beginning here and so.

Youre monitoring we're in dialogue.

Not only.

D.C., but lots of other.

Equipment organizations around the world while other destinations.

And so we'll let that evolve over time and.

We'll make the most prudent decision when the time comes but at this point distribution.

Ill.

I remain a bit of an issue and.

So we'll we'll make a determination is is as.

As things evolve.

Okay can I ask one real quick housekeeping question for for David David can you help us maybe just think about what you guys are thinking from a from an interest perspective for for 21.

So interest expense on the existing debt that we have.

Thats the end of 2020 would be about 130 million a month or call. It a billion six for the year. So.

So depending on the line.

Liability and management.

The other things that could be a low data plus or minus from that.

Okay, great. Thanks, guys appreciate it.

Okay. Thank you.

We have a question for Robin Farley with Qbs. Please go ahead. Your line is open.

Great. Thanks, I wondered if you could give us any sense of the timing or kind of the gating issue for your first your initial test cruises.

Yes, Hi, Robin happy New years day.

Thats Award.

Our work in process phase one were in.

What's been.

Communicated by the CDC the additional guide.

Guidelines for future phases have.

I have not yet been issued.

By CDC.

We have.

Weekly calls or softness we need with them.

So you know that that remains for the same for what I can tell you is that.

We're on track to.

The April.

To do whatever we need to do.

In a very timely manner.

To be able to resolve cruise ultimately.

So it sounds like you're waiting specifically for the CDC to share some specific guidance around to test cruise timing.

Well to answer your question about specific timing on sales group, yes, we would be waiting, but obviously, we're doing a lot of things we started running ships back into the us.

We have.

Bringing those ships back our meeting.

Criteria that you know is currently put out there to be in a position for them subsequently the test cruises, but to give you a specific timing on that helps cruise, we would need additional guidance flow CDC.

Great. Thank you.

Okay and then just one other thing maybe this is thank you for that maybe this one's for David.

How should we think about day.

<unk> expense.

Other receptor and I guess I'm, asking specifically is you've talked about how evil.

Even when the ship is in warm lay up you have some crew onboard you're running the system and all of that.

Actual cost us when that ship goes from being in warm lay up Q2 operating.

Just sort of increasing the staffing levels or is there. Some other incremental expense I mean, obviously as a ship sales will start to burn fuel, you'll you'll start to have to provision for sir.

For people that I'm talking about is there any sort of one time cost or is it just that you staff up and you go from these lower levels shipping what a typical expense per passenger cruise day wouldn't spend.

Higher.

Yes, so I can tell you what our experience has been with us.

Hi, Jeff.

Because with costs and I eat as the capital expenditure was.

For the minimus.

Cruise they brought the crew back which has an expense.

Cleaning flight and testing.

Testing and other protocols you've gotta.

Spend some money for food and other inventory for the ship.

But while this will be a cash outflow as you would expect during this period.

If you are ramping up the share apps you also have the cash in flow from the customer deposits because you're getting final payments in association with those voyages.

So.

And I think I have said before is that the ongoing expenses.

That we experienced relating to protocols in Europe with a few hundred thousand euros per month per share.

Yeah.

For the you asked for the CDC is Arnold indicated before we're still waiting for a lot of the technical guidance that was not included.

In their original conditional sales or whatever and so it's very difficult to estimate.

Yes, there will be anything different for the U.S.

At the time, we restart operation.

Great. Thank you very much.

And our next question is from the line of James Hardiman with Wedbush Securities. Please go ahead your loans open.

Hi, Good morning, Thanks for taking my call. David You gave us the interest expense could you just help us out maybe with.

The share count where it stands today and what you expect it to be what's your what's for making money again on the other exclusive basis.

So today free out.

And share count at the end of 2020 was.

1.087 billion shares.

And the only other thing Rick that I'll add is with the conversion.

The remaining concur.

It would total up billing anyone 140 net.

