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 you all for joining us this morning before.

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.

And no 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 prove 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 help make it happen, particularly our carnival family, both shipboard and shore side and.

And believe me it took all hands on deck.

For returned over 260000 guests home to repatriate 90000 crew members. So process billions of dollars euros and pounds of guest refunds and billions and future crews credits.

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

To move our entire fleet and its a full cost status.

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

To extend debt maturities and the men agreements with over 20, and lenders and 40 different agreements on.

All while completing over a dozen financing transactions for a cumulative net.

$19 billion of new capital.

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

Even in a zero revenue environment.

And we are emerging from a pause for 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, our recurring base of repeat Geff.

And 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 and unit costs, and a 1% reduction and unit fuel consumption going forward.

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

And of course over time, we will achieve and 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.

Pasta for Rins day, and the highly anticipated Carnival Mardi Gras.

Both the first roller coaster assay on board Mardi Gras has already generated significant media attention for Carnival cruise line, garnering hundreds of millions of media impressions Jess and the last few months.

As has the Queen Mary two for two Dart, which was the focal point and the recent star studded film, let them all tall, capturing over 7 billion media impressions.

We further strengthened our board of directors, adding to and 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 John.

Josh is uniquely suited for this row, having previously led carnival UK and prior to that serving as our corporate treasurer and prior to that serving and enrolled and 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 and our sustainability efforts, reducing food waste and accelerating the reduction and single use plastics amongst other goals.

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

Forward booking trends, we have consistently experienced throughout this period in spite of day extended pause and our operations in spite of our minimal advertising and effort and even in spite of 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 position to optimize that pent up demand file 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 given our multiple national brands, which can each be restarted independently and this has already proven to be instrumental and enabling us to resume cruising a limited basis both for cost.

Europe, which is nearly 80% current in our 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 92% 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 and today's environment.

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

Princess key and half Moon.

Half Moon key for.

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

We continue to work diligently to resume operations in the U.S., including.

Including of course ongoing discussions with the CDC.

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

And we're working hard to do so and away that serves the best interest of 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 and the communities, we touch and serve and.

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 size to specifically address the risks associated with cold at 19.

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

And as we are demonstrating with both cost and I, either which have received high satisfaction scores from our value guests. We 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.

And we're working on to our having all of our ships back and 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 and a balanced and responsible way.

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

And secured the necessary financing and 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 schedule pushing out new build capital and more importantly, we have just one ship for delivery in fiscal 2024, and just 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 returned to full operations, our cash flow will be the primary driver to return to investment grade credit overtime, 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 t. 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 Sarah other stakeholders for their ongoing support.

And especially bank.

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 on.

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

And ill 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 trend.

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

Even better our cumulative advance bookings for the first half of 2022, our head 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 on 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 the negative impact EPS future.

Cruise credit on more commonly known as the FCC.

Pricing on bookings in the beginning of fiscal year 2019 is a tough comparison and.

That was on high water Mark for historical yield.

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

In the and we expect to see the benefit of these bundled packages and 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 and not the prior year.

It is particularly reassuring to see that approximately 60% and booking taken during the fourth quarter 2020 for fiscal year, 2021, where new bookings with the remainder being FCC rebooking.

And 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 and new to brand with the remaining 55% and gas being brand loyalists, which is just a little higher than the norm.

A continuation of the positive position, we had at the end and that 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 on $530 million due to the timing of capital expenditures for.

For the first quarter, we expect on 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 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 and we had on the balance sheet at the end and 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, while the senior unsecured notes we completed in late November raised $2 billion.

This was partially offset by three things.

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

Second 1.5 billion driven by scheduled debt maturities and third price decline and customer deposits 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 on.

Previous expectation.

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

Since the pause and our guests cruise operations earlier. This year, we have free 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 notes.

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 obtaining sufficient liquidity to get through the pausing guess cruise operation. However.

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 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. Thanks.

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

Thank you for like the rest are a question on please press the one follow for the for and your telephone you with your thoughts on prompt for acknowledge your question if you're.

A question has been answered on you would like to withdraw your registration. Please press. The one followed by the Threed. If you are using a speaker phone. Please lift your handset before answering your question once and Thats one for to register for a question on briefly on for the first question.

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

Hey, guys good morning.

So and good morning, but I think that hey on how you doing.

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

Yeah 'cause it because you obviously you have wording and the release about how you expect to enter additional financial transactions. What you just talked about but you know 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 get 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.

Right.

For me you know.

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

Yes.

Hoping will happen so far and early 21 here is just the hang over from 2020.

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

And as the planet.

This whole thing so hopefully we'll have a low operating about a year and all that Dave and respond to the rest for your question go ahead David.

[laughter] [noise] income.

And some of the.

Uncertainty relate to the resumption of cruise operations and the various brands around the world exactly when and how soon and so we're just trying to.

Two people 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 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.

