Q4 2023 Carnival Corp & PLC Earnings Call
Good morning, This is Beth Roberts.
Good morning, this is Beth Roberts, SDP Investor Relations. Welcome to our fourth quarter 2023 earnings conference call. I'm joined today by our CEO , Josh Weinstein, our Chief Financial Officer, David Bernstein,
Investor Relations fourth quarter 2023 earnings conference call.
I'm joined today by our CEO, Josh Weinstein, our Chief Financial Officer, David Bernstein, and their chair Vicki Erickson.
Before we begin, please note that some of our remarks on this call will be forward-looking. Therefore, I will refer you to the cautionary statement in today's press release.
Speaker Change: Before we begin please note that some of our remarks on this call will be forward looking therefore I worked for use in the cautionary statement in today's press release.
Speaker Change: All references to ticket prices not for D. M net yield and adjusted cruise costs without fuel will be in constant currency unless otherwise stated.
All references to ticket prices, net per diem, net yield, and adjusted cruise costs without fuel will be in constant currency unless otherwise
references to Berdiams and Yeald will be on a next...
Speaker Change: References to brickey, EMS and yields will be on a net basis.
Our comments may also reference Cruise Costs Without Fuel, EBITDA, Net Income, Net Boss, Earnings Per Share, Free Cash Flow, and ROIC, all of which will be on an adjusted basis unless otherwise.
Speaker Change: Our comments May also reference cruise costs without fuel EBITDA net income net loss earnings per share free cash flow and ROIC.
All of which will be on an adjusted basis unless otherwise stated.
All these references are non-GAAP financial measures defined in our earnings press.
Speaker Change: All of these references are non-GAAP financial measure as defined in our earnings press release.
A reconciliation to the most directly comparable U.S. gas financial measure and other associated disclosures are also contained in our earnings press release and in our investor presentation.
Speaker Change: Conciliation to the most directly comparable U S GAAP financial measure and other associated disclosures are also contained in our earnings press release and in our Investor presentation.
Please visit our corporate website where earnings press release and investor presentation can be found. With that, I'd like to turn the call over to Josh. Thank you Beth. It's safe to say we ended the year on a high note and closed another quarter with record revenues, record booking levels, and record customer deposits. In fact, we consistently set records in all four quarters this past year.
Speaker Change: Please visit our corporate website, where earnings press release, and Investor presentation can be found with that I'd like to turn the call over to Josh.
Josh Weinstein: You bet.
Josh Weinstein: Have to say we ended the year on a high and closed another quarter with record revenues record booking levels and record customer deposits. In fact, we consistently set records in all four quarters this past year.
We also achieved per diem, EBITDA, and net income for the fourth quarter that all exceeded the high end of our September guidance range with cruise cost ex-fuel in line with expectation.
Josh Weinstein: We also achieved.
Josh Weinstein: EBITDA and net income for the fourth quarter that all exceeded the high ends of our September guidance range with cruise costs ex fuel in line with expectations.
The fourth quarter yields continued on a positive trajectory, significantly higher than a very strong 2019 and even higher than we had anticipated, and enabled us to overcome four years of high cost inflation to deliver per unit EBITDA that eclipsed 2019 holding fuel and currency accounts.
Josh Weinstein: Fourth quarter yields continued on a positive trajectory significantly higher than a very strong 2019, and even higher than we had anticipated and.
Josh Weinstein: That enabled us to overcome four years of high cost inflation to deliver per unit EBITDA that eclipsed 2019, holding fuel and currency constant.
He was encouraged to see both North American and European brand occupancy levels exceed 101% in the fourth quarter with per diems for our North American brand of double digits over 2019 and our European brands just shy of a double digit thing.
Josh Weinstein: It was encouraging to see both north American and European brand occupancy levels exceed 101% in the fourth quarter with per diem for our North American brands up double digits over 2019, and our European breads, just shy of a double digit increase.
We delivered per diem improvements of more than seven points for the full year, with even stronger acceleration in Q4, while closing the double digit occupancy gap at the start of the year to reach historical levels for the second half of 2023. An absolute spending on board was consistent across all four quarters as we drove improvements in ticket prices.
Josh Weinstein: We deliberate purdue improvements of more than seven points for the full year with even stronger acceleration in Q4.
Josh Weinstein: While closing the double digit occupancy gap at the start of the year to reach historical levels for the second half of 'twenty or 'twenty three.
Josh Weinstein: Absolute spending outboard was consistent across all four quarters as we drove improvement in ticket prices.
We delivered $85 million more dollars to the bottom line in the fourth quarter of the forecast, which pushed us through to positive adjusted income for the year.
Josh Weinstein: We delivered $85 million more dollars to the bottom line, our fourth quarter than forecasted which pushed us route to positive adjusted income for the year.
Strong event dot and cash from operations also propelled us on our journey to reduce the debt load necessitated during the pause and operation.
Josh Weinstein: Strong EBITDA and cash from operations also propelled us on our journey to reduce the debt load necessitated during the pause in obligations.
We've made debt payments of $6 billion this year alone, and we still have well over $5 billion of equation on top of strong and improving cash flow, which will contribute to further debt reduction over time.
Josh Weinstein: We made debt payments of $6 billion this year alone and.
And we still have well over $5 billion with liquid.
Josh Weinstein: On top of strong and improving cash flow.
Josh Weinstein: Which will contribute to further debt reduction over time.
All of this leaves us firmly placed on our path back to achieve investment-grade leverage metrics by 2026.
Josh Weinstein: All of this leaves us firmly placed on our path back to achieve investment grade leverage metrics by 2026.
And most importantly, our brand delivered happiness to over 12 million guests this year.
Josh Weinstein: And most importantly, our brands deliver happiness to over 12 million guests. This year laying the foundation upon which all of our sea change targets are built.
laying the foundation upon which all of our sea change targets are built.
Josh Weinstein: Turning to bookings, we reached an all time high in booking volumes for the two weeks around Black Friday, cyber Monday and ended the year in the best booked position, we have ever seen on both price and occupancy setting 'twenty 'twenty four off to an amazing start we now have nearly two thirds of the business.
We reached an all-time high in booking volumes for the two weeks around Black Friday, Cyber Monday, and ended the year in the best booked position we have ever seen on both price and occupancy, setting 2024 off to an amazing start. We now have nearly two-thirds of the business on the books for 2024 and at considerably higher prices.
Josh Weinstein: On the books for 'twenty, 'twenty, four and that considerably higher prices.
And during the fourth quarter, we essentially maintain the significant occupancy advantage we have built for 2024 going into the quarter, while improving the year-over-year price position of our book business even further.
And during the fourth quarter, we essentially maintained significant occupancy advantage, we had built for 'twenty 'twenty four going into the quarter, while improving year over year price position of our book business even further.
At this point, much of the first half is already behind.
Josh Weinstein: At this point much of the first half is already behind us with approximately 85% of the business on the books, we've essentially closed the double digit occupancy gap to historical levels on higher capacity and at higher prices.
With approximately 85% of the business on the books, we've essentially closed the double-digit occupancy gap to historical levels on higher capacity and at higher prices.
For our peak summer period, all major products are better booked at higher prices, benefiting from an improving trend in both occupancy and price during the fourth quarter.
Josh Weinstein: For our peak summer period.
Josh Weinstein: All major products are better booked at higher prices benefiting from an improving trend in both occupancy and rate during the fourth quarter.
Our yield management strategy, the baseload booking has clearly set us up for another record year, and again, we have seen no sign of our business slowing.
Josh Weinstein: Our yield management strategy. The Baseload bookings has clearly set us up for another record year and again, we have seen no side of our business slowing.
The book position for our North American brands remains as far out as we have ever seen and well ahead of last year.
Josh Weinstein: The book position for our North American brands remain as far out as we have ever seen and well ahead of last year.
at pricing that is considerably higher. Our European brands just delivered records fourth quarter booking volume at considerably higher prices and with a booking window now fully back to historical north.
Josh Weinstein: Pricing that is considerably higher.
Josh Weinstein: Our European brands, just delivered record fourth quarter booking volume at considerably higher prices and with the booking window now fully back to historical norms Asics.
As expected, our European brands are poised to become an even greater contributor to our 2024 Operating Employment.
Josh Weinstein: As expected our <unk>.
Josh Weinstein: European brands are poised to become an even greater contributor to our 'twenty 'twenty four operating improvements.
At the same time, we are continuing to pull forward onboard revenue through bundling and pre-crew sales. This strategy coupled with even more features onboard our newer ships for our guests to enjoy positions as well for further onboard revenue growth next
Josh Weinstein: At the same time.
Josh Weinstein: We are continuing to pull forward onboard revenue through bundling and pre cruise sales. This strategy coupled with even more features onboard our newer ships for our guests to enjoy it positions us well for further onboard revenue growth next year.
Also, we expect occupancy for the full year to return to historical levels on 5% higher capacity while delivering nicely higher per diem building on this year's record results.
Josh Weinstein: Also we expect occupancy for the full year to return to historical levels.
Josh Weinstein: 5% higher capacity, while delivering nicely higher per diem.
Josh Weinstein: This year's record results.
In 2023, we captured over three and a half million new-to-cruise guests and remain well positioned to continue to take share from land-based alternatives.
Josh Weinstein: In 2023 recaptured over three and a half million new to cruise guests and remain well positioned to continue to take share from land based alternatives in other words, we are gaining momentum and our ability to close the boat oriented value gap the land based alternatives and to aid in that effort.
In other words, we are gaining momentum in our ability to close the unwarranted value gap to land-based alternatives.
And to aid in that effort, we can further channel the fact that while many land-based alternatives have pulled back on services,
Josh Weinstein: We can further channel the fact that while many land based alternatives have pulled back on service levels, we still deliver incredible service to our guests thanks to our amazing.
We still deliver incredible service to our guests, thanks to our amazing
This pairs exceedingly well with the expansive amount of guest-pleasing amenities offered on board our newer...
Josh Weinstein: These parents exceedingly well with the expansive amount of guest pleasing amenities offered onboard our diversity.
In fact, while almost four years have passed since the pause in our operation, our fleet actually came out of the pause a year younger through our fleet optimization effort.
In fact, while almost four years have passed since the pause in our operations.
Josh Weinstein: Our fleet actually came out of the park a year younger through our fleet optimization effort.
This past year alone, we benefited from three fantastic new ships, including Carnival Celebration and P&O Cruises' Arvia, both of which are flagships for their respective brands, yet leverage our scale as the seventh and eighth vessels in our popular and exceptionally efficient series of XL-class ships.
Josh Weinstein: This past year alone, we benefited from three than plastic new ships, including Carnival celebration and piano cruises or.
Josh Weinstein: Both of which are flagships for their respective brands get leverage our scale at the seven and eight vessels in our popular and exceptionally efficient theories of X L class ships.
And we welcome Seabourn Pursuit, our second expedition ship. Seabourn has truly raised the bar for expedition cruising in extreme luxury.
Josh Weinstein: We welcomed seaborne pursuit, our second expedition ship G.
Seaborne has truly raised the bar for expedition cruising in extreme luxury.
And while not technically new, Carnival Cruise Lines also welcomed Carnival Venezia into its fun Italian-style platform via the transfer from Costa, and it has been going gangbusters.
Josh Weinstein: And while not technically new Carnival cruise lines also welcome Carnival, the Netsuite Intuit spun Italian style platform via the transfer from Costa and it has been going gangbusters.
It's the biggest example yet of how we leverage our scale and will be doubling down when we bring over her sister ship, Carnival Forense, in 2020.
Josh Weinstein: It's the biggest example, yet of how we leverage our scale.
Josh Weinstein: We'll be doubling down, but we bring over her sister ship Carnival forensic in 2024.
Looking forward, this year is set to match the excitement level with the introduction of Carnival Jubilee, a new icon for Carnival Cruise Line and which no doubt will be the pride of Texas as she has her inaugural home in Galveston.
Josh Weinstein: Looking forward. This year is set to match the excitement level with the introduction of Carnival Jubilee, a new icon for Carnival cruise line, and which no doubt will be the pride of Texas as she has her inaugural home in Galveston.
The innovator of some princess, the first of its class, and a real game-changer for princesses.
Josh Weinstein: The innovative some princess the first of its class any real game changer for principal.
And Queen Anne, a new flagship for Cunard, and its first new ship since 14-
Josh Weinstein: And Queen Anne.
Josh Weinstein: New flagship for Qunar and its first new ships in 14 years.
With all of these additions, roughly 30% of our capacity will be newly delivered ships.
With all of these additions roughly 30% of our capacity will be newly delivered ships.
We also made meaningful headway on other strategic asset projects.
Josh Weinstein: We also made meaningful headway on other strategic asset projects.
We began construction on Celebration Key, which will be the largest and closest exclusive destination in our destination portfolio and a real game changer for carnival.
Josh Weinstein: We began construction on celebration key which will be the largest and closest exclusive destination.
Josh Weinstein: Destination portfolio and a real game changer for Carnival cruise line.
We'll bring 18 carnival ships departing from nine home ports to Celebration Cay. And while we are still about a year and a half from go live, we are already amping up the awareness and the excitement around this fantastic festivity.
Josh Weinstein: We'll bring 18 carnival ships departing from nine home ports the celebration key and while we are still about a year and a half from go live we are already amping up the awareness and excitement around this that as the destination.
We've also started the process for a significant up-size-and-desk traffic at Hathlunkey, our exclusive and beautiful pristine island destination in the Bahamas, with the creation of a piercide berth that can accommodate even our barge's destination.
Josh Weinstein: We've also started the process for a significant upside in guest traffic at half Moon Cay are exclusive and beautiful pristine island destination in the Bahamas with the creation of a peer side birth that can accommodate even our largest vessels.
We've begun work with our Grand Bahamas shipyard partners on the construction of two floating dry docks, one of which will have the largest lifting capacity in the world. This will result in significant benefit in the future as we reduce travel time, preserve revenue day, and at the same time, reduce our fuel consumption.
Josh Weinstein: We've begun work with our Grand Bahama Shipyard partners on the construction of two loading drydocks, one of which will have the largest lifting capacity even before.
Josh Weinstein: This will result in significant benefit in the future as we reduced travel time preserve revenue days and at the same time reduce our fuel consumption.
As you know, we've also been investing more in advertising over the last 18 months, and it has definitely paid off with elevated awareness and consideration for our brand and record booking levels and revenue results.
Josh Weinstein: As you know we've also been investing more in advertising over the last 18 months and it has definitely paid off with elevated awareness and consideration for our brand and record booking levels and revenue results.
In fiscal 2023, our web visits were up over 35 percent, our paid search was up roughly 50 percent, and our natural search was up almost 75 percent, all many, many multiples of our 5 percent capacity.
Josh Weinstein: In fiscal 'twenty to 'twenty three our web visits were up over 35% our paid search was up roughly 50% and our natural search was up almost 75%.
Josh Weinstein: Paul many many multiples of our 5% capacity growth.
In the fourth quarter, we carried more Nuda crews and more Nuda brand gaffes than we did in the fourth quarter of 2019.
In the fourth quarter, we carried board due to crews have more new to brand gap than we did in the fourth quarter of 2019.
Given our success on generating demand, at this point in time, we plan to maintain a similar level of advertising on a unit basis in 2024 compared to 2023, optimizing around each brand. This will help us continue to build demand and bookings well outside of the current year.
Josh Weinstein: Given our success in generating demand at this point in time, we plan to maintain a similar level of advertising on a unit basis in 'twenty 'twenty four compared to 2023 optimizing around each brand.
Josh Weinstein: This will help us continue to build demand and bookings well outside of the current year.
Josh Weinstein: We're working aggressively to keep our strong momentum going through wave season and beyond.
We're working aggressively to keep our strong momentum going through wave season and beyond.
Just to list a few examples, Costa recently launched a spectacular new campaign in its core markets, focusing on moments where guests are left speechless.
Josh Weinstein: Just to list a few examples Costa recently launched a spectacular new campaign in its core markets focusing on moments where guests are left speechless.
Holland America launched a sequel to its highly successful Time of Your Life campaign, and AIDA just kicked off its new campaign, Experience Yourself Differently, in conjunction with a holiday season.
Josh Weinstein: The American launch the sequel to its highly successful time of your life campaign, and Aida just kicked off its new campaign experience yourself differently in conjunction with the holidays.
Carnival will launch a new marketing campaign highlighting celebration key in times of wave
Josh Weinstein: <unk> will launch a new marketing campaign, highlighting celebration key and time for waves.
Pino Cruises new campaign, holiday like never before, launches Christmas Day in the UK, and CUNAR has planned a welcome fit for a queen to introduce Queen Anne early next year, which is sure to capture huge fanfare.
N O cruises, new campaign holiday like never before launch as Christmas day, and the U K and Qunar was planned a welcomed fit for a queen to introduce Queen Anne early next year, which is short capture huge painful.
We've been talking about upping our game across the commercial space, and we've made good progress. Of course, we're not done. And as you'd expect, we never will as there is always room to improve.
Josh Weinstein: We've been talking about upping, our game across the commercial space and we've made good progress of course, we're not done.
Josh Weinstein: As you would expect we never will.
