Q4 2024 Carnival PLC Earnings Call

Operator 1: Greetings, welcome to the Carnival Corporation & PLC Q4 2024 Earnings Conference Call. It's now my pleasure to turn the call over to Beth Roberts, Senior Vice President, Investor Relations. Please go ahead, Beth.

Beth Roberts: Thank you. Good morning, and welcome to our Q4 2024 Earnings Conference Call. I'm joined today by our CEO, Josh Weinstein, our Chief Financial Officer, David Bernstein, and our Chair, Micky Arison. 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. All references to ticket prices, net per diems, net yields, and adjusted cruise costs without fuel will be in constant currency unless otherwise stated. References to per diems and yields will be on a net basis. Our comments may also reference cruise costs without fuel, EBITDA, net income, 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 release.

Beth Roberts: A reconciliation to the most directly comparable US GAAP financial measures and other associated disclosures are also contained in our earnings press release and in our investor presentation. 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: Thanks, Beth. We had a strong finish to an incredibly strong year. Right off the bat, I'd like to thank the efforts of our hardworking and dedicated team, the best in all of travel and leisure. They have delivered results that consistently outperformed even my own high expectations. Our global portfolio is clearly firing on all cylinders, and I am very proud of what we've been able to accomplish together. We delivered another stellar quarter to close out a phenomenal year. In fact, this was our 7th consecutive quarter achieving record revenues alongside favorable forward indicators like record booking trends and record customer deposits, indicating a continuation of the strong momentum we've been experiencing for the last 2 years. Q4 net income improved by over $250 million year over year, coming in over $125 million better than expected.

Josh Weinstein: The outperformance was up and down the P&L and driven by strong closing demand across the portfolio, which pushed yields, per diems, EBITDA, and operating income all to new highs this year. Full year revenues hit an all-time high of $25 billion and produced all-time high cash from operations of almost $6 billion. Robust demand delivered a full year 2024 yield increase of 11%, with the majority of the increase attributable to higher prices. Yields finished the year nearly 250 basis points better than our original guidance, driven by a strong demand environment that we elevated throughout the year. Encouragingly, this was broad-based. For 2024, prices were up in all of our major brands and trades between mid-single digit to mid-teen percentages. On top of this, onboard spending levels actually accelerated sequentially each quarter throughout the year.

Yields finished the year nearly 250 basis points better than our original guidance driven by a strong demand environment that we elevated throughout the year.

Encouragingly this was broadbased for 'twenty 'twenty four prices were up in all of our major brands and trades between mid single digit to mid teen percentages.

And on top of this onboard spending levels actually accelerated sequentially each quarter throughout the year.

Josh Weinstein: Additionally, unit costs came in 100 basis points better than our original guidance for the year, as we identified and executed upon additional cost savings initiatives and saw the benefit of an easing inflationary environment. All of this translated to an additional $700 million pickup to the bottom line compared to our December guidance, and step change improvements in our two financial metrics that form part of our 2026 SEA Change targets, EBITDA per ALBD and ROIC. After just one year down with two to go, we're already over 80% of the way toward achieving both of these targets, calling for a 50% increase in EBITDA per ALBD from our 2023 starting point and ROIC of 12%, both of which would be the highest the company has seen in almost 20 years.

Additionally unit costs came in 100 basis points better than our original guidance for the year as we identified and executed upon additional cost savings initiatives and saw the benefit of an easing inflationary environment.

All of this translated to an additional $700 million pick up to the bottom line compared to our December guidance and step change improvements in our two financial metrics that form part of our 20th twenty-six sea change targets EBITDA per a L. P D and ROE I see.

After just one year down with two to go we're already over 80% of the way towards achieving both of these targets, calling for a 50% increase in EBITDA for a L. B D from our 'twenty to 'twenty three starting point.

And ROIC of 12% both of which would be the highest the company has seen in almost 20 years.

Josh Weinstein: With ROIC ending 2024 at 11%, comfortably above our cost of capital, we are already delivering long-term value for our shareholders as we lay the foundation we will build upon in 2025 and beyond. At the outset, and with about two-thirds of the year already on the books, 2025 is shaping up to be another banner year, with yield growth exceeding 4%, far outpacing historical growth rates and again exceeding unit cost growth, delivering more than $400 million incrementally to the bottom line. In fact, booking trends even accelerated during the quarter. Despite less inventory for sale as compared to same time last year, 2025 booking volumes over the quarter were actually higher year on year at higher prices for each quarter, including the period leading up to the election. Booking volumes for 2026 also continue to break records, reflecting sustained demand even for further out sailings.

And with Rois see ending 'twenty 'twenty four at 11%.

Comfortably above our cost of capital we are already delivering long term value for our shareholders. As we lay the foundation will build upon in 'twenty or 'twenty five and beyond.

At the outset and with about two thirds of the year already on the books 20 twenty-five is shaping up to be another banner year with yield growth exceeding 4% far outpacing historical growth rates and again exceeding unit cost growth delivering more than $400 million incrementally.

<unk> to the bottom line.

In fact booking trends even accelerated during the quarter.

Despite less inventory for sale as compared to the same time last year 'twenty twenty-five booking volumes over the quarter were actually higher year on year at higher prices for each quarter, including the period, leading up to the election bookings.

Booking volumes for 2020 six also continue to break records, reflecting sustained demand even for further out sailings.

Josh Weinstein: The ongoing strength in demand reinforced our record-breaking booked position. Both price and occupancy are higher for each of the four quarters of 2025, and we managed to increase both our price and occupancy advantage for our 2025 booked position, thanks to our outstanding efforts this past quarter. I can actually now report that our North American and European segments are each at their longest advanced booking windows on record. All core deployments are also better booked at higher prices than the record levels we achieved at the same time last year. With a good amount less inventory to sell for 2025, I cannot stress enough to our customers and trade partners that if you want to sail with us this year, book now while there's still space available.

The ongoing strength and demand reinforced our record breaking book position, both price and occupancy are higher for each of the four quarters of 2025, and we managed to increase both our price and occupancy advantage for 'twenty twenty-five book position, thanks to our outstanding effort.

This past quarter I.

I can actually now report that our North American and European segments are each at their longest advanced booking windows on record.

All core deployments are also better booked at higher prices than the record levels. We achieved at the same time last year, so with a good amount less inventory to sell for 2025, I cannot stress enough to our customers and trade partners that if you wanted to sell with US This year book now.

While there is still space available.

Josh Weinstein: Keep in mind, our 2024 results and booked position for future sailings are being driven by improved operational execution across our brands and are essentially on a same-ship basis. Now, don't get me wrong, new ships are great. In fact, we welcomed three amazing new ships in 2024. Carnival Jubilee, the third of five Excel-class vessels for Carnival Cruise Line, is proudly sailing out of the great state of Texas. Sun Princess Cruises' next-generation flagship, was just awarded Condé Nast Traveler's 2024 Megaship of the Year, beating out all other megaships that entered service this year. Last but not least came the spectacular Queen Anne, Cunard's first ship in 14 years and a beautiful addition to Queen Victoria, Queen Elizabeth, and the venerable Queen Mary 2.

And keep in mind, our 'twenty 'twenty four results and book position for future sailings are being driven by improved operational execution across our brands and are essentially on the same ship basis now don't get me wrong, New ships are great. In fact, we welcomed three amazing news.

<unk> and 'twenty 'twenty four.

Carnival Jubilee the third of five X L class vessels for Carnival cruise line.

Proudly sailing out of the great State of Texas, Some Princess Princess Cruises next generation flagship was just awarded <unk> Nast travellers 'twenty 'twenty four mega ship of the year, beating out all other mega ships that entered service this year.

And last but not least came the spectacular Queen Anne Qunar. Its first ship in 14 years and a beautiful addition to Queen Victoria, Queen Elizabeth and the Venerable Queen Mary two.

Josh Weinstein: While new ships do command a nice premium, the vast majority of our yield growth was driven by fundamental demand improvements for the existing ships across our portfolio of world-class brands. Even excluding our new builds, 2024 yields were still up almost 10% over 2023. That's because we're achieving demand growth well above our modest supply pipeline through ground-up efforts to improve execution across the commercial space. We've been investing in both talent and tools, honing in on each of our brands' unique target markets, crafting marketing campaigns that speak directly to them, and in the most effective forums. We're successfully enticing new cruise guests away from land-based alternatives. In fact, both new-to-cruise and repeat guests were each up double-digit percentages this past year.

Speaker Change: While new ships do command a nice premium the vast majority of our yield growth was driven by fundamental demand improvements for the existing ships across our portfolio of world class brands, even excluding our new builds.

Speaker Change: <unk> 20th fours yields were still up almost 10% over 2023 that's because we're achieving demand growth well above our modest supply pipeline through ground up efforts to improve execution across the commercial space, we've been investing in both talent and tools honing in on.

Speaker Change: Each of our brand's unique target markets crafting marketing campaigns that speak directly to them and in the most effective forums, where success really enticing new cruise gas away from land based alternatives.

Speaker Change: Fact, both new to cruise and repeat guests were each up double digit percentages this past year.

Josh Weinstein: At the same time, our marketing efforts are continuing to deliver growth in web visits, natural and paid search that far outpace our limited capacity growth, keeping the pipeline of new demand full. Simultaneously with augmenting our performance from top-of-funnel consideration to closing the deal and generating the bookings, we've been sharpening our yield management techniques to optimize our booking curves and drive ticket prices and onboard spending higher. All of these efforts are already in flight and clearly working, we have even more in store to continue the momentum. We're launching new marketing campaigns across all our brands. Princess, Cunard, and Seabourn have already debuted spectacular new creatives this month. In Princess' case, its fresh take on its incomparable Love Boat theme, featuring Hannah Waddingham of Ted Lasso fame, already helped to produce record booking volumes for the Black Friday through Cyber Monday period.

Speaker Change: At the same time.

Speaker Change: Our marketing efforts are continuing to deliver growth in web visits.

Speaker Change: Natural and paid search that far outpaced our limited capacity growth keeping the pipeline of new demand full Samuel Tenuously with augmenting our performance from top of funnel consideration.

Speaker Change: To closing the deal in generating the bookings we've been sharpening our yield management techniques to optimize our booking curves and drive ticket prices in onboard spending higher.

Speaker Change: All of these efforts are already in flight and clearly working we have even more in store to continue the momentum.

Speaker Change: We're launching new marketing campaigns across all our brands.

Speaker Change: Princess Cunard and seaborne have already debuted spectacular new creative this month.

Speaker Change: And princesses case, it's fresh take on its incomparable love boat theme, featuring Hana wanting them of Ted last time Fame already helped to produce record booking volumes for the black Friday through cyber Monday period, and stay tuned for new campaigns from Aida Carnival, Costa Holland America M P.

Josh Weinstein: Stay tuned for new campaigns from AIDA, Carnival, Costa, Holland America, and P&O Cruises in the UK, all launching shortly to coincide with wave season, our peak booking period. We're aggressively working to increase awareness and consideration for cruise travel globally. We're also actively working on an enhanced destination strategy to provide guests with yet another reason to take a cruise vacation with us, and that is sure to help us continue to excel. While we retain, by far, the largest footprint in the Caribbean with 6 owned and operated destinations that captured six and a half million guest visits in 2024, we believe we have a meaningful opportunity to expand and capitalize on this strategic advantage. These destinations are amongst our highest-rated guest experiences today, and we have plans to lean into these assets even further.

N O cruises in the U K all launching shortly to coincide with wave season, our peak booking period, we're aggressively working to increase awareness and consideration for cruise travel globally.

Speaker Change: We're also actively working on an enhanced destination strategy to provide guests with yet another reason to take a cruise vacation with us and that is sure to help us continue to excel.

Speaker Change: We retained by far the largest footprint in the Caribbean with six owned and operated destinations that captured six and a half a million guest visits in 'twenty 'twenty. Four we believe we have a meaningful opportunity to expand and capitalize on the strategic advantage. These.

Speaker Change: <unk> are amongst our highest rated guest experiences today.

Speaker Change: And we have plans to lean into these assets even further.

Josh Weinstein: While historically, the marketing of our own assets have really focused on the ships, we have untapped potential to create demand for these amazing destination experiences. I have never been more excited about these prospects as we begin to unfold this multi-year strategy with the opening of Celebration Key in just about 6 months. This will be, by far, our largest and most Carnival-centric destination in our portfolio, with 5 awesome portals built for fun, from family-friendly to exclusive beach club experiences. Not only will Celebration Key be the closest destination in our portfolio, saving fuel costs and reducing greenhouse gas emissions, the only way you can get to Celebration Key is on one of our cruises. Moreover, we just recently announced a change that signals more about the shift in our destination asset strategy.

Well historically, the marketing of our own assets have really focused on the ships, we have untapped potential to create demand for these amazing destination experiences.

Speaker Change: I have never been more excited about these prospects as we begin to unfold. This multi year strategy with the opening of celebration key in just about six months.

This will be by far our largest and most carnival centric destination in our portfolio with five awesome portals built for fun.

Speaker Change: Family friendly to exclusive Beach club experiences now.

Speaker Change: Not only will celebration key be the closest destination in our portfolio saving fuel costs and reducing greenhouse gas emissions. The only way you can get to celebration key is on one of our cruises more.

Speaker Change: Moreover, we just recently announced a change that signals more about the shift in our destination asset strategy half Moon Cay, the highly rated and award winning exclusive Bahamian destination known for beautiful beaches, and Crystal clear waters is being renamed relax away.

Josh Weinstein: Half Moon Cay, the highly rated and award-winning exclusive Bahamian destination known for beautiful beaches and crystal clear waters, is being renamed RelaxAway, Half Moon Cay to better reflect the experience guests can expect as they are immersed in this tropical paradise. Enhancements will include an expanded beachfront experience, lunch venues, a variety of bars, and other features created with intentionality to reinforce this destination's natural beauty and pristine appeal. Ready in summer of 2026, a newly constructed pier on the north side will allow two ships to dock, including Carnival's Excel-class ships that will be able to visit the private island for the first time. We'll be positioning these jewels of the Caribbean with consumers in a way that will encourage guests to actively seek out these specific destinations offered exclusively by our brands.

Speaker Change: Monkey to better reflect the experience guests can expect as they are immersed in this tropical Paradise enhancements will include an expanded beachfront experience lunch venues a variety of bars and other features created with intentionality to reinforce this destination.

Speaker Change: Natural beauty and pristine appeal.

Speaker Change: Ready in summer of 2026.

Speaker Change: Newly constructed peer on the north side will allow two ships to dock, including carnivals XL class ships that will be able to visit the private island for the first time.

Speaker Change: We'll be positioning these jewels of the Caribbean with consumers in a way that will encourage guests to actively seek out. These specific destinations offered exclusively by our brands and many of Carnival cruise lines itineraries will feature both relax away half Moon Cay.

Josh Weinstein: Many of Carnival Cruise Line itineraries will feature both RelaxAway, Half Moon Cay and Celebration Key, providing guests with complimentary experiences enjoying both the idyllic and the ultimate beach days. We believe developing and promoting these unique assets will help us cast the net wider and capture even more new-to-cruise demand. We're already in flight with preparation for branding and marketing campaigns for these amazing destinations, with more to come in the future. As it is, for 2025, we expect to hit our 2026 EBITDA per ALBD target a full year early while raising ROIC to just shy of our 12% 2026 target.