It is a little bit on certain.

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

And before they're allowed to sales.

Well you know as you can you very well aware the Oh vaccine thing and is that the very beginning here and so youre monitoring and we're in dialogue with not only CDC, but lots of other oh equipment organizations around the world while the destinations.

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

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

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

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

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

At the end of 2020, I would be about 130 million a month for call. It <unk> billion six for the year, so depending on liability and management and.

And other things it could be a low data plus and minus from that number.

Okay, great. Thanks, guys appreciate it.

Okay. Thank you.

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

Great. Thanks, I Wonder if you could give us any sense of the timing or kind of the gating issues for years and your first your initial tests cruises.

Yeah, Hi, Rob and happy New years day, you know that and work in process.

One more in what was been communicated.

Communicated by the CDC, the additional guidelines for future phases.

We have not yet been issue, but by CDC you know we have.

Weekly calls our current softness we need with them.

So you know that that remains to be seen but what I can tell you is that we're.

We're on track to.

The April.

To do whatever we need to do in a very timely manner.

To be able to reach on crude ultimately.

To me it sounds like you're waiting specifically for the CDC too and she's some specific guidance around the test screens timing.

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

We have a.

And bringing those ships back and meeting the criteria that you know is currently put out there to be in a position for them subsequently be test cruises, but to give you a specific timing on this house cruises and we would need additional guidance from CDC.

Great. Thank you for that clarification, and and then just one other and maybe this is thinking that maybe this on for David.

How should we think about the expense.

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

And when the ship is and warm lay up you have some crew on board you're running the system and all of that so actual cost us when that ship goes from being and 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 on.

Start to burn fuel, you'll you'll start to have to provision for and for people that I'm talking about you know is there any sort of one time cost or is it just you know that you staff up and you go from these lower levels to be and what a typical expense per passenger cruise day would and span.

Prior.

Yeah. So I can tell you what our experience has been with some cost and like either.

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

The crude they brought the crew back which is and expense.

And you know playing flights and and testing.

Testing and other protocols you've got a.

Spend some money for food and other inventory for the share, but while this will be a cash cow flow as you would expect during this period, if you're ramping up the share price. You're also have a cash inflow from the customer deposits, because you're getting final payments and associated.

And with those voyages.

And so you know and I think I have said before and that the ongoing expenses that.

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

You know for the U.S. and the C.D.C. as Arnold indicated before we're still waiting for a lot of the technical guidance that was not included.

And in their original conditional sales or whatever and.

And so it's very difficult to estimate and that 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 and James Hardiman with Wedbush Securities. Please go ahead. Your line is open.

[noise] 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 and what you expect it to be once you're what you're making money again on the <unk> on a diluted basis.

Yeah. 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.

Hum and the remaining I'm convert.

He would total and billing and when 140 million.

Got it and then as we think about.

Presidential transition here on the next couple of weeks and maybe how you're thinking about.

Potential risk or maybe opportunities do you think that changes the conversation with the CDC and all and you know obviously what was a nice benefit for you guys. During your bottom and 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 Oh, Thanks for your question and happy New year I think.

First of all look for <unk>, we all stand together and trying to mitigate the spread of this virus and.

And.

Whatever other.

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

And 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 you know to sort of the best interest public health and and I think the size ultimately what guidance. All so there are with regards to other matters you know on.

Firstly, Cuba.

No. It was a focal points for the Obama administration opening up Cuba et cetera, and we'll see what happens on what the incoming administration.

We obviously will be well prepared we were very.

They're actually we were the first ones so to sales for Q and we'll be well prepared.

To be able to operate and whatever.

On the guidelines and rules and regulation.

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

And people really want to go to Cuba.

C and the best way, so we feel which is no oh come and rod and be a cruise and.

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

Got it and then 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, you know depending on the punch free and and their their state in terms of of.

Of the virus itself and that's going to change the man, but maybe just more broadly.

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

Yeah, that's that's staying 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 on.

Obviously, one would be cost Asia, where you know the the booking is much closer and.

Dan on many of our other brands, but absent that.

And there's no big dramatic differences across the brands on terms, so booking patterns or trends and and there was a lot of pent up demand for crews, which is evidenced by the booking patterns and.

And so on and 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 and in that regard and the fact that we we have on number of brands and our drive to markets and.

Easier to get too and so on and so for this is another benefit and and that's around the world and so given.

Given that you know, we don't see dramatic losses across the brands and we see genuine and strip them and what should be a robust opportunity one schools reasons.

Got it thanks on hold and thanks David.

Thank you.

Bookings were robust free vaccine and and.

And then you know post vaccine so we haven't seen any day.

Attic shift and and that again, we we havent experienced a demand challenge on for crews for all the reasons, we pointed out on including the large base of previous cruise scores, you know repeat crews et cetera.

