Q3 2024 Carnival Corp & PLC Earnings Call
Speaker Change: Music
Speaker Change: The End of Episode 2
Speaker Change: Greetings, and welcome to the Carnival Corporation PLC 3rd quarter 2024 earnings call. At this time, I'll participate in a listen only mode. A question and answer session will follow the formal presentation. If any of you would require operator assistance during the conference, please press stars zero on your telephone keypad.
Speaker Change: as your mind or this conference is being recorded. I would now like to show the call over to your host, Beth Roberts, Senior Vice President, and Beth relations. Thank you. You may begin.
Beth Roberts: Thank you, good morning and welcome to our third quarter 2024 earnings conference call.
Speaker Change: I'm joined today by our CEO Josh Weinstein, our Chief Financial Officer David Bernstein.
Mickey Erson: and I chair, Mickey Erson.
Speaker Change: Before we begin, please note that some of our remarks on this call will be forward looking. Therefore, I will refer you to the forward-looking statement in today's press release.
Speaker Change: All references to ticket prices, net premiums, net yields and adjusted cruise costs without fuel will be in constant currency unless otherwise stated.
Speaker Change: Reference is to Bertianz and Yale, we'll be on a net basis.
Speaker Change: Our comments may also reference cruise calls without you, even the net income, free cash flow in our IC.
Speaker Change: All of which will be on adjusted bases unless the otherwise stated. All these references are non-gap financial measures defined in our earnings press release, a reconciliation to the most directly comparable U.S. cap financial measures, and other associated disclosures are also contained in our earnings press release in our investor presentation.
Speaker Change: Please visit our corporate website where our earnings, press release and investor presentation can be found. With that, I'd like to turn the call over to Josh.
Josh Weinstein: Before I begin, I'd like to express my support and heartfelt sympathy for all those impacted by Hurricane Haleen this past week.
Josh Weinstein: Our thoughts and prayers are with you.
Josh Weinstein: with that, I'll turn to our prepared remarks.
Josh Weinstein: As September comes to an end and we close out the year, I am happy to report that we are delivering well in excess of 2024 expectations.
Josh Weinstein: We've also built an even stronger base of business for 2025, and we're off to an unprecedented start to 2022.
Josh Weinstein: are third quarter by all the camps with phenomena, breaking multiple records and outperforming on every measure.
Josh Weinstein: Revenue is an all-time high of almost eight billion dollars. A billion more than last year's record level.
Josh Weinstein: Record EBITDA, exceeded 2.8 billion dollars of $600 million over last year, and $160 million over Giants.
Josh Weinstein: and we delivered over 60% more net income than the year prior, achieving double-digit RYC as the year of our third quarter.
Josh Weinstein: These improvements were driven by high margin, same ship, yield growth across all major brands, not driven by capacity growth.
Josh Weinstein: and it resulted in even the and operating income on a unit base of 20% and 26% respectively. To levels we've not seen in the last 15 years.
Josh Weinstein: Strong demand, enable us to increase our full year yield guide for the third time this year.
Josh Weinstein: and consistent with our historical emphasis on efficiency.
Josh Weinstein: We also include our co-op guidance, which enable us to drive more revenue to the bottom line.
Josh Weinstein: with a round 99% of our 2024 ticket revenue all ready on the books. We're point to deliver a record e-bath of $6 billion, almost $600 million above our tire peak, and $400 million above the original guy is set in December.
Josh Weinstein: RLIC is expected to end the year as 10.5% of point and a half better than our original December guidance, and almost double last year's ending point.
Josh Weinstein: Looking forward to the momentum contingent as we actively managed the demand curve. At this point in time, 2025 is the historical high on both occupancy and press. All court appointments are at higher prices than the prior year.
Josh Weinstein: Every Greek brand in our portfolio is well booked at higher prices in 2025. Demonstrating the ongoing benefit of our demand generation efforts throughout our optimized portfolio.
Josh Weinstein: are based voting strategies continuing to work well, allowing us to take price thanks to having told ahead on occupants.
Josh Weinstein: In the last few months, our 2025 Book Physicians Price Advance, which first last year, has actually widened for the full year and for each quarter individually.
Josh Weinstein: and with nearly half of 2025 already full, we feel confident in maintaining our trajectory.
Josh Weinstein: While early days, the benefit of our enhanced commercial performance is cherry nicely into 2020's steps as we just achieved record booking volumes in the last three months for sailing that far out.
Josh Weinstein: This incredibly strong book position for 2024, 2025, and 2026, drove record-third-quarter customer deposits towards $7 billion. And that's a law which can change your growth in precursors purchases of armed or revenue.
Josh Weinstein: It's off the gratifying to note that onboard spending levels were not only up strong again this quarter. Our year over year improvement in onboard computing actually accelerating from the prior quarter.
Josh Weinstein: In a...
Josh Weinstein: All the band indicators are continuing to move in the right direction. And we have so much more of the pipeline to sustain this moment.
Josh Weinstein: including the North American premier of the highly successful dumb princess in just a few weeks.
Josh Weinstein: This will be followed by the introduction of our sister ship, Star Princess.
Josh Weinstein: The Second Next Generation Princess ship coming online in a year.
Josh Weinstein: We also continue to invest in the existing pre-
Josh Weinstein: With major modernization programs like IEA Evolution, expected to deliver additional revenue uplift over the coming years.
Speaker Change: As you know, we're not just going to be buried by our ship. I can't wait for the introduction of our game changing by Amy and Destination, Celebration King.
Speaker Change: It's five quarters, built for fun, will open it in July 2025, but it really wraps up in
Speaker Change: served as a premium call for 19 carnival cruise line ships. And rest assured, we've already planned for our days to land type development to fully leverage the use of the four first we're building.
Speaker Change: In 2026, there's also the major introduction of a tuber of fear that happened to you, are naturally beautiful and pristine, which consistently rated among the top private island in the grid.
Speaker Change: These two destinations will be available to even our largest ships.
Speaker Change: Further reducing fuel costs and our environmental footprint at the same time. Stay tuned, as we'll be sharing more exciting materials about half new key in the next few months.
Speaker Change: We're also stepping up our marketing efforts in the board court, which David will touch you.