Speaker Change: And celebration key providing guests with complementary experiences enjoying both the idyllic Andy Ultimate Beach days.

Speaker Change: We believe developing and promoting these unique assets will help us cast the net wider and capture even more new to cruise demand were already in flight with preparation for branding and marketing campaigns for these amazing destinations with more to come in the future.

As it is for 2025, we expect to hit our 2026 EBITDA per a L. B D target a full year early while raising Rois C to just shy of our 12% 20 twenty-six target.

Josh Weinstein: Considering all the progress we've made without this in place, it's clear we have a tremendous amount of headroom remaining to create more demand, to cultivate more guest loyalty, and capture more pricing for the incredible ship and shoreside experiences we provide our guests. At the same time, we're making meaningful progress on the sustainability front. We achieved about 17.5% reduction in greenhouse gas emissions intensity versus 2019, on track to achieve our target of 20% by the end of 2026, a goal that was previously pulled forward by 4 years. Improvement hasn't just been in emission intensity levels. Despite the fact that we're over 9% larger than we were in 2019, we have actually lowered our absolute greenhouse gas emissions by almost 10% over this time. Of course, we're also making huge strides on rebuilding our financial fortress.

Speaker Change: So considering all of the progress we've made without this in place. It's clear we have a tremendous amount of headroom remaining to create more demand to cultivate more guest loyalty and capture more pricing for the incredible ship and shore side experiences we provide our guests.

Speaker Change: At the same time, we're making meaningful progress on the sustainability front we.

Speaker Change: We achieved about 17, and a 5% reduction in greenhouse gas emissions intensity versus 2019 on track to achieve our target of 20% by the end of 2026. Our goal that was previously pulled forward by four years improve.

Speaker Change: Improvement Hasnt just been in emission intensity levels. Despite.

Despite the fact that we're over 9% larger than we were in 2019, we've actually lowered our absolute greenhouse gas emissions by almost 10% over this time.

Speaker Change: And of course, we're also making huge strides in rebuilding our financial fortress.

Josh Weinstein: In under two years, we've paid down over $8 billion of debt off our peak and significantly reduced interest expense, which, coupled with our improving EBITDA, has improved our leverage metrics tremendously. Our current 2025 guidance will put us at 3.8x net debt to EBITDA, closing in on our expectation to reach investment-grade leverage metrics in 2026. Again, thank you so much to each of our team members who have delivered a step-change improvement in 2024 and set us up for a fantastic 2025 and beyond. As has always been the case and always will be, thank you so much to our travel agent partners who have contributed immensely to this success. We also appreciate the support we've received from our loyal guests, investors, destination partners, and other stakeholders.

Speaker Change: In under two years, we've paid down over $8 billion of debt off our peak and significantly reduced interest expense, which coupled with our improving EBITDA has improved our leverage metrics tremendously.

Speaker Change: Our current 2025 guidance will put us at three eight times net debt to EBITDA closing in on our expectation to reach investment grade leverage metrics in 2026.

Speaker Change: Again.

Speaker Change: Thank you so much to each of our team members, who have delivered a step change improvement in 'twenty 'twenty, four and set us up for a fantastic 2025 and beyond.

And as has always been the case and always will be thank you. So much to our travel agent partners, who have contributed immensely to this success. We also appreciate the support we've received from our loyal guests investors destination partners and other stakeholders.

Josh Weinstein: Let's not forget, these efforts were really all about the main thing, delivering unforgettable happiness to over 13.5 million people in 2024 by providing them with extraordinary cruise vacations while honoring the integrity of every ocean we sail, place we visit, and life we touch. With that, I will turn the call over to David.

Speaker Change: Let's not forget.

Speaker Change: These efforts were really all about the main thing.

David: Livery unforgettable happiness to over 13, and a half million people in 2024 by providing them with extraordinary cruise vacations, while honoring the integrity of every ocean. We sell places we visit and life, we touch 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 Q4 results. I will provide an update on our refinancing and deleveraging efforts. I'll finish up with some color on our 2025 full-year December guidance. Let's turn to the summary of our Q4 results. Net income exceeded September guidance by $126 million as we outperformed once again. The outperformance was essentially driven by three things. First, favorability in revenue worth $77 million as yields came in up 6.7% compared to the prior year. This was 1.7 points better than September guidance, driven by close-in strength in ticket prices as well as strong onboard spending. Second, cruise costs without fuel per available lower berth day, or ALBD, came in up 7.4% compared to the prior year. This was six-tenths of a point better than September guidance, which was worth $13 million.

David: Thank you Josh I'll start today with a summary of our 2020 for fourth quarter results next I will provide an update on our refinancing and deleveraging efforts.

David: Then I'll finish up with some color on our 2025 full year December guidance.

David: Let's turn to the summary of our fourth quarter results.

Net income exceeded September guidance by $126 million as we outperformed once again, the outperformance was essentially driven by three things.

David: First favorability in revenue were $77 million as yields came in up six 7% compared to the prior year. This was 1.7 points better than September guidance, driven by close in strength in ticket prices as well as strong onboard spending.

David: Second cruise costs without fuel per available lower birthday, or a L E D.

Seven 4% compared to the prior year. This was six tenths of a point better than September guidance, which was worth $13 million and third favorability in interest expense other income and expense and tax expense all of which were partially offset by <unk>.

David Bernstein: Third, favorability in interest expense, other income and expense, and tax expense, all of which were partially offset by higher fuel prices, netted to a $38 million improvement. Per diems for the Q4 improved over 5% versus the prior year, which I would remind you were up over 10% last year, with improvements on both sides of the Atlantic driven by higher ticket prices and improved onboard spending. Strong demand allowed us to once again report records, delivering Q4 record revenues, record yields, record per diems, record adjusted EBITDA, and record customer deposits. Next, I will provide an update of our refinancing and deleveraging efforts. Our full-year 2024 yield improvement of 11% was over 3 times our 3.5% cost increase. This drove improved margins and cash flow, which resulted in a strong EBITDA of $6.1 billion and cash from operations of about $6 billion.

David: Higher fuel prices.

That led to a $38 million improvement.

David: Premiums for the fourth quarter improved over 5% versus the prior year, which I would remind you we're up over 10% last year with improvements on both sides of the Atlantic driven by higher ticket prices and improved onboard spending.

David: Strong demand allowed us to once again report records delivering fourth quarter record revenues record yields record per Dms record adjusted EBITDA and record customer deposits.

Next I will provide an update about refinancing and deleveraging efforts.

David: Our full year 2020 for yield improvement of 11% was over three times or 3.5% cost increase.

David: This drove improved margins and cash flow, which resulted in a strong EBITDA of $6 1 billion in cash from operations of about 6 billion.

David Bernstein: All of this propelled us on our journey to pay down debt and proactively manage our debt profile. During 2024, we made debt payments of over $5 billion, which included opportunistically prepaying over $3 billion of debt, reducing secure debt, removing the secured second lien layer from our capital structure, and paying off some of our more expensive debt. We ended 2024 with $27.5 billion of debt, over $8 billion off the January 2023 peak. Our leverage metrics continued to improve in 2024 as our EBITDA continued to grow and our debt levels continued to shrink. We achieved a 4.3x net debt-to-EBITDA ratio, nearly a 2.5 turn improvement from 2023, positioning us three-fourths of the way down the path to investment-grade leverage metrics in just 1 year.

David: All of this propelled us on their journey to pay down debt and proactively manage our debt profile.

David: <unk> 'twenty 'twenty four we made debt payments of Gulf of $5 billion, which included Opportunistically prepaying over 3 billion of debt.

David: Do think secured debt.

David: Moving the secured second lien layer from our capital structure.

David: Paying off some of them more expensive debt.

We ended 2024 with 27 and a half billion of debt over 8 billion cost the January 2023 peak a.

David: Our leverage metrics continue to improve in 2024, as our EBITDAX continue to grow and our debt levels continued to shrink.

David: We achieved a 4.3 times net debt to EBITDA ratio nearly a two and a half turn improvement from 2023 positioning US reports the way down the path to investment grade leverage metrics in just one year.

David Bernstein: With the benefit of well-managed near-term maturity towers and improved leverage metrics, we expect to opportunistically capitalize on improved interest rates while proactively managing our maturity towers for 2027 and beyond with various refinancings. I'll finish up with some color on our 2025 full-year December guidance. On top of 2024's 11% yield growth, we are expecting to deliver strong 2025 yield improvements with our guidance forecasting an increase of approximately 4.2%, worth over $0.60 per share when compared to 2024. The strong improvement in 2025 yields is a result of an increase in higher ticket prices, higher onboard spending, and to a lesser degree, higher occupancy, with all three components improving on both sides of the Atlantic. We are well-positioned to drive 2025 ticket pricing higher, with significantly less inventory remaining to sell than the same time last year. Turning to costs.

David: With demand up there that well manage near term maturity towers and improved leverage metrics, we expect to opportunistically capitalize on improved interest rates, while proactively managing our maturity towers for 2027 M beyond with various refinancings.

David: Now I'll finish up with some color on our 2025 full year December guidance.

David: On top of 2020 fours, 11% yield growth, we are expecting to deliver strong 2025 yield improvement with our guidance forecasting an increase of approximately 4.2% worth over 60 cents per share when compared to 2024.

David: The strong improvement in 2025 yields as a result of an increase in higher ticket prices higher onboard spending and.

David: To a lesser degree higher occupancy with all three components improving on both sides of the Atlantic.

David: We are well positioned to drive 20, twenty-five ticket pricing higher which significantly less inventory remaining to sell than the same time last year.

Now turning to costs.

David Bernstein: Cruise costs without fuel for ALBD is expected to be up approximately 3.7%, costing $0.28 per share for 2025 versus 2024. We are looking forward to the introduction of our game-changing exclusive Bahamian destination, Celebration Key, in July 2025. We anticipate that Celebration Key will be a smash hit with our guests and provide an excellent return on our investment. However, operating expenses for the destination will impact our overall year-over-year cost comparisons by about half a point. In 2025, we are expecting 687 dry dock days, an increase of 17% versus 2024, which will also impact our overall year-over-year cost comparisons by about three-quarters of a point. In 2024, there were several one-time items that we benefited from impacting our overall year-over-year cost comparisons by about a quarter of a point.

Cruise costs without fuel per a L. B D is expected to be up approximately three 7% costing 28 cents per share for 2025 versus 2024.

David: We are looking forward to the introduction of our game changing exclusive Bahamian destination celebration K in July 2025.

David: We anticipate that celebration K will be a smash hit with our guests and provide an excellent return on our investment.

David: However, operating expenses for the destination will impact our overall year over year cost comparisons by about half a point.

David: In 2025, we are expecting 687, Drydock days, an increase of 17% versus 2024, which will also impact our overall year over year cost comparison by about three quarters of a point.

David: In 2024, there were several onetime items that we benefited from impacting our overall year over year cost comparisons by about a quarter of a point.

David Bernstein: The remaining 2.2-point increase in cruise costs are driven by inflation and higher advertising expense, partially offset by efficiency initiatives and further leveraging our industry-leading scale. An increase in depreciation expense and lower interest income is partially offset by an improvement in interest expense from our refinancing and deleveraging efforts for a net impact of $0.04 per share. The net impact of fuel price and currency is expected to favorably impact 2025 by approximately $0.04 per share, with fuel prices favorable by approximately $0.09 per share, while the change in foreign currency exchange rates goes the other way by $0.05 per share. Let's not forget that the European Union Allowance, or EUA regulation in 2025 increases to 70% of carbon emissions from 40% in 2024.

David: The remaining 2.2 point increase in cruise costs are driven by inflation and higher advertising expense, partially offset by efficiency initiatives and further leveraging our industry leading scale.

David: An increase in depreciation expense and lower interest income is partially offset by an improvement in interest expense from our refinancing and deleveraging efforts for a net impact of four cents per share.

David: The net impact of fuel pricing currency is expected to favorably impact 2020 high by approximately four cents per share with fuel prices favorable by approximately nine cents per share while the change in foreign currency exchange rate goes the other way by five cents per share.

David: Yeah.

David: Let's not forget that the European Union allowance or EUA regulation in 2025 increases to 70% of carbon emissions from 40% in 2024.

David Bernstein: As a result, we would expect the impact of higher EUA costs on our year-over-year fuel expense to be about $0.03 per share. In summary, putting all these factors together, our net income guidance for full-year 2025 is over $2.3 billion, an improvement of more than $400 million versus 2024 or $0.28 per share. Robust demand for our brands and continued operational execution is driving our strong financial results, along with our increased confidence in achieving investment-grade leverage metrics during the next couple of years as we move further down the road rebuilding our financial fortress while continuing the process of transferring value from debt holders back to shareholders. Now, operator, let's open the call for questions.

David: As a result, we would expect the impact of higher EUA costs on a year over year fuel expense to be about three cents per share.

In summary.

David: All these factors together, our net income guidance for full year 2025 is over $2 3 billion, an improvement of more than 400 million versus 2024 or 28 cents per share.

Robust demand for our brands and continued operational execution is driving our strong financial results along with our increased confidence in achieving investment grade leverage metrics. During the next couple of years as we move further down the road rebuilding our financial fortress.

While continuing the process of transferring value from debt holders back to shareholders.

David: Now operator, let's open the call for questions.

Operator 1: Certainly. We'll now be conducting a question-and-answer session. If you'd like to be placed into question queue, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. As a reminder, please ask one question, one follow-up, and return to the queue. Our first question today is coming from Matthew Boss from JPMorgan. Your line is now live.

Speaker Change: Certainly what I'll be conducting a question and answer session.

It can be placed in the question queue. Please press star one on your telephone keypad.

Speaker Change: Information tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue and as a reminder, please ask one question one follow up then return to the queue.

Speaker Change: Our first question today is coming from Matthew boss from JP Morgan Your line is that life.

Matthew Boss: Great. Thanks. Congrats on another great quarter.

Speaker Change: Great Thanks, and congrats on another great quarter.

David Bernstein: Thank you very much, Matt.

Speaker Change: Thank you very much Matt.

Matthew Boss: Josh, could you elaborate on the foundation that you've laid over the last two years, which you think has positioned you and the company to capitalize on the current demand that you're seeing? With 2025 shaping up to be another banner year, could you speak to initiatives across the organization to take share, optimize yields, and drive onboard spending in 2025 and beyond?

Speaker Change: Josh could you elaborate on the foundation that you've laid over the last two years, which you think is positioned you and the company to capitalize on the current demand that youre seeing and with twenty-five shaping up to be another banner year could you speak to initiatives across the organization to take share optimize yields in and drive onboard spending and 25 in <unk>.

Speaker Change: John.

Josh Weinstein: Yeah. Thanks for the question, Matt. I guess if we look back at the last two years, probably the biggest thing was just doing a bit of restructuring, as we've talked about in the past, and getting the right leaders in place, leading the brands. Those leaders are a fantastic group of people leading fantastic brands. On the commercial focus side, which we've been talking about for the last few years, it is scrutiny and expectations around how we're improving in the revenue management space, in the marketing space, considerations at top-of-funnel stuff, all the way down to closing the bookings. The amount of advertising that we've ramped up, really just to get us closer to where the rest of the market is, I think is helping to pay dividends.

Speaker Change: Yeah. Thanks, Thanks for the question Matt.

Speaker Change: I guess, if we look back at the last two years.