Josh Weinstein: Always room to improve.
Josh Weinstein: There's much more to come as we rollout advancements to our yield management tools from lead generation techniques continue to invest in sales and sales support and build an already strong relationships with our trade partners.
Josh Weinstein: Turning to costs as we previously indicated unit cruise costs ex fuel for 2024 are expected to be higher than inflation.
Josh Weinstein: The impact of closing the occupancy gap and the higher volume for dry dock.
David will walk you through in more detail, but that said, we have been working aggressively to mitigate inflation through our cost optimization initiatives, including leveraging our skills. In some cases, we're investing today for future benefits.
Josh Weinstein: David will walk you through in more detail, but that said, we have been working aggressively to mitigate inflation through our cost optimization initiatives, including leveraging our scale in some cases, we're investing today for future benefits just decided a couple of examples of initiatives underway.
Just decide a couple of examples of initiatives underway.
Josh Weinstein: Essentially complete with the rollout of Starlink across the fleet.
This will produce more than a 20% reduction in cost per megabit in 'twenty 'twenty, four and significantly increase our bandwidth pipeline, resulting in both better guest experience and higher onboard revenues a clear win win.
Josh Weinstein: And with our new vendor neutral platform, we are positioned to quickly capture cost savings in future years we've.
Josh Weinstein: We've also launched our maritime asset strategy transformation.
Josh Weinstein: Or what we refer to internally as mast.
Josh Weinstein: Bob is a centralized system developed to optimize the management of equipment and machinery across all brands and all of our ships.
MAS will allow us to leverage spare parts more effectively across the entire fleet and optimize our maintenance schedules and practices.
<unk> will allow us to leverage spare parts more effectively across the entire fleet and optimize our maintenance schedules and practices.
all of which will strengthen our efficiency and reduce unplanned maintenance over time. While we won't see the P&L benefits for math this year as we ramp up its implementation in 2024, we expect a multi-year benefit well in excess of $100 million that really begins to ramp up in 2026.
Josh Weinstein: All of which will strengthen our efficiency and reduce unplanned maintenance overtime.
Josh Weinstein: We won't see the P&L benefits from that this year as we ramp up implementation in 2020 four.
Josh Weinstein: We expect a multi year benefit well in excess of $100 million that really begins to ramp up in 2026.
All the efforts we're making to drive revenue and manage costs are expected to lead to a four-point margin improvement in 2020.
Josh Weinstein: All the efforts, we're making to drive revenue and vantage Pas are expected to lead to a four point margin improvement in 2024.
We're guiding to a record EBITDA of over $5.5 billion, which is 30% higher in 2020.
Josh Weinstein: We're guiding to a record EBITDA of over $5 $5 billion, which is 30% higher in 2023.
Thanks to a strong second half of 2023, we're already tracking ahead of our plan to achieve sea change, our three-year financial targets calling for the highest ROIC and EBITDA for ALBD in nearly two decades. And our 2024 guidance delivers another step change toward these deliverables.
Speaker Change: Thanks to a strong second half of 2023, we're already tracking ahead of our plan to achieve C change our three year financial targets, calling for the highest our licensee in EBITDA for a L. P. D. In nearly two decades, and our 'twenty 'twenty four guidance deliberate another step change towards the east.
Speaker Change: Deliverables.
EBITDA for birthday is expected to be up by more than 25% over our target starting
Speaker Change: EBITDA for birthday is expected to be up by more than 25% over our target starting point, hence more than halfway to the 50% increase expected in a sea change targets.
hence more than halfway to the 50% increase expected in our sea change part.
Today's guidance would also deliver 9% ROI, a four point increase from the starting point of our target.
Speaker Change: Today's guidance, but also deliver 9% rois.
Speaker Change: Four point increase from the starting point of our target.
This leaves just one and a half point annual increases in 2025 and 2026 to hit our 12% target. Not surprisingly, our brand dedicated to a single market, Carnival, AIDA, and P&O Cruises in the UK are again leading the charge with the highest ROIC levels in the company.
Speaker Change: This leaves just wanted a half point annual increases in 2025, and 'twenty 'twenty six to hit our 12% target.
Speaker Change: Not surprisingly our brand dedicated to a single market Carnival, Aida and piano cruises in the U K again, leading the charge with the highest rois D levels in the company.
Speaker Change: And with regard to our greenhouse gas targets included in our twenties 26 D change program. Our G. H E intensity in 'twenty 'twenty four is expected to be just shy of the 20% reduction from 2019, we're targeting.
And with regard to our greenhouse gas target included in our 2026 de-change program, our GHC intensity in 2024 is expected to be just shy of the 20% reduction from 2019 for target.
It's worth noting, this was a 2030 goal, we had already pulled forward by four years.
Speaker Change: It's worth noting this was a 2030 goal we had already pulled forward by four years.
We have been and continue to work aggressively to reduce our environmental footprint and fuel costs at the same time.
Speaker Change: Have been and continue to work aggressively to reduce our environmental footprint and fuel costs at the same time.
This deep commitment has not only resulted in industry-leading fuel efficiency, it has also resulted in lower absolute GHG emissions.
Speaker Change: The deep commitment has not only resulted in industry, leading fuel efficiency. It has also resulted in lower absolute G. H G. English.
Our absolute emissions are over 10% lower than the 2011 peak, and that's despite capacity growth of 30% since then.
Speaker Change: Our absolute ambition or over 10% lower than the 2011, Pete and that's despite capacity growth of 30% since then.
Last year, we also exceeded our industry-leading shore power capability goal. We are ahead of the curve and now have twice as many ships capable of shore power than there are ports around the world available to plug into.
Speaker Change: Last year, we also exceeded our industry, leading shore power capability.
Speaker Change: We are ahead of the curve and now have twice as many ships capable of shore power than there are ports around the world available plug ins.
Again, I credit all of these important achievements to our people, ship and shore. Collectively, they continue to outperform, allowing us to make good headway on our sea change target. We're poised for another step change in operating improvement this year, with nearly two-thirds of the business on the books at considerably higher prices. Ongoing momentum from improvements across the commercial space.
Speaker Change: Again, I credit all these important achievements to our people ship and shore.
Speaker Change: Collectively they continue to outperform allowing us to make good headway on our sea change part we're poised for another step change in operating improvement this year.
Speaker Change: With nearly two thirds of the business on the books at considerably higher prices ongoing momentum from improvements across the commercial space.
the amazing vacation experiences we deliver day in, day out at way too good of a relative value to land-based alternatives and an even greater experience.
Speaker Change: The amazing vacation experiences, we deliver day in day out at way too good of a relative value demand based alternatives and an even greater experienced staff.
all while growing onboard revenues and managing costs.
Speaker Change: All while growing onboard revenues managing costs.
All of this combines. That sets us up well to deliver another year of record revenues and records even though.
Speaker Change: All of this combined.
Speaker Change: That's us up well to deliver another year of record revenues and record EBITDA.
our cash flow strength coupled with excess liquidity, the return of credit card reserves in a few weeks, and the lowest order book in decades.
Speaker Change: Our cash flow strength, coupled with excess liquidity the return of credit card reserves in a few weeks and the lowest order book in decades.
will allow us to continue to actively manage down debt and aggressively reduce interest expense over time. It will also propel us on our path to deleveraging, investment credit rating, and higher ROI
Speaker Change: It will allow us to continue to actively manage down debt and aggressively reduce interest expense over time.
He will also propel us on a path to deleveraging.
Speaker Change: Great credit ratings and higher Rois.
I remain confident in our continued execution with an unparalleled portfolio of best-in-class brands, an amazing fleet that just keeps getting better and better, and our greatest asset are people.
Speaker Change: I remain confident in our continued execution with an unparalleled portfolio of best in class brands and amazing fleets that just keeps getting better and better and our greatest asset our people.
This has been a truly remarkable year, and we've come a long way in an incredibly short amount of time. I would like to thank our team members, ship and shore, the best in all of traveling,
Speaker Change: This has been a truly remarkable year and we've come a long way in an incredibly short amount of time I.
Speaker Change: I would like to thank our team members ship and shore the best in all of the travel and leisure were delivering unforgettable happiness to over 12 million guests. This year by providing them with extraordinary cruise vacations, while honoring the integrity of every ocean. We sell places we visit and life we touch.
for delivering unforgettable happiness to over 12 million guests this year by providing them with extraordinary cruise vacations, while honoring the integrity of every ocean we sail, place we visit, and life we touch.
Speaker Change: And thank you for the strong support from our travel agent partners as well as our loyal guests.
and thank you for the strong support from our travel agent partners, as well as our loyal guests, destination partners, investors, and on many other stakeholders. With that, I'll turn the call over to
Destination partners investors and many other stakeholders with that I'll turn the call over to David.
David Bernstein: Thank you Josh I'll start today with a summary of our 2023 fourth quarter and full year results.
Thank you, Josh. I'll start today with a summary of our 2023 fourth quarter and full year.
Next I will provide a recap of our refinancing and re-leveraging efforts during 2023 and finish up with some color on our 2024 full year and first quarter December guide.
David Bernstein: Next I will provide a recap of our refinancing.
David Bernstein: Leveraging efforts during 2021 and finish up with some color on our 2020 for full year and first quarter December guidance.
Our fourth quarter bottom line exceeded the better end of our guidance range as we outperformed our September guidance.
David Bernstein: Fourth quarter bottom line.
David Bernstein: End of our guidance range.
David Bernstein: Our September guidance.
$85 million improvement was driven by favorability and revenue from higher ticket prices, as net per diems were up over 10 percent.
David Bernstein: 85.
David Bernstein: Mark was driven by favorable revenue from higher ticket prices.
David Bernstein: What particular items were up over time.
three points better than the midpoint of our September guidance.
David Bernstein: Three points better by one one points of our September guidance.
In fact, fourth-quarter revenues of $5.4 billion were a fourth-quarter record, and net yields were up nearly 8% as compared to $290 billion.
David Bernstein: Right.
David Bernstein: Quarter revenues of $5 4 billion for a fourth quarter record, but they also were up 8% compared to 20 months.
a great way to close out the year and another indication that we do not see a slowdown in our
A great way to close out the year.
David Bernstein: Other indications absent a slowdown.
Consumers.
For the full year, thanks to the tremendous efforts of our team members, Ship and Shore, we closed the books on 2023 with positive, adjusted netting.
David Bernstein: For the full year.
David Bernstein: A lot of the efforts of our team members ship them sure.
David Bernstein: Close the books on 2023 with constant other Justin.
David Bernstein: That is a far cry from our March guidance.
That is a far cry from our March guidance as we delivered over $550 million more dollars to the bottom line, which was partially offset by a drag from fuel prices and currency exchange rates of over $100 million.
David Bernstein: Alright.
David Bernstein: Hi hungry.
David Bernstein: $4 to the bottom line, which was partially offset by a drag from the field.
David Bernstein: Currency exchange rates.
Over a hungry.
The improvement was driven by delivering a seven-and-a-half percent increase in what revenue prudence.
David Bernstein: Yeah.
David Bernstein: Driven by delivering several over half.
David Bernstein: You know what.
David Bernstein: Versus 'twenty two.
was over double the 3.5% midpoint of our March guidance, while closing the double digit occupancy gap at the start of the year to reach historical
David Bernstein: For example, a three and a half per score.
David Bernstein: Point of our March guidance, while closing.
David Bernstein: October was the gap.
David Bernstein: Starting.
David Bernstein: Historical occupancy levels.
Absolute spending per diems on void were consistent across all four quarters as we drove improvements in ticket prices on both sides of the Atlantic and ended the year with net yields of nearly 1% over 2019.
David Bernstein: Absolutely.
David Bernstein: Currently Amazon going are consistent across all four quarters actually drove improvements in ticket prices on both sides are going to finance it.
Speaker Change: With that one Chris.
Speaker Change: Over 20 languages.
Next I will provide a recap of all.
Next, I will provide a recap of our refinancing and deleveraging efforts during 2023.
Speaker Change: Leveraging efforts during 2023.
As Josh indicated, our full year 2023 strongly deducts of $4.2 billion, and strong cash from operations of $4.3 billion propelled us on our journey to pay down debt and reduce the debt burden necessitated by the pause in guest cruise operations.
Speaker Change: It's Joshua.
Joshua: Full year 2023, strong EBITDA of $4 2 billion.
Joshua: Cash from operations of $4 3 billion propelled us on our journey.
Got.
Joshua: Okay.
Joshua: Okay. This is a pause just cruise operations.
Joshua: During 2023.
During 2023, we made debt payments of $6 billion, and ended the year with just over $30 billion of debt.
Joshua: So $6 billion.
Joshua: With just over $30.
Joshua: Which of your screen.
billion better than we forecasted just nine months ago during our March conference call and almost five billion on the first quarter of this year.
Joshua: Forecast of just nine months ago during our March conference call.
I guess, what's the first quarter.
Joshua: Transferring.
transferring enterprise value from debt holders to shareholders.
God holders to Sheryl.
Joshua: Through 2023 with proactively interest like that profile as well.
During 2023, we proactively addressed our debt profile as we successfully started our refinancing and deleveraging program.
Successfully started our refinancings.
Joshua: Leveraging program.
accelerated our debt repayment efforts, and aggressively managed our interest
Joshua: Salaried advice.
Joshua: And that person.
Joshua: Restaurant.
Joshua: Interest expense.
In 2023, we effectively stretched out a 2025 maturity on favorable terms by replacing it with a $1.3 billion Term Loan B facility through 2027 and a $500 million offering of serious secured notes.
Joshua: 2023.
Joshua: Stretched out 2025 maturity.
Joshua: A whole terms by replacing it with a $1 3 billion term loan b facility through 2027.
Joshua: $500 million offering.
The secured notes due 2029.
This refinancing along with our optimism about our future and the return of customer deposit reserves gave us the confidence to accelerate our debt repayment by calling 1.2 billion of our highest cost debt.
Joshua: So along with our optimism about our future and the return of customer deposit reserves.
Joshua: Our confidence to accelerate our growth.
Joshua: I call it 1.2.
Joshua: Of our highest cost.
In addition, we opportunistically prepaid $2.8 billion of additional debt for a total of $4 billion of debt prepayment.
Joshua: Integration.
Joshua: Opportunistically prepay $2 8 billion of additional cost.
Joshua: A total of 4 billion.
Joshua: Repayments.
1.2 billion of debt pull. Our credit card processes return to us 800 million of credit card reserves and we now expect an additional 800 million to be returned this current quarter representing substantially all of the remaining credit card reserves at U.S.
Joshua: The $1 2 billion.
Paul.
Joshua: Our credit card processors returned to us hungry for the Oregon credit card reserves.
We now expect an additional $800 million will be returned this current quarter.
Joshua: Representing substantially all of the credit card reserve.
All right.
took actions in both 2022 and early in 2023.
Joshua: We took actions in both 2022 or early in 2023.
the fixed rate percentage of our debt portfolio to over 80 percent.
Joshua: Fixed rate for Savage public that portfolio to over 80%.
Joshua: Up significantly from 58% fixed level.
up significantly from our 58% six levels at the end of 2021, which provided us protection from life.
Joshua: 21, which provides us protection from rising interest rates.
Joshua: Our overall average interest rate is just over 5.5% or.
just over five-and-a-half percent. All these actions to address our debt profile alongside our improved business performance drove $200 million of interest savings compared to our March guidance.
Joshua: All these actions to address our debt profile alongside our improved business performance drove 200 million interest savings compared to our March five.
Joshua: Our maturity towers have been well managed in 2026, which is $2 1 billion of debt maturities next year.
26, which is $2.1 billion of debt maturity.
Joshua: Sure.
Joshua: 25 or three.
and 3.2 billion in 2026.
Joshua: Three points.
Joshua: 2026.
And looking forward, we will continue to evaluate reasonable and effective measures
Joshua: Looking forward, we will continue to evaluate.
Joshua: The opportunities are.
opportunistically prepay additional debt.
Joshua: The tools group.
Joshua: Vishal.
Joshua: So in 2024.
So in 2024, we will be replacing higher-cost fixed-rate debt with lower-cost export credit financing as we take delivery of ships during 2024.
Higher cost fixed rate debt.
Joshua: Lower costs export credit financing.
Delivery of ships during 2024.
Joshua: Our leverage metrics will also continue to improve throughout 2024.
throughout 2024, as our leader does.
Joshua: EBITDA continues to grow.
Now turning to our 2024 full-year December guidance.
Joshua: Now turning to our 2024 holding your December guidance.
We are forecasting a capacity increase of about five and a half percent compared to 20 percent.
Joshua: We are forecasting a capacity increase of about five and a half per cent compared to 2023.
we are expecting to deliver strong 2024 net yield improvement with our guiding
Joshua: We were expecting to deliver a strong 2024.
Joshua: Guidance for an.
approximately eight-and-a-half percent for the full year 2024 compared to 2023. And that is on top of our improved 2023 results where we delivered a seven-and-a-half percent
Joshua: The increase of approximately.
Joshua: 5% for the full year 2024.
Joshua: For 2023.
Joshua: Yeah.
Joshua: On top of our improved 2023 results, where we delivered seven 5%.
Joshua: Yeah.