David Bernstein: are elevated marketing investments has been working as we continue to drive demand. Well, to next step of our capacity growth, with year-to-date web visits of over 40% versus 2019.
David Bernstein: Page search, up more than 60% and natural search, up over 70%.
David Bernstein: Our brains are generating on the creative marketing and constantly finding ways to attract more attention to the amazing product and execution we've already done the problem.
Speaker Change: and it is continuing to pay off, as we chip away at the unborn, to Christ the Spirit, the land-based vacations.
Speaker Change: All of these activities, along with strong support from our travel agent partners, have allowed us to once again take care of land-based peers as we attract even more new, decreased deaths. In fact,
Speaker Change: Both new to crews and we think that for a double digit percentage is over last year.
Speaker Change: Now, turning to our balance, we expect to continue on our path for an investment grade and have a clear line of sight for further death data, having recently finalized our order book through 2021. We have just three ships spread over the next four ships.
Speaker Change: that's 1 ship delivery in 2025, in 1926, and 1 ship in YouTube 2027 in 2020.
Speaker Change: This limited order book should also position us well to continue to create the man in excess of capacity growth. Our continued focus on high margin, same ship yield growth, should deliver improving EBITDA of this year's record levels.
Speaker Change: Of course.
Speaker Change: Strong New Rowling 3 Casual and further debt reductions provided consistent forms for ongoing improvement in our leverage metrics.
Speaker Change: and a continuation in the trajectory we have experienced already this year, resulting in a two-turn improvement in death to be with us in just nine months.
Speaker Change: We have certainly come a long way in a relatively short amount of time.
Speaker Change: In just two years, we've already more than doubled our revenue, and are going from negative EBITDA to an unexpected all-time high of $6 billion this year.
Speaker Change: This remarkable achievement is all thanks to our global team.
Speaker Change: They can continue to outperform as we progress through 2024 and they are also setting us up for a successful 2025.
Speaker Change: It is there continued execution that has put us firmly on the path to achieving our sea change targets.
Speaker Change: and Justin's important. They once again powered our ability to deliver unforgettable
Justin: to nearly 4 million guests this past book by providing them with extraordinary three-facations while honoring the integrity of every ocean we sail, play some visit and life we touch.
Justin: with that I'll turn the call over to David.
David Bernstein: Thank you, Josh. I'll start today with a summary of our 2024 Third Quarter Results.
David Bernstein: Next, I will provide the highlights of our fourth quarter September guidance.
David Bernstein: Some color on our improved four-year guidance, along with a few of the things to consider for 2025. Then I'll finish up with an update on a refinancing and de-leveraging efforts.
David Bernstein: Let's turn to the summary of a third quarter result.
David Bernstein: that income exceeded June guidance by $170 million as we outperforms once again. The outperformance was essentially driven by two things.
David Bernstein: First, favorability in revenue worth $40 million as yields came in up 8.7% compared to the prior year.
David Bernstein: This was seven tenths of a point better than June guidance, driven by close and strength in ticket prices, as well as on board and other spending.
David Bernstein: Second, cruise costs without fuel for available lower birth date, or ALDB, improves slightly compared to the prior year, and we're nearly 5 percentage points, better than June guidance, which was worth over $120 million dollars.
David Bernstein: The third quarter benefited from cost-saving opportunities, accelerated easing of inflationary pressures, benefits from one-time items and the timing of expenses between the quarters.
David Bernstein: Most of the third quarter cruise cost benefits will flow through as an improvement to our full year September guidance.
David Bernstein: For the years for the third quarter, improvedly at least 6% versus the prior year driven by higher ticket prices and improved onboard spending on both sides of the Atlantic.
Speaker Change: At the same time, are European brands on their past back to higher eye-kick and feel of these?
Speaker Change: So our outside growth in occupancy of five percentage points as compared to the third quarter of 2023. For the third quarter, we reported record setting operating results.
Speaker Change: with strong demand of eddling record revenues, record yields, records prevailing, and record operating income.
Speaker Change: Now two things to highlight about a fourth quarter September guide.
Speaker Change: The positive trends we saw in the third quarter are expected to continue in the fourth.
Speaker Change: Yolgaiden's growth for the fourth quarter is set at five percent over the prior year.
Speaker Change: The difference between the yield guidance for the fourth quarter, and the third quarter yield improvement of 8.7% is the result of a tougher prior year comparison as fourth quarter 2023, crdms will up over 10%.
Speaker Change: 1.5% for the third quarter of 2023.
Speaker Change: Having said that, it is great to see that we anticipate continued strong yield growth in the fourth quarter and that it is driven primarily by Christ.
Speaker Change: Cruz Costs without fuel per available lower birth date for the fourth quarter, are expected to be up 8%. Like first quarter of 2024, which was up 7.3%.
Speaker Change: Both quarters are impacted by higher-dried updates and higher-apportizing expenses plan, and we did have about 25 million of anticipated third-quarter-poss ship to the fourth quarter. As I have said many times, relative to cruise costs per ALVD.
Speaker Change: Judges on the full year and not the quarters, as we often see certain cross-biting, like dry-dark expense, advertising, and other items have different seasonalizations between the quarters from year to year.
Speaker Change: 2024 is a great example of this, where cruise costs without fuel per LBC.
Speaker Change: We're up 7.3% in the first quarter, essentially flat in the second quarter, improved slightly in the third quarter and are expected to be up approximately 15% in the fourth quarter.
Speaker Change: Turning to our improved full-year September guide.
Speaker Change: Net income for September guidance is set at $1.76 billion, a $210 million improvement over our June guidance.
Speaker Change: This improvement was driven by three things. First, an improvement in yields to 10.4% by flowing through the $40 million revenue benefit from the third quarter.
Speaker Change: 2.
Speaker Change: A one-point improvement includes costs per ALBD to approximately 3.5%.
Speaker Change: from flowing through a hundred million dollars of the hundred and twenty five million dollar cost benefit from the third quarter, with twenty five million receipts and lies to the fourth quarter as I previously mentioned.
Speaker Change: and third, a benefit from fuel pricing currency worth 70 million dollars.
Speaker Change: The strong 10.4% improvement in 2024 yields is a result of the increase in all the component parts.