Speaker Change: Probably the biggest thing was was just doing a bit of restructuring as we've talked about in the past and getting the right leaders in place leading leading the brands and those leaders are a fantastic group of people leading fantastic brands.

Speaker Change: On the.

Speaker Change: On the commercial focus side, which we've been talking about for the last few years right. It is it is scrutiny and expectations around how we're improving in the revenue management space in the marketing space consideration set top of funnel stuff all the way down to closing the bookings.

Speaker Change: The amount of advertising that we've ramped up really just to get us closer to where the rest of the market is I think is helping to pay to pay dividends.

Josh Weinstein: Everything from making sure our brands have great relationships with the trade to investing in our own capabilities. Probably the last thing about the foundation would be the portfolio management. We've been actively managing the portfolio and allocating ships differently, moving vessels, winding up a brand in the case of P&O Australia. I think it's setting ourselves up to really put the assets where the highest returns are in the immediate term and the medium term, while we help all the brands who aren't yet where I think they should be, get to those levels. With respect to 2025, and what are the things that we've got that are going to continue our progress? At a base level, it's a continuation of all those things in the commercial space and having those great brand leaders really lean in even further. We're investing in our people.

Speaker Change: Everything from making sure our brands have great relationships with the trade to investing in our own capabilities.

Speaker Change: Probably the last thing about the foundation would be.

Speaker Change: The portfolio management, we've been actively managing the portfolio and.

Speaker Change: Allocating shifts differently moving vessels lightening up a brand in the case of PNR Australia.

Speaker Change: Setting ourselves up to really put the assets, where the highest returns are in the immediate term intermediate term, while we help all the brands, who aren't yet where I think they should be.

Speaker Change: I'll get to those levels so.

Speaker Change: With respect to 2025 and what are the things that we've got that are going to continue our progress.

Speaker Change: At a base level, it's a continuation of all of those things in the commercial space and having those great brand leaders really lean in even further.

And in our people we are investing in our tools our revenue management tools to make sure that we are utilizing the technology effectively to optimize the yields the destination strategy that you've already heard in the prepared remarks, I think that's going to be a tailwind that continues for a really long time and work.

Josh Weinstein: We're investing in our tools, our revenue management tools, to make sure that we are utilizing the technology effectively to optimize the yields. The destination strategy that you already heard in the prepared remarks, I think that's going to be a tailwind that continues for a really long time, and we're really looking forward to that. As far as the OBR onboard spending, we've got runway there. We've got a good amount of runway to continue the progress we've been making around pulling forward the spend, which, as everybody knows, opens up the second wallet, and the more people spend before they get on the cruise, the more they spend on the cruise. Our brands are, again, working hard to continue that, and we're nowhere near what the cap could be on those types of efforts. I'm pretty enthusiastic, as you could probably tell.

Speaker Change: Really looking forward to that as far as the Ob are onboard spending.

Speaker Change: Got runway there I mean, we've got a good amount of runway to continue the progress we've been making around pulling forward the spend which as everybody knows opens up the second wallet and the more people spend before they get on the cruise of more than seven omni crews.

Speaker Change: So our brands are again working hard to continue that and we're nowhere near what the cap could be on those types of efforts.

Speaker Change: I'm pretty enthusiastic as you could probably tell.

Matthew Boss: I can tell. Then David, maybe just quick, if you could just break down net cruise cost, ex fuel components and that 3.7 for this year? I think more so, help us to think about maybe a reasonable spread between yields and cruise cost multi-year, if there's maybe a back of the envelope rule of thumb multi-year?

Speaker Change: I can tell I can tell and then David maybe just quick if you could just break down net cruise cost ex fuel components in that $3 seven for this year, but I think more so how best to think about maybe a reasonable spread between yields and cruise costs multiyear if there's maybe a back of the envelope rule of thumb multiyear.

David Bernstein: I did in my notes talk about the 3.7 because just briefly, the expenses relating to Celebration Key were 0.5 points. Increase in dry dock days was 0.75 points. I also said about a 0.25 points was the one-time items that we benefited from in 2024. The remaining 2.2 points really was a combination of inflation and higher advertising that Josh mentioned, partially offset by efficiency initiatives and other leveraging our scale throughout the company. Those are really the four key components that make up the 3.7. As far as the difference, I don't think there's any rule of thumb here. I really do believe we can continue. As you saw in 2024, it was 3 times, but that was a recovery story.

Speaker Change: So I I did in my my notes talk about the $3 seven because yes, just briefly at the expenses relating to celebration key were a half a point.

Speaker Change: Increase in dry dock days was three quarters of a point I also say about a quarter of a point was the.

Speaker Change: One time items that we benefited from in 2024, and then the remaining 2.2 points really was a combination.

Speaker Change: Inflation and higher advertising.

Josh: Josh mentioned.

Josh: Partially offset by efficiency initiatives and other leveraging our scale throughout the company. So those are really the four key components that make up the three seven.

Josh: As far as the difference.

Josh: I don't think there's any rule of thumb here I really do believe we can.

Can you as you saw.

Josh: 'twenty 'twenty four it was three times, but that was a recovery story.

David Bernstein: Our guidance has a half a point difference between a yield improvement and a cost improvement. Keep in mind that a point a yield is worth almost double what a point of cost is. There is leverage there in and of itself. We will work hard to continue to maintain our cost consciousness. As Josh talked about, all the things we're investing in advertising and revenue management should help drive yields higher over time, as well as the destination strategy. We do expect to see a continued improvement in margins.

Josh: Our guidance has a half a point difference between the yield improvement.

Josh: And our cost improvement and keep in mind that a point of yield is worth almost double what our point of cost is so there is leverage there in and of itself.

Josh: But we will work hard to continue to maintain our cost consciousness and as Josh talked about.

Josh: All of the things, we're investing in advertising and revenue management should help drive yields higher over time as well as the destination strategy. So we do expect to see a continued improvement in margins.

Matthew Boss: Great color. Best of luck.

Josh: Great color best of luck.

Operator 1: Thank you. Next question is coming from Ben Chaiken from Mizuho Securities. Your line is now live.

Speaker Change: Thank you. Your next question is coming from Ben Chaiken from Mizuho Securities. Your line is that a lot.

Ben Chaiken: Hey, thanks for taking my questions. Celebration Key looks pretty exciting opening up later this summer. Where do you think you are in the customer awareness of this product? Do you think it's well understood, appreciated by customers, or is that marketing and awareness still ramping? I have one follow-up. Thanks.

Ben Chaiken: Hey, Thanks for taking my questions celebration keel, it's pretty exciting opening up later this summer or do you think you are in the customer awareness of this product or do you think it's well understood and appreciated by customers or is it still or is that marketing kind of like and then an awareness still ramping and I have one follow up. Thanks sure. Thanks, Thanks, Matt definitely still still ramping I mean, it doesn't exist yet.

Josh Weinstein: Sure. Thanks, Ben. Definitely still ramping. It doesn't exist yet. We are definitely building momentum there. We're building excitement. We're getting the response that we expected with respect to how the bookings are shaping up, which is good to see. It's still early days. I think the really exciting part is once we're in there really operating and having guests enjoy these experiences and optimizing what we do and how we do it takes off from there because right now it's make-believe. We got to let everything get in place and then I think it'll help tremendously.

Ben Chaiken: So we are definitely building momentum there we're building excitement we're getting.

The response that we expected with respect to how the bookings are shaping up which is good to see but it's still early days I think.

Ben Chaiken: The really exciting part is once were once we're in there are really operating and having guests enjoy these experiences in optimizing what we do and how we do it.

Speaker Change: It takes off from there because right now to make believe so we got a we got to let everything.

Ben Chaiken: Get in place and then I think it will help tremendously.

Ben Chaiken: Got it. Understood. In the release and call transcript, you referenced an enhanced destination strategy. Can we open this up a little bit? Does this refer to Celebration Key or just a little bit of a teaser to additional opportunities to prod guests with differentiated Carnival-owned, operated destinations? I know you mentioned a pier at Half Moon Cay, I believe. Just trying to understand the magnitude and direction of the strategy. Thanks.

Ben Chaiken: Got it understood and then and then in the release and call.

Speaker Change: Script, you referenced an enhanced destination strategy.

Speaker Change: Can we open this up a little bit does this refer to celebration key or just a little bit of a teaser to an additional traditional opportunities to provide guests with differentiated carnival operated destinations and I know you mentioned appear it happens okay. I believe I'm, just trying to understand the magnitude and direction of the strategy. Thanks.

Josh Weinstein: Let's take a step back from any one particular destination. I think what I've seen for a long time now, for several years, that I think some are doing better than others and better than us, is turning their own destinations into something that not only guests but non-cruisers look at and decide that's going to help tilt my vacation decision to take a cruise because the destination itself looks amazing, is an amazing experience, and I can only do it on a cruise. We have not historically, I think, done a good enough job in raising the level of awareness on the amazing destinations that we have and that are in the pipeline.

Speaker Change: So, let's let's take a step back from any one particular destination I think.

Speaker Change: <unk> for a long time now for several years and I think some are doing better than others and better than us is turning their own destinations into something that not only gas, but non cruisers look at and decide that's going to help tilt my vacation decision to take a cruise because the destination itself looks amazing.

Speaker Change: <unk> is an amazing experience and I can only do it on a cruise and.

Speaker Change: We have not historically I think done a good enough job in raising the level of awareness on the amazing destinations that we have and that are in the pipeline. So when it comes to celebration key we're getting a head start because were doing it before the the location exists.

Josh Weinstein: When it comes to Celebration Key, we're getting a head start because we're doing it before the location exists. When you think about the change to RelaxAway for Half Moon Cay, it is beautiful. It is one of the most stunning destinations in the world, and yet if you're not a cruiser, you don't know anything about it. You're not looking for it. We're going to change that dynamic. With RelaxAway, what we're trying to convey to people who don't cruise is really the vibe of the experience that they can get. The great thing about it is we're leaning into that natural beauty, which is going to be different from Celebration Key. Celebration Key, as we said, that is the ultimate beach day, right? RelaxAway is all about the idyllic.

Speaker Change: When you think about the change to relax away for half Moon Cay.

Speaker Change: It is beautiful it is one of the most stunning destinations in the world and yet if you're not a cruiser you don't know anything about it youre not looking for it.

And we're going to change that dynamic and with relax away what were trying to convey to people who don't cruise is is really the five of the experience that they can get and the great thing about it is we're leaning into that natural beauty, which is going to be different from celebration cake celebration key as we said that is the ultimate Beach day right.

Speaker Change: Relax a way is all about the ideal it it's being in a tropical Paradise I'm, we're going to be able to marry those two things together. So people on the same crews will be able to get both experiences that are very very different and exclusive to us and so we're going to raise our game there and there's more things that we can do without heavy investment with some of the destinations that we own.

Josh Weinstein: It's being in a tropical paradise. We're going to be able to marry those two things together, so people on the same cruise will be able to get both experiences that are very, very different and exclusive to us. We're going to raise our game there, and there's more things that we can do without heavy investment with some of the destinations that we own to make that part of that more exclusive collection. Early days, but we're pretty excited about it.

Speaker Change: Make that part of that more exclusive collection. So early days, but we're pretty excited about it.

Steve Wieczynski: Very helpful. Thanks.

Speaker Change: Very helpful. Thanks.

Operator 1: Thank you. Next question is coming from Steve Wieczynski. Steve, your line is now live.

Thank you next question is coming from Steve Rucinski from Stifel. Your line is now live.

Steve Wieczynski: Yeah, hey guys. Good morning. Happy holidays to all you guys. Josh or David, if we think about the yield guidance for 2025, just based on the fact that you're two-thirds booked already for next year, it seems like you have strong pricing momentum across pretty much all your geographies. I know you'll hate that I say this, it seems like the 4% or approximate 4% yield guidance to us might end up being conservative when we have this same call a year from now. I guess the question is, can you give us a little color around the makeup of that yield forecast? Maybe to us it seems like you could be taking a conservative view around whether it's onboard trends, whether it's the close-in pricing opportunity.

Steve Rucinski: Yeah, Hey, guys good morning.

Speaker Change: The holidays to telling you guys.

Speaker Change: So Joshua David if we think about the yield guidance for for 2025.

Speaker Change: Just based on the fact that your two thirds booked already for next year.

Speaker Change: It seems like you have strong pricing momentum across pretty much all your geographies.

Speaker Change: I know, you'll hate that I'll say this but it seems like the 4% or approximately 4% yield guidance do you have to us might end up being conservative.

When we have this same call a year from now so I guess the question is can you give us a little color around the makeup of that yield forecast and then maybe it doesn't seem like you could be taking a conservative view around.

Speaker Change: Whether it's onboard trends, whether it's the close in pricing opportunity.

Steve Wieczynski: If I ask that question another way, if we think about your initial yield guidance last year, which I think was 8.5%, and it ended up closer to about 11%, what did you guys underestimate for 2024? Thanks.

Speaker Change: And if I asked that question another way I mean, if we think about the your initial yield guidance last year, which I think was 8% and it ended up.

We ended up closer to about 11%.

Speaker Change: Did you guys underestimate for for 2024.

Josh Weinstein: Hey, Steve. Well, first of all, we were a little worried you weren't first in the queue, so we were going to literally call 911 to make sure you were okay. Glad to hear your voice.

Speaker Change: Well first of all we were a little worried you weren't first in the queue. So we're going to literally calling on them and wanted to make sure. You were you were okay.

Speaker Change: Glad to hear your voice.

Steve Wieczynski: All good.

Josh Weinstein: Good. Look, our goal is to give guidance based on what we know, it's certainly something that we want to meet and obviously work hard to achieve. Last year, I meant what I said in my prepared remarks. I think it was a fantastic year by the whole team. That outperformance, I would argue, was pretty special. Also argue that 250 basis points of yield on top of a base of 8.5% proportionally is not 2.5% on top of 4.2%. We have a very good handle, I think, on where we are today, much more so than last year even because we're already back up in full at the full occupancy percentage, more or less, that we always get.

Speaker Change: Good good good good.

Speaker Change: Look our goal is to give guidance based on what we know.

Speaker Change: Certainly something that we want to meet and obviously work hard to exceed.

Speaker Change: Last year I meant what I said in my prepared remarks, I think it was a fantastic year by the whole team that.

Speaker Change: That outperformance was I would argue was pretty pretty special.

Speaker Change: Also argue that 250 basis points of yield on top of a base of two of eight 5%.

Speaker Change: Proportionally as is not two 5% on top of four 2%.

Speaker Change: So we have a very good handle I think on where we are today much more so than last year, even because we're already back up and full already.

Full occupancy percentage more or less if we always get and if you remember the first half of the year, we're still in catch up which is about five points of our improvement in yields last year.

Josh Weinstein: If you remember, the H1 of the year was still a catch-up, which is why 5 points of our improvement in yields last year was occupancy. I think we're in a more stable place than we were. Well, the onboard spends have been fantastic. There's no doubt about it, and we're working hard to continue that trend. When you look at the 4.2%, there's a little bit for occupancy, but it's all price, right? Outside of a little bit of occupancy, it's price, and it is a combination of the ticket side and the onboard side continuing, and we'll work hard to optimize as much as we can. I promise you, our goal is the same as yours, which is get as much revenue as we can.

Speaker Change: Was occupancy so I think we're in a more stable place than we were.

Speaker Change: Well the onboard spend have been fantastic.

Speaker Change: No doubt about it and we're working hard to continue that trend and when you look at the four 2%.