Got it.

And then as we think about.

Presidential transition here.

Couple of weeks, maybe how you're thinking about.

Potential risks or maybe opportunities do you think that changes the conversation with the CDC at all and obviously what was a nice benefit for you guys. During your bottling Ministration was was the.

Availability of Cuba have you had any conversations on that front seems like it could be maybe an opportunity going forward.

I think first of all loans.

Thanks for your question and happy New year I think.

First of all look low we all stand together and trying to mitigate the spread of this virus and.

Whatever.

Administration is in place, obviously, we're going to be totally a compliance.

But we just want to be an ongoing part of the solution regardless.

So in terms of.

Incremental risks associated with one administration versus another.

No.

Not not thinking that way at all.

Either way, we have to do the right thing.

Sort of the best interest public health and I think the size ultimately.

We will guide us all so there our regards to other matters.

You know obviously.

Two books you know what.

Focal points for the Obama administration, low Cuba et cetera.

We'll see what happens with the incoming administration.

We obviously will be well prepared.

We were.

Very active we were the first ones to.

Sales for Q.

And we will be well prepared.

To be able to operate and whatever so.

The guidelines and rules and.

Regulations are.

But we'll be prepared to.

Again help.

People really want to go to Cuba.

The best way Jill.

We feel which is no.

Robyn via cruise soon.

Net experiencing what Cuba has software when it opens.

Got it and then just maybe lastly for me.

Uh huh.

The different brands that you employ as we think about sort of a post vaccine environment are you seeing major differences in terms of demand for those different brands obviously.

Depending on the punch free and their their state in terms of.

Of the virus itself thats going to change demand, but maybe just more broadly.

Are there some brands that are there.

Better position than others as we look to second half 21 and 22.

Yes, as us some opening remarks Java sales all.

Demand has been very robust.

We find that.

Very affirming.

Cloud business, we do not see major differences across brands.

Obviously, one would be cost Asia, where.

For the booking is much closer in.

Than any of our other brands, but absent that.

There's no big dramatic differences across the brands in terms of.

Booking patterns or trends and and there was a lot of pent up demand, so cruise, which is evidenced by the booking patterns.

And so we're going to have smaller fleets for small we're going to reintroduce other staggered basis.

The fact, we have national brands as we pointed out before.

Plays well for us in that regard and the fact that we we have a number of brands that our drive to markets.

Easier to get to the sauna. So for this is another benefit and thats around the world and so.

Given that you know.

We don't see dramatic losses across the brands and.

And we see genuine strength.

What should be a robust.

Opportunity what's cruise reasons.

Got it thanks, Arnold and thanks, David.

Thank you.

Our next question is from Brent on tour with JP Morgan. Please go ahead. Your line is open.

Good morning, everyone. Thanks for taking my questions Jeff.

Curious on bookings good morning, hopefully you could maybe flesh out some of the cadence in bookings qualitatively sort of interested in knowing how bookings pace is faring now versus pre vaccine and if thats a meaningful difference pace and sort of when did you might might have you seen that slack.

Yes.

Bookings were a robust free vaccine and.

Have them post vaccine. So we haven't seen any dramatic shift and that again, we havent experienced a demand challenge.

For cruise for all the reasons, we pointed out including the large base of previous cruise scores repeat cruise its et cetera, where the demand is really getting pent up because they've been many months without being able to satisfy their cash.

Craving for for cruise experience for.

But I'll, let David comment.

More granularly on on some of the book interest David.

Yes, no other young.

That's correct, what you said Arnold and other things that I would add to that.

Good demand.

All of the various cruise markets, whether it be the Caribbean.

In areas Europe itineraries.

We're seeing good demand for Australia for World cruise is et cetera. So.

So it is broad based and across as Arnold said all the brands.

Thanks for that Thats helpful. And then one more for me is on the CDC I was I was hoping that.

You could help us understand the relationship between.