Speaker Change: Higher ticket prices, higher onboard spending, and higher occupancy as historical levels. With all three components improving on both sides of these landing.
Speaker Change: Now a few things for you to consider for 2020.
Speaker Change: We are forecasting a capacity increase of chef's seven tenths of a percent compared to 2024.
Speaker Change: We are well positioned to drive 2025 pricing higher with less inventory remaining to sell than the same time last year.
Speaker Change: We are also looking forward to the introduction of our game-changing behavior and destination celebration key in July 2025. We anticipate that celebration key will be a smash hit with our guests and provided excellent return on our investment.
Speaker Change: However, we do expect that the operating expenses for the destination will impact our overall year-over-year pause comparisons by about half a point.
Speaker Change: In 2025, we are expecting 688 dry.ds, an increase of 17% versus 2024, which will also impact our overall year-over-year cost comparison by about three quarters of a point.
Speaker Change: I will finish up with a summary of our refinancing and de-labraging efforts.
Speaker Change: with records third quarter ebina of 2.8 billion or efforts to proactively manage our debt profile continue.
Speaker Change: Since June, we pre-paid another $625 million of debt, bringing our total pre-payments to $7.3 billion since the beginning of 2023.
Speaker Change: Additionally, we successfully upsized the borrowing capacity on a revolving credit facility by nearly $500 million, bringing the total joint commitment to $3 billion back to its 2019 level.
Speaker Change: Furthermore, we will continue to look for more opportunistic refinancing over time.
Speaker Change: Our leverage metrics will continue to improve in 2024 as our e-pidot continues to grow and our debt levels improve.
Speaker Change: Using our September guidance EBITDA of $6 billion, we expect better than a two-turn improvement in net debt to EBITDA leverage compared to year end 2023 approaching 4.5 times, composition 2-thirds of the way down the path to investment grade metrics.
Speaker Change: Looking forward, we expect substantial free cash flows, driven by an ongoing focus on operational execution and among the lowest new build-of-word-of-book-in-deck dates.
Speaker Change: to deliver continued improvements in our leverage metrics and our balance sheet.
Speaker Change: Moving us further down the road to rebuilding our financial fortress while continuing the process of transferring value from deadholders back to shareholders.
Speaker Change: Now operator, let's open up the call for questions.
Speaker Change: Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.
Speaker Change: You may press star 2 if you'd like to remove your questions from the queue. For part of Specities and Speaker equipment, it may be necessary to pick up your hands up before pressing the star keys.
Speaker Change: In order to allow First Many Questions as possible, we ask you to keep to one question and one follow-up. Thank you.
Speaker Change: Our first question comes from the line of Matthew Boss with JP Morgan. Please proceed with your question.
Matthew Boss: Great, thanks and congrats on another really nice quarter.
Speaker Change: Thank you very much.
Speaker Change: Don't Josh, on the continued momentum, maybe could you elaborate on the stronger base of business for 2025 and the records start to 2026 that you cited. Maybe you can touch on volume and pricing trends that you're currently seeing across regions and maybe specifically in Europe.
Josh Weinstein: Sure, so I'm probably broad based is the best way to talk about the strength in what we're seeing on 20.25.
Josh Weinstein: The book position is higher for both North America and European brands and that's consistent across the quarters as well.
Josh Weinstein: So we're positioned very well, our brands have been doing a great job of pulling forward the booking curve and now we get to take price, which is the goal. So it is very encouraging, you know, we're about, we're about two-thirds both when you look at next 12 months. So we're in a pretty unbeatable place.
Matthew Boss: Matthew, you're a follow-up.
Matthew Boss: Yes, thanks. So maybe just a follow-up would be on the balance sheet. If you could speak to capital priorities from here, just give in the free cash flow generation and some of the changes that you've made.
Speaker Change: So, you know, basically, you know, a priority 1, 2, and 3 is debt reduction.
Speaker Change: You know where you have the goal of becoming a investment grade and we do expect to see both the reduction in our debt levels as well as the improvement in our EBITDA, the chief investment grade metrics is part of our C change program towards the end of 2026.
Speaker Change: and so we've got plenty of time to think about other alternatives beyond that.
Speaker Change: Great, congrats again, that's the block.
Speaker Change: Thank you. Thank you.
Speaker Change: Thank you. Our next question comes in the line of Steve Wizzinski with Steve O'Please for see you with your questions.
Steve Wizzinski: Good morning and congratulations on the strong quarter in the outlook.
Joshua David: So, Joshua David, this might be some of a short-sighted question, and David, you touched on this a little bit in your prepared remarks, but if we kind of think about the fourth quarter yield guidance, it looks like it might be a little bit lower versus
Speaker Change: The implied guidance for the fourth quarter back in June, so just wondering if there's anything from a, you know, whether it's a pricing perspective or any geography or brand. You know, it is showing any, I don't want to use the word softness, but I guess I have to use that word.
Speaker Change: You know, or re-canning and pricing during the fourth quarter, or are you guys just taking a more conservative view around on board spending over the next couple months?
Speaker Change: Hey Steve, this is Josh, actually I'm not sure you're math but there was really no change from where we were in June guidance when it comes to the fourth quarter
Speaker Change: I'm a year old, so you know, we always said...
Speaker Change: When we came out with our guidance, frankly, in December, we were challenged a lot, particularly on the fourth quarter, and people didn't think we'd be able to actually reach, you know, break even year over year, because the fourth quarter of 23 was so strong. So now we're talking about 5% and we feel we feel good about that.
Joshua David: Okay, Joshua, I want to ask about the 25 and 26 bookings and you talked about how you're already 50% bookters.
Joshua David: for next year and in a pretty good position, it seems like already for 2,026. So, just wondering if you think about your booking window, it has it expanded too much. You know, we're saying that differently, are you, are you nearing a point where you might start leaving, you might be leaving money on the table if the man kind of stays.
Speaker Change: Status quo from here, and then following up on that question, just one of you have seen demand accelerate for, you know, for bookings, maybe, you know, more in late 25 and 26 that are going to be touching celebration key.