Speaker Change: A little bit for occupancy, but it's all price right outside of a little bit of occupancy its price and it is a combination of the ticket side and the onboard by continuing and we'll work hard to optimize as much as we can I promise you. Our goal is the same as yours, which is get as much revenue as we can.

Steve Wieczynski: Okay. That's good color. Then Josh, if we look at slide 17, about SEA Change. You noted your EBITDA per ALBD is going to be hopefully achieved in 2025. If we look at your ROIC targets, we look at even the carbon reduction target, it's almost like you're going to potentially hit those as well next year. I guess the question is, and I know you're going to hate this, but do you start to think about laying out another set of long-range financial targets at some point? To us, it seems like those SEA Change targets really were important pillars and gave the investment community something to really rally behind. I'm just trying to get a little bit more color as how you're thinking about the long-term opportunities here.

Speaker Change: Okay. That's good color and then Josh if we look at it.

Speaker Change: Slide 17.

Speaker Change: You know about sea change you noted your EBITDA pretty L. B D. It's going to be hopefully achieved in 2025, but if we look at your ROIC targets, we look at the even the carbon reduction target I mean, it's almost like youre going to hit those potentially hit those as well next year. So.

Speaker Change: I guess the question is do you use.

Speaker Change: And I know youre going to hit this but do you start to think about laying out another.

Speaker Change: Set of long range financial targets at some point.

Speaker Change: To us it seems like the sea change targets really were important pillars and gave the investment can we do something to to really rally behind so im just trying to get a little bit more color as to how youre thinking about the long term opportunities here yes.

Josh Weinstein: Yeah. No, look, when we get there, I can tell you that whether we do it on the same day or whether we wait a quarter to catch our breath, I can promise you, I like the concept of longer-term targets that we set for ourselves and we set for our investors so you can understand what we think our trajectory should be, and I can motivate my team internally to rally around what I think we should be expecting of ourselves. Yes, you can expect that to happen when we get there. Look, I'd love nothing more to get to where we were, where we say we're going to be in 2026 SEA Change targets early. We need about $100 million of operating income to get to the ROIC. Carbon will be harder.

Speaker Change: Look when we get there I can I can tell you that whether we get whether we do it on the same day or whether we wait a quarter to catch our breath I can promise you I like the concept of longer term targets that we set for ourselves and we set for our investors. So you can understand what we think our trajectory should be and I can motivate my team internally.

Speaker Change: Rally around what I think we should be expecting of ourselves. So yes, you can expect that to happen when when we get there.

Speaker Change: I'd love nothing more to give.

Speaker Change: To where we were.

Speaker Change: When we say we're going to be in 2000 2060 change targets early.

Speaker Change: We need about 100 million Bucks.

Speaker Change: <unk> operating income to get to the ROIC see carbon will be harder we have a pretty good.

Josh Weinstein: We have a pretty good understanding of where we are, but getting to 19% is pretty good, and we'll see what happens.

Understanding of where we are but.

Speaker Change: Getting to 19%.

Speaker Change: Pretty good almost let's see what happens.

Steve Wieczynski: Okay. Got you. Real quick, housekeeping-wise, David, is there anything we should think about in terms of cadence of costs? Obviously, we've got the Q1 NCC guide, but anything else through the rest of the year we should think about?

Speaker Change: Okay Gotcha.

Speaker Change: Real quick housekeeping wise, David is there anything we should think about in terms of cadence of costs. Obviously, we've got the first quarter and so you see guide, but anything else through the rest of the year, we should think about.

David Bernstein: As you can imagine, it is tough in terms of seasonalization between quarters. The guidance I would give you is that in Q2, we do expect higher dry dock days. I wouldn't be surprised if Q2 and Q3 were, call it 1.5 to 2 points above the full-year average, and Q4 is lower. That's about the best initial guidance I can give you.

Speaker Change: So as you can imagine is tough in terms of season realization between quarters, but the guidance that would give you is that in the second quarter. We do expect higher dry dock days, so I wouldn't be surprised if the second and third quarter were partly one and a half to two points above the full year average in the fourth quarter.

Speaker Change: There is lower.

Speaker Change: That's about the best initial guidance I can give you.

Speaker Change: But we too.

David Bernstein: We'll probably see some changes because this guidance presumes we've made every decision on all advertising and everything else between the quarters. Just take it as a forecast.

Speaker Change: We'll probably see some changes because this guidance presumes. We've made every decision on all advertising and everything else between the quarters. So just take it as a forecast okay. Thanks, guys happy holidays.

Steve Wieczynski: Okay. Thanks, guys. Happy holidays.

David Bernstein: You too, Steve.

Speaker Change: Sure.

Operator 1: Thank you. Next question is coming from Robin Farley from UBS. Your line is now live.

Speaker Change: Thank you and next question is coming from Robin Farley from UBS. Your line is my life.

Robin Farley: Great. Thank you. Obviously, fantastic guidance here, and better than expected. I did want to ask about 2 things just to get a feel for whether these things are in your guidance or how much they're in your guidance and whether this is the additional upside. First is Celebration Key. You mentioned obviously expect it to be very successful and a driver, but you're not really able to see at this point what it would add really to ticket price or onboard spend. I'm just wondering if you could help us understand how much or really how little you may have in your yield guidance today for Celebration Key. I know in your cruise cost guidance, it's that 50 basis points. How much is it in your yield guidance at the moment? Thanks.

Speaker Change: Great. Thank you, obviously, a fantastic guidance here.

Speaker Change: And there was unexpected I did want to ask about two things just to get a feel for whether these things are in your guidance or how much. They are in your guidance and whether this would be additional upside.

First is celebration key you mentioned, obviously you expect it to be very successful and a driver, but you're not really able to see at this point, what I would add really to ticket price or onboard spend so I'm. Just wondering if you could help us understand how much you really how little you may have in your yield guidance today for for celebration key I know in your crew.

Speaker Change: Cost guidance is that 50 basis points.

Speaker Change: Much is there.

Speaker Change: In your yield guidance at the moment. Thanks, Yeah. Thanks Robyn.

David Bernstein: Yeah. Thanks, Robin. It is in our guidance, but I'll give you some magnitude of just what touches Celebration Key this year, and it's only 5% of our total sailings in 2025. It's not that much. When we get to 2026 and we're on a full-year run rate basis, you're talking about 15% plus. It'll be more meaningful for the company overall. Nonetheless, I'm not going to say what it is, but we're happy to say that when we look at our bookings in Q4 for Carnival, we are seeing the premium that we expected to see, which is good to see.

So it is in our guidance, but I'll give you some magnitude of just what touches celebration this year and it's only 5% of our total sailings in 2025, so it's not that much when we get to 2026 somewhere around kind of a full year run rate basis, you are talking about 15% plus so so there'll be more.

Speaker Change: It's meaningful for the company overall.

Speaker Change: Unless I'm not going to say what it is but we're happy to say that when we look at our bookings in the fourth quarter for Carnival. We are seeing the premium that we expect it to see which is good news.

Robin Farley: Okay, great. Thank you. Also in your EPS guidance, I think that you have $3 billion in debt that's callable next year. I hope I'm getting this number right. I assume that you're not factoring in the lower interest cost from some of that very expensive debt. If that were redone at maybe what some other things this year have been done at, could that be $0.20 or $0.25 of upside in annual interest expense savings? Is that the ballpark to think potential upside?

Speaker Change: Okay, great. Thank you and then also in your EPS guidance.

Speaker Change: I think that you'll have $3 billion in debt. That's callable next year I hope I'm getting this number right, but it is and I assume that you're not factoring in the lower interest costs from some of that very expensive debt.

Speaker Change: That were redone at maybe what some other things this year have been done that could that be 20, or 25 cents of sort of upside in annual interest.

Speaker Change: Interest expense savings is that kind of a ballpark to think about potential upside.

David Bernstein: $0.20 to $0.25. $0.20 would be $280 million because it's $0.14 per penny. Just keep that in mind. I'm not sure what you were thinking of. I will say that there is opportunity on the refinancing. We do expect to address those 2 double-digit interest rate debts that you're referring to. They're both callable, as you said, in the H1 of the year. There will be some additional savings. We will look at that throughout the year. We did include just a bit of interest savings in our forecast because we're not sure what the market will bring in terms of interest rates to us. Hopefully, we'll have a number of successful transactions this year, which will provide some upside for, I should say, some lower interest expense.

So 'twenty to 'twenty, five 'twenty would be $280 million because its 14 cents per penny. So just keep that in mind I'm not sure. What what you were thinking of I will say that there is opportunity on the refinancings.

Speaker Change: We do expect to address those two.

Speaker Change: Double digit interest rate debts that you're referring to they're both callable as you said in the first half of the year there will be some additional savings we do it we will look at that throughout the year. We did include just a bit of saving interest savings in our forecast, but because we're not sure what the market will bring in terms of interest rates.

Speaker Change: To us.

Speaker Change: So there is hopefully we will have a number of successful transactions this year, which will provide some upside for it shouldn't say some lower interest expense.

Robin Farley: Okay, great. Thanks very much.

Speaker Change: Okay, great. Thank you very much.

David Bernstein: Thanks, Robin.

Sure.

Operator 1: Thank you. Next question is coming from James Hardiman from Citi. Your line is now live.

Speaker Change: Thank you. Your next question is coming from James Hardiman from Citi. Your line is now live.

James Hardiman: Hey, good morning. I wanted to ask maybe a big picture question. Obviously, not a whole lot of capacity being added here, and so much of this growth story is organic, obviously. I guess my first question is, how much of that organic turnaround do you think is a function of factors taking place in the industry versus, I don't know, self-help, right? You listed, obviously, a whole bunch of things that you're doing brand by brand. I'm ultimately trying to figure out the sustainability of this organic growth that we're seeing right now.

James Hardiman: Hey, good morning.

James Hardiman: So I wanted to ask maybe a big picture question, obviously, not a whole lot of capacity being added here and so so much of this.

James Hardiman: Growth story as is.

James Hardiman: It's organic obviously.

Speaker Change: So I guess my first question is how much of that organic turnaround.

Speaker Change: Think it's a function of of sort of factors taking place in the industry versus I don't know self-help right. You've listed obviously, a whole bunch of things that youre doing brand by brand.

Speaker Change: I'm ultimately trying to figure out sort of the sustainability of this organic growth that we're seeing right now.

David Bernstein: Yeah. Hi, James. How you doing? Man, I wish I could tell you what the scientific answer to your question is about the industry overall versus us. I think the industry being more mainstream along with us is certainly a fantastic thing for everybody, and I don't want to discount that. I meant what I said about same-ship sales. We got almost 10% yields on same-ship. If you look at our history, our historic growth rates on revenue are significantly lower than our cruise competitor set. I don't know what they're going to do next year, but when you look at this year, we're right in the mix and we're at the top. I feel very good that our trajectory is changing for us versus what we had been accustomed to.

Speaker Change: Yes, Hey, James How're you doing.

Speaker Change: I wish I could tell you with the scientific answer to your question is about the industry overall versus US I think I think the industry being more mainstream along with US are certainly a fantastic thing for everybody and I don't want to discount that but I.

Speaker Change: I meant what I said about same ship sales.

Speaker Change: We got almost 10% yields.

Speaker Change: On same ship and.

Speaker Change: If you look at our history, our historic growth rates on revenue are significantly lower than our crews competitor set.

And when you look I don't know what theyre going to do next year, but when you look at this year.

Speaker Change: <unk>.

Speaker Change: Right in the mix and at the top so.

I feel very good that our trajectory is changing for us versus what we had been accustomed to and it means we've got a pretty good amount of headroom as we look forward because people should be paying more for our experiences.

David Bernstein: It means we've got a good amount of headroom as we look forward because people should be paying more for our experiences. Not only vis-à-vis our cruise competitors, but I'm talking about vis-à-vis the experience gap that exists on what we do versus what land offers. What we call the price to experience ratio is just remarkably skewed, and we should be getting a lot more versus what land competitors do. I think it's probably a pretty good sign that I'm right about that and the potential when you think about Disney basically saying we're going to under-invest in things that we have in the past, but we're going to double down on cruise. They see the value of that as well. I think we're in good company, and we've got a lot of self-help along the way.

Speaker Change: Not only vis vis our crews competitors, but I'm talking about vis vis the experience gap.

Speaker Change: That exist and what we do versus what land offers.

Speaker Change: Cause the price to experience ratio is just remarkably skewed and.

And we should be getting a lot more versus what competitors.

Speaker Change: Competitors do it I think it's probably a pretty good sign.

Speaker Change: That I'm right about that and the potential when you think about Disney.

Speaker Change: Basically, saying, we're going to underinvest in things that we have in the past, but we're going to double down on crews basically the value of that as well. So I think we're in good company and we've got a lot of self help along the way.

James Hardiman: Got it. I guess along those same lines, although I guess in a lot of ways I'm asking previous questions in a different way. You finished 2024 with per diems up north of 5%. The guidance for the year, yield guidance is 4.2. There's some occupancy in there. Q1 is 4.6. We're going 5-plus to 4.6 to something lower. I guess from our perspective, Celebration Key, which comes on in H2 should actually help with some acceleration. I guess, is there anything quantifiable that we should be thinking about that would weigh on per diems as we work our way through the year? Maybe, an itinerary geographical mix issue, or is this just, you get some version of this question every quarter, right? Is this just sort of conservatism the further out you look?

Speaker Change: Got it and then.

Speaker Change: I guess, along those same lines, although I guess in a lot of ways I'm asking some previous questions in a different way, but you're finished 24 with per Dms up north of 5%.

Speaker Change: The guidance for the year because yield guidance is for two theres some occupancy in there.

Speaker Change: And then you know first quarter is $4 six that we're going five plus four six to something lower.

Speaker Change: I guess from our perspective, right celebration key which comes on in the back half should should actually help with some acceleration.

Speaker Change: Is there anything quantifiable.

Speaker Change: That we should be thinking about that would weigh on a per dms as we work our way through the year, maybe an itinerary geographical mix issue or is this just you know you get some version of this question every quarter right is this just sort of concern.

Speaker Change: Chisholm to further out you look.

Speaker Change: Uh huh.

Speaker Change: I got it.

Josh Weinstein: Same answers that we've been giving, right? We're trying to be as transparent as we can be with everyone on the call and everyone who's not on the call. We haven't been through Wave yet. We will. Although it's been a remarkable ride for 2 years, it feels like Wave hasn't stopped since summer of 2022. We haven't been there yet. We'll see what that brings us. We'll talk again in March.

Speaker Change: Same answers that we've been giving right we're trying to be as transparent as we can be with our with everyone on the call and everyone who's not on the call. We havent been through wave yet we will although although it's been a remarkable ride for two years it feels like wave hasn't stopped since summer.

Speaker Change: Summer of 2022.

But we haven't been there yet.

We'll see what that brings us and and we'll talk again in March.

James Hardiman: Got it. Appreciate it.

Speaker Change: Got it I appreciate it.

Operator 1: Thank you. Next question is coming from Patrick Scholes from Truist. Your line is now live. Patrick, perhaps your phone is on mute.

Speaker Change: Thank you next question is coming from Patrick Scholes from Truest. Your line is now live.

Speaker Change: Patrick perhaps your phone is on mute.

Patrick Scholes: Hi. Good morning. Can you hear me?

Hi, Good morning can you hear me.