Maybe potentially as we move to the summer season and ships tend to sale more abroad is it at.

At all likely that you might look to look to get fewer ships.

Fitted in certified under the CDC guidelines sense, there's not a whole lot of point to get certified for for one month in the spring and then and then go and then go sale elsewhere, where there is not going to be the same restrictions.

We want the freedom.

Freedom to operate period.

And so we'll be focused on again being in compliance with.

Whatever CDC.

Regulates obviously, we give our inputs and off for other.

Life Science medical experts their inputs and whatnot, but the CDC I'll make those determinations and.

We want the freedom to operate having said that as we mentioned earlier. The fact that we are global that large some of our sailings normally or outside the U.S.

So on.

As you know gives us additional degrees of freedom.

But we also have two secured freedom to operate in other places that we have been.

Doing a really good job so for Europe with.

The limited startup so cost.

And I either.

But youre right as you look around the world and different targeted markets, but obviously the summers.

So.

Also.

At this time, the U.S. sailings with.

Holidays, and vacations of course, all of that feels a little different now, but but nonetheless.

It is.

An active period so.

We're well positioned for differentiated with non Worley cruise line brands with National brands.

Things open up and staggered ways around the world, we can take full advantage of that.

But we'd like to have the free them operate everywhere.

And now I'll just add that if you look at the CDC website, you'll see that we brought 30 ships back and Pos waters.

One more is expected to come back and transit Carnival Mardi Gras.

And those are the share that we expect to sale.

In U.S. waters through the balance of the conditional sales or whatever.

That's the CDC issued this year and the remainder of the ships would sale how tied us orders.

Perfect. Thank you.

And our next question is from Assia Georgieva with Infinity Research. Please go ahead. Your line is open.

Good morning, happy new year.

Quick questions for smartphones for.

Thank you.

Inclination or ability to possibly restarts and most of the ships that are currently scheduled to.

Sorry, David Let's say May and June as opposed to again to launch next how easy is that or is that something that is not going to change.

Yes.

If it made sense and first of all we're always going to act in the best interest of public health decimal one non.

For two years.

We have the freedom.

Top rate.

Sooner and their itineraries that made sense.

We would not rule out here in January.

Introducing.

Customize itineraries price of those periods for Brian's if it made sense and as we were able to do so.

So yes, there is the possibility even with brands that have announced a pause through a certain period of time that if the opportunities present itself for that made sense.

Especially for this is now January for here for me.

No absolutely we could handle it.

Yes some.

Customize I'd say there is nothing to reintroduce it could make sense.

And Arnold you mentioned.

Sure. It includes is which of course makes more sense, but small deal for the longer voyages over seven nights of.

For the hiring plans again.

Do you think the CDC might be open to considering.

Considering their position and possibly allow a longer voyages thus for in November.

Well, we have to see what evolve some and again you know with the advent of.

The vaccines.

The acceleration of the low cost more rapid testing.

The advancements in treatment and so on.

I think all of this is potentially influx that would definitely be the cdcs call to make and.

But again, you know things change all the time and we'd have to see so I wouldn't say it's impossible.

No.

Thanks, again, everyone wants to ACA and the best interest based on science and as the science and conditions made.

Made it possible.

They may.

Change their position and then there's other places in the world and whatnot and and they have their rules or regulations and so there will definitely be no opportunity in some places in the world they have longer.

Cruise.

Itineraries for certain then possibly here in the US you acquired so that they will have to see.

And lastly, given your very active communications with the CDC DEA have any sort of other than expected timeline as to when you might be receiving for their technical orders in guidance or are you just.

Weighting in the day, they come out and Thats on all of us to find out.

Hey, thanks.

Yes, I learned a long time ago and different businesses never try to protect regulatory anything.

Because by its nature is not that predictable.

So.

We provide the information we're in active dialogue.

They'll make their determinations and the timeframe that that low.

Obviously, they feel comfortable doing so and we'll respond to that.