And the demand is really getting pent up because you know they've been many months without being able to satisfy their craving for for a cruise experience, but I'll, let David calm and more granularly on on and on some level of interest statement.

And now a young and.

That's correct what your sand on.

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

Yeah, good demand and all of the various crews and markets whether it be the Caribbean Itineraries Europe itineraries, we're seeing good demand for Australia for World cruises et cetera, and so it's it's broad based and.

And across as Arnold said, all the brands.

Thanks for that that's helpful. And then one more for me is on the C.D.C. I was I was hoping that you.

You can help us understand the relationship between maybe yeah potentially as we move to the summer season and ships tend to sale more abroad is it at.

And will likely that you might look to look to get fewer shifts.

Outfitted and certified under the CDC guidelines and since you know there's not a whole lot of point to get certified for for one month and this spring and then and then go and then go sell elsewhere, where there's not going to be the same restrictions.

And we want the and freedom to operate and period and so we'll be focused on again being and compliance with whatever CDC I regularly for obviously you know we give our inputs and all for no other like.

Science medical experts their inputs and whatnot, but let's see do you see on make those determinations and 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 sailings normally or outside the U.S. and so on.

And as you know give those additional degrees of freedom, but we also have to secure and freedom operating other places that we've been doing.

Doing a really good job, so far and Europe with.

And you know the limited and the startups of Costa and and I, either but you're right as you look around the world and and their current targeted markets and but obviously the summers you know I'm also an active time for the U.S. dealings with you know holidays and vacations.

Of course, all of that feels a little different now, but but nonetheless, you know it is the.

And active period. So you know, we're well positioned for differentiate and we have nine world leading cruise line brands with National brands.

Yes, things open up and staggered ways around the world. We can take full advantage of that but we'd like to have the freedom to operate everywhere.

And and now I'll just add that if you look at the CDC website, you'll see that we brought 30 ships back and to U.S. waters wanting more is expected to come back and transit Carnival and Mardi Gras and those are the share that we expect to sale on.

And in U.S. waters through is a balance on the conditional sales or whatever on.

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 Infiniti Research. Please go ahead. Your line is open.

Good morning happened here and.

Couple of quick questions [laughter] [laughter] sales.

Thank you.

And inclination or ability to possibly restarts and on the ships that are currently scheduled to start out and 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.

Yeah.

If it made sense and first of all we're always going to act and the best interest a public health that's number one and number two is and Ah we have the freedom and.

Operating a sooner and and there were itineraries and made sense.

We would not rule out here in January.

Introducing.

And customize itineraries you know price are 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 presented itself and it made sense and especially this is now January here for me no absolutely we could introduce you know some customized.

For something to reintroduce it could make.

And I know you mentioned sort.

Sure to quizzes, which of course makes more sense, but something on the longer voyages and over seven nights and went to hire and brands again or do you think the Cds he might be open to considering their position and possibly allow for a longer voyages for November.

And we'll have to see where the ball's and again and you know with the advent of.

And the vaccines with the acceleration of low cost more rapid testing and what the advancements and treatments and so on and I think all of this is potentially influx and that would definitely be the cdcs call to make and.

But again, you know things change all the time and and we'd have to see so I wouldn't say, it's impossible and no I think again, everyone wants back and and and the best interest based on science and as the science and conditions, you know and made it possible then.

They may you know change their position and then there's other places and the world and and and whatnot and and they have their rules and regulations and so there will definitely be no opportunity and some places on the world you know to have longer.

On a cruise.

Itineraries for certain and possibly here in the U.S. you know parts of that day, but we'll have to see.

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

Weighting in the day, they come out and that's on an old well find out.

Yeah. Thank.

I learned a long time ago and different themselves never try to protect regulatory anything <unk>, because buys majors and it's not that predictable. So you know we provide the information we're in active dialogue and they'll make their determinations and the time frame that that you know.

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

So no we don't have a good.

Day definite no for a future guideline release and from them and but we'll be prepared to act on or whatever comes whenever it comes on.

I think on this will be waiting for you know for further guidance as soon as its label and thank you so much Arnold.

Okay. Thank you so much and then no outcome and 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 crews and as soon as possible because you know the.

Cash generation and.

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

So whether we start selling and and April or March or June or whenever you know the real value and 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 and growth and earnings growth and cash generation et cetera, and I'm and you look at it all the time you know a matter of on multi or a month. There are a couple of months here or there you know are not determined in the future value of the industry or.

Thank you I agree, but they've been on falling and you know.

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

Actually getting the ships.

On <unk>.

Alright, sitting and [laughter], yeah, Okay, where we're married and [laughter] linky, but I do.

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

Hi, good morning, everyone.

Current and work on here for that there was an industry leading early last week with the CDC and if that is correct I'm wondering if I can share and details for from that and eating.