Operator 1: Go ahead, Patrick.

Speaker Change: Eric.

Patrick Scholes: Great. Thank you. I want to ask a little bit about Mexico for my first question. Some news out there lately, regarding additional passenger charges on that. Josh, do you think this is a done deal? Is there any chance that that may not go through at this point? Specifically for your folks, for your ships, what percentage of your itineraries do make a stop at a port in Mexico? That's my first question. Thank you.

Speaker Change: Great great. Thank you.

Speaker Change: I want to ask a little bit about Mexico for my first question some news out there lately rigs.

Speaker Change: Regarding additional.

Speaker Change: <unk> charges on that.

Speaker Change: Do you just you said deal.

Speaker Change: Or is there any chance that that may not go through at this point and then specifically for your folks for your.

For your shifts what percentage of your.

Speaker Change: Itineraries do make a stop at <unk>.

Speaker Change: Important in Mexico. That's my first question. Thank you.

Josh Weinstein: Yep. Right off the bat, no, I do not think it is a done deal. We've been dealing with this with the folks in Mexico for the last few weeks. We were not consulted. No one was consulted when this was passed. It's pretty clear to me. I have a lot of respect for the president and what she's doing. She was misinformed, not informed, and no one was thinking through the ramifications of what they were suggesting. There's a reason why cruise is in transit historically, as opposed to people who fly into Mexico and stay there for several days. It's already been pushed off to 1 July. We're not satisfied with that.

Speaker Change: Yes.

Speaker Change: So right off the bat no I do not think it is a done deal.

Speaker Change: Right.

<unk>.

Speaker Change: Dealing with this with the folks in Mexico for the last few weeks, we were not consulted.

Speaker Change: No one was consulted when this was passed it was pretty it's pretty clear to me I have a lot of respect for the precedent and what she is doing.

Speaker Change: But she was misinformed not informed.

Speaker Change: And no one of them is thinking through the ramifications of what they were suggesting and there's a reason why cruises in transit historically.

As opposed to people, who fly into Mexico and stay there for several days. So it's already been pushed off the July 1st we're not satisfied with that we want to have good dialogue with the government and explain all the benefits that we bring to Mexico, which are significant and it doesn't take much.

Josh Weinstein: We want to have good dialogue with the government and explain all the benefits that we bring to Mexico, which are significant, and it doesn't take much to tweak itineraries to effectively erase what the proposed tax is on the industry. I feel we are engaged in those conversations. We hope to have more after the new year, but it's definitely not settled, and we have nothing in the forecast for these changes for the tax, just so everybody knows. Nothing for the year. As far as what the impact would be, for 2025, assuming it did go into place and we made no changes, starting in July of 2025, it's less than 5% of our itineraries for the full year.

Speaker Change: To tweak itineraries to effectively erase would be.

Speaker Change:

Speaker Change: Proposed tax is on the industry and so I feel.

Speaker Change: We are engaged in those conversations we hope to have more after after the new year, but it's definitely not settled and we have nothing in the forecast for these changes for the for the tax just so everybody knows.

Speaker Change: Nothing for the year as far as as.

Speaker Change: As far as what what the impact would be.

Speaker Change: For 2000 2025, assuming it did go into place and we made no changes.

Speaker Change: Starting in July.

Speaker Change: 2025 is less than 5% of our itineraries.

Speaker Change: For the year.

Patrick Scholes: Okay. Thank you. Certainly a fluid situation. A follow-up question is on the year-over-year growth rate in your passenger ticket revenues versus year-over-year growth rate in your commissions, transportation and other. The past several quarters, those growth rates sort of moved in line or lockstep. This most recent quarter, you did have a noticeable increase in passenger ticket revenue percentages higher than the commissions paid out. Are you starting to see more book direct or anything to read into that? Thank you.

Speaker Change: Okay.

Speaker Change: Okay.

Certainly.

Speaker Change: A fluid situation and then a follow up question.

Is on the.

Speaker Change: Year over year growth rate in your passenger ticket revenues versus year over year growth rate in your commissions transportation and other.

Speaker Change: The past several quarters those growth rates sort of moved in.

Speaker Change: In line or lockstep. This most recent quarter you did have a noticeable.

Speaker Change: The increase in passenger ticket revenue percentages higher than.

Speaker Change: The commission paid out are you starting to see.

See more book direct or anything to read in there.

Speaker Change: Thank you.

Josh Weinstein: Patrick, we should talk after the call. I thought it was a tenth of a percent or something very close.

Speaker Change: Patrick.

Speaker Change: We should talk after the call I thought it was a pretty close there was a 10th of a percent or something very close oh, okay revenue.

Patrick Scholes: Oh, okay.

Josh Weinstein: Revenue.

Patrick Scholes: Okay. I probably have a loaded question. We'll talk about that after.

Speaker Change: Okay, I'll talk about a little bit difficult, we'll talk we'll talk about that after the call, but anything anything else into.

Josh Weinstein: Yeah

Patrick Scholes: the call. Anything else?

Josh Weinstein: Nothing else to consider. I mean, the numbers as you know do vary a little bit from quarter to quarter because of currency and the amount of air sea mix that we have. Nothing significant otherwise.

Speaker Change: No.

Speaker Change: I mean, the numbers as you know do vary a little bit from <unk>.

Speaker Change: The quarter because of currency and the amount of <unk>.

Speaker Change: <unk> mix that we have.

Speaker Change: But nothing significant otherwise.

Patrick Scholes: Okay. Thank you for the clarification.

Okay. Thank you for the clarification.

Josh Weinstein: Thanks, Patrick.

Thanks, Patrick.

Operator 1: Thank you. Next question today is coming from David Katz from Jefferies. Your line is now live.

Speaker Change: Thank you. Your next question today is coming from David Katz from Jefferies. Your line is now live.

David Katz: Hi, afternoon. Thank you for taking my question. Covered a lot already. I wanted to get a sense for the cost side of the equation, right? The variability within there. Right? The degree to which, and what would have to happen for you to turn out a little bit better on the cost increases that you may have built into your guidance. I have a quick follow-up.

David Katz: Hi afternoon covered thank you for taking my question covered a lot already I wanted to get a sense for the cost side of the equation right and.

David Katz: The variability within there right the degree to which you know and what would have to happen for you to turn out a little bit better.

David Katz: On the cost increases that you may have built into your guidance.

David Katz: And then I have a quick follow up.

Josh Weinstein: Yeah, if we're talking about the full year.

David Katz: Yes, so the.

David Katz: If we're talking about the full year.

David Bernstein: The 3.7%. The thing that is likely to change over time is most likely to be the efficiencies we find and the magnitude of those efficiencies. We are constantly working hard. We have lots of ideas out there. It is always very difficult to figure out the exact timing, and we did build quite a bit into our guidance and into our forecast, but we continue to work hard to improve on those. Last year, we were able to exceed what our expectations were. We'll work hard to try to do better this year, but it's very hard on the timing of all these items.

David Katz: And the three 7%.

David Katz: You know the thing that is likely to change over time.

David Katz: It is most likely to be the efficiencies we find in the magnitude of those efficiencies.

We're constantly working hard we have lots of ideas out there. It is always very difficult to figure out.

David Katz: The exact timing and we did build quite a bit into our guidance and into our forecast.

David Katz: But we continue to work hard to improve on those and so last year, we were able to exceed our expectations, where and we'll work hard to try to do better this year, but it's very hard on the timing of all these items.

David Bernstein: We built in inflation, something a little bit less than 3%. Trying to get that number perfect, if you know absolutely in every category what inflation will be in 2025, let me know, because we did the best we could. I'm sure some of those pieces are going to be off. As I always say, there's only one thing I know about every forecast that's wrong. I just don't know by how much and in what direction.

David Katz: Plus you know.

David Katz: We built in inflation, something a little bit less than 3% and trying to.

David Katz: To get that number perfect I mean, if you know absolutely in every category what inflation will be in 2025, let me now because we did the best we could.

David Katz: But I'm sure.

David Katz: Some of those pieces are going to be off as I always say, there's only one thing I know about every forecast it's wrong I, just don't know by how much and in what direction.

David Katz: Yeah.

David Katz: Well said. I wanted to follow up just on the leverage side of things. When I look back historically at where the company has operated, obviously making good progress today, but should we be thinking about the 2x or better as a long-term aspirational target? Is that still achievable?

Well said I wanted to follow up just on the leverage side of things when I look back historically.

Where the company has operated.

David Katz: Obviously, making good progress today, but should we be thinking about the two times or better.

David Katz: As a long term aspirational target is that still achievable.

David Bernstein: Well, as proud former treasurer of the company, it's not a target we have for ourselves right now. Our target right now is get to investment-grade metrics, which is the 3.5x. How strong we want to rebuild that fortress, that's up for a decision. Do we need to be an A-minus-rated company again, bordering on A, which is some of the situations we found ourselves in? I could argue, no, we don't need to. Do we want to be a solid investment grade? Absolutely. As we get closer to that metric, we're obviously going to be having conversations with our board to really set out what we think the right balance is between that balance sheet strength, investing in ourselves, and investing in our shareholder returns via dividends or buybacks. Well, remains to be seen what the form will be and when.

David Katz: Well.

I'm proud of former treasurer of the company.

David Katz: It's not a target we have for ourselves right now you know our target right now is get to an investment grade metrics, which is at the three and a half times, how strong we want to rebuild that fortress.

David Katz: That's still up for that.

David Katz: Thats up for a decision do we need to be.

An a minus rated company again bordering on a which is some of the some of the situations. We found ourselves and I could argue no we don't need to.

David Katz: Do we want to be a solid investment grade absolutely so as we get closer to <unk>.

David Katz: Closer to that metric, we're obviously going to be having conversations with our board to really set out what we think the right balances between that balance sheet strength investing in ourselves investing in our in our shareholder returns via dividends or buybacks will remains to be seen what the formal being wet.

David Bernstein: That all goes into the mix, but I'd say nobody should be thinking about a 2x as a target we're setting for ourselves.

David Katz: But that all goes into the mix, but I would say nobody should be thinking about a two time, there's a target we're setting for ourselves.

David Katz: Thank you very much. Appreciate it.

David Katz: Thank you very much appreciate it yeah.

David Bernstein: Yep. Pleasure.

Operator 1: Thank you. Next question today is coming from Jaime Katz from Morgan Stanley. I'm sorry, from Morningstar. Your line is now live.

Speaker Change: Thank you. Your next question today is coming from Jamie Katz from Morgan Stanley I'm, sorry from Morningstar. Your line is that life.

Jaime Katz: Hey, good morning. Thank you for taking my questions. First, I'm hoping that you guys can talk a little bit about Wave season. I guess I'm trying to understand how to think about balancing filling the rest of 2025 with pulling forward more demand from 2026 and whether or not one is a better strategy than the other without giving too much competitive information away. Is there a way to, I guess, bundle even less than you are bundling now and maybe promote less in order to optimize pricing? Thanks.

Jamie Katz: Hey, good morning. Thank you for taking my questions first I'm, hoping that you guys can talk a little bit about waiver season, I guess I'm trying to understand how to think about balancing filling the rest of 2025 with pulling forward more demand from 2026, and whether or not one is.

Hum.

Jamie Katz: A better strategy than the other without giving too much competitive information away is there a way to I guess.

Jamie Katz: I believe in less than you are bundling now and you know maybe promote less.

Jamie Katz: In order to optimize pricing.

David Bernstein: Yeah. Thanks. It's a little bit of a hard question to answer. We are actively and have been actively selling 2025 and 2026 for some time, as you might have picked up in the prepared remarks. We actually just set a record this past quarter for booking activity for the further year out, so 2026 in this case. I think our brands are actually, when it comes to revenue management and optimizing the shape of the curve, they're doing a pretty solid job across the board, which doesn't mean there's not a lot of room for improvement, but a pretty solid job. Everyone's hitting Wave in slightly different positions with respect to how much they're booked for 2025 and in what quarters. I'd say it's a case-by-case decision about how they're going to be tackling Wave. I would say everybody does promotions in Wave. Everyone.

Jamie Katz: Yeah. Thanks so.

Speaker Change: It's a little bit of a hard question to answer.

Speaker Change: <unk> actively and have been actively selling 2025 and 2026 for some time as you as you might have picked up in the prepared remarks, we actually just set a record.

This past quarter for booking activity for the further year out. So 2026 in this case. So I think our brands are actually when it comes to revenue management and optimizing the shape of the curve they're.

Speaker Change: They're doing a pretty solid job across the board, which doesn't mean, there's not a lot of room for improvement, but a pretty solid job so everyone's hitting.

Wave.

Speaker Change: Slightly different positions with respect to how much they are booked for 2025 and what quarters. So I'd say, it's a case by case decision about how theyre going to be tackling wave I would say everybody does promotions and wave.

David Bernstein: It's how you get people interested in cruising during this critical period. I would remind you, we did promotions last year in Wave, and we ended up with 11% yields. The promotional tactics and tools that we use, they're healthy, and they're part of the process that we go through.

However, it is how you get people interested in incursion.

Speaker Change: During this critical period, but I would remind you we did promotions last year and we ended up with 11% yields.

So so the promotional.

Speaker Change: The tactics and tools that we use are they are healthy.

Speaker Change: And they are part of the process that we go through.

Jaime Katz: Yeah. The other question I have is a little bit of a longer-term strategic question, right? We know what the costs are associated with Celebration Key this summer, but I suspect this isn't a one-and-done project. Is there some non-new build CapEx we should be thinking of level that will be in these brand-building projects longer term that might be higher than it was in the past?

Speaker Change: Yeah.

Speaker Change: And then the other question I have is a little bit of a.

Speaker Change: A longer term strategic question right, we know what the costs are affiliated with them.

Speaker Change: Celebration Kiva.

Speaker Change: Summer, but.

Speaker Change: I suspect that this isn't a one and one and done project. So is there some non new build capex.

Speaker Change: Should be thinking of like level that will be in the years.

Speaker Change:

Speaker Change: And these brand building projects longer term that might be higher than it was in the past.

David Bernstein: That's a fair question. I think if you think about the things that we've been investing in outside of the new build Celebration Key, Pier at Half Moon Cay, AIDA Evolution, right, which is their midship refurbishment plan. Much to Carnival's chagrin, AIDA is pretty much neck and neck with Carnival for highest returning brand in our portfolio. We're making the right investments in non-new build to continue the momentum that we have.

Speaker Change: That's a fair question I think if you think about the things that we've been investing outside of outside of the Newbuild celebration kidneys appear a half moon Cay.

Speaker Change: How EDA evolutions, right, which is their mid ship refurbishment plan.

Speaker Change: He is.

Speaker Change: There's much to carnival chagrin, Aida is pretty much neck in neck with carnival for highest returning brands in our portfolio, we're making the right investments in non newbuild to continue the momentum that we have as far as what the ultimate level is on a run rate basis goes.

Josh Weinstein: As far as what the ultimate level is on a run rate basis goes, I don't have a number for you that I'd stick to that says over the next six years or seven years, this is what you should expect. Clearly, we're making these investments on the basis that they are going to support the improved returns that we demand of ourselves. It's about $600 million for Celebration Key, as we talked about. It's another few hundred million for what we're doing at RelaxAway, Half Moon Cay, and AIDA Evolution. For any one particular ship that they're going through this process, you're talking about tens of millions, but we think it's tens of millions that really is going to be a boost for a brand that is incredibly high returning. I don't know, David, if you want to add any more color.