Joshua: Versus 2019.
The strong improvement in 2020.net yields is a result of the increase in interest rates.
Our strong 2020.
Joshua: As a result.
Joshua: All the component parts.
higher ticket prices, higher upward spending, and higher occupancy.
Joshua: Higher prices higher onboard spending and higher occupancy.
Joshua: So with all three components.
with all three components improving on both sides of the event.
Joshua: On both sides of it.
Joshua: We are well positioned to drive 2020 for such a pricing higher.
We are well positioned to drive 2024 tick inflation higher, which significantly less inventory remaining to sell at the same time last year, despite a capacity of more than 1,000.
Speaker Change: I can't wait.
Speaker Change: Tori.
Speaker Change: Wow.
Speaker Change: Same time last year.
The capacity increase of older Hi, Chris.
of over 5%. Occupancy for the full year 2024 is on track to return to a state of emergency.
Speaker Change: Opposing of 'twenty 'twenty four is on track to return to historical levels.
Just in mind, 2019 was a high-water, marked black year.
Speaker Change: Keep in mind 20 months with a high watermark for occupancy.
In 2024, we forecast to be well within our historical on-capacity range as we balance price and value to optimize total revenues and achieve records.
Speaker Change: For 2024 forecast well within our historical occupancy range.
Speaker Change: With price and volume.
Speaker Change: <unk> total revenues.
Speaker Change: Okay.
Speaker Change: Now turning to costs.
cruise costs without fuel for available lower bird space or hail
Speaker Change: Cruise costs without fuel per available low warfare.
Speaker Change: It is currently expected to be up.
currently expected to be up approximately four and a half percent for 2024 versus 2020.
Speaker Change: Approximately four and a half or two.
Speaker Change: 24 versus 2023.
Hardly speaking, there are four main drivers at the cost
Oddly spoken with there are four drivers of the cost.
First, our forecast is for decelerating inflation, but nonetheless inflation with an average three and a half percent increase across all our cost categories globally.
Speaker Change: First our forecast is for you.
Speaker Change: Salaries are approaching that.
Speaker Change: Nonetheless inflation with an average three and a half questions increase across all our cost categories globally.
Second, with occupancy returning to historical levels, the impact on cost should be one and a half to two percentage points higher in 2024 as compared to 2024.
Speaker Change: Second with occupancy returning to historical levels.
Gosh, one and a half to two percentage points higher in 2024 compared to 2020.
Speaker Change: Third.
Third, in 2024, we are expecting 586 dry dock dates to increase to 14 percent versus
<unk> 24, we are expecting 506 dry docks.
Speaker Change: 14% versus 2023.
As expected.
expected to impact their overall year-over-year cost comparisons by about three-quarters
Speaker Change: Overall.
Cost comparison by about three quarters of a point.
Speaker Change: For answering.
Speaker Change: Great.
Speaker Change: These cost increases will be somewhat mitigated by a couple of points.
somewhat mitigated by a couple of points given economies of scale from our capacity growth, which is enhanced by taking delivery of larger, more efficient ships along with various other cost-optimizing systems.
Speaker Change: Hi, Nishu.
Speaker Change: All of our capacity growth, which is caused by taking delivery of larger more efficient ships along with various other cost optimization initiatives.
your consumption for ALBV is expected.
Speaker Change: Assumption for Hale.
Speaker Change: The decrease.
Or Chris.
Speaker Change: That is on top of that.
Speaker Change: Half personal perception.
Speaker Change: 21.
Speaker Change: For 2023.
Speaker Change: Currency is expected to favorably impact.
Speaker Change: 2024 by $90 million with lower fuel prices.
Speaker Change: 94 million, while the change in currency exchange rates slightly.
Speaker Change: Other way.
And finally, a few things to note about the outsized increases in the first
Speaker Change: Finally, a few things to note about outsized increases in the first quarter 2024.
A higher net yield guidance for first quarter 2024 at 16.5% versus the full year 8.5% is driven by the larger improvement of the first quarter.
Speaker Change: Our higher guidance for first quarter 2024, six and a half.
Speaker Change: <unk>.
Paul here.
It was driven by the larger improvement first quarter occupancy.
Let's not forget that we did not reach historical occupancy levels until the second half.
Speaker Change: Let's not forget that we did not win.
Speaker Change: Historical occupancy levels until the second half of 2023.
So there is much more occupancy driven that yield opportunity.
Speaker Change: So there is much more occupancy driven the opportunity in the first half.
On the cost side, the higher cruise costs without fuel for available lower birthday guidance to the first quarter of the year.
Speaker Change: On the cost side, the higher cruise cost without fuel per available lower for guidance for the first quarter of 2024, 9.5%.
And nine and a half percent is driven by four main factors.
Speaker Change: All right.
first, the largest improvement in high-techency will occur in the first quarter, and while it drives greater yield increases in the first quarter, it also drives
Speaker Change: First the largest improvement occupancy will occur in the first quarter on wireless drives greater yield increases in the first quarter. It also drives greater cost increases, which means a total of three to four point cost drag in the quarter.
total of three to four points cost drags in the quarter.
second, while dry dot costs impact our full year guidance. The seasonality of dry dot costs in the first quarter 2024, as compared to the prior year, drives the cost increase of about one and a half points in this quarter.
Speaker Change: Second while dry dock cost.
Speaker Change: Our full year guidance.
Speaker Change: So now as you drive out costs in the first quarter 2024, as compared to the prior year drives a cost increase of about one and a half points for this quarter.
Speaker Change: Sure.
of advertising extent and a variety of other examples.
Speaker Change: Triality advertising expense from a variety of other expenses between the quarters.
differs in 2024 as compared to 2023, which will put a total cost increase of approximately three points into this quarter.
Speaker Change: 2024 as compared to 2023.
Speaker Change: We'll put a total costs an increase of approximately three points this quarter.
Speaker Change: Advertising alone is one of the three points.
And for it, like the full-year inflation mitigated by economies of scale, our capacity growth along with various other cost-offices.
Speaker Change: Hum.
Speaker Change: The full year inflation.
Speaker Change: Economies of scale.
Speaker Change: Passenger growth along with various other cost optimization initiatives.
given the higher first quarter cruise costs without fuel for available lower birthday, the implied guidance to the cost in the second to the fourth quarter,
Speaker Change: The higher first quarter cruise costs without fuel per rep.
[noise] birthday.
Speaker Change: My guidance for the cost in the second and fourth.
Speaker Change: Quarter.
3%.
In summary, putting all these factors together, our net income guidance for the full year 2024 is approximately $1.2 billion, which is even not forecasted at $5 billion.
Speaker Change: In summary.
Speaker Change: All these factors together.
Speaker Change: Our net income guidance for the full year 2024 is approximately $1 2 billion.
Speaker Change: They have forecasted a five.
Speaker Change: 6 billion.
Speaker Change: What's a good improvement from 2020 through it.
significant improvements from 2023. For those of you who are modeling EPS, let's not forget that when you calculate the rooted EPS,
Those of you who are modeling two actually.
Speaker Change: Not to forget that when we calculate.
Speaker Change: Yes.
add back the $94 million of interest expense related to the company's convertible notes, our improved financial results, and our successful refinancing and deleveraging efforts in 2023, along with our 2024 December guide,
Speaker Change: Thanks Randy.
Speaker Change: Interest expense related to the company's convertible notes are correct from the actual results are successful refinancing and deleveraging our post 2023.
Speaker Change: Along with our 2024th the former guidance.
is firmly placed on our path to achieve our 2020 goal.
Firmly placed on our path to achieve our 2000 Twenty's shakes change goals.
goals, moving us further down the road to rebuilding our financial fortress and delivering long-term shareholders out.
Speaker Change: Further down the road.
Speaker Change: Our financial forecast.
Speaker Change: Long term shareholder value.
Now, Operator, let's open up the call for questions.
Speaker Change: Well, operator, let's open up the call for questions.
Speaker Change: Thank you.
If you would like to register a question, please press the 1-4 on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered, then you would like to withdraw your registration, please press the 1, fall about a 3. Once again, to register a question, please press the 1-4 on your telephone. One moment, please, for the first question.
Speaker Change: If you would like to register a question. Please press the one four on your telephone you will hear a three pronged toward larger request. If your question has been answered then you would like to withdraw your registration. Please press. The one followed by the three once again to register a question. Please press the one four on your telephone one moment. Please.
Speaker Change: First question.
Our first question comes from Steve Wozinski with Steful, please proceed.
Speaker Change: Our first question comes from Steve was in ski with Stifel. Please proceed.
Yeah, hey guys, good morning and happy holidays to all of you.
Steve: Yeah, Hey, guys, good morning, and happy holidays to all of you.
So so so josh or David.
So, so Josh or David, you know, if we think about the yield guidance, you know, for the year, just, just based on the fact that your occupancy should return to, you know, somewhat normal levels and then, you know, pricing has momentum at this point, it seems to be pretty strong or healthy across the majority of your geographies.
If we think about the yield guidance for the year just based on the fact that your occupancy should return to.
Steve: Somewhat normal levels, and then pricing has momentum at this point it seems to be pretty strong or healthy across the majority of your of your geographies.
It seems like that plus 8.5% yield guidance might end up being somewhat conservative when we have this call a year from now. I guess the question is, can you give us a little color about more of the makeup of your yield forecast? It seems like you might be taking a somewhat conservative view around on-board trends and then potentially underestimating the opportunity around taking close-in pricing.
Steve: It seems like that plus 8.5% yield guidance might end up being.
Steve: Somewhat conservative when we have this call a year from now so.
Steve: You know I guess the question is can you give us a little color about you know more of the makeup of the of your yield forecast. It seems like you might be taking you somewhat conservative view around onboard trends and then potentially underestimating the opportunity around <unk>.
Steve: In close in pricing.
Thanks.
As Steve Happy holidays to you too so I hope you're right I look forward to the call in a year.
Hey, Steve. Happy holidays to you too. So I hope you're right. I look forward to the call in a year.
Look, we've given our good faith estimate on how we're seeing the world right now. We come in with a good amount of visibility because of how well booked we are. And as you said, we have seen accelerating momentum.
Steve: But we've given our are our good faith estimate on how we're seeing the world right now we come in with a good amount of visibility because of how well booked we are as you said, we have seen accelerating momentum.
in the volume and the price. So we're very pleased with the trajectory.
Steve: In the in the volume and the price. So we're very very pleased with the trajectory.
that we've been seeing. Obviously, this is also before wave. We do a little bit of a disadvantage of doing this in December versus end of January and February . So, you know, all I can tell you is we've baked in what we see and we always want to outperform. Obviously, that's a given. So I think the best thing I can tell you is we'll talk in March with Wave under our belt. Having said that, Wave hasn't ended since last year, so we'll continue to ride it as long as we can.
Steve: No. We've been seeing obviously this is also before wave and we do have a little bit of a disadvantage of doing this in December.
Steve: Versus you know end of January into February so.
Speaker Change: All I can tell you is we've we baked in what we see and we always want to outperform and obviously that's a that's a given so I think the best thing I can tell you is when we'll talk in March with with wave under our belt.
Speaker Change: Having said that wave has amended since last year, so well.
Speaker Change: Well continue to write it as long as we can.
Speaker Change: Let me, let me ask a different way then Josh so so if if we think about it we think about what you guys are embedding in terms of onboard.
Let me, let me ask that a different way than Josh. So, so if we think about, if we think about what you guys are embedding in terms of, of on board, you know, is it fair to assume you are being pretty conservative with, with the way on board to shake out in, in 24, basically meaning, you know, you potentially could see, you know, a little bit of a slowdown and on board, or, you know, are you still guys kind of assuming that, that on board remains as robust as it has.
Speaker Change: Is it fair to assume you are being pretty conservative with with the way onboard should shake out in 'twenty four basically meeting you potentially could see.
Speaker Change: Little bit of a slowdown in onboard or are.
Speaker Change: Or are you still guys kind of assuming that the onboard remains as robust as it has been.
Speaker Change: Yeah, you know, we're coming off a great performance when it comes to onboard and we expect our onboard for Dms to be increasing in 2024 versus 2023 brands are doing a real good job of.
Yeah, you know, we're coming off a great performance when it comes to on board and we expect our on board podiums to be increasing in 2024 versus 2023. You know, brands are doing a real good job of pulling forward more spend, providing differentiated experiences. So we absolutely expect an increase in 24 versus 20.
Speaker Change: Pulling forward more spend providing differentiated experiences. So we absolutely expect an increase in 24 versus <unk> versus 'twenty three.
Speaker Change: Yeah.
Okay, gotcha then real real quick one more question if I could David in terms of the cost you gave you give some pretty good color around you know the impact to The you know everything's going into the first quarter and why it's you know why it's so high You know as we think about the rest of the year the cadence of cost I think you said if we think about the third the second quarter through the fourth quarter Those should all be you know around three percent. I just want to make sure I heard that right and if there is anything You know in two q through four q that we should be thinking about that might you know move one of those quarters one way or the other
Speaker Change: Okay got you and then real quick one more question if I could David in terms of the cost you gave you gave some pretty good color around the impact to the you know everything is going into the first quarter and why it's why it's so high.
David Bernstein: As we think about the rest of the year the cadence of cost I think you said, if we think about the third the second quarter through the fourth quarter those should all be around 3% I just to make sure I heard that right and if there is anything into Q3 <unk> that we should be thinking about that might move one of those quarters, one way or the other.
David Bernstein: Yeah.
Yeah, so I was not trying to give individual guidance for each quarter. What I was trying to do is say that the three quarters collectively together would average three quarters.
Speaker Change: I was not trying to give individual guidance for each quarter. What I was trying to do is say that the three quarters collectively together would average 3%.
We will see some, you know, year-over-year differences versus 2023. You know, a great example of that is that the dry dock days will be down in second quarter, but they'll be up in fourth. So there will be differences. There's also advertising, seasonalization differences, and other things. So I was not trying to say 3% every quarter, just 3% on average.
We will see some year over year differences versus 'twenty 'twenty. Three you know a great example of that is that the dry dock days will be down in second quarter, but there'll be nothing for it. So there will be differences. There's also advertising seasonal <unk> differences and other things. So I was not trying to say 3%.
Speaker Change: Every quarter, just 3% on average for the three.
Speaker Change: Okay that is great. Thank you very much guys happy holidays, I appreciate it and great quarter.
Okay, that is great. Thank you very much guys. Happy holidays. Appreciate it and great quarter.
Speaker Change: Thank you very much stickier.
Speaker Change: Our next question comes from Brad I'm on tour with Barclays.
Our next question comes from Brad Montour with Barclays. Please proceed.
Speaker Change: Please proceed.
Brad: Great. Thanks, everyone and congratulations on the results this morning.
Great. Thanks, everyone, and congratulations on the results this morning. So Josh, you gave us an update on the sea change long-term targets.
Speaker Change: So Josh you gave us an update on the sea change long term targets and the drastic improvement towards that target and that you've made so far in 'twenty three and then 24 expected in I guess fuel has been a nice tailwind if you'd take few out and maybe just focus on your your yield.
and the drastic improvement toward that target that you've made so far in 23 and in 24 expected. And I guess, you know, fuel has been a nice tailwind. If you take fuel out and maybe just focus on your yield growth target within 24 guidance, is that in line with your internal expectations for that three year ramp or how do you think about it?
Gross target within 24 guidance is that in line.
Speaker Change: With your internal expectations for that three year ramp and how do you think about it.
Speaker Change: Yeah, I think it's fair to say that you know when we talked about it in June for the first time and we laid out what will it take we talked about the fact that.
Yeah, I think it's fair to say that, you know, when we talked about it in June for the first time and we laid out, you know, what will it take, we talked about the fact that, excuse me, getting back to historical occupancy.
Speaker Change: Getting back to you.
Speaker Change: Historical occupancy.
We expect pretty much all of that in 24 versus 20, where we were in 23. And that's, you know, as far as we can tell, that's exactly how it's going to play out. And on top of that, we predict price, we estimate pricing to be up low to mid-single digits every year, 24, 25, 26. And so, you know, we feel like we are, we entered the year a little bit ahead, given how we ended the second half of 2023, and we'll keep pushing forward.
Speaker Change: We expect pretty much all of that in 'twenty four versus 'twenty, where we were in 'twenty three and that's as far as we can tell that's exactly how it is going to play out and on top of that we predict price we estimate the pricing to be up low to mid single digits every year 'twenty four 'twenty five 'twenty six.
And so we feel like we are we entered the year little bit ahead, given how we ended the second half of 2023 and keep pushing forward.
Okay, great. Thanks for that. And then you said you were two thirds books for 24 that struck me as incredibly impressive. I mean, if you give us a sense of what that would have been in prior years, but also the crux of the question is, did that base loading strategy.
Speaker Change: Okay, great. Thanks for that and then.
Speaker Change: You said you were two thirds booked for 'twenty for that struck me is incredibly impressive I mean, if you could give us a sense of what that would have been in prior years, but also the crux of the question is did that base loading strategy.
Do you think that impacted your pricing meanfully versus what it would have been if you had it just kept this sort of historical booking curve and then as you go into January and wave season, you know, you've never been in this book. So has that changed your strategy with pricing as you move through wave?