Speaker Change: Sure, so at the great point on the booking curve, you know, the goal is not an ever-increasing booking curve. It's the match-and-muzzle revenue that we're going to generate by the time we settle.
Speaker Change: I would say this is a brand by brand, I tend to worry, you know, build up. And I would say that almost all of our brands are pretty much our higher year over year. There's one that's not, and that's an active decision to pull back because we want to make sure we're not leaving price on the table. It's that way to your point.
Speaker Change: So despite the fact that overall we're in a record position, we are looking at that, you know, obviously a lot more.
Speaker Change: Clinical Eye, and making sure we're doing the right thing to optimize that revenue.
Speaker Change: When it comes to celebration key, clearly there's a premium and it's going to benefit us in particular, it's the 2026 ongoing story when we get to ramp up to about.
Speaker Change: 20 ships, which is going to be pretty fantastic. And the fact that we're doing all of this, that we've been able to talk about with 2024 and even into the first half of 2005, it's got nothing to do with celebration cake.
Speaker Change: This is just based on the natural demand and all the commercial activities that we're doing and delivering on board and that's supporting real strong revenue increases.
Speaker Change: Thanks for Joshua, appreciate it, and bless you guys.
Speaker Change: Thank you. Our next question comes from the line of Robin Farley with UBS. Please proceed with your questions.
Robin Farley: Great, thank you. I know it's too early to give guidance for 2025, but you're going to have to get any way when you're going to have to get it. Well, let me just ask it this way, which I think is harmless. You know, given everything you're saying about the book position for 2025 and even 2026, being at record level.
Speaker Change: Is it fair to say that you're off to a better start for 2025 than a typical...
Speaker Change: So hopefully that's an innocent way to ask it and then I also did just look to clarify on the expense David, I heard when you mentioned the 25 million of expense that was sort of borrowed from, you know, that will show up in Q4 that kind of shifted that 25 million. But was there a separate amount and I apologize if I missed this that was a was a one-time cost saved this year that we should think about coming back.
Speaker Change: in 2025. I just wanted to catch what that amount was and even what it was for us if you would care that. Thanks.
Speaker Change: Okay, so I will actually very directly answer your question. So we are...
Speaker Change: Starting off even better for 25 than we did for 2024, which is shaping up to be a record year. We are higher in occupancy and we're higher in price.
Speaker Change: and the brands are doing a great job of really trying to optimize that book and curve and revenue generation. So that's not guidance, but it's a point in time and that's where we are.
Speaker Change: As far as the second question is concerned, yeah there were a couple of reasons why we reduced cost by the full point city, and one included some one-time benefits. Wasn't huge, probably about $20 million of the $100 million, related to some pension credits and a few other little things.
Speaker Change: for the year.
Speaker Change: Thank you. Our next question comes from line of Ben Chagan with Missy Ho Securities. Please proceed with your question.
Ben Chagan: Hey, good morning. On the car side, I'd eat it up full thru stin.
Speaker Change: Stronger than expected, it was almost 60%.
Speaker Change: You know, it's a cost of it better.
Speaker Change: Generally, for the majority of the year, can you talk about some of the cost-saves, margin-opportunities you're finding? Is this simply better leveraging a fleet that is now leaner, subsequent to some of the asset sales over the past few years? Or is it cost that you're actively pulling out of the business or both, thanks?
Speaker Change: It's not possible to put pull and get into business, I mean, what we're seeing is hundreds of small items across the board, across many brands, things like...
Speaker Change: Crew travel savings, other port savings opportunities as well as a lot of sourcing savings cost innovation.
Speaker Change: Better Leveraging our scale across all the brands. And that probably represented about half of the $100 million cost savings that we have rolled through for the full year.
Josh Weinstein: Hi, that's helpful. And then I guess for Josh, higher level, you folded Pino Australia into the carnival brand this year. I know it was somewhat smaller scale, but you think there's other opportunities to streamline the portfolio in a similar way going forward. Thanks.
Josh Weinstein: I've never seen never taking things off the table. I think this is one of those decisions. It just made a lot of sense and something that we felt pretty passionately about executing quickly. We'll continue to review our portfolio brand-by-brand ship by ship, but right now we feel real good about how we're entering in 2025.
Speaker Change: Thanks. Thank you.
Speaker Change: Thank you. Our next question comes from the line of James Hardman with City. Please proceed with your question.
James Hardman: Hi, good morning. I wanted to dig in to some of the costs commentary you gave us.
Speaker Change: David, so three and a half percent growth for this year. That seems like it's getting better. Obviously, it was in cost savings and maybe better inflation. I mean, you called out about a half a point next year for celebration key in another 75 bits.
Speaker Change: from DryDocs. I guess, are there any call out on the other side of that equation? I don't think our starting point should be, you know, in that 5% range if we were to just take the 3.5 this year and add those two.
Speaker Change: Callouts. Maybe talk us through sort of what the base level of inflation is as we think about 2025 and any other sort of positive factors that will help offset in the negative once we're next year.
Speaker Change: Don't worry, some...
Speaker Change: If you know exactly what inflation is going to be over the next 15 months, let me know, but we're still trying to figure that out. There is some level of inflation that continues in our business. We'll include that within our guidance when we provide in December plus. We continue to work on cost saving opportunities.
Speaker Change: You know, as I said in the June call, even though we have the best.
Speaker Change: in the Cosmetrics and the Business.
Speaker Change: We still believe there are opportunities in our business to further leverage our scale and to work through those opportunities as we did in the second and the third quarter and we'll continue to do so and we'll include some of that.
Speaker Change: and our guidance which will offset some of the inflation.
Speaker Change: So, but the two things that I gave in my prepared remarks were relative to the dry dots and the cost of celebration key are pretty well fixed at this point and so we wanted to highlight those in the prepared remarks.
Speaker Change: Got it. And then, you know, obviously sounds like everything's going pretty well from the demand perspective. Maybe speak to, you know, one of the questions that we keep getting is...
Speaker Change: and the potential for the widening conflict in the Middle East to negatively impact your business.
Speaker Change: To some degree, it would seem to help that much of that region was already vacated in 2024. I guess the hope was that that would be a 25-tailwind that now seems off the table, but just maybe speak to how, if at all, you expect that region to impact your business next year.