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

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

Things and so on that at this point what I can tell you is that you know we're in constant communication as are the other cruise lines and and also our industry Association CLIA and it was also you know having dialogue as appropriate and and everybody's working together.

And focused on resumption and crews and and in a way that that fits with Volvo.

With CDC is determining is best for our society.

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

Our leaving or have left or someone and have left years here fleet can you give us a ballpark idea of what the net or cash income and cash flow from those are thank you.

Good day, and yeah, you're talking about the sales 19 chips, we plan to exit and.

Yeah, So I know you say and how.

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

Right, Oh, 20, and I think I've talked about that for I'm sorry. The proceeds per lot was improved on the older for <unk> yeah yeah.

So we we don't disclose.

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

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

50, 60 $70 million apiece, but obviously.

These and other.

These cases, we were selling ships for somewhat less than historical and standard you know post coli. Thank team.

So and it wasn't it wasn't and it was a de Minimis and a grand scheme other company with them.

You know I've our 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 on Hey, Ben you took and you talked about lower cruise cost from ships, leaving the fleet and <unk> and I think incrementals on that insinuated I believe some lower cost as a result, and more efficient shore side can you touch on what those improvements are and then maybe any way to.

Think about sizing that opportunity and then just one more there's uh huh.

Yeah, as I mentioned with the ships vaccine and fleet and they were they were lucky fish and chips, we accelerated the exits given the fact that there was no opportunities for them to generate cash in the near term there given you know the pause went on.

And so the.

And gives us a 2% reduction.

And then kind of base cost and based on those ships exiting.

And then what percent.

Fuel.

Vantage as well.

So that's on the the ship side on shore side and stuff are basically with this pause and you know obviously, we for load and.

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

On 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 and your marketing department 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 had been very successful on blue our sourcing efforts, but beyond that you know either on our operating.

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

Getting unnecessary costs out of the system and.

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

And I have found additional opportunities for.

For improved efficiency.

Gotcha. That's that's helpful. And then I think David and they're in your pricing commentary you mentioned debt I don't know if I caught this right. The forward pricing includes bundles, presumably I guess implication on the lifting pricing there. So and 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 credit box vs.

The 19 comparison and I think.

So the [noise].

When we get on the bundle.

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

To the on boarding and other revenues for the price that we're using and the comparison.

Only a portion.

For the total price that was paid by the GAAP.

Overall.

So it says.

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

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

And indicated where I said, we were down 1%, excluding the future crews credit.

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

But you would expect to see a big increase and on board and other as a result, and the pre purchase.

So hopefully that clarifies it for you.

It does thank you.

And we have a question from Jamie.

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

Hi, good morning.

More and more.

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

And then they knew that you create and.

So it on no we have not seen any like dramatic trend there for us and you know new.

And book or on a new cruisers on that than we have and the past the Davis and like you wanted to make a comment go ahead on yeah, and I was just going to add and that you know overall, whether it be a 45% or the 55%, which on a wrap brand loyalists, which by the way just a little you know just.

Slightly more than and no one.

And we.

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

And we're seeing you know people and their twentys and Thirtys and sweat lets people and their 50, 60 70 and eighties.

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

They were telling me that some of the longer voyages and early 2022, and they were seeing quite a few people.

70, and up booking those wages and.

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

All products and all brands.

Excellent and then just a quick housekeeping follow up on for free.

And she is and for 2021 I know a lot of the ship on out.

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

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

What we saw and 2020, but it.

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

Number but at this point that's <unk>, 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 those are the last call roughly two thirds were still outstanding. So curious if that kind of roughly how old and and 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.

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

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

2021.

And when you start looking at you know that the time period that we're talking about the back half for 21 and the front half of on 20.

22, you're still on when 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%.

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 on multiple families with kids and.

And and you've got to coordinate 'em vacations with supervisors at work and time frames. So we would expect these fccs to turn into bookings over the next six or 12 months.

And 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 and you've talked about sales less efficient ships, probably kicking out some overhead.

Well the arrival of newer and more efficient ships just curious what type of EBITDA margin opportunity. Do you think is have you as a as revenue more fully recovers probably and 22 23.

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

Is alluding to and it went improvement, but you know give us some time to resume guess cruise operations get back and 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 and metrics would lead you to a better margin opportunity and the future.

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

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

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

Good day, ladies Gonna Trups net net debt number and.

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

And on the expense to say.

And thanks.

So so debt.

That is at the end of 2020 and November Thirtyth, 2020, which drove 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 and that was probably and additional call. It three and a half if I remember correctly in December on the Carnival MYDICAR and got cost for friends.

Okay, Thanks, and just just and so.

Well I mean, you've obviously, given and some visibility on the delivery schedule and Twentytwenty, one and have you given any thought and.

Whether you could can so any future shit ship deliveries and oak. So what would be your anticipated fleet size and Twentytwenty. Two gross is 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 on delivery dates as Arnold indicated and we got a delay and all of the ship deliveries, but there are no cancellation clauses.