Speaker Change: Do you think that impacted your pricing meaningfully versus what it would have been if you had it just kept the sort of historical booking curve and then as you go into the end of January and wave season.
Speaker Change: <unk> never been this book so has that changed your strategy with pricing as you move through wave.
Speaker Change: So so this is playing out as we would expect it to play out by pulling pulling forward all the volume it gives us better.
So this is playing out as we would expect it to play out by pulling forward all the volume. It gives us better,
better control over our pricing environment and our ability to keep pricing at an elevated level. And so it's literally playing out as it should.
Speaker Change: Better control over our pricing environment, and our ability to keep pricing at an elevated level and so it's literally playing out is as it should this is we are we are 10 points higher than we were when we entered the <unk>.
This is we are, you know, we are 10 points higher than we were, you know, when we entered the Q1 of 24, 10 points higher year over year, it's higher than 2019 as well.
Speaker Change: Q1, 'twenty 410 points higher year over year, it's higher than 2019 as well.
Speaker Change: But which was a.
which is a very long, normalized booking window. And it's important that we do that, right? I mean, let's keep in mind, you know, being 10 points above last year is good progress, but we expect to end our occupancy significantly higher than last year. So that's all feeding into the strategy and pricing is playing along as well.
Speaker Change: It was a very long normalized booking window.
Speaker Change: And it's important that we do that right I mean, let's keep in mind, you know being 10 points above last year is is good progress, but we expect to end our occupancy significantly higher than last year. So that's all feeding into the strategy and pricing is playing along as I tried to say in my notes I'm not sure how how clear it was you know when we.
I tried to say in my notes, I'm not sure how clear it was, when we entered the fourth
Speaker Change: Entered the fourth quarter.
of this year. We were about 10 points higher.
Of this year, we were we're about 10 points higher.
than prior year in the occupancy position, and prices were higher. As we've made our way through the quarter, we've managed to pretty much keep that occupancy advantage and prices on everything that's booked is now considerably higher. So it is working the way we anticipated.
Speaker Change: Than the prior year and the occupancy position and prices were higher as we've made our way through the quarter.
Speaker Change: We've managed to pretty much keep that occupancy advantage and prices on everything that's booked is now considerably higher so it is working the way we anticipated.
Speaker Change: Crystal clear thanks again.
Speaker Change: Excellent Thanks Brent.
Speaker Change: Okay.
Our next question comes from James Hardiman with Citi.
Speaker Change: Our next question comes from James Hardiman with Citi. Please proceed.
James Hardiman: Hey, good morning, guys. Thanks for taking my question so.
Hey, good morning guys. Thanks for taking my question so.
I'm going to ask, I think, Steve's question in a slightly different way, there was a lot of conjecture that you would only give first quarter guidance similar to last year. Obviously, your peers are at a bit of an advantage because they get that first month of wave.
James Hardiman: I'm going to ask I think Steve's question in a slightly different way there was a lot of conjecture.
James Hardiman: You would only give our first quarter guidance similar to last year. Obviously your peers are at a bit of a disadvantage because they get that first month of wave.
as they try to assess what the demand environment looks like.
James Hardiman: Trying to assess what the demand environment looks like obviously you gave us the full year guide anyway as we interpret that guide then take us through that thought process and whether or not that plays into sort of your level of conservatism.
Obviously, you gave us the full year guide anyway, as we interpret that guide, then, you know, take us through that thought process and whether or not that plays into sort of your level of conservatism being effectively ahead of way.
Being effectively a head of wave.
Speaker Change: Yeah, well, we are effectively back to normal. This is this is what we used to do before before the you know the last few years and I think it was quite important that we get back into this.
Yeah, well, we're we are effectively back to normal. This is this is what we used to do before before the you know the last few years and I think it was quite important that we get back into this into this.
Speaker Change: And to this cadence now good news, we are highest book we've ever been so we do have more visibility than even we had before.
Now, good news, we are highest book we've ever been, so we do have more visibility than even we had before.
before 2020. So, I think that's setting us up well to be able to be in a pretty good position to give you this preliminary.
Speaker Change: Before 2020, so I think of that setting us up well to be able to be in a pretty good position to give you to give you. This preliminary guidance for 2024, obviously, we have I have high expectations and my brands and what would I expect them to achieve including during wave and you got to remember the whole focus of wave this year.
guidance for 2024. Obviously, I have high expectations of my brands and what I expect them to achieve, including during Wave. And you've got to remember, the whole focus of Wave this year, we have the benefit of being able to focus on different things.
Speaker Change: We have the benefit of being able to focus on different things last year and wave a lot of what we were trying to accomplish in our brands. We're trying to accomplish was just filling the ships because we were at such a different position from an occupancy perspective. This time, we actually get to go through wave.
last year in WAVE, a lot of what we were trying to accomplish and our brands were trying to accomplish was just filling the ships because we were in such a different position from an occupancy perspective. This time we actually get to go through WAVE and really be more strategic in how we are trying to advance the needle not just on the short term but on the longer term. So I think it sets us up well and I keep asking David to change the fiscal year end and like can we please start on January 1st like everybody else but apparently that's a lot of work so we're not going to do that.
Speaker Change: And really be more strategic in how we are trying to advance the needle not just on the short term, but on a longer term. So I think it sets us up well and I keep asking David to change the fiscal year end in like can we please start on January one so like everybody else, but apparently that's a lot of work. So we're not going to do that.
Speaker Change: Got it and then.
There was a comment in the prepared remarks about not only are you seeing better new to cruise numbers, but better new to brand numbers relative to 2019. Josh, you talked about having confidence in your brand, but that latter point.
Speaker Change: There was a there was a comment in the prepared remarks.
Speaker Change: Not only are you seeing better.
New to cruise numbers, but better new to brand.
Speaker Change: <unk> relative to 2019, Jack you've talked about having confidence in your brands, but that that latter point.
Seems like a big one right so much so much of the conversation just seems to be about the cruise industry, but maybe talk to what you think might be a carnival specific story as in terms of improving consideration among people that are that are already in.
Speaker Change: Seems like a big one right. So so much of the.
Conversation just seems to be about the cruise industry.
Speaker Change: But maybe talk to what you think might be a carnival specific story is in terms of.
Speaker Change: Improving consideration among people that are that are already into crazy.
Yeah, I think our brands are doing phenomenally in really understanding who that target audience is and how to speak to them with their creative marketing. And then on the performance side, just making sure that that consideration and awareness gets converted into bookings. So, you know, we gave up.
Speaker Change: Yeah, I think our brands are doing phenomenally and really understanding who the target audience is and how to speak to them with their creative marketing and then on the performance side, just making sure that that consideration and awareness gets converted into bookings. So we gave.
You know, I said in my preparatory remarks, we've got several campaigns that are either started or about to start. We've got a few examples you can click through the prepared materials, the slides that have been put up. They're doing a great job at captivating the market and I think getting cut through not just with Nuda brand, Nuda brand and Nuda cruise, I'm the value that we have.
Speaker Change: I said in my prepared remarks, we've got several campaigns that are either started or about to start and we've got a few examples you can click through the prepared materials are slides that have been put out.
They're doing a great job of captivating the market and I think getting cut through not just with new to <unk>.
Speaker Change: New to brand new to brand new to cruise on the value that we have.
Speaker Change: And unfortunately for us as much as we've improved on the pricing front in 2023.
Speaker Change: It's still a big gap versus land. So all of those things are wind at our backs and and and I expect more of that overtime.
Speaker Change: Got it thanks, guys and good luck during wave.
Thank you.
Our next question comes from Jamie Katz with Morningstar, please proceed.
Speaker Change: Our next question comes from Jamie Katz with Morningstar.
Speaker Change: Proceed.
Good morning, Thank you.
I'm, hoping you can talk a little bit about changes to the sourcing strategy I know, it's shifted back a little bit more to 10, North American cruisers and <unk>.
Speaker Change: The last couple of years back Kevin.
Speaker Change: The strength in the European <unk>.
Speaker Change: And the fact that they might be closing the gap should we expect that to move back to a normal next.
Speaker Change: Well good morning, Jami, So I think we should kind of thing.
Speaker Change: Take a step back and think about our portfolio and how we operate you know we've got dedicated brands to European markets, but piano cruises in the UK and Aida in Germany cost not just for Italy, but really Italy, Spain, and France and all of those are either the.
Biggest in their market or the second biggest in the case of constant across the Mediterranean.
And we didn't deviate from our strategy when it comes to our dedicated market brands. And so they have continued to view those markets as the right thing to be in in the long term, and we absolutely support that. And we're starting to see the strength of that really come through as we've started talking about the last few quarters.
Speaker Change: And we didn't deviate from our strategy.
Speaker Change: When it comes to our dedicated market brands and so they have continued to view those markets is the right thing to be in the long term and we absolutely support that and we're starting to see the strength of that really come through as we've started talking about the last few quarters.
with respect to our North American brand, you know, Carnival has been and will continue to be America's cruise line and they're knocking the cover off the ball. And there hasn't been that much dramatic change when it comes to sourcing
Speaker Change: With respect to our North American brands.
Speaker Change: You know carnival has been and will continue to be America's cruise line in there, they're not going to cover off the ball.
Speaker Change: And there hasn't been that much dramatic change when it comes to sourcing.
for Holland America and princess other than the fact that for princess they had so much sourcing that was really geared towards Markets that have been slow to open In in Asia, etc. So we've repositioned. We've done a bit of that But but I think we're very well positioned to take the strength of the European consumer and the UK consumer and continue to ride that into 2024
Speaker Change: For Holland America, and Princess other than the fact that for Princess They had so much sourcing that was really geared towards.
Speaker Change: Markets that have been slow to open.
Speaker Change: In Asia et cetera, So we've repositioned we've done a bit of that but but I think we're very well positioned to take the strength of the European consumer in the UK consumer and continue to ride that into 2024.
And then there was a lot of positive commentary, obviously, on this call, so I'm curious if there's anything left out there that concerns you that you would like to share with the audience. Thanks.
Speaker Change: Okay, and then there was a lot of positive commentary on here for you on this call. So I'm curious if there's anything left out there that I'm concerned do you that you would like to share with the audience. Thanks.
No.
Great question. No. Thank you. Okay, you're welcome. Thanks. Happy holidays.
Speaker Change: Great question.
Speaker Change: Thank you [laughter], Okay Youre welcome Thanks happy holidays.
Speaker Change: You too.
Yes.
Our next question comes from Patrick Scholes with Twist. Please proceed.
Our next question comes from Patrick Scholes with twist. Please proceed.
Patrick Scholes: Hi, good morning, everyone.
Good morning, Patrick. Good morning. Josh, I am not going to ask you if you were planning on touching fuel this time, but I do have a question. Yeah. Thank you, Patrick.
Speaker Change: Good morning, Patrick.
Patrick Scholes: Good morning, Josh I am not going to ask you. If you were planning on as you build this time, but.
Patrick Scholes: But.
Speaker Change: Uh huh.
Speaker Change: [laughter] yeah. Thank you Patrick.
Speaker Change: Sometimes you should listen to it sometimes not.
Sometimes you should listen to us, sometimes not, but here we are.
Speaker Change: Yeah.
Uh huh.
I want to hear from you, you know, what friends
Speaker Change: I wanted to hear from you.
Speaker Change: <unk> trends.
of late, especially around
Speaker Change: Of late.
Especially around.
Black Friday, Cyber Monday, you've seen with new to cruise. You know, is that becoming a larger part of the booking mix? And, you know, if so, you know, what would be the
Speaker Change: Black Friday, cyber Monday, you've seen with.
Speaker Change: New to cruise is that becoming a larger.
Speaker Change: Part of the booking mix and if so what would be the <unk>.
impact on your margins. I imagine Nuda Cruz typically calls the 800 number of books direct, which probably saves you travel agency commissions. You just talked about those trends.
Speaker Change: Impact on.
Speaker Change: Your margins I imagine new to cruise typically called 800 number of books direct which probably saves you travel agency commissions.
Talk about those trends and the potential impact on our.
potential impact on revenues and costs. Thank you.
Speaker Change: Revenues Abbas thank you.
Thank you. So, candidly, I don't have literally for the period that you're referencing the Cyber Monday and Black Friday, I don't have a breakdown of Nuda Cruise versus Nuda Brand versus Brand Loyalist. I do have the fourth quarter, obviously, which includes some of that, where our Nuda Cruise is obviously up significantly, year over year, 51%. And so, that is part of the strategy, right?
Abbas: Thank you so candidly I don't have literally for the period that you're referencing the cyber Monday and Black Friday, I don't have a breakdown of new to cruise versus new to brand versus.
Abbas: Brand loyalists.
Abbas: I do have the fourth quarter of Italy, which include some of that where are new to cruise is obviously up significantly year over year, 51% and so that is that as part of the strategy right taking.
taking a greater share of folks who have never cruised before is part of the strategy to increase overall demand, get them in our pipeline, and allow us to raise pricing over time for frankly everybody.
Abbas: Taking a oh, notwithstanding pardon me I'm, sorry that was sale.
Abbas: But take a taking.
Abbas: Taking a greater share of folks who have never cruised before is part of the strategy to increase overall demand get them in our pipeline.
Abbas: Allow us to raise pricing over time for frankly, everybody.
Abbas: With respect to what's the most cost efficient obviously coming direct on the web is always going to be the most cost effective I wouldn't make a categorization, though that new to cruise comes in a particular way because it really depends on the characteristic of the new to cruise guests themselves what brand. It is what's the I 10.
what's the most cost efficient? Obviously coming direct on the web is always going to be the most cost effective. I wouldn't make a categorization though that Nuda Cruise comes in a particular way because it really depends on the characteristic of the Nuda Cruise guests themselves, what brand it is, what's the itinerary length,
Abbas: Thanks.
You know, et cetera. Now, clearly, a lot of NudaCruise will overindex on the shorter cruises because they're trying it out for the first time, and that lends itself to maybe also a younger crowd, which is more comfortable just playing around on the net and doing things direct. But, I mean, frankly speaking, historically, and I expect us to continue, our trade partners are absolutely critical in driving NudaCruise to us.
Abbas: Sacha now clearly a lot of new to cruise will over index on the shorter cruises because they're trying it out for the first time and that lends itself to maybe also a younger crowd, which is more comfortable I'm just playing around on the net and doing things direct but I mean, frankly speaking historically and I expect us to continue our trade.
Abbas: Partners are absolutely critical in driving new to cruise to us.
and we've relied on them for decades to do that, and we will rely on them for decades more, and they have done a great job of really catching up to where we've been in the curve, and year over year they're showing great strength as well.
Abbas: And we have relied on them for decades to do that and we will rely on them for decades more and they have done a great job of really catching up to where we've been in the curve and and year over year, they're showing great strength as well.
Okay. Thank you very much.
Speaker Change: Thanks, Patrick.
Our next question comes from Robin Farley with QBS. Please proceed.
Speaker Change: Our next question comes from Robin Farley with UBS. Please proceed.
Great. Thank you. I wanted to circle back to your yield guidance and just looking at the recovery and occupancy to previous levels being, you know, maybe six to 700 basis point that kind of implies that your per diem guidance is.
Great. Thank you.
Robin Farley: I wanted to circle back to your yield guidance and just looking at the recovery in occupancy.
Robin Farley: These levels being maybe six to 700 basis points. It kind of implies that you are.
Robin Farley: <unk> guidance is maybe less than 2% growth. So I just I don't know if im doing the math wrong here, if there's any anything to clarify and then also you.
maybe less than 2% growth. So I just I don't know if I'm doing the math wrong there if there's any anything to clarify and then also
You've talked about the price on the books for next year being considerably higher, but your yield guidance for the year, it's just nicely higher, which I think the David Bernstein glossary would be a deceleration.
Robin Farley: You've talked about.
Robin Farley: The price on the books for next year being considerably higher but.
Robin Farley: Your yield guidance for the year.
Robin Farley: Jeff nicely higher, which I think David Bernstein glossary.
Robin Farley: Hello.
I'm laughing at the glossary, yeah, keep going, Robin. If I remember, if I'm interpreting the glossary correctly, I think that implies sort of a deceleration in the price there. So is that just because the on-board growth rate while up is lower, and so that brings like considerably a higher price to just nicely higher yield, or maybe my glossary definition is wrong, but maybe you could help us with that and with the math on the per diem to begin with.
Robin Farley: So.
Speaker Change: I think that the glossary, yeah keep going around.
Speaker Change: If I if I remember if I'm interpreting it correctly I think that implies.
Speaker Change: The deceleration in the price there. So just is that just.
Speaker Change: Because the onboard growth rate, while up is lower and so that brings like considerably a higher price to just nicely higher yield or maybe Mike glossary definition is wrong, but it maybe you can help us.
With that and with the math on the Caribbean.
Well, actually, you know, David said it in the prepare remarks, I thought he said it pretty well. So, David, do you want to repeat what you said? Yeah, so, you know, keep in mind that 2019 was the high-water mark for us.
Speaker Change: Thank you Robyn.