Speaker Change: So we weren't banking on it getting better and hope that it doesn't get worse, you know, I thought so
Speaker Change: and everybody in the Middle East region and hoping for peace. But our business isn't really contingent on it. It's not a major source market for us and we're not going to the region.
Speaker Change: So unless it were to escalate to something significantly wider than the Middle East, you know, our ships are mobile and we're in source markets that are fundamental for us with lots of potential.
dad: Got it. Thanks, Dad.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question comes from the line of Patrick Skulls, with true insecurities. Please participate in the question.
Patrick Skulls: Hey, good morning, everyone. My first question, you talked about dry docs increasing next year. Can you get a little more?
Patrick Skulls: Possible grain of larity on dry docked increases or decreases for perhaps some quarters. Bye quarter for next year for my Holy Purpose. Thank you.
Speaker Change: So I don't have all that detail handy on Patrick, but if you call Beth, I'm sure she can provide it.
Speaker Change: we will call you. Thank you. And then second, I see there's some news out about a new cruise peer at Hathmune K.
Speaker Change: Do you have any longer-term plans above and beyond just a pierc, perhaps in the case such as water parks and the like General Road?
Speaker Change: So I'll give you a yes and a no. So do we have more plans? Absolutely. Do we want to water park? Absolutely not.
Speaker Change: So, the difference between celebration and key and what we're building at the department. The difference we're going to happen when we're building a celebration key is really that five portals of fun.
Speaker Change: and looking to be that entertainment center. What we have at Half Moon Key is one of the most naturally beautiful light sand beach crescent shape islands in the Caribbean and that's a true private destination and something that we want to enhance.
Speaker Change: and we will be talking about that more over the coming months, I won't steal Christine Sunder, but good things coming that are going to make that a pretty amazing destination in it's self-recompletely different region.
Speaker Change: [inaudible]
Speaker Change: Great, sounds great, thank you all set.
Speaker Change: Thank you. Our next question comes from the line of Brandt Monttoyer with Barclays. Please proceed with your question.
Brandt Monttoyer: Good morning, everybody. Thanks for taking my questions. So just starting off, you know, we haven't really touched on sea change and your three-year targets there.
Brandt Monttoyer: We kind of got a little bit of an update in the release, you know, I guess the question is, Josh, with this new 24-4-year guidance, obviously we can calculate, you know, the progress you're making and we can look at that number.
Brandt Monttoyer: and sort of imply some KPIs yields cause to get to those targets and it's...
Speaker Change: and applying a pretty narrow spread between those two in would be.
Speaker Change: and give us the sense that if we've harken back to you know what you gave us in the investor day, what you were thinking for perdiems, that we're sustainable and cost, that we're sustainable, that you know we would think you could do better. So I guess if you could just I know that that was a long-winded way of asking the same question that you've already gotten twice, but if you could just give us the sense for how you think about the business in the current operating environment.
Speaker Change: given all the positive commentary you've said today, vis-a-vis those longer-term targets.
Speaker Change: Well, I think the teams around the world are doing a phenomenal job and you think about it.
Speaker Change: in December.
Speaker Change: We were saying up 8.5 points on yield, up 4.5% on cost, which gets us to 9% ROI seed. And now we're saying up almost 10.5% on yield.
Speaker Change: Only up 3.5% on calls, it gets us to 10.5%.
Speaker Change: on ROIC. So clearly we're all performing the expectations. It gets us about 75% of the way there for...
Speaker Change: Two of the metrics, the EBITDA Parail BD and the RLIC.
Speaker Change: after one year with two years remaining, you know, and carbon is progressing as expected. We're about 50% there after one year.
Speaker Change: The teams aren't doing all those things to make targets, they're doing those things to make the guests happy and provide great business results. And the outcome is going to be hitting those targets. Do I want to hit them early? Yes, do I want to get farther than that? Absolutely, but you know.
Speaker Change: We'll take that and strive and we'll probably talk more when we get to December guidance and you could put that in context. We're going to end in 2025 and then take it from there.
Speaker Change: Okay, thanks for that, and then just to follow up, maybe Josh, if you could address the broader...
Josh Weinstein: Land-based, you know, leisure demand environment, you know, we're seeing elsewhere is.
Josh Weinstein: not what Cruz has seen. We kind of see sort of steady, slow, somewhat softer normalization. We don't get any of that from you and your commentary today. I guess we understand why it's happening, but if the rest of the world...
Speaker Change: is narrowing a little bit toward narrowing your gap from the top. Do you see any of that affecting your consumer's behavior and willingness to spend and sort of price in sensitivity?
Speaker Change: Yeah, we, um...
Speaker Change: We are still a remarkable value to lamb-based alternatives, and maybe they're maybe lamb-based is offening because we're doing better. Who knows?
Speaker Change: I can't tell you they're business, but...
Speaker Change: We have a tremendous value. We are doing a better job of getting our word out, better marketing, more eyes on the industry, more eyes on us, our new to crews.
Speaker Change: this past quarter was up about 17% year over year. That's not my accident. That's because our brands are really focused on driving.
Speaker Change: Driving that's a man profile, so...
Speaker Change: I don't have a crystal ball, and I can't tell you what the world's going to look like a year from now two years from now, but I can tell you if we keep focusing on commercial execution and doing the right things and doing them better, then there's a long runway, because the one thing that's never been a question.
Speaker Change: is, can we execute on board and deliver a great experience? And that's always been the case, it's just a matter of how we convince people to come with us who have never have, and I can't be doing a good job on that.
Speaker Change: Great, congrats on the quarter. Thank you.
Speaker Change: and I guess I'd be remiss if I didn't shout out the travel agents because all they do is amplify our voice in a tremendous way. And so that success that we're seeing and building that demand profile is really hand in hand with their success and we appreciate their efforts.
Speaker Change: to
Speaker Change: Thank you. Our next question comes from the line of Connor coming him with Amelia's research. Please proceed with your question.
Connor: Everyone, thank you. Maybe sticking with that comment on new to cruise canoe.
Speaker Change: I mean, look at your 25 bookings. Are you seeing new to crews in new to brand accelerate? And if you could just touch on just the younger demographic, I think I asked you that last quarter, but it seems like a pretty big mega trend for you over the long term. Thanks.