And our Newbuilding contracts, so as a result and that I wouldn't expect any cancellation of any of the of the new builds on or whatever we started the year with 14 on order. We took delivery of two so we have 12 and where and 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 in l. 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 the fleet.

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

[noise] interest and with that I. Thank you yeah.

Thank you everyone. We really appreciate.

I appreciate your interest happy new year be say.

Be responsible I'm sure you all are and and together and we look for it so what hopefully will.

It will be you know.

A a very nice 2021.

Leading to a many future years Oh. So soon so thank you. Thank you so much.

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 our business update conference call.

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 and 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, and 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.

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 guests refunds.

And billions and future crudes credits.

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

And move our entire fleet for cost status for the.

Develop new crews protocols and put them to the test as we resumed cruise operations and both Italy and Germany.

To extend debt maturities and amend agreements with over 20 and lenders and.

For the 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, either.

Even in a zero revenue environment.

And we are emerging from a pause for 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, our recurring base of repeat guests.

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 and unit costs, and a 1% reduction and 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 and 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 piece.

UK Iona.

Cost of for M&A, and the highly anticipated Carnival Motty gross.

Both the first roller coaster assay on more Moneygram has already generated significant media attention for Carnival cruise line, garnering hundreds of millions of media impressions, Jeff and the last few months.

As has the Queen Mary two for two North which was the focal point and the recent star studded film, let them all tall, capturing over 7 billion media impressions.

We further strengthened our board of directors, adding to and 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 serve and as our corporate treasurer and prior to that serving and enrolled and 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 and our sustainability efforts.

Reducing food waste and accelerating the reduction and 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 and.

Bite of the extended pause and our operations in spite of our minimal advertising efforts and even in spite of the abundance of negative global news affirm 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 and is also very encouraging to see demand from new guess upon.

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

And 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 and this has already proven to be instrumental and enabling us to resume cruising on limited basis both for cost.

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 likely to persist usource on.

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 out too highly regarded private on us in the Caribbean.

Princess key and half Moon.

Half Moon key for.

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

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

And of course ongoing discussions with the CDC.

At the same time will work and toward resuming operations and many other parts of the world, including Asia, Australia and of course the UK.

And we're working hard to do so and away that serves the best interest of the public health.

Our highest responsibilities and therefore, our top priorities are always compliance.

Environmental protection and.

On the health and safety and well being of our GAAP of.

Of the people and 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.

And 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 were for.

I appreciated the changes weve 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.

And we're working on to our having all of our ships back and 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 influence 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 and a balanced and responsible way.

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

And secured the necessary financing and 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 schedules pushing out new build capital and more importantly, we have just one ship for delivery in fiscal 2024, and just 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 and keeping with our primary financial objective going forward.

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 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 to our other stakeholders 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 on.

Current today with an update on booking trends and.

And ill provide on 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 and time, our cumulative advance bookings for the second half of 2021 and within the historical range.

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

Directionally comparable pricing on these bookings for the second half on 2021, and the first half of 2022 are down cash at 1% versus pricing on bookings in the beginning of fiscal year 2019, if you exclude the negative impact on future.

Cruise credit on.

More commonly known as Cc.

Pricing on bookings in the beginning for fiscal year 2019 is a tough comparison.

That was a high water mark for historical yield.

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

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

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

Due to the price in gas crews and operation in 2020, the company's future booking trend will be compared to 2019 and not the prior year.

It is particularly reassuring to see that approximately 60% and bookings taken during the fourth quarter 2020 for fiscal year, 2021, where new bookings with the remainder being FCC rebooking.

And 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 and new to brand with the remaining 55% GAAP being brand loyalists, which is just a little higher than the norm.

A continuation.

Sensitive position, we had at the end and third quarter.

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

For the first quarter, we expect on 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 for.

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 and we had on the balance sheet at the end and 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.

To 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 on monthly average cash burn rate of 500 million per month times three.

Second 1.5 billion, driven by scheduled debt maturities and third and price decline and customer deposits.

And $2 billion from $2.4 billion at the head and going to the third quarter to $2.2 billion at the end and the fourth quarter, which was better than our previous expectations.

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

And deposits and our guests 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 dairy and have our convertible note through.

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 pause and gas cruise operation. However.

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 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. Thanks.

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

Thank you for like the rest on a question on please press the one followed by the for and your telephone you will hear a three to on prompt for acknowledge your request 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 and Thats one for to register for a question on briefly.

For the first question.

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

Hey, guys good morning.

So and good morning, but I think hey are and how you go on.

So David want to start 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. 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.

Restate for me.

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

Sales.

I'm, hoping will happen so far and early 21 here assessor angle were from 2020.

We're still navigating this day as the.

As the planet.

This whole thing so hopefully we'll have a low.

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

Thank you.

And the.