So we don't have a.

Good day definite low for.

Guideline release from Maryland.

But but we'll be prepared to act on whatever comes whatever Rick.

I think all of us will be waiting for.

Further guidance as soon as its available. Thank you so much Arnold.

Hey, Thank you so much and then the last comment it would be this that you know obviously, we're in this business for the for the long term and.

While we all want to resume cruise and as soon as possible.

Because you know.

Cash generation.

Cash maximization is created a day for us as a business at this point.

The reality is we want to do it in the right way and and.

Make certain that we're well prepared and to be in compliance whatever the rules and regulations are.

But you.

Whether we start selling in April or March or June or whenever.

The real value in this business, obviously makes sense for many years and eventually we'll all be back so the great day. So.

Growth in our industry and growth in earnings growth and cash generation et cetera, and on when you look at it all the time you know a matter of a month or a month. There are a couple of months here or there.

Or not determining the future value.

The industry our company thanks.

Thanks, I agree, but other than a falling.

Following.

Pricing for all the voyages for close to two decades, now and im kind of reaching the standard getting.

Actual day getting for ships.

Hi, Jeff.

We were there or is it price it again.

Yes, Okay, we are where other area.

Thank you for you.

We have a question from Patrick gross with Truest. Please go ahead. Your line is open.

Hi, good morning, everyone.

Credit more money for that.

There was an industry meeting early last week with the CDC and this day.

That is correct I'm wondering if you can share any detail.

Sales for from that meeting.

No we wouldn't share any any details there are multiple meetings.

With the CDC at different levels.

Other technical levels those medical levels, there's all kinds of.

Things and so at this point what I can tell you is that you know we're in constant communication as are the other cruise lines.

And.

Also our industry Association CLIA.

It was also having.

Having dialogue as appropriate and then everybody's working together.

Focused on resumption cruise and in a way that that fits with old low.

What CDC as determining.

Is best for our Society.

Okay Fair enough and then a second question on the 19 Shipsets a.

Our leaving or have left some of them have last year's here fleet can you give us a ballpark idea of what the net.

Cash income and cash flow from those are thank you.

During the day after day, Yeah, you're talking about the sale 19 chips, we plan to exit.

Yeah. So I know you said.

For the cash flow that was only 3% we had indicated before was 3% of operating income.

Right, Okay, 2019, I'm talking about the per I'm sorry, the proceeds per lot was improved all the flow yeah yeah.

So we we don't disclose.

The net sales price of any ship as you would imagine that would put us in a.

Disadvantage and future negotiations, but but I will say that you know prior to covert. Thank teen in many cases, we were selling ships for.

50, 60 $70 million apiece, but obviously.

These non.

In these cases, we were selling ships for somewhat less than the historical standard.

Post.

Thanks.

So it wasn't it wasn't.

It was up to Minimis in the Grand scheme of a company with them.

You know how far size.

Okay, great that business for the rough ballpark idea. Thank you very much.

Thank you.

I have a question from Ben Chaiken with cash.

I just wish. Please go ahead your line is open.

Hey, How's it going.

Say that you took you talked about lower cruise cost from ships.

Ships, leaving the fleet net I think incremental that insinuated I believe some lower cost as a result of more efficient shore side can you touch on what those improvements are and then maybe any way too.

Think about sizing that opportunity and then just one more on that.

Yeah, the minutes and what the Shipsets Neenah fleet. There were there were less efficient ships, we accelerated the exits given the fact that there was no opportunities for them to generate cash in the near term there given the pause where.

And so the.

No it gives us a 2% reduction.

And then kind of base cost.

Based on those ships exiting.

And what percentage Q.

Advantage as well.

So that's on the Shipside onshore side is basically.

Basically with this cause.

Obviously weve for low them.

You know I had to make a number of changes from a cash conservation standpoint to get our burn rate, though and it's also given us opportunity.