Speaker Change: We don't I don't have a number for you that that I'd stick to this is over the next six years or seven years. This is what you should expect but clearly we're making these investments on the basis that they're going to support the improved returns that we demand of ourselves.

Speaker Change: So it's about 600 million for celebration key as we've talked about it's another few hundred million for what we're doing at relax away half Moon Cay.

Speaker Change: And I eat evolution for any one particular ship that they are going through this process you are talking about tens of millions, but we think it's tens of millions. It really is going to be a boost for a brand that is incredibly high returning.

Speaker Change: So.

Speaker Change: I don't know David if you want to add any more color yeah. The only thing I'd say is I mean, you're so you saw in the press release, what our number was for 2025.

David Bernstein: Yeah, the only thing I'd say is you saw in the press release what our number was for 2025. In all likelihood, it's going to be something similar to that going forward, but it's hard to say exactly what it will be every single year because there's so many bigger decisions that we'll be making over time, which will make up that number.

Speaker Change: Likelihood, it's going to be something similar to that going forward, but it's hard to say exactly what it will be every single year, because there's so many bigger decisions that we'll be making over time, which will make up that number.

Josh Weinstein: One thing I would say about the destination side is Celebration Key and Half Moon Cay are a little bit unique in the scope and size of what we're doing. The other destinations we have in our footprint, they're amazing, and we will spend some money over time to do some things and make the experience better and better opportunity for us to generate returns. I don't see, other than maybe a continued expansion of Celebration Key, as we've already been talking about through the end of this decade. I'm not sure I see on the horizon anything that I'd flag for you right now as out of the blue that we'd be talking about in six months or a year.

Speaker Change: One thing I would say about the destination side as celebration key it happened here a little bit unique in the scope and size of what we're doing.

Speaker Change: The other destinations we have in our footprint there amazing we will spend some money over time to do some things that make the experience better and better opportunity for us to generate returns, but I don't see other than maybe a continued expansion of celebration key as we've already been talking about through the end of this decade I'm not sure I see on the horizon or anything.

Speaker Change: That I would flag for you right now is kind of out of the blue.

Speaker Change: That would be talking about in.

Speaker Change: Six months earlier.

David Bernstein: Great. Thank you.

Speaker Change: Great. Thank you.

Speaker Change: Yeah.

Operator 1: Thanks.

Operator 1: Next question. Go ahead, I'm sorry.

Speaker Change: Okay.

Speaker Change: Next question.

Speaker Change: Go ahead I'm sorry.

Josh Weinstein: Yeah, we'll just take one more question. We're approaching an hour.

Yes, let's just take one more question where appropriate.

Operator 1: Sure thing. Our final question today is coming from Brandt Montour from Barclays. Your line is now live.

Speaker Change: Sure thing our final question today is coming from Brent month tour from Barclays. Your line is that a lot.

Brandt Montour: Good morning, everybody. Thanks for taking my question, and congratulations on the results today. You are welcome. The first question is on the booking curve. Josh, I do not know if this is an easy one to answer, but when you try to take forecasting out of it and you just focus in on your booking curve today versus how your bookings looked at the same time last year, does the pricing look any less robust than this time last year, perhaps tougher comps or anything else that you would highlight?

Brent Montour: Good morning, everybody. Thanks for taking my question and congratulations on the results today.

Speaker Change: So the first question.

Speaker Change: So my first question is on the booking curve, Josh and I don't know if this is an easy one to answer but when you. When you can try to take the forecasting out of it and you're just focusing on your booking curve today versus the way or versus how you are booking your bookings looked at the same time last year.

Speaker Change: Does the pricing look any less robust than this time last year, perhaps tougher comps or anything else that you would highlight.

Josh Weinstein: Well, it's certainly tougher comps this year than it was last year. The brands are, as I said, though, in the prepared remarks, we're basically at a higher occupancy at a higher price point, and that's across all four quarters. I think the brands are doing a good job of continuing the momentum and optimizing that curve. It probably doesn't answer the question the way you'd like it to, but we'll see where that shakes out. We gave you our view of yields as of now, and we'll update you as there's things to update.

Speaker Change: Well I mean, it's certainly tougher comps this year than it was last year the brands are.

Speaker Change: As I've said, though.

Speaker Change: Paired remarks.

Speaker Change: We're basically at a higher occupancy at a higher price point and that's across all four quarters.

Speaker Change: So I think the brands are doing a good job of continuing the momentum and optimizing.

Speaker Change: Optimizing that.

Speaker Change: That curve so it probably doesn't answer the question the way you'd like it to but.

Speaker Change: We'll see where that where that shakes out we gave you our our view of yields as of now.

Update you as things to update.

Brandt Montour: Okay, great. Thanks. Just a quick housekeeping. The Red Sea had something like $130 million impact last year. How much of that, effectively, do you get back in 2025? How should we think about the timing of it and the cadence and where it would show up in the comps?

Okay, great. Thanks, and then just a quick housekeeping the Red Sea had a something like a $130 million impact last year, how much of that.

Speaker Change: Secondly, do you get back in 'twenty, five and sort of how should we think about the timing of it and the cadence and where it would kind of show up in the comps.

Josh Weinstein: Yeah. I think when it all shook out, it was probably a little less than $100 million at the end of the day, as we did our analysis for 2024. I think the thing about year over year for 2025 that people need to keep in mind is it's not a huge spring back. The reason why is if you think about this time last year, we had already sold our world cruises. People were already on them before the Red Sea became a thing. We had to scramble. We did everything we had to do. It cost us $90 million. This year, we're in a different place, which is we knowingly took Red Sea out of the equation back in February, March for 2025, which meant we had to sell cruises that weren't necessarily as attractive to sell because you can't go through the Red Sea.

Speaker Change: So I think what it all shake out it was probably a little less than $100 million at the end of the day as we did our analysis for 2024 I think the thing about year over year for 25 that people need to keep in mind is it's not a huge spring back and the reason why.

Speaker Change: Is if you think about this time last year, we had already sold our world cruises people were already on them.

Speaker Change: Before the Red Sea became a thing.

Speaker Change: We had to scramble we did everything we had to do a cost of $90 million. This year. We're in a different place, which is we knowingly took <unk> out of the equation back in.

Speaker Change: February March for 2025, which meant we had to sell cruises that werent necessarily as attractive to sell because you can't go through the Red Sea.

Josh Weinstein: From a year over year, it's a different pain point that we had to deal with, and we dealt with, and it's in our numbers. It means that what you'd love to see is this bounce back and we're whole and we move forward. I don't think 2025 versus 2024 is really the year that we'll see that. The normalization is now, and so 2026 versus 2025 will be on an apples-to-apples basis.

Speaker Change: So from a year over year, it's a different kind of pinpoint that we had to deal with.

Speaker Change: We've dealt with and it's in our numbers.

Speaker Change: It means that you'd love to see us kind of this bounce back and were a hole and we move forward I don't think 25 versus 24 is really the year that we'll see that the normalization is now and so 26 versus 25 will be on an apples to apples basis.

Brandt Montour: It's a lower yield offsetting no disruption this year.

Speaker Change: It's a lower yields offsetting no disruption does she had bought some more or less in high level. Yeah. That's fair. Okay. Alright. Congrats again guys. Thanks, Thanks, very much Brent Okay. So with that I think we're over time, so I would say happy.

Josh Weinstein: Yeah, more or less in high level. Yeah, that's fair.

Brandt Montour: Okay. All right. Congrats again, guys. Thanks.

Josh Weinstein: Thanks very much, Brandt. With that, I think we're over time, I'd say happy holidays and wishing everybody on the call nothing but good health and happiness in 2025. Thanks very much for joining.

Happy holidays, and wishing everybody on the call nothing but good.

Speaker Change: Good health and happiness in 2025, thanks very much for joining.

Operator 1: Thank you. That does conclude today's teleconference. Let me disconnect your line at this time, and have a wonderful day. We thank you for your participation today.

Speaker Change: Thank you that does conclude today's teleconference. You may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.

Speaker Change: Okay.

[music].

Operator 2: Greetings, welcome to the Carnival Corporation & plc Q4 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad. A question-and-answer session will follow the formal presentation. You may be placed in the question queue at any time by pressing star one on your telephone keypad. We ask that you please limit yourselves to one question and one follow-up, then return to the queue. As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Beth Roberts, Senior Vice President, Investor Relations. Please go ahead, Beth.

Speaker Change: Greetings and welcome to the Carnival Corporation and plc fourth quarter 2024 earnings Conference call. At this time, all participants are in a listen only mode.

Speaker Change: If anyone should require operator assistance. Please press star zero on your telephone keypad.

Speaker Change: A question and answer session will follow the formal presentation.

Speaker Change: You may be replacing the question shoot anytime by pressing star one on your telephone keypad. We ask you. Please limit yourself to one question and one follow up then return to the queue.

As a reminder, this conference is being recorded.

Speaker Change: My pleasure to turn the call over to Beth Roberts Senior Vice President of Investor Relations. Please go ahead Beth. Thank you good morning, and welcome to our fourth quarter 2024 earnings Conference call I'm joined today by our CEO, Josh Weinstein, our Chief Financial Officer, and David Bernstein, and our chair Micky Arison.

Beth Roberts: Thank you. Good morning. Welcome to our Q4 2024 Earnings Conference Call. I'm joined today by our CEO, Josh Weinstein, our Chief Financial Officer, David Bernstein, and our Chair, Micky Arison. Before we begin, please note that some of our remarks on this call will be forward-looking. I will refer you to the forward-looking statement in today's press release. All references to ticket prices, net per diems, net yields, and adjusted cruise costs without fuel will be in constant currency unless otherwise stated. References to per diems and yields will be on a net basis. Our comments may also reference cruise costs without fuel, EBITDA, net income, 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 release.

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, all references to ticket prices net premiums net yields an adjusted cruise costs without fuel will be in constant currency, unless otherwise stated references to premiums and yields will be on it.

Speaker Change: That basis.

Speaker Change: Our comments May also reference cruise costs without fuel EBITDA and net income free cash flow and ROIC.

Speaker Change: 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 release, a reconciliation to the most directly comparable U S. GAAP financial measures and other associated disclosures are also contained in our earnings press release and in our Investor presentation. Please visit.

Beth Roberts: A reconciliation to the most directly comparable US GAAP financial measures and other associated disclosures are also contained in our earnings press release and in our investor presentation. 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.

At 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.

Operator 2: Thanks, Beth. We had a strong finish to an incredibly strong year. Right off the bat, I'd like to thank the efforts of our hardworking and dedicated team, the best in all of travel and leisure. They have delivered results that consistently outperformed even my own high expectations. Our global portfolio is clearly firing on all cylinders, and I am very proud of what we've been able to accomplish together. We delivered another stellar quarter to close out a phenomenal year. In fact, this was our 7th consecutive quarter achieving record revenues alongside favorable forward indicators like record booking trends and record customer deposits, indicating a continuation of the strong momentum we've been experiencing for the last 2 years. Q4 net income improved by over $250 million year over year, coming in over $125 million better than expected.

Speaker Change: We had a.

Speaker Change: A strong finish to an incredibly strong year and right off the bat I'd like to thank the efforts of our hardworking and dedicated team the best in all of travel and leisure. They have delivered results that consistently outperformed even my own high expectations, our global portfolio.

Speaker Change: <unk> is clearly firing on all cylinders.

Speaker Change: I'm very proud of what we've been able to accomplish together.

Speaker Change: We delivered another stellar quarter to close out a phenomenal year.

Speaker Change: In fact, this was our seventh consecutive quarter, achieving record revenues alongside favorable forward indicators like record booking trends and record customer deposits, indicating a continuation of the strong momentum we've been experiencing for the last two years.

Speaker Change: Fourth quarter net income improved by over $250 million year over year coming in over $125 million better than expected.

Operator 2: The outperformance was up and down the P&L and driven by strong closing demand across the portfolio, which pushed yields, per diems, EBITDA, and operating income all to new highs this year. Full-year revenues hit an all-time high of $25 billion and produced all-time high cash from operations of almost $6 billion. Robust demand delivered a full-year 2024 yield increase of 11%, with the majority of the increase attributable to higher prices. Yields finished the year nearly 250 basis points better than our original guidance, driven by a strong demand environment that we elevated throughout the year. Encouragingly, this was broad-based. For 2024, prices were up in all of our major brands and trades between mid-single digit to mid-teen percentages. On top of this, onboard spending levels actually accelerated sequentially each quarter throughout the year.

Speaker Change: The outperformance was up and down the P&L and driven by strong close in demand across the portfolio, which pushed yields per dms EBITDA and operating income all to new highs this year.

Speaker Change: Full year revenues hit an all time high of $25 billion and produced all time high cash from operations of almost $6 billion.

Speaker Change: Robust demand delivered a full year 'twenty 'twenty four yield increase of 11% with the majority of the increase attributable to higher prices yields.

Speaker Change: Yields finished the year nearly 250 basis points better than our original guidance driven by a strong demand environment that we elevated throughout the year.

Speaker Change: Encouragingly. This was broad based for 'twenty 'twenty four prices were up in all of our major brands and trades between mid single digit to mid teen percentages.

And on top of this onboard spending levels actually accelerated sequentially each quarter throughout the year.

Operator 2: Additionally, unit cost came in 100 basis points better than our original guidance for the year, as we identified and executed upon additional cost-savings initiatives and saw the benefit of an easing inflationary environment. All of this translated to an additional $700 million pickup to the bottom line compared to our December guidance and step-change improvements in our 2 financial metrics that form part of our 2026 SEA Change targets, EBITDA per ALBD and ROIC. After just 1 year down with 2 to go, we're already over 80% of the way toward achieving both of these targets, calling for a 50% increase in EBITDA per ALBD from our 2023 starting point and ROIC of 12%, both of which would be the highest the company has seen in almost 20 years. With ROIC ending 2024 at 11%, comfortably above our cost of capital.

Speaker Change: Additionally unit costs came in 100 basis points better than our original guidance for the year as we identified and executed upon additional cost savings initiatives and saw the benefit of an easing inflationary environment.

Speaker Change: All of this translated to an additional $700 million pick up to the bottom line compared to our December guidance and step change improvements in our two financial metrics that form part of our 2026 C change targets EBITDA per a L B D and ROI see.

Speaker Change: After just one year down with two to go we're already over 80% of the way towards achieving both of these targets, calling for a 50% increase in EBITDA per a L. B D from our 2023 starting point.

Speaker Change: And ROIC of 12%.

Speaker Change: Both of which would be the highest the company has seen in almost 20 years.

Speaker Change: And with Rois see ending 'twenty 'twenty four at 11% comfortably above our cost of capital we are already delivering long term value for our shareholders. As we lay the foundation will build upon in 2020 five and beyond.

Josh Weinstein: We are already delivering long-term value for our shareholders as we lay the foundation we'll build upon in 2025 and beyond. At the outset, and with about two-thirds of the year already on the books, 2025 is shaping up to be another banner year, with yield growth exceeding 4%, far outpacing historical growth rates, and again exceeding unit cost growth, delivering more than $400 million incrementally to the bottom line. In fact, booking trends even accelerated during the quarter. Despite less inventory for sale as compared to same time last year, 2025 booking volumes over the quarter were actually higher year-on-year at higher prices for each quarter, including the period leading up to the election. Booking volumes for 2026 also continue to break records, reflecting sustained demand even for further out sailings. The ongoing strength in demand reinforced our record-breaking book position.