Speaker Change: Well, sorry, I just got distracted. As far as what the demand profile is for the future bookings, we don't really talk about that in advance, but we're happy to talk about it when we get to our...
Speaker Change #100: A result, and we can talk about what the breakdown is for the profile of the folks who sail. But suffice to say everything I'm saying is not ending in 2024 with respect to our efforts to keep optimizing and keep getting better at execution, keep driving that demand profile and catching that net as widely as we can.
Speaker Change #100: You know, we have almost no capacity growth, so all of that increased demand is just going to result in who wants to pay the most to get on our ships and that's what we're driving for.
Speaker Change #101: and as far as the age for a fight is concerned, I think we touched on this last quarter. I mean, if you look back at all of our brands over the last 10, 12 years or so, the average age for most of the brands really hasn't changed. Now, of course, the repeat guess.
Speaker Change #101: who failed the decade ago or 10 years old, but the average age of our guests. So we are attracting a lot of new young people in some of our brands like Carnival Cruise Sciences and average age of like 41 years old. So, you know, that's a brand, obviously, millennials these days.
Speaker Change #101: or I think it's 43 or 44 years old or younger. And that does represent half the over half the population in the United States, but, you know, carnivals got over half of its guests who are millennials.
Speaker Change #101: because the average age is...
Speaker Change #101: 41, or young. I would say that I said this on either the last call I'll be for.
Speaker Change #102: We love boomers.
Speaker Change #102: And we love genetics. I mean, if you think about our portfolio approach, we have brands like Holland America, like Q&R where that is where they're trying to push that demand profile because it's folks with a very good income, a very good retirement base, and a lot of time to take cruises that can go 14, 9, 21 nights world cruises. So we love the fact that we're pushing harder into that millennial generation and we're getting that interest and that demand profile. But we don't want that to the exclusion of really leaning into the other generations for what we have to offer.
Celebration Key: I'm Celebration Key and I've got a lot of questions on that just you know it is opening you know in mid of next year You know is it creating the halo effect that you would have expected like our people asking for it or maybe that's a little bit different. I think you mentioned 19 ships
Speaker Change #104: We're going to touch there, like are those ones selling out quicker than you would have expected? First relative.
Speaker Change #105: and General. Thank you. Unfortunately, because every corner of the ship is going, there's no test case. So, yes, we are seeing a premium for it. We are seeing people that are seeking it out. And the good thing is it hasn't even opened yet. So, we think the rubber is really going to hit the road once we can deliver the experience and really show people what...
Speaker Change #105: What it can do.
Speaker Change #106: Thank you.
Speaker Change #107: Thank you. Our next question comes in line of David Kaths with Jeffries. Please proceed with your question.
David Kaths: Hi, morning everyone. Thanks for taking my question.
David Kaths: Hi, hi, hi, I am.
David Kaths: I appreciate all the details so far and it's interesting when we look across our coverage. There are some smaller pockets of weakness that consumers have started to demonstrate here and there.
David Kaths: and this is a broadly-based positive quarter and I just wanted to double-click on the issue of, you know, are there?
Speaker Change #109: you know, any small pocket, any, you know, any areas of consumer behavior that we should just keep an eye on.
Speaker Change #109: as we go forward, that are, you know, again embedded in what appears to be a pretty broad based, you know, strong quarter and outlaw.
Speaker Change #110: I appreciate the question, I guess I'm happy that I just have to say no.
Speaker Change #111: We're seeing, you know, what we're seeing is, in fact, broad-based, we're seeing that demand for all the brands pretty much across the portfolio.
Speaker Change #111: and we're seeing it in the book and trends that we've talked about, the onboard spending, you know, the onboard spending levels are we're 7% up year over year. I thought my head in my off by a point. So I'm like that. More than this second quarter. So we're 6.7%. I'm more per day is we're up 6.7%. Year over year, which is an acceleration versus the increase that we sell a second quarter versus the prior year. So all the things that you look at is that the man profile changing or is the state of the consumer changing. I can't speak to macro economics because it's a lot going on in the world, but at least with what we have to offer people are happy to pay and to participate. And we think that's a great thing.
Speaker Change #111: and we think that goes back to all the things that we've been talking about for the last two years about what we want to focus to make sure that we are doing a better and better job as time goes on.
Speaker Change #112: Perfect, and if I can just as my follow-up, are you able to observe or record you know any trade-down dynamics where you know part of the demand.
Speaker Change #113: You know, you're seeing as, you know, a consumer who's, you know, traded out of something else and into a cruise vacation.
Speaker Change #114: Now, nothing that we've seen that says that. I mean, I think it's the opposite. It's we're doing a better job of convincing them of this or something they want to do. Because they're trading out from something but that they want to experience what we have to offer.
Speaker Change #115: Okay, and I apologize for the, you know, the questions my ratings are there? I think there are good questions. I think they're fair. Congrats on the quarter.
Speaker Change #115: so
Speaker Change #116: Thank you. Our next question come to an line of Jamie Katz with Morningstar. Please wish you a good your question.
Carrie: Hi, good morning. I'm Carrie, if you have any updates on the Chinese consumer, is it trending as you would like or age as it's a vegan?
Speaker Change #118: and General.
Speaker Change #119: just because the data that's been coming out of the region has been a little bit lumpy and it was obviously something that was pretty meaningful prior to the pandemic. Thanks.
Speaker Change #120: Yeah, it wasn't very meaningful for us prior to the pandemic and the grand scheme of things. It was a few percentage points of our capacity that was really dedicated to China. We have, as I've been pretty open about, I've...
Speaker Change #120: I'm ecstatic that it's reopened to international cruising, I wanted to be very successful for our competitors, but it's not something that we're pursuing at this time and have not.
Speaker Change #120: with respect to the region overall when it comes to Japan, Taiwan and other nations that's going well. People like cruising with us before and they continue to enjoy it now.
Speaker Change #121: Yes, I'm just curious if there was any movement with outbound travel more so than anything else. As far as occupancy in the European brands, is there a little bit of room left in that for upside or has the gaps sort of closed on that?