David said it in the prepared remarks, I thought he said it pretty well so David you want to repeat what you said yeah. So you know keep in mind that 2019 was the high watermark for occupancy and we look back to like 2005 in the historical occupancy levels were in the range of 104 to 107.
And we look back to like 2005 and the historical occupancy levels were in the range of 104 to 107 percent. So what we're saying is we will be solidly back to historical occupancy levels, but we weren't saying we're going to be back to the high water mark of 2000.
David Bernstein: 10%. So what we're saying is we will be solidly back to historical occupancy levels, probably werent, saying, we're going to be back to the high watermark of 2019, so keep that in mind. The other thing about the considerably higher versus the nicely higher keep in mind that you know.
So, keep that in mind. The other thing about the considerably higher versus the nicely higher, keep in mind that, you know, last March when we gave guidance, you know, we had thought that our expectation for per diem increases was about 3.5 percent, and we wound up, you know,
David Bernstein: Last March when we gave guidance, we had thought that or expectation for per diem increases was about 3.5%.
David Bernstein: Wound up seven and a half per se. So we saw some very strong pricing in the back half of the year and as a result of that on a year over year comparison basis, our book position may be considerably higher.
So we saw some very strong pricing in the back half of the year and as a result of that on a year-over-year comparison basis, you know, a book position may be considerably higher. But what we're looking to see is at least nicely higher pricing on a per diem basis built into our
David Bernstein: We're looking to see is at least nicely higher pricing on a per DM basis built into our guidance. So when you put those two factors together hopefully you can understand how we built our guidance.
So when you put those two factors together, hopefully you can understand how it works.
Yeah, and the only thing I'd add, let me just have one thing, Robin, which is.
Yeah.
Speaker Change: Let me just add one thing Robin which is our focus is on generating the most revenue possible when that ship leaves, it's crews and that's going to be a combination of optimizing that price and occupancy relationship. So there's no magic to getting back to 2019 high watermark of 100.
Our focus is on generating the most revenue possible when that ship leaves on its cruise, and that's going to be a combination of optimizing that price and occupancy relationship.
So there's no magic to getting back to 2019 high watermark of 107 percent and we play in the fringes, we play in that 104 to 107 percent to make sure that when you combine that ending point along with the pricing, it's the happiest we can be.
Speaker Change: 7%.
Speaker Change: And we play in the fringes, we play in that 104% to 107% to make sure that when you combine that ending point along with the pricing.
Speaker Change: It's a happy as we can be.
I understood that occupancy, that you don't manage to a certain occupancy once you're in that range, but just that the price comment, what you're saying on the book is being considerably up versus nicely up.
Speaker Change: Understood that occupancy rate that you don't manage to a certain occupancy once winter in that range, but just say.
Speaker Change: Is that the price.
Speaker Change: Price comment.
Okay.
Speaker Change: Sure.
Speaker Change: But what youre seeing on the books being considerably up versus a nicely up.
does seem to imply that you would be expecting a deceleration from current levels and so I mean maybe the answer is you're just being conservative but I just if that's correct in interpreting considerably moving to nicely as
It does seem to imply that you would be expecting a deceleration from current levels.
Speaker Change: So I mean, maybe the interest you just being conservative, but I just if if that if that's correct in interpreting considerably moving to nicely.
Being a lower rate of growth that's I guess, that's what I'm trying to clarify.
being a lower rate of growth that's I guess that's why I'm trying to clarify. So one thing to stress right we just came off of the fourth quarter which everybody's glossing over real quick but it was up 10 and a half points in price.
Speaker Change: So one thing to stress right. We just came off of the fourth quarter, which everybody's glossing over real quick but it was up 10 five points in price.
That's what we're going to lap, you know, when we get through 2024. If you think about our booked business, we have the most to go in the fourth quarter, not surprisingly, it's the farthest out. So, as we build towards that and we cycle through the first quarter and the second quarter where we're the most booked, we just have to fill and get over a larger hurdle, which we expect to do, but we have to take that whole thing into the equation when we're giving full year guidance.
Speaker Change: That's what we're going to lap when we get through 2024, if you think about our booked business.
Speaker Change: We have the most to go in the fourth quarter not surprisingly so far this out so as we build towards that and we cycle through the first quarter in the second quarter were the most book, we just have to fill and get over a larger hurdle, which we expect to do but we have to take that whole thing into the equation when we're giving full year guide.
Speaker Change: <unk>.
That makes perfect. That makes perfect sense. Thank you. Thank you. And then just one last clarification on your C change on the expense side you've talked about the three-year being up low single digit
Oh that makes that makes perfect that makes perfect sense. Thank you. Thank you and then just one last clarification on your <unk>.
Speaker Change: The change on the expense side, you talked about three year being up low single digits.
in like 24, 25, 26 each year, this year up for or 2024 guidance up four and a half percent, you know, probably above low single digit kind of implies.
Speaker Change: 24, 25 2006 each year.
This year for <unk>.
Speaker Change: Our 2024 guidance up four 5%.
Speaker Change: Probably.
Low single digits kind of implies.
Very, very low expense growth in 25 and 26 is that how we should think about, in other words, there's not a change in your, the three year average would be up low single digit, even though it's up a bit more in 24 than that would suggest. And again, possibly you're just being conservative, but, but I don't know if you had a thought on how we should think about how much better that would be in 20 would have to be in 25 and 26 to keep your C change expense target. Thank you.
Very very low expense growth and 25 and 26 is that how we should think about in other words, there's not a change in your the three year average would be up low single digit even though its up a bit more in 'twenty. Four then that would suggest and again, possibly you're just being conservative, but I don't know if you had a thought on.
Speaker Change: How we should think about how much better that.
Speaker Change: Would be in 'twenty would have to be <unk> 25 in 2006 to keep your sea change expense target. Thank you.
Speaker Change: Sure. So you know.
Sure, so, you know, when we were presenting our seed change program, I guess it was...
Speaker Change: When we were presenting a sea change program I guess it was Oh you know in June we were.
In June , we were talking about the fact that low single digits, but I did say we'd have some outsized impacts in 2024 due to occupancy, both on the yield and on the cost.
Speaker Change: Talking about the fact that low single digits, but I did say, we'd have some outsized impacts in 2024 due to occupancy both on the yield and on the cost. So the 4.5% I also indicated that occupancy would probably cost a point tamp to two points this year. So.
So the 4.5%, I also had indicated that occupancy would probably cost a point half to two points this year. So we are, you know, in that low single digits equation that was built into the model. So I feel like we are very well positioned, and as Josh indicated, we're ahead of where we expected to be on our way towards achieving those goals.
We are in that low single digits equation that was built into the model. So I feel like we are very well positioned and as Josh indicated we're ahead of where we expect it to be on our way towards achieving those targets.
Speaker Change: I would say Robin I didn't think we'd get through the call without you trying to get ahead of 24 guidance I'm looking through 'twenty five.
Robin Farley: [laughter], well, but I almost didn't get in the last five minutes of the call I'm glad I got it. Thank you.
Speaker Change: No problem.
Speaker Change: Our next question comes from Dan Pulitzer with Wells Fargo. Please proceed.
Dan Pulitzer: Hey, good morning, everyone and thanks for taking my questions I, just actually wanted to touch on the fourth quarter, a little bit more.
Hey, good morning, everyone, and thanks for taking my questions. I just actually want to touch on the fourth quarter a little bit more. You know, the uptick in revenues on pricing certainly was impressive. Can you maybe unpack that a little bit more? I mean, was that really just, you know, the carnival centric line? Or was it Europe or, you know, North America more broadly? Or was this, you know, alternatively related to your strategy of more base loading and maybe benefiting from some of the compression we've
Dan Pulitzer: The uptick in revenues on pricing certainly was impressive can you maybe unpack that a little bit more I mean was that really just you know the carnival centric line.
Dan Pulitzer: Or was it Europe or North America more broadly or was this you know alternatively related to your strategy of more base loading and maybe benefiting from some of the compression we've seen.
This was Portfolio Live, so we're very pleased with, you know, with where we headed into the fourth quarter. Dave, I don't know if you want to give any color. Yeah, no, I mean, you're right. It was all brands, and we saw strength in booking.
Speaker Change: This was a portfolio wide. So we were very pleased with.
Speaker Change: With where we where are we headed into the fourth quarter.
I don't know if you want to give any color yeah, no I mean, you're right. It was all brands and we saw strength in bookings and you know our brands did a great job yield managing the revenue and taking price up and so as a result of that you saw the end result.
Our brand did a great job yield managing the revenue and taking price up and so as a result of that you saw the end result.
Got it. And then, Grand Bahama, I know you've started to talk a little bit more about that. Are there any parameters you can give us there in terms of capacity per day, amenities, you know, the CAPEX or return profile you're looking at? And also, I know you've started to see some booking activity that's going there. Are you receiving, you know, premiums on those bookings? I think you mentioned like 100s of salings in the release.
Speaker Change: Got it and then Grand Bahama I know you've started to talk a little bit more about that are there any parameters you can give us there in terms of capacity per day amenities, the capex or return profile, you're looking at and also I know you started to see some booking activity that's going there or are you receiving premiums on those bookings.
Speaker Change: You mentioned like 100 hundreds of ceilings in that release.
Yeah, let me start with that. It's tiny in the grand scheme of things still, because you're talking about Carnival Cruise Line, which
Speaker Change: Yes, well.
Let me start with that we have it's it's tiny in the Grand scheme of things still I mean, because you're talking about carnival cruise line, which.
You know, doesn't have a lot of short programs, et cetera, that don't really start booking. So it's a tiny amount now.
Speaker Change: You know it doesn't have a lot of short programs et cetera that don't that don't really start booking so it's a tiny amount now.
we'll give color as we as we get through 2024 in that respect. So we'll come back to that with respect to to your other points. You know, we've said this is this is a big investment. This is this is half a billion dollar type of investment. You know, and and we can do that obviously in 2025. We only have one chip and we have none in 2026. So we think this is the right way to optimize our resources and really benefit the carnival brand and
Speaker Change: We'll give color as we as we get through 2024 in that respect so we'll come back to that with respect to your other points. You know we've said. This is this is a big investment. This is this is half a billion dollar type of investment.
And we can do that obviously in 2025.
Speaker Change: Only have one chip and we have none in 2026, and we think this is the right way to optimize our resources and really benefit the carnival brand and you've heard US say 18 chips from day. One. So we're very very excited about that I don't want to get ahead, I really want to do a good job of disappointing myself to not get ahead of Christine Duffy who re.
I'll say 18 chips from day one, so we are very, very excited about that. I don't want to get ahead, I really want to do a
Good job of disciplining myself to not get ahead of Christine Duffy who really wants to and should talk about what this experience is going to be like and more to come in 2024 and I can't wait for you to listen to Christine and hear all about it.
Speaker Change: Really wants to and should.
Speaker Change: Talk about what this experience is going to be like and more to come in 2024, and I can't wait for you to listen to Christine and hear all about it.
Speaker Change: Got it and then just if I could squeeze in one quick housekeeping Panorama that was I think out of service a little bit in the fourth quarter and the first quarter is there any way to just quantify the impact of that.
And then just if I could squeeze in one quick housekeeping, panorama, that was, I think, out of service a little bit in the fourth quarter and the first quarter. Is there any way to just quantify the impact of that?
Speaker Change:
You know, in the grand scheme of things, it's probably a couple of pennies. And between like maybe one penny in the fourth quarter and a couple in the first. Got it. Thanks so much and happy holidays.
Speaker Change: And in the Grand scheme of things, it's probably a couple of pennies between between Uh Huh.
Speaker Change: Maybe one penny in the fourth quarter and a couple in the first.
Speaker Change: Got it thanks, so much and happy holidays.
Speaker Change: Thanks, Frank we have time for one last question.
We have a question from Asia Georgieva with Infinity Research.
Speaker Change: We have a question from Assia Georgieva with Infiniti Research. Please proceed gupta with Lucky ones.
Please proceed. Got to be the lucky one. Congratulations, guys, on a great Q4. So happy that we're back to looking at the odds as opposed to per diems. And then half percent was a great metric, but the 7.8% I liked better.
Assia Georgieva: Congratulations guys on a great Q4.
Gupta: So happy that we are back to looking at deals as opposed to per Dms and Tim.
Gupta: Tim half percent what was it.
Gupta: <unk> metric, but the seven 8% they like better.
Gupta:
Speaker Change: I apologize, but again I wanted us to finally get back to where we were looking at are the more useful metrics.
I apologize, but again, I wanted us to finally get back to where we're looking at the more usual metrics.
different that we have a very
Speaker Change: Do you have that we have theory.
Speaker Change: The outlook in terms of yields in Q1 Q2.
try docs, I think I at least understand well, so we have a good viewing to EBITDA throughout the year.
Speaker Change: Drydocks.
Speaker Change: I think I I at least to just handle how so we have a good view into EBITDA.
I'm proud of the year.
Speaker Change: David would you mind, taking this to sort of the debt and interest expense burden that you.
David Bernstein: Maybe trying to modify including as part of the sea change program by fiscal year end 2024.
Speaker Change: Sure so.
Sure. So, to start with, you know, you saw our interest expense guidance in the press release. It was close to $100 million less than 2023. And keep in mind that while we did pay down, you know, quite a bit of debt, the average balance for the year is for 2024 is probably like two and a half billion less.
Speaker Change: To start with you know you saw our interest expense guidance in the press release it was a close.
Close to $100 million less than 2023, and keep in mind that Wow, we did pay down you know.
Speaker Change: Quite a bit of debt the average balance for the Aries.
Speaker Change: For 2024 is probably like two and a half billion less than 2023, so that that will lower interest expense by 200 million, but also keep in mind that we have less cash on the books.
So that will lower interest expense by $200 million, but also keep in mind that we have less cash on the books and with declining interest income rates, that probably is offsetting the savings by about $100 million. So that's why it's a net decline of about $100 million in interest expense.
Speaker Change: And with declining interest income rates that probably it's offsetting the savings by about 100 million. So that's why it's a net decline of about $100 million in interest expense on a year over year basis.
I'm looking at the debt level, I actually said this in my notes, you know, in 2024, we are looking...
Speaker Change: Looking at the debt level I actually said this in my notes.
Speaker Change: In 2024, we are looking at about.
about 2 point, I think it's 2.1 billion of scheduled maturities, but we will be replacing that debt with the 2.3 billion of export credit.
Speaker Change: About two point I think its $2 1 billion of scheduled maturities, but we will be replacing that debt with the $2 3 billion of export credits that we take on so but in addition to that we have built in some prepayments of debt into our guidance.
That we take on so but in addition to that we have built in some prepayments of debt into our guidance And as I said, we are evaluating that so we do expect to see debt to go down in 2024 however, we do expect to see strong
Speaker Change: And as I said, we are evaluating that so we do expect to see that to go down in 2024. However, we do expect to see strong Hum deleveraging from a metrics perspective, because our EBITDA grows substantially so our debt to EBITDA will also improve.
of deleveraging from a metrics perspective, because our EBITDA grows substantially, so our debt to EBITDA will also grow.
makes perfect sense and this is a quick follow-up before I ask my second question, if I may. Would we be looking at refinancing as opposed to repayment?
Speaker Change: Makes perfect sense and just as a quick follow up before I ask my second question if I may.
Speaker Change: Hmm.
Speaker Change: Would we be looking at the.
Speaker Change: Refinancing as opposed to repayment.
So, we are looking at both, you know, as far as we expect to continue to prepay debts and to continue the deleveraging, but on top of that, we also expect to look at some potential refinancing, which really would drive the interest cost.
Speaker Change: So we are looking at both as far as we we we expect to continue to prepay debt and to continue the deleveraging, but on top of that we also expect to look at some potential refinancing, which really would drive the interest.
Speaker Change: Costs down.
And so we'll see how what opportunities are presented to us in 2024, and if it makes sense, we'll take
Speaker Change: And so we'll see how what opportunities presenters are presented to us in 2024, and if it makes sense, we'll take advantage of them.
Speaker Change: It sounds great and so if I can ask my second question and.
Great, and so if I can ask my second question, and I don't think anyone has touched on this, given geopolitical pressures, and we are comparing, used to be comparing 2023 to 2019 when we had St. Petersburg, which, uh...
I don't think anyone has touched on this.
Speaker Change: Given geopolitical pressures and.
We are comparing.
Speaker Change: Used to be comparing between 23 to 2019, when we have seen peers like which.
Clearly the Eastern Baltics have been kind of off the books. Now we have an issue with the Middle East.
Speaker Change: Clearly D eastern Baltics had been kind of off the books.
Speaker Change: Now we have an issue with the middle East.
Speaker Change: And.
Costa Scana, I believe, is in the Persian Gulf, but will be one of the ships that will have to come back to Europe and going through, you know,
Speaker Change: Gosh, the scanner I believe is in the Persian Gulf, but will be one of the ships that will have to come back to Europe and going to.
S trade that is.
He has been trying to get done by E. M E military.
He has been targeted by Yemeni military cells.
Speaker Change: South.
Yes right.
Obviously, our first priority is going to be safety and that's already on our radar screen and we've got mitigation plans should we need it, but keep in mind this is months away.
Speaker Change: Obviously, we you know our first priority is going to be safety.