On certain key relate to date resumption of cruise operations and the various brands around the world exactly when and how soon.

And so we just try and 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 on certain.

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

I assume you guys are puts and saw it 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 very well aware the low.

Vaccine thing and is that the very beginning here and so.

For monitoring and we're in dialogue with 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.

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

Okay and can I ask one real quick housekeeping question for for David David can you help us and 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.

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

So depending on like.

Liability and management.

And other things that could be a low data plus and minus from that.

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 cruises.

Yes, Hi, Rob and happy New years day.

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.

We have not yet been issued.

By CDC.

We have.

Weekly calls or gross office, we need with them.

So that remains to be seen but what I can tell you is that.

We're on track to.

Then on the April.

To do whatever we need to do and a better.

Free timely manner.

To be able to lease on crude volume level.

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

Well to answer your question about specific timing on Santa Cruz, Yes, we would be waiting, but obviously, we're doing a lot of things we started to bring shifts back into the us.

We have.

And bringing those ships back and they are meeting the criteria that you know is currently put out there to be in a position for then subsequently be test cruises, but to give you a specific timing on the test cruises.

I would need additional guidance from CDC.

Great. Thank you for that case.

Kitchen, and and then just one other question. Maybe this is thank you and that maybe this one's for David.

How should we think about day.

Expense.

Sure and and I guess, what im asking specifically and you've talked about how.

Even when the ship is and where Im glad you have some crew on board you're running the system and all of that.

Actual cost of witness ship goes from being and warm lay up Q2 operating and.

And 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 see you'll start to have to provision for sir.

And for people and 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 would expense.

Prior.

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

EBITDA.

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

The minimus.

Crude they brought the crew back which has and expense.

Cleaning flights and and testing.

Testing and other protocols Uganda.

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

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

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

So.

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

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

Yeah.

For the you asked for the CDC is.

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.

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

For the time, we restart operations.

Great. Thank you very much.

And on next question is from the line and James Hardiman with Wedbush Securities. Please go ahead and open.

[music].

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 once you're much and making money again on a on a diluted basis yeah.

So today the outstanding share count at the end of 2020.

1.087 billion shares.

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

And the remaining concur.

It would total and billing anyway and 149.

Got it.

And then as we think about.

Presidential transition here and then.

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

Potential risks or maybe opportunities do you think that changes the conversation with the CDC and all and.

Firstly, what was a nice benefit for you guys. During your bottom and ministration was was the.

Availability of Cuba have you had any conversations on that front seems likely to be maybe an opportunity going forward.

You know I think first of all on.

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 and compliance.

But we just want to be and 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 and I think the size ultimately.

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

You know obviously.

The two book to Bill was a 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.

They're actually we were the first ones to.

So 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.

And people really want to go to Cuba.

See it the best way, so we feel which is.

Right and be a cruise and then.

And experiencing or what you would have saw for when it opens.

Got it and then just maybe lastly for me.

Okay.

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 country and and their their state in terms of.

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

Are there some brands that are there better.

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

Yes, and as US stay some opening remarks, and obviously overall.

Demand has been very robust and.

We plan on that.

Very affirming.

For our business we.

We do not see major differences across brands.

Obviously, one would be cost Asia, where.

The booking is much closer and.

Than any of our other brands, but absent that.

There's no big dramatic differences across the brands on terms so.

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

And so and we're going to have smaller fleets for.

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 and in that regard and the fact that we we have on number of brands that our drive to markets and.

Year to get to so on and so for this is another benefit and thats around the world and so.

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

And we see genuine and strip them and what should be a robust.

Opportunity once gross reasons.

Got it thanks on hold 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.

Just curious on on bookings good morning, hopefully and you could maybe flesh out some of the cadence in bookings qualitatively sort of interested in knowing how bookings pace is fair and now versus pre vaccine and assets and meaningful different pace and sort of when did you might might have you seen that and slack.

Yeah.

Bookings were robust free vaccine and and have them.

Gross vaccine. So we haven't seen any dramatic shift and that again, we havent experienced a demand challenge for us.

First of all the reasons, we pointed out and including the large base of previous cruise scores repeat cruises et cetera, where the demand is really getting pence up because they've been many months without being able to satisfy their craving for for cruise experience.

But I'll, let David comment more.

More granularly on costs on some of the book interest David.

Yeah, no other young.

Thats, correct switches and Arnold and other things that I would add to that [noise].

And we're seeing 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 cruises et cetera.

So it fixed.

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 can help us understand the relationship between.

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

I'll likely that you might look to look to get fewer ships outfitted and certified under the CDC guidelines.

And there's not a whole lot of point to get and certified for for one month and this spring and then and then go and then go sale elsewhere, where there's not going to be the same restrictions.

And we want the freedom.

Freedom to operate period, and so we'll be focused on again being and compliance with whatever CDC.