To examine and we continue to do so.

You know all of our operations I'm sure side to see where we can be more efficient where we can be more effective.

And that's in every aspect of the business. So you know when you say give you a few examples it it would be the normal things you would think about.

Right now, we're not advertising and all that but you look at your marketing department to see how you're structured also what you're spending money on it and what have you and we were on a path of continuous improvement before we had been very successful blue.

Through our sourcing efforts, but beyond that you know you are.

Operating.

Procedures, so where we were.

Got a pretty good job of.

Getting unnecessary costs out of the system.

So we continue to do that.

And with this pause weve been able to take a hard look at every aspect of the business and continue to do that and have filed additional opportunities for.

For improved efficiency.

Gotcha. That's that's helpful. And then I think David in your in your pricing commentary you mentioned that I don't know if I caught this right. The forward pricing includes bundles, presumably I guess the implication of the lifting pricing. There. So you mentioned that was not apples to apples. So is it possible to get an apples to apples pricing for what you're seeing.

On your Howard Bucks vs.

The 19 comparison I think.

So the [noise].

When we do the bundle.

What we do is we allocate a portion of the bundled product.

To the onboard and other revenue so the price that we're using in that comparison is only a portion.

For the total price that was paid by the gas.

Overall.

So it says.

Hi, It is close to half for an apples because we can get it but the problem is that you get into it because the allocation would.

Then to see the benefit in onboard and other revenue.

That's why I said that the comparison was probably more favorable.

Than indicated where I said, we were down 1%, excluding the future cruise credit.

That's about as close as I can get it because weve allocated how PLM for went in other.

But you would expect to see a big increase in onboard and other as a result for the pre purchase.

So hopefully that clarifies it for you.

It does thank you.

And we have a question from.

Jamie Katz with Morningstar. Please go ahead your line is open.

Hey, good morning.

Good morning.

Any interesting insights or takeaways from the 45% new to brand book or is that you guys are seeing or day skewing younger or they may be longer lifetime customer is that if there's anything different than.

On the net new that you create the net.

So no we have not seen any like dramatic trend difference and.

No.

Book.

Book or other.

Cruisers than we have for the past the David So like you wanted to make a comment go ahead, yeah. No I was just going to add that you know overall, whether it be a 45% or at the 55%, which are wrapped brand loyalists, which by the way just a little you know just a slight.

Slightly more than that no one.

We really haven't seen any significant change in the overall demographics.

People booking cruises.

We're seeing you know people in their twentys and Thirtys heading swell as people in their 50, 60 seventies and eighties.

And you know anecdotally I was talking to.

A couple other brands asking them about various wages and things and they.

They were telling me that some of the longer voyages in early 2022.

They were seeing quite a few people.

7 billion up booking those wages.

And we would just speculating that maybe those whoever retired people that didn't have to worry about a work schedule. So they could plan you know considerably further ahead than most people. So we're not seeing any significant changes or trends and demographics around the globe and seeing all ages booking.

All products in all brands.

Excellent and then just a quick housekeeping follow up for depreciation for 2021, I know a lot of the ship out.

Out of the fleet are probably largely free depreciated, but can you give us an idea of like what the delta year over year might be figure.

So 2021, we're looking at roughly.

2.2 billion, which is similar to what we saw in.

In 2020, but.

It is a preliminary number.

The difficulty in that is.

You know trying to estimate our Capex for 2021, we obviously haven't made all of our decisions for 2021 yet.

Some of it depends on the timing of the restart.

So that is a preliminary number but at this point that that's.

That's a good ballpark ish figure.

Thank you that's helpful. Frank.

And we have a question from Vince CPL with Cleveland Research Company. Please go ahead. Your line is open.

Great. Thanks, I wanted to come back to the FCC is I think there's a for the last call roughly two thirds were still outstanding. So curious if that kind of roughly how old and what you think it's going to take for more of those to start to convert and then.