Speaker Change #122: We're all back to historical norms, which is a range, it's not a number. And I'd say all of our brands to varying degrees have the ability to maybe just a little higher here and there. It's not going to be a big driver of our, you know.
Speaker Change #122: Improvement as we look forward, it's really going to be from driving price, which is where we're focused, but there's always an opportunity to make some tweaks and find some more occupancy.
Speaker Change #123: And I don't think you guys had mentioned anything on any hurricane impact, but any insight to the cost of that disruption if you have it would be helpful.
Speaker Change #124: Yeah, ours is insignificant compared to the impact that it's having on the region. First and foremost, we should take a second to just think about putting that aside. It's a few million dollars for us. It's not anything of significance.
Speaker Change #124: Thanks.
Speaker Change #125: Thank you. Our next question comes from a line of ACA, Georgia, about with Infinity Research. Please receive either question.
Speaker Change #126: Good morning, guys. Congratulations on a great quarter. And I'll just delve into the few quick questions that I have. Occupancy is still not fully caught up throughout the fiscal 2019. Isn't that by itself already a year-dopportunity?
Speaker Change #127: Yeah, like I said, you know, we operate in a range for occupancy and we are within our range, but there's certainly the opportunity to push that a little bit more, it's just not going to be the biggest driver of how we can improve the revenue picture going forward.
David: and maybe a quick question for David, if you'll cost a thing to be a little bit higher out of what we were estimating because we tracked for 183 AD at NGL, could that possibly be related to shore power in the Baltics Denmark?
David: Germany boards that are offering short power, you know.
Speaker Change #129: Sweden et cetera, and he's that part of the play there.
David: No, because our shore power, when we buy it, is actually not included in the fuel expenses included in port expenses, because we purchase it at the port.
Speaker Change #130: So, that would not have been an impact. So, I'm not sure what you're looking at and what you're tracking, but Beth can give you some websites to look at, which may be will improve your tracking overall.
Speaker Change #131: That's the great and best I'm sorry, I'll bother you on this one. And basically my second question.
Speaker Change #132: given the acceleration in EBITDA generation.
Speaker Change #133: and how far I had year with the SeaChange Programme, if it's possible at this point too.
Speaker Change #134: Order a sister ship for a 227, 228 delivery whether it's for a princess band or a carnival band.
Speaker Change #135: Now our order book is set through 2028. We feel very good about that. And as you know, we did order, you know, what we call project ace, which is that next generation for Carnival with that doesn't start until 2029.
Speaker Change #136: You know, the focus of all that EBITDA generation is really it's cash flow and we're going to use the headroom with a reduced capital expenditures to pay down debt.
Speaker Change #136: So, Josh, in terms of the trenches, we're going after the highest cost of that, correct?
Speaker Change #137: Well, as long as it's got a good MPV if we want to pay it down. So there's a lot of factors that go ahead. It's going to say it's really a combination of three.
Speaker Change #137: And we look at one is the cost of the death and we do have two double-digit issuance's out there, both are callable in 2025, so that should help our overall economy.
Speaker Change #137: and we'll look at refinancing those in the early part of the next year. We also look at the maturity towers. We'll well set through 26 on the 30 towers that very well managed.
Speaker Change #137: but the tower's in 27 and 28 will be looking at refinancing some of that as well as looking at secured versus unsecured debt because our goal is to get to be completely unsecured, but we'll manage that over time as we move forward.
Speaker Change #137: and David, that was basically my question, you know, high-askers versus secured towers.
David: It's a balancing act I imagine
David: Correct.
Speaker Change #138: Alright, and lastly, if I may ask somebody who's in coaching, I'll...
Speaker Change #139: on your Galveston Xusport and building a terminal there.
Speaker Change #140: What do you think about that? They already have a presence in Miami, and are doing Puerto Canaveral, etc., an unnamed competitor who do not have to report to some ROIC or other metrics.
Speaker Change #141: How do you feel about served the what I call the encroachment?
Speaker Change #142: I don't think about it as an encroachment, you know, we are 2% of the overall vacation market and if it's the company I think you're talking about it's a small part of the overall cruise market growing but small.
Speaker Change #142: and so there's the man profile as long as we do our jobs with our world class portfolio brands will be just fine.
Speaker Change #143: I've got to cut you off though. You did three questions and the upper one. I don't say one. Thank you. Our next question comes from the line of Dan Pollitzer with Wells Fargo. Please proceed with your question.
Dan Pollitzer: Hey, good morning, everyone. Thanks for taking my question.
Dan Pollitzer: I do want to follow up on the fourth quarter yield comment. I know you mentioned that there really wasn't much if any actually any change to your prior guide, but as we think about you know, the third quarter came in better David cited better close in demand and on board driving the beat. I mean, is there any reason that wouldn't be in a car for the fourth quarter or are there near term?
Speaker Change #145: The man hiccups or noise, whether it's the new cycle or a lecture in that could be maybe driving additional conservatism.
Speaker Change #146: Look, we try to give you our best estimate of what's going to happen, and do we always try to outperform, absolutely, you know, that's the goal. There's nothing in particular about the fourth quarter, other than what you said. I mean, right the next month, a lot of attention is going to be focused on something other than, you know, what's normal, it happens every four years. So we'll see what kind of impact that has, but the business is still going strong, and we expect a lot of ourselves.
Speaker Change #147: and also keep in mind that 99% of the ticket revenue for the gear already on the books is not allowed to sell.
Speaker Change #148: Right, no, that makes sense and this is for my follow-up
Speaker Change #149: in a couple of weeks here hosting some investors aboard Sun Princess.
Speaker Change #150: Anyway, this kind of thing about maybe brain work and maybe kind of the key topics we should focus on. It seems like there's a lot of progress on, you know, key change, your self-racing key. Maybe some of these cost opportunities or savings from easing inflation. But what are the kind of the key high-level field disappoints we should be thinking about? Thanks.
Speaker Change #150: [inaudible]
Speaker Change #151: It's been about 15 months since we got together for the first time to talk about what our priorities were and announce each change and think it's a good opportunity for us to just kind of level set on where we are in everything and hopefully as you see it, the way we see it, which is the progress that we're making across the board.