Regulates obviously, we give our inputs and.

For no other.

Life Science medical experts their inputs and whatnot, but the CDC on make their determinations and and.

And we want the freedom to operate have 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. and so on.

And as you know gives us additional degrees of freedom.

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

Doing a really good job, so far and Europe with.

On the limited and the startup so cost and.

And I either.

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

So.

Also and.

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

Holidays, and vacations of course, all of that vehicle there for now, but but nonetheless.

You know it is.

For the active period so.

We are well positioned with differentiated way of non Wally 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 freedom to 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 T.U.S. waters.

One more is expected to come back and transit down 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 so hot that to CDC issued this year and the remainder of the ships would say on how high you as orders.

Perfect. Thank you.

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

Good morning happening any interest.

Quick questions for smartphones for.

Thank you.

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

Sorry, Tom, Let's say May and June as opposed to again to have lunch knows 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 on the best interest of public health, thus on a one on non.

For two years.

We have the freedom.

Its operating.

Sooner and there were itineraries and made sense.

We would not rule out here in January.

Introducing.

And customize itineraries price of those periods for Brian's, 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 opportunities present and itself and it made sense.

Especially on this is now January for here for me.

No absolutely we could.

There is some.

Customize here, it's up and to reintroduce the basis.

And on you mentioned.

And when it closes which of course makes more sense, but some of the on the longer voyages and over seven nights and.

And the hiring plans again.

Do you think the CDC might be open to reconsidering their position and possibly allow a longer voyages and before and November.

And we'll wait to see whether you balsam and again, you know with the advent of.

The vaccines.

With the acceleration of low cost more rapid testing.

What the advancements and treatments and so on.

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

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

No.

Thanks, again, everyone wants stack and and and the best interest based on science, and if the size and conditions.

Made it possible.

And they may.

Change their position and then there's other places and the world and and whatnot and and they have their rules and regulations and so there will definitely be real opportunity and some places on the world they have longer and.

Crudes.

Itineraries for certain and possibly here and the U.S. you acquired so that they will have to see.

And lastly, given your very active communications with the CDC on D. have and you sort of and expect a timeline as to when you might be receiving for their technical orders and guidance or are you just go on.

Waiting and they they come out and Thats on all this and find out.

Hey, thanks.

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

Because by its nature is not that predictable so.

We provide the information we're in active dialogue.

I'll make their determinations and the timeframe that that will.

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

So we don't have a good day.

They definitely low for.

Future guideline release on from them and.

But but we'll be prepared to act on.

Whatever comes whenever it comes on.

I think all of us will be waiting for you know and.

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

Hey, Thank you so was and then though outcome and it would be this that no other.

Obviously, we're in this business for the for the long term and.

And.

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

Because you know.

Cash generation and.

And cash maximization is Korea on it a day for losses business at this point.

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

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

Whether we start selling and and APRU or March or June or whenever.

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

So.

Growth in our industry, and and growth and earnings growth and cash generation et cetera, and on when 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 determined and the future value of the industry our income.

Thank you I agree, but theyve been on a.

Falling and does pricing for all of the voyages for close to two decades, now and and kind of reaching just on getting actual and getting the ships.

First we will move on.

And then or is the pricing and.

Yes, Okay, we are world, Larry and [laughter], Thank you, but I do.

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

Hi, good morning, everyone.

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

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

And with the CDC at different levels other.

Technical levels those medical levels, there's all kinds of on a.

Things and so on that at this point what I can tell you is that we're in constant communication and.

For the other cruise lines and.

Also our industry Association CLIA.

It was also having dialogue as appropriate and and everybody's working together and focused on resumption and crews and and away 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 share.

EPS that.

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.

Good day.

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

Yeah, So no he sent and how.

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

Right, Okay, and 29 thinking I'm talking about the per I'm, sorry, the proceeds the price always improving on the old coils. The yeah yeah.

And what so we don't disclose on the.

On the sales price of any ship as you would imagine and that would put us in a.

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

These and other.

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

You know post.

And we think team.

So it was it was and.

It was de Minimis and the Grand scheme other company with them.

You know how far size.

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

Thank you.

And a question from Ben Chaiken with cash.

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

Hey, How's it going on.

Say that.

Hey, you talked about lower cruise costs from ships, leaving the fleet and that and I think incremental that insinuated I believe some lower cost as a result, and more efficient shore side can you touch on what those improvements are and then maybe any way too.

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

Yeah, the minutes and with the Shipset seamlessly.

They 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 went on.

And so the.

You know it gives us a 2%.

Reduction.

And then kind of base costs and.

Based on those ships exiting and and what percent.

You.

Advantage as well.

So that's on the Shipside on shore side as well.

Basically what this caused obviously weve for load and.

I had to make a number of changes from a cash conservation standpoint to get our burn rate, though and and is also give on us opportunity.

And to examine and we continue to do so.