Speaker Change: And we have we that's already on our on our radar screen and we've got mirrors mitigation plans should we need it but keep in mind. This is months away.
And so we will do the right thing, but
And so we will we will do the right thing.
Speaker Change: But.
There's always something, you know, I hate to say it that way, but there is always something and our brand I've been around long enough, you know, 26 years, so there is always something, Josh, I agree
Speaker Change: There's always something you know I hate to say it that way, but there is always something and I've been around long enough. You know 26 years. So there is always some like Josh I agree.
So, all right, I think with that, we do have to end it, but I'd say happy holidays to everybody, and thank you very much. Have a good new year.
Speaker Change: So alright, I think with that we do have to end it but I'd say happy holidays to everybody and thank you very much have a good new year.
Speaker Change: That does conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect. Your line have a great day.
That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line. Have a great day. Thank you.
Speaker Change: Okay.
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Good morning. This is Beth Roberts VP Investor Relations welcome to our fourth quarter 2023 earnings Conference call.
Speaker Change: I'm joined today by our CEO Kashiwagi.
Speaker Change: Our Chief Financial Officer, David Bernstein, and our chair Vicki Erickson.
Speaker Change: Before we begin please note that some of our remarks on this call will be forward looking therefore, I worked for using our cautionary statements in today's press release.
Speaker Change: All references ticket prices macro Dan net yield and adjusted cruise costs without fuel will be in constant currency unless otherwise stated.
References to break the EMS and yield will be on a net basis.
Speaker Change: Our comments May also reference cruise costs without fuel EBITDA net income net loss.
Speaker Change: Our earnings per share free cash flow and ROIC.
Speaker Change: All of which will be on an adjusted basis unless otherwise stated.
Speaker Change: Are these references are non-GAAP financial measures defined in our earnings press release.
Speaker Change: Conciliation to the most directly comparable U S GAAP financial measure and other associated disclosures are also contained in our earnings press release and in our Investor presentation.
Speaker Change: Please visit our corporate website, where earnings press release, and Investor presentation can be found with that I'd like to turn the call over to Josh.
Josh Weinstein: You bet.
Josh Weinstein: It's safe to say we ended the year on a high and closed another quarter with record revenues record booking levels and record customer deposits. In fact, we consistently set records in all four quarters this past year.
Josh Weinstein: We also achieved.
EBITDA and net income for the fourth quarter that all exceeded the high end of our September guidance range with cruise costs ex fuel in line with expectations.
Josh Weinstein: Fourth quarter yields continued on a positive trajectory significantly higher than a very strong 2019, and even higher than we had anticipated.
Josh Weinstein: And enabled us to overcome four years of high cost inflation to deliver per unit EBITDA that eclipsed 2019, holding fuel and currency constant.
Josh Weinstein: It was encouraging to see both north American and European brand occupancy levels exceed 101% in the fourth quarter with per Dms for our North American brands up double digits over 2019, and our European breads, just shy of a double digit increase.
Josh Weinstein: We delivered per diem improvements of more than seven points for the full year with even stronger acceleration in Q4.
Josh Weinstein: While closing the double digit occupancy gap at the start of the year to reach historical levels for the second half of 2023.
Absolute spending onboard was consistent across all four quarters as we drove improvement in ticket prices.
Josh Weinstein: We delivered $85 million more dollars to the bottom line fourth quarter than forecasted, which pushed us to positive adjusted income for the year.
Josh Weinstein: Strong EBITDA and cash from operations also propelled us on our journey to reduce the debt load necessitated during the pause in obligations.
Josh Weinstein: Made debt payments of $6 billion this year alone.
Josh Weinstein: And we still have well over $5 billion with liquid.
Josh Weinstein: On top of strong and improving cash flow.
Josh Weinstein: Which will contribute to further debt reduction over time.
Josh Weinstein: All of this leaves us firmly placed on our path back to achieve investment grade leverage metrics by 2026.
Josh Weinstein: And most importantly, our brands deliver happiness to over 12 million guests. This year laying the foundation upon which all of our sea change targets are built.
Turning to bookings, we reached an all time high in booking volumes for the two weeks around Black Friday, cyber Monday and ended the year in the best booked position, we have ever seen on both price and occupancy setting 2024 off to an amazing start we now have nearly two thirds of the business.
Josh Weinstein: Just on the books for 'twenty, 'twenty, four and at considerably higher prices.
Josh Weinstein: And during the fourth quarter, we essentially maintained significant occupancy advantage, we had built for 2024 going into the quarter, while improving year over year price position of our book business even further.
At this point much of the first half is already behind us with approximately 85% of the business on the books, we have essentially closed the double digit occupancy gap to historical levels on higher capacity and at higher prices.
Josh Weinstein: For our peak summer period.
Josh Weinstein: Major projects are better booked at higher prices benefiting from an improving trend in both occupancy and rate during the fourth quarter.
Josh Weinstein: Our yield management strategy. The Baseload bookings has clearly set us up for another record year and again, we have seen no sign our business slowing.
Josh Weinstein: The book position for our North American brands remain as far out as we have ever seen and well ahead of last year at pricing that is considerably higher.
Josh Weinstein: Our European brands, just delivered record fourth quarter booking volume at considerably higher prices.
Josh Weinstein: And with the booking window now fully back to historical norms.
As expected our.
Josh Weinstein: European brands are poised to become an even greater contributor to our 2020 for operating improvements.
Josh Weinstein: At the same time.
Josh Weinstein: We are continuing to pull forward onboard revenue through bundling and pre cruise sales.
Josh Weinstein: Strategy, coupled with EBIT Board features onboard our newer ships for our guests to enjoy <unk>.
Josh Weinstein: Positions us well for further onboard revenue growth next year.
Josh Weinstein: Also we expect occupancy for the full year to return to historical levels.
5% higher capacity, while delivering nicely higher per diem building on this year's record results in.
Josh Weinstein: In 2023 recaptured over three and a half million new to cruise guests and remain well positioned to continue to take share from land based alternatives in other words, we are gaining momentum and our ability to close the boat oriented value gap for land based alternatives and to aid in that effort.
We can further champion the fact that while many land based alternatives have pulled back on service levels, we still deliver incredible service to our guests thanks to our amazing.
Josh Weinstein: This appears exceedingly well with the expansive amount of guest pleasing amenities offered onboard our diversity.
Josh Weinstein: In fact, while almost four years have passed since the pause in our operation.
Josh Weinstein: Our fleet actually came out of the park a year younger.
Josh Weinstein: Fleet optimization.
Josh Weinstein: This past year alone we benefited from three plastic new ships.
<unk> Carnival celebration and piano cruises are.
Josh Weinstein: Both of which are flagships for their respective brands that leverage our scale at the seven and eight vessels in our popular and exceptionally efficient theory of XL flagships, and we welcomed seaborne pursuit.
Josh Weinstein: Our second expedition ship.
Josh Weinstein: Seaborne has truly raised the bar for expedition cruising in extreme luxury.
Josh Weinstein: Well not technically new Carnival cruise lines also welcome Carnival, the Netsuite Intuit spun Italian style platform via the transfer from Costa and it has been going gangbusters.
Biggest example, yet of how we leverage our scale and we'll be doubling down, but we bring over her sister ship Carnival forensic in 2024.
Josh Weinstein: Looking forward. This year is set to match the excitement level with the introduction of Carnival Jubilee.
Josh Weinstein: New icon for Carnival cruise line, and which no doubt will be the pride of Texas as she has her inaugural fone and Galveston.
Josh Weinstein: The innovative sub Princess the first of its class any real game changer for principal.
Josh Weinstein: And Queen Anne.
Josh Weinstein: New flagship for Qunar and its first new ship in 14 years.
Josh Weinstein: With all of these additions roughly 30% of our capacity will be newly delivered ships.
Josh Weinstein: We also made meaningful headway on other strategic asset projects.
Josh Weinstein: We began construction on celebration kit, which will be the largest and closest exclusive destination.
Josh Weinstein: Destination portfolio and a real game changer for Carnival cruise line.
Josh Weinstein: We'll bring eight Jeep carnival ships departing from nine home ports the celebration key.
Josh Weinstein: We are still about a year and a half from go live we are already ramping up the awareness and excitement around this fantastic destination.
We've also started the process for a significant upside in guest traffic at half Moon Cay are exclusive and beautiful pristine island destination in the Bahamas with the creation of a peer side birth that can accommodate even our largest vessels.
Josh Weinstein: Begun work with our Grand Bahama Shipyard partners on the construction of two floating drydock.
Josh Weinstein: One of which will have the largest lifting capacity in before this.
Josh Weinstein: This will result in significant benefit in the future as we reduce travel time preserve revenue days and at the same time reduce our fuel consumption.
Josh Weinstein: As you know we've also been investing more in advertising over the last 18 months and it has definitely paid off with elevated awareness and consideration for our brand and record booking levels and revenue results.
Josh Weinstein: In fiscal 'twenty to 'twenty three our web visits were up over 35% our paid search was up roughly 50% and our natural search was up almost 75%.
Josh Weinstein: Many many multiples of our 5% capacity growth.
Josh Weinstein: In the fourth quarter, we carried board due to crews have more new to brand than we did in the fourth quarter of 2019.
Josh Weinstein: Given our success in generating demand at this point in time, we plan to maintain a similar level of advertising on a unit basis in 2024 compared to 2023 optimizing around each brand.
Josh Weinstein: This will help us continue to build demand and bookings well outside of the current year.
Josh Weinstein: We are working aggressively to keep our strong momentum going through wave season and beyond.
Just to list a few examples KAUST, our recently launched spectacular new campaign in its core markets focusing on Beaumont, where guests are left speechless.
Josh Weinstein: The American launch the sequel to its highly successful time of your life campaign, and Aida just kicked off its new campaign experience yourself differently in conjunction with the holidays.
Carnival will launch a new marketing campaign, highlighting celebration key and time for waves.
Josh Weinstein: Piano cruises, new campaign holiday like never before largest Christmas day, and the U K.
Josh Weinstein: Qunar was planned a welcomed fit for a Queen introduced Queen Anne early next year, which is short capture huge pain.
We've been talking about upping, our game across the commercial space and we've made good progress of course, we're not done and as you would expect we never will.
Josh Weinstein: Always room to improve.
There's much more to come as we rollout advancements to our yield management tools and lead generation techniques continue to invest in sales and sales support.
Josh Weinstein: And build an already strong relationships with our trade partners.
Josh Weinstein: Turning to costs.
Josh Weinstein: As we previously indicated unit cruise cost ex fuel for 2024 are expected to be higher than inflation due to the impact of closing the occupancy gap and the higher volume of dry dock.
David will walk you through in more detail with that said, we have been working aggressively to mitigate inflation through our cost optimization initiatives, including leveraging our scale.
David Bernstein: In some cases, we're investing today for future benefits just decided a couple of examples of initiatives underway.
David Bernstein: We're essentially complete with the rollout of Starlink across the fleet.
David Bernstein: This will produce more than a 20% reduction in cost per megabit in 'twenty 'twenty, four and significantly increase our bandwidth pipeline, resulting in both better guest experience and higher onboard revenues a clear win win.
David Bernstein: And with our new vendor neutral platform, we are positioned to quickly capture cost savings in future years.
David Bernstein: We've also launched our maritime asset strategy transformation.
David Bernstein: Or what we refer to internally as mast.
David Bernstein: Matt is a centralized system developed to optimize the management of equipment and machinery across all brands and all of our ships.
David Bernstein: <unk> will allow us to leverage spare parts more effectively across the entire fleet and optimize our maintenance schedules and practices.
David Bernstein: All of which will strengthen our efficiency and reduce unplanned maintenance overtime.
David Bernstein: We won't see the P&L benefits from that this year as we ramp up its implementation in 2024.
David Bernstein: We expect a multiyear benefit well in excess of $100 million that really begins to ramp up in 2026.
David Bernstein: All the efforts, we're making to drive revenue and vantage power are expected to lead to a four point margin improvement in 2024.
David Bernstein: We're guiding to a record EBITDA of over $5 $5 billion, which is 30% higher in 2023.
David Bernstein: Thanks to a strong second half of 2023, we're already tracking ahead of our plan to achieve featuring our three year financial targets, calling for the highest <unk> and EBITDA for <unk> in nearly two decades, and our 2024 guidance deliberate another step change towards the east.
David Bernstein: Deliverables.
David Bernstein: EBITDA for birthday is expected to be up by more than 25% over our targets 30 points, hence more than halfway to the 50% increase expected in a sea change targets.
David Bernstein: Today's guidance, but also deliver 9% ROIC.
David Bernstein: Four point increase from the starting point of our target.
David Bernstein: This leaves just wanted a half point annual increases in 2025, and 2026 to hit our 12% target not.
David Bernstein: Not surprisingly our brand dedicated to a single market Carnival, Aida and piano cruises in the U K.
David Bernstein: They're leading the charge with the highest rois D levels in the company.
David Bernstein: And with regard to our greenhouse gas targets included in our 2026 D change program or ghd intensity in 'twenty 'twenty four is expected to be just shy of the 20% reduction from 2019, we're targeting.
David Bernstein: It's worth noting this was a 2030 goal we had already pulled forward by four years.
David Bernstein: Have been and continue to work aggressively to reduce our environmental footprint and fuel costs at the same time.
David Bernstein: The deep commitment has not only resulted in industry, leading fuel efficiency. It has also resulted in lower absolute ghd English.
David Bernstein: Our absolute emissions are over 10% lower than the 2011, Pete and that's despite capacity growth of 30% since then.
David Bernstein: Last year, we also exceeded our industry, leading shore power capability.
David Bernstein: We are ahead of what occurred and now have twice as many ships capable of shore power than there are ports around the world available plug ins.
Again, I credit all these important achievements to our people shipping sure.
David Bernstein: Collectively they continue to outperform allowing us to make good headway on our sea change part we're poised for another step change in operating improvement this year.
David Bernstein: With nearly two thirds of the business on the books at considerably higher prices ongoing momentum from improvements across the commercial space.
David Bernstein: Amazing vacation experiences, we deliver day in day out at way too good of a relative value to land based alternatives and an even greater experience gap.
David Bernstein: All while growing onboard revenues managing costs.
David Bernstein: All of this combined.
David Bernstein: This up well to deliver another year of record revenues and record EBITDA.
David Bernstein: Our cash flow strength, coupled with excess liquidity will return of credit card reserves in a few weeks and the lowest order book in decades will allow us to continue to actively manage down debt and aggressively reduce interest expense over time.
We will also propel us on a path to deleverage.
David Bernstein: That's me, great credit ratings and higher Rois.
David Bernstein: I remain confident in our continued execution with them.
David Bernstein: Unparallel portfolio of best in class brands in them.
David Bernstein: Major fleets that just keeps getting better and better.
David Bernstein: And our greatest asset our people.
This has been a truly remarkable year and we've come a long way in an incredibly short amount of time I.
David Bernstein: I would like to thank our team members ship and shore the best in all of the travel and leisure were delivering unforgettable happiness to over 12 million guests this year by providing them with extraordinary cruise vacations.
David Bernstein: Honoring the integrity of every Osha, we sell places we visit and life we touch.
David Bernstein: And thank you for the strong support from our travel agent partners as well as our loyal guests.
David Bernstein: Destination partners investors and our many other stakeholders with that I'll turn the call over to David.
David Bernstein: Thank you Josh I'll start today with a summary of our 2023 fourth quarter and full year results.
David Bernstein: Next I will provide a recap of our refinancing and deleveraging efforts during 2023 and finish up with some color on that.
David Bernstein: <unk> thousand 20 for full year and first quarter December guidance.
David Bernstein: Fourth quarter bottom line.
David Bernstein: Our end of our guidance range as we outperformed our September guidance.
David Bernstein: 85.
David Bernstein: Credit markets driven by favorability in revenue from a higher ticket prices.
David Bernstein: What premiums were up over 10%.
David Bernstein: Three points better, but the midpoint of our September guidance.
David Bernstein: Fourth quarter revenues of $5 4 billion or a fourth quarter record.
David Bernstein: Yields were up nearly 8% compared to 20.
David Bernstein: A great way to close out the year.
David Bernstein: Another indication.
David Bernstein: Absent a slowdown of our consumers.
David Bernstein: For the full year.
David Bernstein: Thanks to the tremendous efforts of our team members shipped offshore.
Close the books on 2023 with positive adjusted EBITDA.
That is a far cry from our March guidance.
David Bernstein: Deliberate over 500.
David Bernstein: $4 to the bottom line, which was partially offset by a drag from fuel price and currency exchange rates of over 100.
David Bernstein: Yes.
David Bernstein: The improvement was driven by delivering a settlement of a half percent increase.
David Bernstein: Revenue versus.
David Bernstein: Versus 'twenty.
David Bernstein: Once resolved with double a 3.5%.
Point of our March guidance, while closing a couple of things.
David Bernstein: She had occupancy gap.
David Bernstein: Started the year to reach historical occupancy levels.
David Bernstein: Absolutely Crazy Amazon going.
David Bernstein: Across all four quarters.
David Bernstein: Improvements in ticket prices on both sides of the Atlantic.