Next part of that is I think you previously alluded to a mid single digit type of net.

Negative impacts from the FCC just coming in on the pricing side and Im curious if that impacts kind of has held and should continue to hold as more of those convert.

So the blast.

Last time, when I was talking about mid single digits I was talking about the back half.

2021.

When you start looking at you know that the time period that we're talking about the back half the 21 in the front half of some 22, you're still in the same ballpark in terms of famine.

You know, including the Fccs in terms of the pricing.

And as far as the FCC is.

Probably it's about 45%.

Our customer deposits at this point 'cause still on applied Fccs. So we still have quite a few fccs that have yet to walk to rebook, but that's not really very very surprising you know a lot of times you get families that are booking multiple families with kids.

And and you've got to coordinate.

Occasions with supervisors at work and timeframe. So we would expect these fccs to turn into bookings over the next six or 12 months.

As people plan their vacation opportunities.

Great. That's that's really helpful and maybe I wanted to think a little bit about the longer term margin opportunity you've talked about sales less efficient ships, probably kicking out some overhead.

Well the arrival of newer more efficient ships, just curious what type of.

EBITDA margin opportunity do you think is have you as a is revenue more fully recover it's probably 20 to 23.

Yeah, I would be reluctant at this point Thomas Kinda give you that margin opportunity that would be providing guidance.

And were non into position yet I think by Arnold comments.

Indicating the efficiencies that we expect.

He was alluding to when improvement, but you know give us some time to resume guess cruise operations get back in service.

And we'll be in a much better position later.

Later this year, perhaps to take give you more guidance and details into that but.

But at this point you know all of the cost.

Metrics would lead you to a better margin opportunity in the future.

Great Operator, we'll take one more question. Please thank you.

And we have a question from Stuart coordinate with Berenberg. Please go ahead. Your line is open.

Yeah. Good afternoon, and I was wondering if you could.

You can't manage an approximate net debt number and at the end of Twentytwenty and ideally calendar. So I think there is some export credit facilities drawn down in December.

And on the fiscal say.

And thanks.

So so.

That is at the end of 2020.

In November Thirtyth, 2020, which <unk> balance sheet date will be $27 billion and you're correct. We did shortly thereafter, we took delivery of two additional share.

And true on the export credits associated with them that was probably an additional call. It every day and a half if I remember correctly hot in December on the Carnival, MYDICAR and GAAP cost difference.

Okay. Thanks, and just just and so I mean, you've obviously given us some visibility on the delivery schedule and Twentytwenty one.

Have you given any thought whether you could 10, so any future ship ship deliveries no. So what would be your anticipated fleet size in Twentytwenty two doses 2019, given the changes with the ships leaving.

Okay. So in terms of the young for ship deliveries I mean, you know we've said this many times before I mean, we did renegotiate.

Delivery dates as Arnold indicated.

And we got a delay in all of the ship deliveries, but there are no cancellation clauses in par newbuilding contracts. So as a result of that I wouldn't expect any cancellation of the any of the of the new builds I know where we.

We started the year with 14 on order we took delivery of two so we have 12, where in the ensuing years.

And as far as capacity is concerned.

If you look at the end of 2022 you.

You'll see that and we tried to do this.

Inhale biggies.

Our capacity at the end to 2022 would be about 5.6 percentage points higher than 2019, So you're really just talking about less than two per cent per year capacity growth from 19 to 22 because of the new pills. They came in but remember the acceleration.

For the 19 chipset left the fleet.

So it nets out to less than 2% here.

Yeah.

Okay. Thank you yes.

Thank you everyone. We really appreciate.

I appreciate your interest.

Happy New year these sales.

Be responsible I'm sure you all are and.

Together, we look for it so what hopefully.

We will be.

Very nice 2021.

Lead to.

Many future years. So soon so thank you. Thank you so much.

That concludes the call for today, we thank you for your participation. Please disconnect your line.