Speaker Change #152: We also get an opportunity to showcase the Princess brand, and specifically the some princess, which is a just a true game changer for princess. And I'd say for the premium market, she's a remarkable ship, and the team on board does a remarkable job.
Speaker Change #153: and you also get an opportunity not just to hear from me, but you'll hear and David, but you'll be able to hear from the president of that brand and to actually meet the presidents of pretty much all of our brands who will be there with us. So good opportunity for you to get a little bit more educated and inundated by all things Carnival Corporation.
Speaker Change #153: Thanks so much in congrats on our nice quarter. Thanks a lot then.
Speaker Change #154: Thank you. Our next question comes from the line of Chris Bethel Ablus with SIG. Please pursue with your questions.
Speaker Change #155: Good morning. Thanks for taking my question. So, Joshua, I'm going to ask the demand question here in a different way as we think about.
Speaker Change #156: Global Travel and Tourism, and think about different...
Speaker Change #157: segments, if you will, within the ecosystem, so lodging airlines.
Speaker Change #157: um
Speaker Change #158: Hearing a different dynamic here as we think about the man, certainly within lodging, lower to middle and consumer concerns around price sensitivity.
Speaker Change #158: Little bit of a mixed back in airlines. In cruise lines, this is unique here.
Speaker Change #158: with what feels like this sort of persistent demand and just kind of ongoing momentum, if you will. Now, I was wondering.
Speaker Change #159: If you could rank order up and think about the moving pieces as to the walk-ys. So there's the new to cruise peace, I would say perhaps, the later reopening of certain markets, growing US dollar discount to land-based trips, base loading.
Speaker Change #160: should just give you could help us provide some context as we think about the moving parts of demand here. There's still some debate around whether this is any pent-up demand here, which I think is just not the case or what act we know. Is this actual face load going forward? Thanks.
Speaker Change #161: Well, I guess the most affirmative thing I'll say is I completely agree with you, it's not pent up the man anymore.
Speaker Change #162: We've been sailing for over three years now, so I think that that is...
Speaker Change #163: That is coming, God, you know, I-I-I-I
Speaker Change #164: I'm not going to answer your question by rank ordering, but I would say that when it comes to all of the industry I think we're all doing a pretty good job at that demand generation and creation, getting awareness, getting people interested in cruising, who maybe have never thought about it before, with respect to us.
Speaker Change #164: There is a lot of activity going on at all of our brands to really just try to do better and better at blocking the tackling.
Speaker Change #164: when it comes to the commercial operations, generating new creative, generating more eyeballs, and performance marketing, looking for, and then being looked at by the right potential customer.
Speaker Change #164: Driving people to our trade partners, driving people to our websites, doing everything we can to just get the word out and get them interested. And I think that's part of what's driving us in a pretty significant way.
David: Okay, and then it's my fall of David so...
David: My math here, I have about a point and a quarter on the adjusted NCCs for next year and we can come up with our own assumptions as you said on inflation. Does we think about the other moving pieces here puts and takes on the advertising side?
Speaker Change #165: I know I think it's expected to be elevated and for Q is there a reason?
Speaker Change #166: or how should we think about next year and do we need this level advertising per LBD to continue? Is it part of the base load book plan or can we expect that to sort of get softer if you will as that initiative continues to take hold? Thanks.
Speaker Change #167: Yes, so the advertising as well as many other decisions, so things that we really need to talk about over the next month or two in the planning process, which we're in the midst of doing, and we'll give guidance in December relative to all of those items.
Speaker Change #167: It would be premature for us to be making a decision today exactly what we want to do particularly for, you know, next summer or the back half of next year and advertising. So we'll give you more insight into that in three months.
Speaker Change #168: I just added a couple of things. One is, you know, remember we just talked about a record setting 2026 booking period. So we're not just, you know, we're not just booking for the short term, we're booking for the long term and advertising is a combination of, you know, getting people to consider things for the longer term and getting the shifts filled as we need to in the shorter term.
Speaker Change #168: So, the metric of just looking at it on an ALBD basis is...
Speaker Change #168: It's useful for benchmarking, but it's not too scientific. It's really about how much bookings we want to generate, and how we think we need to spend to go get it. And I think we're doing a good job. And when you do look at us at a benchmark basis, even though we're higher than we were back in 2019 at a couple of percent higher than you're over year.
Speaker Change #168: We're still quite a bit lower than most, if not everyone. So we'll continue to be thoughtful about it and do what we think we need to do to drive the business. I think we got time for one more. Yeah, thank you. I think we got time for one more if there are any more operating.
Speaker Change #169: Thank you. Our final question comes from line at Fred Whiteman with Wolf Research. Please proceed with your question.
Fred Whiteman: I got it.
Fred Whiteman: and I just wanted to come back to new to Cruz, Josh, and I think you said that was up 17% this quarter. Last quarter that was up 10% it's a pretty big acceleration curve brand.
Speaker Change #171: This is big as you guys are keep touch on what drove that was there a reallocation of some of the add spend and maybe how you think strategically that could sort of increase that penetration that from 2% to something larger, a percentage of total vacation spend. Thanks.
Speaker Change #172: Yeah, so there's no one thing that's going to be the answer for driving you to cruise either, is that same combination of better advertising, the trade doing a great job.
Speaker Change #173: but are usability of our website, you know, I'd say Alaska in particular for this past years was off the charts. It was absolutely phenomenal and that tends to skew hired a new cruise because if you're going to go see Alaska, which everybody should go do, the only way you can go see it is by a cruise ship to really appreciate it and the only way you should do that is by one of our brands because they do it amazingly.
Speaker Change #173: and we have more permits for Glacier Bay than anybody else and we have the shoreside footprint that nobody else has and can replicate. So that has served as very, very well. And I'd say it's, you know, the same things that you've heard me talk about in the press quarters. I hope you'll continue to talk about it in the quarters to come about to do in the basics better.
Speaker Change #174: Thank you.
Speaker Change #175: I appreciate it. Well, thank you everybody for joining us and look forward to talking again in a few months for those of you that I don't see next week. Take care.
Speaker Change #176: Thank you, this concludes the late conference call you may disconnect your lines at this time. Thank you for your participation.
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