Speaker Change: At the outset and with about two thirds of the year already on the books 20 twenty-five is shaping up to be another banner year with yield growth exceeding 4% far outpacing historical growth rates and again exceeding unit cost growth delivering more than $400 million incrementally.

Speaker Change: <unk> to the bottom line.

Speaker Change: In fact booking trends even accelerated during the quarter.

Speaker Change: Despite less inventory for sale as compared to same time last year 'twenty twenty-five booking volumes over the quarter were actually higher year on year at higher prices for each quarter, including the period, leading up to the election book.

Speaker Change: Booking volumes for 2026 also continue to break records, reflecting sustained demand even for further out sailings.

Speaker Change: The ongoing strength and demand reinforced our record breaking book position.

Josh Weinstein: Both price and occupancy are higher for each of the 4 quarters of 2025. We managed to increase both our price and occupancy advantage for our 2025 book position, thanks to our outstanding efforts this past quarter. I can actually now report that our North American and European segments are each at their longest advanced booking windows on record. All core deployments are also better booked at higher prices than the record levels we achieved at the same time last year. With a good amount less inventory to sell for 2025, I cannot stress enough to our customers and trade partners that if you want to sail with us this year, book now while there's still space available. Keep in mind, our 2024 results and book position for future sailings are being driven by improved operational execution across our brands and are essentially on a same-ship basis.

Speaker Change: Both price and occupancy are higher for each of the four quarters of 2025, and we managed to increase both our price and occupancy advantage for our 20th twenty-five book position. Thanks to our outstanding efforts this past quarter I.

I can actually now report that our North American and European segments are each at their longest advanced booking windows on record.

Speaker Change: All core deployments are also better booked at higher prices than the record levels. We achieved at the same time last year, so with a good amount less inventory to sell for 2025, I cannot stress enough to our customers and trade partners that if you wanted to sell with US This year book now.

Speaker Change: While there is still space available.

And keep in mind, our 'twenty 'twenty four results and book position for future sailings are being driven by improved operational execution across our brands and are essentially on the same ship basis now don't get me wrong, New ships are great. In fact, we welcomed three amazing news.

Josh Weinstein: Now, don't get me wrong, new ships are great. In fact, we welcomed 3 amazing new ships in 2024. Carnival Jubilee, the third of 5 Excel-class vessels for Carnival Cruise Line, is proudly sailing out of the great state of Texas. Sun Princess Cruises' next-generation flagship, was just awarded Condé Nast Traveler's 2024 Megaship of the Year, beating out all other megaships that entered service this year. Last but not least came the spectacular Queen Anne, Cunard's first ship in 14 years and a beautiful addition to Queen Victoria, Queen Elizabeth, and the venerable Queen Mary 2. While new ships do command a nice premium, the vast majority of our yield growth was driven by fundamental demand improvements for the existing ships across our portfolio of world-class brands. Even excluding our new builds, 2024's yields were still up almost 10% over 2023.

Speaker Change: <unk> and 'twenty 'twenty four.

Speaker Change: Carnival Jubilee the third of five X L class vessels for Carnival cruise line.

Speaker Change: Proudly sailing out of the great State of Texas, Some Princess Princess Cruises next generation flagship was just awarded <unk> Nast travellers 'twenty 'twenty four mega ship of the year, beating out all other mega ships that entered service this year.

Speaker Change: And last but not least came the spectacular Queen Anne Qunar. Its first ship in 14 years and a beautiful addition to Queen Victoria, Queen Elizabeth and the Venerable Queen Mary two.

Speaker Change: While new ships do command a nice premium the vast majority of our yield growth was driven by fundamental demand improvements for the existing ships across our portfolio of world class brands, even excluding our new builds.

<unk> 20th fours yields were still up almost 10% over 2023 that's because we're achieving demand growth well above our modest supply pipeline through ground up efforts to improve execution across the commercial space, we've been investing in both talent and tools honing in on.

Josh Weinstein: That's because we're achieving demand growth well above our modest supply pipeline through ground-up efforts to improve execution across the commercial space. We've been investing in both talent and tools, honing in on each of our brands' unique target markets, crafting marketing campaigns that speak directly to them, and in the most effective forums. We're successfully enticing new cruise guests away from land-based alternatives. In fact, both new-to-cruise and repeat guests were each up double-digit percentages this past year. At the same time, our marketing efforts are continuing to deliver growth in web visits, natural and paid search that far outpace our limited capacity growth, keeping the pipeline of new demand full. Simultaneously with augmenting our performance from top-of-funnel consideration to closing the deal and generating the bookings, we've been sharpening our yield management techniques to optimize our booking curves and drive ticket prices and onboard spending higher.

Speaker Change: Each of our brand's unique target markets crafting marketing campaigns that speak directly to them and in the most effective forums, where success really enticing new cruise gas away from land based alternatives.

Speaker Change: Fact, both new to cruise and repeat guests were each up double digit percentages this past year.

At the same time.

Speaker Change: Our marketing efforts are continuing to deliver growth and web visits.

Speaker Change: Natural and paid search that far outpace our limited capacity growth keeping the pipeline of new demand full simultaneously with augmenting our performance from top of funnel consideration.

Speaker Change: The closing of the deal and generating the bookings we've been sharpening our yield management techniques to optimize our booking curves and drive ticket prices in onboard spending higher.

Josh Weinstein: While all of these efforts are already in flight and clearly working, we have even more in store to continue the momentum. We're launching new marketing campaigns across all our brands. Princess, Cunard, and Seabourn have already debuted spectacular new creatives this month. In Princess' case, its fresh take on its incomparable "Love Boat" theme, featuring Hannah Waddingham of "Ted Lasso" fame, already helped to produce record booking volumes for the Black Friday through Cyber Monday period. Stay tuned for new campaigns from AIDA, Carnival, Costa, Holland America, and P&O Cruises in the UK, all launching shortly to coincide with wave season, our peak booking period. We're aggressively working to increase awareness and consideration for cruise travel globally.

Speaker Change: While all of these efforts are already in flight and clearly working we have even more in store to continue the momentum.

Speaker Change: We're launching new marketing campaigns across all of our brands Princess Cunard and seaborne have already debuted spectacular new creators. This month in princesses case, it's fresh take on its incomparable love boat theme, featuring Hana wanting them of Ted lots of fans already helped to produce record book.

Speaker Change: Volumes for the Black Friday through cyber Monday period, and stay tuned for new campaigns from Aida Carnival, Costa Holland America M. P. N O cruises in the U K all launching shortly to coincide with wave season, our peak booking period, we're aggressively working to increase awareness and.

Speaker Change: Consideration for cruise travel globally.

Josh Weinstein: We're also actively working on an enhanced destination strategy to provide guests with yet another reason to take a cruise vacation with us, and that is sure to help us continue to excel. While we retain, by far, the largest footprint in the Caribbean with six owned and operated destinations that captured 6.5 million guest visits in 2024, we believe we have a meaningful opportunity to expand and capitalize on this strategic advantage. These destinations are amongst our highest-rated guest experiences today, and we have plans to lean into these assets even further. While historically, the marketing of our own assets have really focused on the ships, we have untapped potential to create demand for these amazing destination experiences. I have never been more excited about these prospects as we begin to unfold this multi-year strategy with the opening of Celebration Key in just about six months.

Speaker Change: We're also actively working on an enhanced destination strategy to provide guests with yet another reason to take a cruise vacation with us and that is sure to help us continue to excel.

Speaker Change: While we retained by far the largest footprint in the Caribbean with six owned and operated destinations that captured six and a half a million guest visits in 'twenty 'twenty. Four we believe we have a meaningful opportunity to expand and capitalize on this strategic advantage.

Speaker Change: These destinations are amongst our highest rated guest experiences today and.

Speaker Change: And we have plans to lean into these assets even further.

Speaker Change: While historically the marketing of our own assets have really focused on the ships, we have untapped potential to create demand for these amazing destination experiences.

Speaker Change: I have never been more excited about these prospects as we begin to unfold. This multi year strategy with the opening of celebration key in just about six months.

Josh Weinstein: This will be by far our largest and most Carnival-centric destination in our portfolio, with five awesome portals built for fun, from family-friendly to exclusive beach club experiences. Not only will Celebration Key be the closest destination in our portfolio, saving fuel costs and reducing greenhouse gas emissions, the only way you can get to Celebration Key is on one of our cruises. Moreover, we just recently announced a change that signals more about the shift in our destination asset strategy. Half Moon Cay, the highly rated and award-winning exclusive Bahamian destination known for beautiful beaches and crystal clear waters, is being renamed RelaxAway, Half Moon Cay to better reflect the experience guests can expect as they are immersed in this tropical paradise.

Speaker Change: This will be by far our largest and most carnival centric destination in our portfolio with five awesome portals built for fun.

Speaker Change: Family friendly to exclusive Beach club experiences now.

Speaker Change: Not only will celebration key be the closest destination in our portfolio saving fuel costs and reducing greenhouse gas emissions. The only way you can get the celebration key is not one of our cruises.

Speaker Change: Moreover, we just recently announced a change that signals more about this shift in our destination asset strategy half Moon Cay, the highly rated and award winning exclusive Bahamian destination known for beautiful beaches, and Crystal clear waters is being renamed relax away.

Monkey to better reflect the experience guests can expect as they are immersed in this tropical Paradise enhancements will include an expanded beachfront experience lunch venues a variety of bars and other features created with intentionality to reinforce this destination.

Josh Weinstein: Enhancements will include an expanded beachfront experience, lunch venues, a variety of bars, and other features created with intentionality to reinforce this destination's natural beauty and pristine appeal. Ready in summer of 2026, a newly constructed pier on the north side will allow two ships to dock, including Carnival's Excel-class ships that will be able to visit the private island for the first time. We'll be positioning these jewels of the Caribbean with consumers in a way that will encourage guests to actively seek out these specific destinations offered exclusively by our brands. Many of Carnival Cruise Line itineraries will feature both RelaxAway, Half Moon Cay and Celebration Key, providing guests with complimentary experiences enjoying both the idyllic and the ultimate beach days. We believe developing and promoting these unique assets will help us cast the net wider and capture even more new-to-cruise demand.

Speaker Change: Natural beauty and pristine appeal.

Ready in summer of 2026.

Speaker Change: Newly constructed peer on the north side will allow two ships to dock, including carnivals XL class ships that will be able to visit the private island for the first time.

Speaker Change: We'll be positioning these jewels of the Caribbean with consumers in a way that will encourage guests to actively seek out. These specific destinations offered exclusively by our brands and many of Carnival cruise lines itineraries will feature both relax away half Moon Cay.

Speaker Change: And celebration key providing guests with complementary experiences enjoying both the idyllic Andy Ultimate Beach days.

Speaker Change: We believe developing and promoting these unique assets will help us cast the net wider and capture even more new to cruise demand were already in flight with preparation for branding and marketing campaigns for these amazing destinations with more to come in the future.

Josh Weinstein: We're already in flight with preparation for branding and marketing campaigns for these amazing destinations, with more to come in the future. As it is, for 2025, we expect to hit our 2026 EBITDA per ALBD target a full year early while raising ROIC to just shy of our 12% 2026 target. Considering all the progress we've made without this in place, it's clear we have a tremendous amount of headroom remaining to create more demand, to cultivate more guest loyalty, and capture more pricing for the incredible ship and shoreside experiences we provide our guests. At the same time, we're making meaningful progress on the sustainability front. We achieved about 17.5% reduction in greenhouse gas emissions intensity versus 2019, on track to achieve our target of 20% by the end of 2026, a goal that was previously pulled forward by four years.

Speaker Change: As it is for 2025, we expect to hit our 2026 EBITDA per a L. B D target a full year early while raising Rois C to just shy of our 12% 20 twenty-six target.

Speaker Change: So considering all the progress we've made without this in place. It's clear we have a tremendous amount of headroom remaining to create more demand to cultivate more guest loyalty and capture more pricing for the incredible ship and shore side experiences we provide our guests.

Speaker Change: At the same time, we're making meaningful progress on the sustainability front we.

Speaker Change: We achieved about 17, and a 5% reduction in greenhouse gas emissions intensity versus 2019 on track to achieve our target of 20% by the end of 'twenty twenty-six a goal that was previously pulled forward by four years improve.

Josh Weinstein: Improvement hasn't just been in emission intensity levels. Despite the fact that we're over 9% larger than we were in 2019, we have actually lowered our absolute greenhouse gas emissions by almost 10% over this time. Of course, we're also making huge strides on rebuilding our financial fortress. In under 2 years, we have paid down over $8 billion of debt off our peak and significantly reduced interest expense, which, coupled with our improving EBITDA, has improved our leverage metrics tremendously. Our current 2025 guidance will put us at 3.8x net debt to EBITDA, closing in on our expectation to reach investment-grade leverage metrics in 2026. Again, thank you so much to each of our team members who have delivered a step-change improvement in 2024 and set us up for a fantastic 2025 and beyond.

Speaker Change: Improvement Hasnt just been in emission intensity levels. Despite.

Speaker Change: Despite the fact that we're over 9% larger than we were in 2019, we've actually lowered our absolute greenhouse gas emissions by almost 10% over this time.

Speaker Change: And of course, we're also making huge strides in rebuilding our financial fortress.

Speaker Change: In under two years, we've paid down over $8 billion of debt off our peak and significantly reduced interest expense, which coupled with our improving EBITDA has improved our leverage metrics tremendously.

Speaker Change: Our current 2025 guidance will put us at three eight times net debt to EBITDA.

Speaker Change: Closing in on our expectation to reach investment grade leverage metrics in 2026.

Speaker Change: Again.

Speaker Change: Thank you so much to each of our team members, who have delivered a step change improvement in 'twenty 'twenty, four and set us up for a fantastic 2025 and beyond.

Josh Weinstein: As has always been the case and always will be, thank you so much to our travel agent partners who have contributed immensely to this success. We also appreciate the support we've received from our loyal guests, investors, destination partners, and other stakeholders. Let's not forget, these efforts were really all about the main thing, delivering unforgettable happiness to over 13.5 million people in 2024 by providing them with extraordinary cruise vacations while honoring the integrity of every ocean we sail, place we visit, and life we touch. With that, I'll turn the call over to David.

Speaker Change: And as has always been the case and always will be thank you. So much to our travel agent partners, who have contributed immensely to this success. We also appreciate the support we've received from our loyal guests investors destination partners and other stakeholders.

Speaker Change: And let's not forget.

Speaker Change: These efforts were really all about the main thing delivering unforgettable happiness to over 13, and a half million people in 2024 by providing them with extraordinary cruise vacations, while honoring the integrity of every ocean. We sell places we visit and life we touch.

David: With that I'll turn the call over to David.

David Bernstein: Thank you, Josh. I'll start today with a summary of our Q4 2024 results. I will provide an update on our refinancing and deleveraging efforts. I'll finish up with some color on our 2025 full-year December guidance. Turn to the summary of our Q4 results. Net income exceeded September guidance by $126 million as we outperformed once again. The outperformance was essentially driven by three things. First, favorability in revenue worth $77 million as yields came in up 6.7% compared to the prior year. This was 1.7 points better than September guidance, driven by close-in strength in ticket prices as well as strong onboard spending. Second, cruise costs without fuel per available lower berth day, or ALBD, came in up 7.4% compared to the prior year. This was six tenths of a point better than September guidance, which was worth $13 million.