We ended the year with.
One Chris Hall over 20 languages.
David Bernstein: Next I will provide a recap.
David Bernstein: Yeah.
David Bernstein: Leveraging efforts during 2023.
David Bernstein: As Josh indicated our full year 2023, strong EBITDA of $4 2 billion.
David Bernstein: Strong cash from operations.
David Bernstein: 3 billion propelled us on our journey.
David Bernstein: Okay.
Painted by the pause guest cruise operations.
David Bernstein: During 2023.
David Bernstein: $6 billion.
David Bernstein: With just over $30.
David Bernstein: Which is 3 billion.
David Bernstein: Forecasted just nine months ago during our March conference call.
David Bernstein: Almost I believe.
First quarter peak transferring enterprise value.
David Bernstein: Cheryl.
David Bernstein: Through 2023 with proactively interest like that profile as we successfully started.
David Bernstein: And deleveraging program.
Accelerated debt repayment now of course, all the restaurants.
David Bernstein: Our interest expense.
David Bernstein: 2023.
David Bernstein: Stretched out a 2025 Oh charity.
There are whole terms by replacing it.
David Bernstein: One 3 billion term loan B facility.
David Bernstein: 27.
David Bernstein: $500 million offering of senior.
David Bernstein: The secured notes due 2029.
So along with our optimism about our future and the return of customer deposit reserves.
Our confidence to accelerate.
I call it the $1 2 billion.
Our highest cost.
David Bernstein: In addition.
David Bernstein: Opportunistically prepay $2 8 billion of additional cat alright.
David Bernstein: Total of $4 billion.
Payments.
David Bernstein: One 2 billion.
David Bernstein: Our credit card processors returned to us $800 million credit card reserves.
So expect an additional $800 million to be returned this current quarter.
Presenting substantially all of the remaining credit card reserve.
David Bernstein: Yeah.
David Bernstein: We took actions in both 2022 or early in 2023.
David Bernstein: Fixed rate percentage of our debt portfolio to over 80%.
David Bernstein: Up significantly from 58% fixed level.
David Bernstein: 2021, which provides the best protection.
Interest rates.
David Bernstein: Our overall average interest rate is just over 5.5% all of these actions to address our debt profile alongside our improved business performance drove 200 million interest savings.
David Bernstein: Our March guidance.
David Bernstein: Our maturity towers have been well managed in 2020 shacks with just $2 1 billion of debt maturities next year.
David Bernstein: 2025.
David Bernstein: Three points.
David Bernstein: In 2026.
David Bernstein: And looking forward.
David Bernstein: Continuing to evaluate.
We're seeing opportunities.
David Bernstein: Additionally.
David Bernstein: So in 2024.
David Bernstein: Higher cost fixed rate debt.
David Bernstein: Lower costs export credit financing as we take delivery of ships during 2024.
David Bernstein: Our leverage metrics will also continue to improve throughout 2024.
David Bernstein: EBITDA continues to grow.
Now turning to our 2024 fold year December guidance.
David Bernstein: We are forecasting a capacity increase of about 5.5% compared to 2023.
David Bernstein: We are expecting to deliver a strong 2024.
Our guidance forecast.
David Bernstein: Approximately 5% for the full year 2024.
David Bernstein: For 2023.
That is on top of our improved 2023 results, where we delivered seven 5% increase.
Revenue.
David Bernstein: Versus 2019.
Our strong two.
David Bernstein: 2020.
David Bernstein: As a result, all of the component parts.
Okay prices higher onboard spending Ohio.
David Bernstein: Okay.
David Bernstein: All three components approval on both sides of it.
David Bernstein: We are well positioned to drive 2024 ticket prices higher.
Higher.
David Bernstein: Okay.
David Bernstein: Tori.
David Bernstein: So on the phone.
David Bernstein: Last year.
David Bernstein: The capacity increase Hello, Hi, Chris.
David Bernstein: Okay.
David Bernstein: 2024 is on track to return to historical levels.
David Bernstein: Keep in mind 20, along with a high watermark for occupancy.
David Bernstein: 24 forecast well within our historical occupancy range.
David Bernstein: Balance price and volume.
David Bernstein: <unk> total revenues.
David Bernstein: Correct.
David Bernstein: Now turning to costs.
David Bernstein: Cruise costs without fuel per available lower bird.
It is currently expected to be up approximately four and a half.
David Bernstein: 2024 versus 2023.
David Bernstein: Oddly suppose there are four drivers of the cost.
David Bernstein: First our fourth cashless shallow anymore.
David Bernstein: But nonetheless, one question with an average three and a half questions increase across all our cost categories globally.
David Bernstein: Second with occupancy returning to historical levels.
Speaker Change: Josh one and a half to two percentage points higher in 2024.
It's a 2020.
Speaker Change: Third in 2024, we are expecting 506, Drydock days, an increase of 14% versus 2023.
She is expected to impact our overall year over year.
Cost comparison by about three quarters of a point.
Speaker Change: Oh I'm sorry.
Speaker Change: We expect these cost increases will be somewhat mitigated by a couple of points.
Speaker Change: The economy of scale from our capacity growth, which is of course, taking.
Speaker Change: Taking delivery of larger more efficient ships, along with various other cost optimization initiatives your consumption per <unk>.
Speaker Change: The decrease.
Speaker Change: Sure Chris.
On top of that.
Personal perception.
Speaker Change: From 'twenty one to 2023.
What's your question.
Speaker Change: Expected to favorably impact 2024 by $90 million with lower fuel prices.
While the change in currency exchange rates slightly goes the other way.
Speaker Change: Finally, a few calls people are worried about.
Increases in the fed.
Speaker Change: First quarter 2024.
Our higher guidance for first quarter 2024, 6%.
Speaker Change: Versus the full year.
Speaker Change: So it's driven by the larger improvement first quarter occupancy.
Speaker Change: Let's not forget that we did not win.
Speaker Change: Historical occupancy levels until the second half of 2023.
Speaker Change: There was much more occupancy driven.
Speaker Change: The opportunity in the first half.
On the cost side, the higher costs without offer available to offer guidance for the first quarter of 2029.5%.
Speaker Change: All right.
Speaker Change: First the largest improvement.
She will occur in the first quarter on wireless drives greater yield increases in the first quarter. It also drives greater cost increases.
Speaker Change: So a total of three to four points cost drag in the quarter.
Speaker Change: Second while dry dock costs.
Speaker Change: Our full year guidance.
Speaker Change: So now you have dry dock costs in the first quarter of 2024 as compared to the prior year.
Speaker Change: Strikes a cost increase of about one and a half points for this quarter.
Speaker Change: Sure.
Speaker Change: Our advertising expense.
Speaker Change: Other expenses between the quarters.
Speaker Change: 2024, as compared to 2023, which will put a total cost of approximately three points this quarter.
Speaker Change: Advertising allowance is one of the three points.
Speaker Change: Okay.
Speaker Change: Full year inflation.
By economies of scale.
Capacity growth along with various other costs.
Speaker Change: Yes.
Speaker Change: The higher first quarter cruise costs without fuel per rep.
Speaker Change: Okay.
Speaker Change: My guidance for the cost in the second.
Speaker Change: For the fourth quarter.
Speaker Change: 3%.
Speaker Change: In summary.
Speaker Change: All these factors together.
Speaker Change: Net income guidance for the full year 2024 is approximately $1 2 billion.
Speaker Change: Our forecasted.
Speaker Change: Six.
Speaker Change: A significant improvement from 2023.
So those of you who are modeling.
Speaker Change: But when you calculate.
Speaker Change: Yes.
Speaker Change: I think the 94 million of interest expense related to the company's convertible notes.
Speaker Change: Actual results are successful reform.
Speaker Change: Leveraging our post 2023.
Speaker Change: Along with our 2024 at the former guidance.
Speaker Change: It's firmly placed on our path to achieve our 2026 change goals.
Speaker Change: Further down the road.
Speaker Change: Our financial forecast.
Long term shareholder value.
Speaker Change: Well, operator, let's open up the call for questions.
Speaker Change: Thank you.
Speaker Change: If you would like to register a question. Please press the one four on your telephone.
Speaker Change: You will hear a three pronged technology request. If your question has been answered then you would like to withdraw your registration. Please press. The one followed by the three once again to register a question. Please press the one four on your telephone.
Speaker Change: One moment please for the first question.
Speaker Change: Our first question comes from Steve <unk> with Stifel. Please proceed.
Steve: Yeah, Hey, guys, good morning, and happy holidays to all of you.
Speaker Change: So Josh or David.
Speaker Change: Think about the yield guidance for the year just based on the fact that your occupancy should return to.
Speaker Change: Somewhat normal levels, and then pricing has momentum at this point it seems to be pretty strong or healthy across the majority of your of your geographies.
Speaker Change: It seems like that plus feet in a 5% yield guidance might end up being.
Speaker Change: Somewhat conservative when we have this call a year from now so.
Speaker Change: I guess the question is can you give us a little color about more.
Speaker Change: The makeup of the pure yield forecast it seems like you might be taking a somewhat conservative view around onboard trends and then potentially underestimating the opportunity around <unk>.
Speaker Change: In close in pricing.
Speaker Change: Thanks.
Speaker Change: As Steve Happy holidays to you too so I hope you're right.
Steve: I look forward to the call in a year.
Steve: But we've given our good.
Good faith estimate on how we're seeing the world right now.
Steve: We come in with a good amount of visibility because of how well booked we are as you said, we have seen accelerating momentum.
Steve: In the in the volume and the price. So we're very very pleased with the trajectory.
Steve: We've been seeing obviously this is also before wave and we do have a little bit of a disadvantage of doing this in December versus end of January into February so.
All I can tell you is we've baked in what we see and we always want to outperform and obviously thats a given so I think best thing I can tell you is we'll talk in March with with wave under our belt.
Steve: Having said that wave hasn't ended since last year or so.
We will continue to ride this as long as we can.
Speaker Change: Let me, let me ask a different way then Josh so if we think about it we.
Speaker Change: We think about what you guys are embedding in terms of onboard.
Speaker Change: Is it fair to assume you are being pretty conservative with with the way onboard should shake out in 'twenty four basically meeting.
You potentially could see a little bit of a slowdown in onboard or.
Speaker Change: Or are you still guys kind of assuming that the onboard remains as robust as it has been.
We're coming off a great performance when it comes to onboard and we expect our onboard for Dms to be increasing in 2024 versus 2023 brands are doing a real good job of pulling forward more spend providing differentiated experiences. So we absolutely expect an increase in 24 versus.
Speaker Change: <unk> versus 'twenty three.
Okay got you and then real quick one more question if I could David in terms of the cost you gave you gave some pretty good color around the impact to the everything is going into the first quarter and why it's why it's so high.
David Bernstein: As we think about the rest of the year the cadence of cost I think you said, if we think about the third the second quarter through the fourth quarter those should all be around 3% I just want make sure I heard that right and if there is anything into Q3 <unk> that we should be thinking about that might move one of those quarters, one way or the other.
Yeah.
So I was not trying to give individual guidance for each quarter. What I was trying to do is say that the three quarters collectively together would average 3% we will see some year over year differences versus 2023, and a great example of that is that the dry dock days will be down.
David Bernstein: In second quarter, but there'll be nothing for it. So there will be differences, there's also advertising seasonality Asian differences and other things. So I was not trying to say, 3% every quarter just 3% on average for the three.
Speaker Change: Okay that is great. Thank you very much guys happy holidays, I appreciate it and great quarter.
Speaker Change: Thank you very much stickier Steve.
Speaker Change: Okay.
Speaker Change: Our next question comes from Brad <unk> with Barclays.
Brad: Please proceed.
Great. Thanks, everyone and congratulations on the results this morning.
Brad: So Josh you gave us an update on the sea change long term targets and.
Brad: The drastic improvement towards that target and that you've made so far in 'twenty three 'twenty four expected I guess fuel has been a nice tailwind if you take fuel out and maybe just focus on your your yield growth target within 24 guidance is that in line.
With your internal expectations for that three year ramp or how do you think about it.
Speaker Change: Yeah, I think it's fair to say that you know when we talked about it in June for the first time and we laid out what will it take we talked about the fact that excuse.
Speaker Change: Excuse me getting back to excuse me historical occupancy.
Speaker Change: We expect pretty much all of that in 'twenty four versus 'twenty, where we were in 'twenty three and that's as far as we can tell that's exactly how it is going to play out and on top of that we predict pricing.
Estimated pricing to be up low to mid single digits every year 'twenty four 'twenty five 'twenty six.
And so we feel like we are we entered the year little bit ahead, given how we ended the second half of 2023 and think you're pushing forward.
Speaker Change: Okay, great. Thanks for that and then.
You said you were two thirds booked for 'twenty for that struck me is incredibly impressive.
Speaker Change: Can you give us a sense of what that would have been in prior years, but also.
Speaker Change: The crux of the question is did that base loading strategy.
Speaker Change: Do you think that impacted your pricing meaningfully versus what it would have been if you had it just kept the sort of historical booking curve and then as you go into two ended January and wave season.
Speaker Change: <unk> never been this book so has that changed your strategy with pricing as you move through wave.
Speaker Change: So.
Speaker Change: So this is playing out as we would expect it to play out by pulling pulling forward all the volume it gives us better.
Speaker Change: Better control over our pricing environment, and our ability to keep pricing at an elevated level and so it's literally playing out is as it should this is we are we are 10 points higher than we were when we entered the Q1 'twenty 410 points higher year over year, it's higher than 2019.
Speaker Change: As well.
Speaker Change: But which was a.
Speaker Change: Which is a very long normalized booking window.
Speaker Change: And it's important that we do that right I mean, let's keep in mind, you know being 10 points above last year is is good progress, but we expect to and our occupancy significantly higher than last year. So that's all feeding into the strategy and pricing is playing along as I tried to say in my notes I'm not sure how how clear it was when we.
Speaker Change: Entered the fourth quarter.
Speaker Change: Of this year, we were about 10 points higher.
Speaker Change: Than the prior year and the occupancy position and prices were higher as we've made our way through the quarter, we've managed to pretty much keep that occupancy advantage and prices on everything that's booked is now considerably higher so it is working the way we anticipated.
Speaker Change: Crystal clear thanks again.
Speaker Change: Excellent Thanks Brent.
Yeah.
Speaker Change: Our next question comes from James Hardiman with Citi. Please proceed.
James Hardiman: Hey, good morning, guys. Thanks for taking my question so.
James Hardiman: I'm going to ask I think Steve's question in a slightly different way.
James Hardiman: A lot of conjecture.
James Hardiman: You would only give first quarter guidance similar to last year. Obviously your peers are at a bit of an advantage because they get that first month of wave.
Try to assess what the demand environment looks like obviously you gave us the full year guide anyway, as we interpret that guide then.
James Hardiman: Through that thought process, and whether or not that plays into sort of your level of conservatism.
James Hardiman: Being effectively a head of wave.
Well, we are effectively back to normal. This is this is what we used to do before before the the last few years and I think it was quite important that we get back into this.
James Hardiman: And to this cadence now good news, we are highest book we've ever been so we do have more visibility than even we had before.
James Hardiman: Before 2020, so I think of that setting us up well to be able to be in a pretty good position to give you to give you. This preliminary guidance for 2024, obviously, we have I.
James Hardiman: I have high expectations of my brands, and what would I expect them to achieve including during wave and you got to remember the whole focus of wave. This year, we have the benefit of being able to focus on different things last year and wave a lot of what we were trying to accomplish in our brands. We are trying to accomplish was just filling the ships because we were at such a different position from an occupancy.
James Hardiman: At this time, we actually get to go through wave.
James Hardiman: And really be more strategic in how we are trying to advance the needle not just on the short term, but on the longer term. So I think it sets us up well and I keep asking David to change the fiscal year end in like can we please start on January one so like everybody else, but apparently that's a lot of work. So we're not going to do that.
Yeah.
Speaker Change: Got it and then.
Speaker Change: There was a there was a comment in the prepared remarks.
Speaker Change: Not only are you seeing better.
Speaker Change: New to cruise numbers, but better new to brand.
Speaker Change: <unk> relative to 2019, Jack you've talked about having confidence in your brands, but that that latter point.
Speaker Change: Seems like a big one right. So so much of the.
Speaker Change: Conversation just seems to be about the cruise industry.
Speaker Change: But maybe talk to what you think might be a carnival specific story is in terms of.
Speaker Change: Improving consideration among people that are that are already integrated.
Speaker Change #100: Yeah, I think our brands are doing phenomenally in really understanding who the target audience is and how to speak to them with their creative marketing and then on the performance side, just making sure that that consideration and awareness gets converted into bookings. So we gave up.
Speaker Change #100: I said in my prepared remarks, we've got several campaigns that are either started or about to start.
We've got a few examples you can click through the prepared materials are slides that have been put out.
Speaker Change #100: They're doing a great job of captivating the market and I think getting cut through not just with new to new to brand new to brand new to cruise on the value that we have.
Speaker Change #100: And unfortunately for us as much as we've improved on the pricing front in 2023.
It's still a big gap versus land. So all of those things are wind at our backs and and I expect more of that overtime.