All of our operations I'm sure side, and see where we can be more efficient where we can be more effective and that's in every aspect of the business. So 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 on your marketing Department and see how you're structured also what you're spending money on them and and what have you and we were on a path of continuous improvement before we had been very successful on blue.

Through our sourcing efforts, but beyond that you know either on our operating.

Procedures, and so where we were you know.

Go on pretty good job of.

Getting unnecessary costs out of the system and.

So 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 and filed additional opportunities for.

For improved efficiency.

Gotcha. That's that's helpful. And then I think David on there in your pricing commentary you mentioned that I don't know if I caught this right. The forward pricing includes bundles, presumably I guess implication and lifting pricing there. So and 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 colored box vs.

Okay, 90, and comparison I think.

So the [noise].

When we do the bundle.

And what we do is we allocate a portion of the bundle product.

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

For the total price that was paid by the gas.

Overall.

So it says.

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

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

And indicated where I said, we were down 1%, excluding the future crews credit that's.

That's about as close as I can get it because weve allocated how people on board and other.

But you would expect to see a big increase and onboard and other as a result, and as a 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.

And with more and more and there were any interesting insights and hopefully and from the 45% news to share brand and book or is that you guys are seeing are they you and 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.

And.

Book or.

No.

Cruisers on that.

And we have for the past the Davis and like you wanted to make a comment go ahead, yeah, and I was just going to add to and that you know overall, whether it be a 45% or the 55%, which on wrap brand loyalists, which by the way just a little he and I guess a slightly.

Slightly more than that no one time, and we really haven't seen any significant change and the overall demographics have on how did the people book and cruises.

We're seeing you know people and 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 other brands asking them about areas for wages and things and I and.

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

They were seeing quite a few people 70 and up booking those wages and.

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 and most people. So we're not seeing any significant changes or trends and demographics around the globe and seeing all ages booking.

Core products and all brands.

Excellent and then just a quick housekeeping follow up on for depreciation for 2021, I know a lot of the ships that have come out.

Out of this.

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

And so 2021, we're looking at roughly.

2.2 billion, which is similar to what we saw on and.

And 2020, but.

It is a preliminary number on that 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 and.

Some of it depends on the timing of the restart.

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

That's a good ballpark ish figure.

Thank you that's helpful. Thanks.

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

Great. Thanks and were to come back to the Fccs I think there's a for the last call roughly two thirds were still outstanding so curious.

Kind of roughly how old and.

And what do you think it's going to take for more of those to start to convert and then the next part of that is I think you previously alluded to a mid single digit type and.

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

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

2021.

And when you start looking at you know that the time period that we're talking about the back half for 21, and they try and half on from 22, you're still on the same ballpark in terms of fine.

You know, including the Fccs and terms had the pricing.

And as far as the Fccs.

Probably it's about 45%.

Our customer deposits at this point 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 on 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.

And 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 merge and opportunity and you've talked about sales less efficient ships, probably kicking out some overhead.

On the arrival of newer and more efficient ships just curious what type of EBITDA margin opportunity. Do you think is ahead of you as a is revenue more fully recovers probably and 22 23.

Yeah, I I'd be reluctant at this point and kinda give you that margin opportunity that would be and providing cadence on.

And were non into position, yet I think by harnessing comments, indicating the efficiencies that we expect.

And is alluding to you know and improvement.

But you know give us some time to resume guess cruise operations kept back in service and for being a much better position.

Later this year, perhaps to take give you more guidance and details and but at this point and now all of the cost on.

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

Great the Hopper and 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.

And yeah. Good afternoon, and I was wondering if you could add.

Given that is gonna Trups net net debt number and.

At the end of Twentytwenty, and and ideally calendar and I think there is some export credit facilities drawn debt in December and.

And on the expense Cook say.

And thanks.

So debt.

That is at the end of 2020 and November Thirtyth, 2020, which <unk> balance sheet day 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 on.

That was probably and additional call. It every day and a half if I remember correctly in.

In December on the Carnival, MYDICAR and debt cost the frenzy.

Okay. Thanks, and just just and so 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 and and so what would be your anticipated fleet size and 2020 to GAAP since 2018, 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 on and.

And we got a delay and all of the ship deliveries, but there are no cancellation clauses in current newbuilding contracts. So as a result and of that I wouldn't expect any cancellation of any of the of the new build try and or whatever we started the year with 14 on.

Order, we took delivery of two so we have 12 for and 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 Bds or capacity at the end to 2022 would be about 5.6 percentage points higher than 2000, and king. 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 that came in but remain.

For the acceleration.

Other than 19 chipset left the fleet.

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

And with that I. Thank you yes.

Thank you everyone we really.

I appreciate your interest.

Happy new year be safe.

The responsible I'm sure you all are and and.

Together and we look for it so what hopefully.

Well be.

Very nice 2021.

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

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