Got it thanks, guys and good luck during wave.
Speaker Change #101: Thank you.
Speaker Change #101: Yes.
Speaker Change #102: Our next question comes from Jamie Katz with Morningstar.
Speaker Change #102: <unk>.
Jamie Katz: Good morning, Thank you.
Jamie Katz: I'm, hoping you can talk a little bit about changes to the sourcing strategy I know, it's shifted back a little bit more to 10, North American cruisers.
The last couple of years, but given the strength in the European market around the fact that they might be closing the gap should we expect that to move back to normal.
Jamie Katz: <unk>.
Well yeah.
Good morning, Jamie so.
Jamie Katz: I think we should kind of.
Jamie Katz: Take a step back and think about our portfolio and how we operate we've got dedicated brands to European markets, but piano cruises in the UK and Aida in Germany cost not just for Italy, but really Italy, Spain, and France and all of those are either.
Jamie Katz: The biggest in their market or the second biggest in the case of costa across the Mediterranean.
Jamie Katz: And we didn't deviate from our strategy.
Jamie Katz: When it comes to our dedicated market brands and so they have continued to view those markets is the right thing to be in the long term and we absolutely support that and we're starting to see the strength of that really come through as we've started talking about the last few quarters.
Jamie Katz: With respect to our North American brands.
Jamie Katz: Carnival has been and will continue to be America's cruise line in there, they're not going to cover off the ball.
Jamie Katz: And there hasnt been that much dramatic change when it comes to sourcing.
Jamie Katz: For Holland America, and Princess other than the fact that for Princess They had so much sourcing that was really geared towards.
Jamie Katz: Markets that have been slow to open.
Jamie Katz: In Asia et cetera, So we've repositioned we've done a bit of that but but I think we're very well positioned to take the strength of the European consumer in the UK consumer and continue to ride that into 2024.
Speaker Change #104: Okay, and then there was a lot of positive commentary on here for you on this call. So I'm curious if there's anything left out there that concerns you that you would like to share with the audience. Thanks.
Speaker Change #104: No.
Speaker Change #105: Great question.
Speaker Change #106: Thank you [laughter], Okay Youre welcome Thanks happy holidays.
Speaker Change #107: You too.
Speaker Change #108: Our next question comes from Patrick Scholes with twist. Please proceed.
Patrick Scholes: Hi, good morning, everyone.
Speaker Change #109: Good morning, Patrick.
Good morning, Josh I am not going to ask you. If you were planning on as you build this time, but.
Speaker Change #109: Yeah.
Speaker Change #110: [laughter] yeah. Thank you Patrick.
Speaker Change #111: Sometimes you should listen to us sometimes not.
Speaker Change #111: Yeah.
Speaker Change #112: Uh huh.
Speaker Change #113: I wanted to hear from you.
Speaker Change #113: <unk> trends.
Friends.
Speaker Change #113: Of late.
Speaker Change #113: Especially around <unk>.
Speaker Change #113: Friday, cyber Monday, you've seen with new.
Speaker Change #113: New to cruise is that becoming a larger.
Speaker Change #113: Part of the booking mix and if so what would be the.
Speaker Change #113: Impact on on your margins I imagine new to cruise typically called 800 number of books, correct, which probably saves you travel agency commissions.
Speaker Change #113: Talk about those trends and the potential impact on <unk>.
Speaker Change #113: Revenues at cost thank you.
Speaker Change #114: Thank you so candidly I don't have literally for the period that you're referencing the cyber Monday and Black Friday, I don't have a breakdown of new to cruise versus new to brand versus.
Speaker Change #114: Brand loyalists I do have the fourth quarter, obviously, which include some of that where are new to cruise is obviously up significantly year over year, 51%.
Speaker Change #114: So.
That is that as part of the strategy right taking.
Speaker Change #114: Taking a oh dollar sale pardon me I'm, sorry that was sale.
Speaker Change #114: But take a taking.
Speaker Change #114: Taking a greater share of folks who have never cruised before.
Speaker Change #114: As part of the strategy to increase overall demand get them in our pipeline and allow us to raise pricing over time for frankly everybody.
Speaker Change #114: With respect to <unk>.
What's the most cost efficient obviously coming direct on the web is always going to be the most cost effective I wouldn't make a categorization, though that new to cruise comes in a particular way because it really depends on the characteristic of the new to cruise guests.
Speaker Change #114: <unk> what brand it is what's the itinerary length et.
Speaker Change #114: Et cetera, now clearly a lot of new to cruise will over index on the shorter cruises because they're trying it out for the first time and that lends itself to maybe also a younger crowd, which is more comfortable just playing around on the net and doing things direct but I mean, frankly speaking historically and I expect us to continue our trade.
Speaker Change #114: Partners are absolutely critical in driving new to cruise to us.
Speaker Change #114: And we have relied on them for decades to do that and we will rely on them for decades more and they have done a great job of really catching up to where we've been in the curve and.
Speaker Change #114: Year over year, they're showing great strength as well.
Speaker Change #115: Okay. Thank you very much.
Thanks, Patrick.
Speaker Change #116: Our next question comes from Robin Farley with UBS. Please proceed.
Robin Farley: Great. Thank you.
Robin Farley: I wanted to circle back to your yield guidance.
Robin Farley: Looking at the recovery in occupancy.
Speaker Change #117: Previous levels being maybe six to 700 basis points. It kind of implies that your per diem guidance is maybe less than 2% growth. So I just I don't know if im doing the math wrong here, if there's any anything to clarify and then also you.
You've talked about.
Speaker Change #117: Yes.
Based on the books for next year being considerably higher.
Speaker Change #117: Your yield guidance for the year.
Speaker Change #117: Jeff nicely higher, which I think David Bernstein glossary.
Speaker Change #117: The deceleration.
Speaker Change #117: So.
Speaker Change #118: I think that's it.
Speaker Change #118: Lottery, Yeah keep going Robyn.
Robyn: So if I if I remember if I'm interpreting you correctly I think that implies sort of a deceleration in the price. There. So just is that just.
Robyn: Because the onboard growth rate while up is.
Robyn: Lower and so that brings like considerably a higher price to just nicely higher yield or maybe Mike glossary definition is wrong, but maybe you could help us with.
Robyn: With that and with the math on the Caribbean.
Speaker Change #120: Thank you Robyn.
Speaker Change #120: David said it in the prepared remarks, I thought you said it pretty well so David you want to repeat what you said, yes. So you know keep in mind that 2019 was the high watermark for occupancy and we look back to like 2005 in the historical occupancy levels were in the range of 104 to 107.
David Bernstein: <unk> percent. So what we're saying is we will be solidly back to historical occupancy levels, probably werent, saying, we're going to be back to the high watermark of 2019.
David Bernstein: So keep that in mind, the other thing about the considerably higher versus the nicely higher keep in mind that you know last March when we gave guidance we had thought that.
David Bernstein: Our expectation for per Diem increases was about three 5% and we wound up seven 5%. So we saw some very strong pricing in the back half of the year and as a result of that on a year over year comparison basis.
David Bernstein: <unk> position may be considerably higher.
Looking to see is at least nicely higher pricing on a per DM basis built into our guidance. So when you put those two factors together hopefully you can understand how we built our guidance.
David Bernstein: Yes.
Hey, guys.
Speaker Change #121: So let me just add one thing Robin which is our focus is on generating the most revenue possible when that ship leaves.
It's crews and that's going to be a combination of optimizing that price and occupancy relationship. So there's no magic to getting back to 2019 high watermark of 107%.
We play in the fringes, we play in that 104% to 107% to make sure that when you combine that ending point along with the pricing.
Speaker Change #121: It's a happy as we can be.
Speaker Change #121: Understood that occupancy rate that you don't manage to a certain occupancy once once you are in that range, but just that.
Speaker Change #122: Got that.
Speaker Change #122: The price comment.
Speaker Change #122: Okay.
Speaker Change #122: Sure.
But you are seeing on the books being considerably up versus said nicely up.
Does seem to imply that you would be expecting a deceleration from current levels.
Speaker Change #123: So I mean, maybe the interest you just being conservative, but I just if if that if that's correct in interpreting considerably moving to nicely.
Speaker Change #123: Being a lower rate of growth that's I guess, that's what I'm trying to clarify.
Speaker Change #123: So one thing to stress right. We just came off of the fourth quarter, which everybody's glossing over real quick but it was up 10 five points in price.
That's what we're going to lap when we get through 2024, if you think about our booked business.
We have the most to go in the fourth quarter not surprisingly so far this out so as we build towards that and we cycle through the first quarter in the second quarter were the most book, we just have to fill and get over a larger hurdle, which we expect to do.
Speaker Change #123: But we have to take that whole thing into the equation, when we're giving full year guidance.
Speaker Change #124: Okay that makes that makes perfect that makes perfect sense. Thank you. Thank you and then just one last clarification on your seat.
Speaker Change #124: The change on the expense side, you talked about three year being up low single digits.
Speaker Change #124: In my 24, 25 2006 each year.
Speaker Change #124: This year for <unk>.
Speaker Change #124: Our 2024 guidance up four 5%.
Speaker Change #124: Probably.
Speaker Change #124: Low single digits kind of implies.
Speaker Change #124: Very very low expense growth and 25 and 26 is that how we should think about in other words, there's not a change in your the.
Speaker Change #124: Three year average would be up low single digit even though its up a bit more in 'twenty. Four then that would suggest and again, possibly youre just being conservative, but I don't know if you have a thought on how we should think about how much better that.
Speaker Change #124: Would be in 'twenty would have to be in 2005, and 2006 to keep your sea change expense target. Thank you.
Speaker Change #125: Sure. So you know.
When we were presenting a sea change program I guess it was Oh you know in June we were.
Speaker Change #125: Talking about the fact that low single digits, but I did say, we'd have some outsized impacts in 2024 due to occupancy both on the yield and on the cost. So the four 5% I also had indicated that occupancy would probably cost a point tamp to two points. This year. So.
Speaker Change #125: We are in that low single digits equation that was built into the model. So I feel like we are very well positioned and as Josh indicated we're ahead of where we expect it to be on our way towards achieving those targets.
Speaker Change #126: I would say Robin I didn't think we'd get through the call without you trying to get ahead of 24 guidance I'm looking through 'twenty five.
[laughter], well, but I almost didn't get in the last five minutes of the call I'm glad I got it in.
Speaker Change #127: Thank you.
Speaker Change #128: No problem.
Speaker Change #129: Our next question comes from Dan Pulitzer with Wells Fargo. Please proceed.
Dan Pulitzer: Hey, good morning, everyone and thanks for taking my questions I, just actually wanted to touch on the fourth quarter, a little bit more.
Dan Pulitzer: The uptick in revenues on pricing certainly was impressive can you maybe unpack that a little bit more I mean was that really just the carnival centric line or.
Dan Pulitzer: Or was it Europe or North America more broadly or was this you know alternatively related to your strategy of more base loading and maybe benefiting from some of the compression we've seen.
Speaker Change #130: This was a portfolio wide. So we were very pleased with you know with.
Speaker Change #130: Where are we where are we headed into the fourth quarter.
You know if you want to give any color yeah, no I mean, you're right. It was all brands and we saw strength in bookings and our brands did a great job yield managing the revenue and taking price up and so as a result of that you saw the end result.
Speaker Change #131: Got it and then Grand Bahama I know you've started to talk a little bit more about that are there any parameters you can give us there in terms of capacity per day amenities, the capex or return profile, you're looking at and also I know you started to see some booking activity that's going there or are you receiving premiums on those bookings I think it. Thank you.
Like 100 hundreds of ceilings in that release.
Speaker Change #131: Yes.
Speaker Change #132: Let me start with that we have it's it's tiny in the Grand scheme of things still I mean, because you're talking about carnival cruise line, which.
Speaker Change #132: You know it doesn't have a lot of short programs et cetera that don't that don't really start booking so it's a tiny amount now.
Speaker Change #132: We'll give color as we as we get through 2024 in that respect so we'll come back to that with respect to your other points. You know we've said. This is this is a big investment. This is this is half a billion dollar type of investment.
Speaker Change #132: And we can do that obviously in 2025.
Speaker Change #132: Only have one chip and we have none in 2026. So we think this is the right way to optimize our resources and really benefit the carnival brand and you've heard US say 18 chips from day. One. So we're very very excited about that I don't want to get ahead, I really want to do a good job of disappointing myself to not get ahead of Christine Duffy, who.
Speaker Change #132: Really wants to and should.
Speaker Change #132: Talk about what this experience is going to be like and more to come in 2024, and I can't wait for you to listen to Christine and hear all about it.
Speaker Change #133: Got it and then just if I could squeeze in one quick housekeeping Panorama that was I think out of service a little bit in the fourth quarter and the first quarter is there any way to just quantify the impact of that.
Speaker Change #133:
Speaker Change #133: And in the Grand scheme of things, it's probably a couple of pennies.
Speaker Change #133: Between between like.
Speaker Change #133: Mike maybe one penny in the fourth quarter and a couple in the first.
Mike: Got it thanks, so much and happy holidays.
Speaker Change #135: Thanks, Frank we have time for one last question.
Speaker Change #136: We have a question from Assia Georgieva with Infiniti Research. Please proceed.
Thank you.
Congratulations guys on a great Q4, so happy that were.
Speaker Change #136: We are back to looking at deals as opposed to per Dms and.
Speaker Change #136: I'm half percent was a great metric, but the seven 8% they like better.
Speaker Change #136: No.
Speaker Change #136: I apologize, but again I wanted us to finally get back to where we were looking at a more useful metric.
From that we have a very healthy outlook in terms of yields in Q1 Q2.
Speaker Change #136: Drydocks.
I think I I at least in this handle now.
Speaker Change #136: So we have a good view into EBITDA.
Speaker Change #136: Throughout the year.
Speaker Change #136: David would you mind, taking this to sort of the debt and interest expense burden that you made.
David Bernstein: Maybe trying to modify including as part of the sea change program by fiscal year end 2024.
Speaker Change #137: Sure so.
To start with you know you saw our interest expense guidance in the press release it was a.
Speaker Change #137: Close to $100 million less than 2023, and keep in mind that Wow, we did pay down.
Speaker Change #137: Quite a bit of debt the average balance for the Aries.
Speaker Change #137: For 2024 is probably like two and a half billion less than 2023, so that that will lower interest expense by 200 million, but also keep in mind that we have less cash on the books and with declining interest income rates that probably it's offsetting the savings by about 100 million.
Speaker Change #137: So that's why it's a net decline of about $100 million in interest expense on a year over year basis.
Speaker Change #137: Looking at the debt level I actually said this in my notes you know in.
Speaker Change #137: In 2024, we are looking at about.
About two point I think its $2 1 billion of scheduled maturities, but we will be replacing that debt with the $2 3 billion of export credits that we take on so but in addition to that we have built in some prepayments of debt into our guidance.
Speaker Change #137: And as I said, we are evaluating that so we do expect to see that to go down in 2024. However, we do expect to see strong.
Deleveraging from a metrics perspective, because our EBITDA grows substantially so our debt to EBITDA will also improve.
Speaker Change #138: Makes perfect sense and just as a quick follow up before I ask my second question if I may.
Speaker Change #138: Hmm.
Speaker Change #138: Would we be looking at a lease.
Speaker Change #138: The refinancing as opposed to <unk>.
Speaker Change #138: Repayment.
Speaker Change #138: So we are looking at both as far as we we expect to continue to prepay debt and to continue the deleveraging, but on top of that we also expect to look at some potential refinancing, which really would drive the interest.
Speaker Change #138: Costs down.
Speaker Change #138: And so we'll see how what opportunities presenters are presented to us in 2024, and if it makes sense, we'll take advantage of them.
Speaker Change #139: It sounds great and so if I can ask my second question and.
Speaker Change #139: I don't think anyone has touched on this.
Given geopolitical pressures and we.
Speaker Change #139: We are comparing.
Speaker Change #139: Used to be comparing between 23 to 2019, when we have seen peers bike, which.
Speaker Change #139: Clearly the eastern Baltics have been kind of off the books.
Speaker Change #139: Now when we have an issue with the middle East.
Speaker Change #139: And.
Speaker Change #139: Gosh, the scanner I believe is in the Persian Gulf, but will be one of the ships that will have to come back to Europe in going to.
Speaker Change #139: S trade that is.
Speaker Change #139: It has been kind of get the Baie M&A military.
Speaker Change #139: South.
Speaker Change #140: Yes right.
Speaker Change #140: Obviously, we you know our first priority is going to be safety.
Speaker Change #140: And we have.
Speaker Change #140: That's already on our on our radar screen and we've got mirrors mitigation plans should we need it but keep in mind. This is months away.
Speaker Change #140: So we will we will do the right thing.
Speaker Change #140: But there's.
Speaker Change #140: There's always something.
Speaker Change #140: To say it that way, but there is always something and I've been around long enough you know what.
Speaker Change #140: Six years. So there is always some like Josh I agree.
Speaker Change #141: So alright, I think with that we do have to end it but I'd say happy holidays to everybody and thank you very much have a good new year.
Speaker Change #141: That does conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect your lines have a great day.
Speaker Change #142: Thank you.