David: Thank you Josh I'll start today with a summary of our 2024 fourth quarter results next I will provide an update on our refinancing and deleveraging efforts.

David: And then I'll finish up with some color on our 2025 full year December guidance.

David: Let's turn to the summary of our fourth quarter results.

David: Net income exceeded September guidance by $126 million as we outperformed once again, the outperformance was essentially driven by three things.

David: First favorability in revenue were 77 million as yields came in up six 7% compared to the prior year. This was 1.7 points better than September guidance, driven by close in strength in ticket prices as well as strong onboard spending.

David: Second cruise costs without fuel per available lower birthday, or a L. E D 2 million up seven 4% compared to the prior year. This was six tenths of a point better than September guidance, which was worth $13 million and third favorability in interest expense.

David Bernstein: Third, favorability in interest expense, other income and expense, and tax expense, all of which were partially offset by higher fuel prices, netted to a $38 million improvement. Per diems for the Q4 improved over 5% versus the prior year, which I would remind you were up over 10% last year, with improvements on both sides of the Atlantic, driven by higher ticket prices and improved onboard spending. Strong demand allowed us to once again report records, delivering Q4 record revenues, record yields, record per diems, record adjusted EBITDA, and record customer deposits. Next, I will provide an update of our refinancing and deleveraging efforts. Our full-year 2024 yield improvement of 11% was over 3 times our 3.5% cost increase. This drove improved margins and cash flow, which resulted in a strong EBITDA of $6.1 billion and cash from operations of about $6 billion.

David: Other income and expense and tax expense all of which were partially offset by higher fuel prices.

David: Added to a 38 million dollar improvement.

David: Premiums for the fourth quarter improved over 5% versus the prior year, which I would remind you we're up over 10% last year with improvements on both sides of the Atlantic driven by higher ticket prices and improved the onboard spending.

David: Strong demand allowed us to once again report records delivering fourth quarter record revenues record yields record per Dms record adjusted EBITDA and record customer deposits.

David: Next I will provide an update about refinancing and deleveraging efforts.

David: Our full year 2020 for yield improvement of 11% was over three times or 3.5% cost increase.

David: This drove improved margins and cash flow, which resulted in a strong EBITDA of $6 1 billion in cash from operations of about 6 billion.

David Bernstein: All of this propelled us on our journey to pay down debt and proactively manage our debt profile. During 2024, we made debt payments of over $5 billion, which included opportunistically prepaying over $3 billion of debt, reducing secure debt, removing the secured second lien layer from our capital structure, and paying off some of our more expensive debt. We ended 2024 with $27.5 billion of debt, over $8 billion off the January 2023 peak. Our leverage metrics continued to improve in 2024 as our EBITDA continued to grow and our debt levels continued to shrink. We achieved a 4.3x net debt to EBITDA ratio, nearly a 2.5 turn improvement from 2023, positioning us 3/4 of the way down the path to investment-grade leverage metrics in just 1 year.

David: All of this propelled us on their journey to pay down debt and proactively manage our debt profile.

David: 'twenty 'twenty four we made debt payments of Gulf of $5 billion, which included Opportunistically prepaying over 3 billion of debt ridden.

David: Using secured debt.

Moving the secured second lien layer from our capital structure and paying off some of them more expensive debt.

David: We ended 2024 with 27 and a half billion of debt over 8 billion at the January 2023 peak.

David: Our leverage metrics continued to improve in 2024, as our EBITDA continue to grow and our debt levels continue to shrink.

David: We achieved a 4.3 times net debt to EBITDA ratio nearly a two and a half turn improvement from 'twenty to 'twenty three positioning US reports the way down the path to investment grade leverage metrics in just one year with.

David Bernstein: With the benefit of well-managed near-term maturity towers and improved leverage metrics, we expect to opportunistically capitalize on improved interest rates while proactively managing our maturity towers for 2027 and beyond with various refinancings. I'll finish up with some color on our 2025 full-year December guidance. On top of 2024's 11% yield growth, we are expecting to deliver strong 2025 yield improvement with our guidance forecasting an increase of approximately 4.2%, worth over $0.60 per share when compared to 2024. The strong improvement in 2025 yields is a result of an increase in higher ticket prices, higher onboard spending, and to a lesser degree, higher occupancy, with all three components improving on both sides of the Atlantic. We are well-positioned to drive 2025 ticket pricing higher, with significantly less inventory remaining to sell than the same time last year. Turning to costs.

David: With demand up there that well manage near term maturity towers and improved leverage metrics, we expect to opportunistically capitalize on improved interest rates, while proactively managing our maturity towers for 2027 M beyond with various refinancings.

David: Now I'll finish up with some color on our 2025 full year December guidance on.

David: On top of 2024 is 11% yield growth, we are expecting to deliver strong 2025 yield improvement with our guidance forecasting an increase of approximately 4.2% worth over 60 cents per share when compare to 2024.

David: The strong improvement in 2025 yields as a result of an increase in higher ticket prices higher onboard spending and to a lesser degree higher occupancy with all three components improving on both sides of the Atlantic.

David: We are well positioned to drive 20, twenty-five ticket pricing higher which significantly less inventory remaining to sell than the same time last year.

David: Now turning to costs.

David Bernstein: Cruise costs without fuel per ALBD is expected to be up approximately 3.7%, costing $0.28 per share for 2025 versus 2024. We are looking forward to the introduction of our game-changing exclusive Bahamian destination, Celebration Key, in July 2025. We anticipate that Celebration Key will be a smash hit with our guests and provide an excellent return on our investment. However, operating expenses for the destination will impact our overall year-over-year cost comparisons by about half a point. In 2025, we are expecting 687 dry dock days, an increase of 17% versus 2024, which will also impact our overall year-over-year cost comparisons by about three-quarters of a point. In 2024, there were several one-time items that we benefited from impacting our overall year-over-year cost comparisons by about a quarter of a point.

David: Cruise costs without fuel per a L. B D is expected to be up approximately 3.7% costing 28 cents per share for 2025 versus 2024.

David: We are looking forward to the introduction of our game changing exclusive Bahamian destination celebration K in July 2025.

David: We anticipate that celebration K will be a smash hit with our guests and provide an excellent return on our investment.

David: However, operating expenses for the destination will impact our overall year over year cost comparisons by about half a point.

David: In 2025, we are expecting 687, Drydock days, an increase of 17% versus 2024, which will also impact our overall year over year cost comparison by about three quarters of a point.

David: In 2024, there were several onetime items that we benefited from impacting our overall year over year cost comparisons by about a quarter of a point.

David Bernstein: The remaining 2.2-point increase in cruise costs are driven by inflation and higher advertising expense, partially offset by efficiency initiatives and further leveraging our industry-leading scale. An increase in depreciation expense and lower interest income is partially offset by an improvement in interest expense from our refinancing and deleveraging efforts for a net impact of $0.04 per share. The net impact of fuel price and currency is expected to favorably impact 2025 by approximately $0.04 per share, with fuel prices favorable by approximately $0.09 per share, while the change in foreign currency exchange rates goes the other way by $0.05 per share. Let's not forget that the European Union Allowance, or EUA regulation in 2025 increases to 70% of carbon emissions from 40% in 2024.

David: The remaining 2.2 point increase in cruise costs are driven by inflation and higher advertising expense, partially offset by efficiency initiatives and further leveraging our industry leading scale.

David: An increase in depreciation expense and lower interest income is partially offset by an improvement in interest expense from our refinancing and deleveraging efforts for a net impact of four cents per share.

David: The net impact of fuel pricing currency is expected to favorably impact 2000, Twenty's high by approximately four cents per share with fuel prices favorable by approximately nine cents per share while the change in foreign currency exchange rate goes the other way by five cents per share.

David: Yeah.

David: Let's not forget that the European Union allowance or EUA regulation in 2025 increases to 70% of carbon emissions from 40% in 2024.

David Bernstein: As a result, we would expect the impact of higher EUA costs on our year-over-year fuel expense to be about $0.03 per share. In summary, putting all these factors together, our net income guidance for full-year 2025 is over $2.3 billion, an improvement of more than $400 million versus 2024 or $0.28 per share. Robust demand for our brands and continued operational execution is driving our strong financial results, along with our increased confidence in achieving investment-grade leverage metrics during the next couple of years as we move further down the road rebuilding our financial fortress while continuing the process of transferring value from debt holders back to shareholders. Now, operator, let's open the call for questions.

David: As a result, we would expect the impact of higher EUA costs on a year over year fuel expense to be about three cents per share.

David: In summary.

David: All these factors together, our net income guidance for full year 2025 is over $2 3 billion, an improvement of more than 400 million versus 2024 or 28 cents per share.

David: Robust demand for our brands and continued operational execution is driving our strong financial results along with our increased confidence in achieving investment grade leverage metrics. During the next couple of years as we move further down the road rebuilding our financial fortress.

David: While continuing the process of transferring value from debt holders back to shareholders.

David: Now operator, let's open the call for questions.

Operator 1: Certainly. We'll now be conducting a question-and-answer session. If you'd like to be placed into question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. As a reminder, please ask 1 question, 1 follow-up, then return to the queue. Our first question today is coming from Matthew Boss from JPMorgan. Your line is now live.

Speaker Change: Certainly what I'll be conducting a question and answer session.

Speaker Change: It can be placed in the question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if he'd like to remove your question from the queue and as a reminder, please ask one question one follow up then return to the queue.

Speaker Change: First question today is coming from Matthew boss from Jpmorgan. Your line is now live.

Matthew Boss: Great, thanks. Congrats on another great quarter.

Matthew Boss: Great Thanks, and congrats on another great quarter.

Josh Weinstein: Thank you very much, Matt.

Speaker Change: Thank you very much Matt.

Matthew Boss: Josh, could you elaborate on the foundation that you've laid over the last two years, which you think has positioned you and the company to capitalize on the current demand that you're seeing? With 2025 shaping up to be another banner year, could you speak to initiatives across the organization to take share, optimize yields, and drive onboard spending in 2025 and beyond?

Speaker Change: Josh could you elaborate on the foundation that you've laid over the last two years, what do you think its position in the company to capitalize on the current demand that youre seeing and with 25 shaping up to be another banner year could you speak to initiatives across the organization to take share optimize yields and drive onboard spending in 'twenty five and <unk>.

Speaker Change: John.

Josh Weinstein: Thanks for the question, Matt. I guess if we look back at the last 2 years, probably the biggest thing was just doing a bit of restructuring, as we talked about in the past, and getting the right leaders in place, leading the brands. Those leaders are a fantastic group of people leading fantastic brands. On the commercial focus side, which we've been talking about for the last few years, it is scrutiny and expectations around how we're improving in the revenue management space, in the marketing space, consideration set, and top-of-funnel stuff, all the way down to closing the bookings. The amount of advertising that we've ramped up really just to get us closer to where the rest of the market is, I think is helping to pay dividends. Everything from making sure our brands have great relationships with the trade to investing in our own capabilities.

Speaker Change: Yeah. Thanks, Thanks for the question Matt.

Speaker Change: I guess, if we look back at the last two years.

Speaker Change: Probably the biggest thing was was just doing a bit of restructuring as we've talked about in the past and getting the right leaders in place leading leading the brands and those leaders are a fantastic group of people leading fantastic brands.

Speaker Change: On the call.

Speaker Change: On the commercial focus side, which we've been talking about for the last few years right. It is it is scrutiny and expectations around how we're improving the revenue management space in the marketing space consideration set top of funnel stuff all the way down to closing the bookings.

Speaker Change: The amount of advertising that we've ramped up really just to get us closer to where the.

Speaker Change: The rest of the market is I think is helping to pay to pay dividends.

Speaker Change: Everything from making sure our brands have great relationships with the trade to investing in our own capabilities.

Josh Weinstein: Probably the last thing about the foundation would be the portfolio management. We've been actively managing the portfolio and allocating ships differently, moving vessels, winding up a brand in the case of P&O Australia. I think it's setting ourselves up to really put the assets where the highest returns are in the immediate term and the medium term, while we help all the brands who aren't yet where I think they should be, get to those levels. With respect to 2025, and what are the things that we've got that are going to continue our progress? At a base level, it's a continuation of all those things in the commercial space and having those great brand leaders really lean in even further. We're investing in our people.

Speaker Change: Probably the last thing about the foundation would be.

Speaker Change: The portfolio management.

Speaker Change: Been actively managing the portfolio and.

Speaker Change: Allocating ships differently moving vessels.

Speaker Change: Going up a brand in the case of PNR Australia.

Speaker Change: It's setting ourselves up to really put the assets where the highest returns are in the immediate term intermediate term, while we help all the brands, who aren't yet where I think they should be.

Speaker Change: Get to those levels so.

Speaker Change: With respect to 2025 and what are the things that we've got that are going to continue our progress.

Speaker Change: At a base level, it's a continuation of all of those things in the commercial space and having those great brand leaders really lean in even further.

Josh Weinstein: We're investing in our tools, our revenue management tools, to make sure that we are utilizing the technology effectively to optimize the yields. The destination strategy that you already heard in the prepared remarks, I think that's going to be a tailwind that continues for a really long time, and we're really looking forward to that. As far as the OBR onboard spending, we've got runway there, and we've got a good amount of runway to continue the progress we've been making around pulling forward the spend, which, as everybody knows, opens up the second wallet. The more people spend before they get on the cruise, the more they spend on the cruise. Our brands are, again, working hard to continue that, and we're nowhere near what the cap could be on those types of efforts. I'm pretty enthusiastic, as you can probably tell.

Speaker Change: Vesting in our people we are investing in our tools our revenue management tools to make sure that we are utilizing the technology effectively to optimize the yields.

Speaker Change: Restoration strategy that you already heard in the prepared remarks, I think that's going to be a tailwind that continues for a really long time, and we're really looking forward to that as far as the Ob are onboard spending.

Speaker Change: We've got runway there I mean, we've got a good amount of runway to continue the progress we've been making around pulling forward the spend which as everybody knows opens up the second wallet and the more people spend before they get on the cruise or more of their spend on the cruise.

Speaker Change: So our brands are again working hard to continue that and we're nowhere near what the cap could be on those types of efforts.

Speaker Change: I'm pretty enthusiastic as you could probably tell.

Matthew Boss: I can tell. David, maybe just quick, if you could just break down net cruise cost, ex-fuel components and that 3.7 for this year. I think more so, help us to think about maybe a reasonable spread between yields and cruise costs multi-year, if there's maybe a back-of-the-envelope rule of thumb multi-year.

Speaker Change: I can tell I can tell and then David maybe just quick if you could just break down net cruise cost ex fuel components in that $3 seven for this year, but I think more so how best to think about maybe a reasonable spread between yields and cruise costs multiyear if there's maybe a back of the envelope rule of thumb multiyear yes.

David Bernstein: Yeah. I did in my notes talk about the 3 7 because just briefly, the expenses relating to Celebration Key were a half a point. Increase in dry dock days was three-quarters of a point. I also said about a quarter of a point was the.

Speaker Change: Yes, so I I did in my mind notes talk about the $3 seven because it just briefly at the expenses relating to celebration key were a half a point.

The increase in dry dock days was three quarters of a point I also said about a quarter of a point was the.

David Bernstein: One-time items that we benefited from in 2024. The remaining 2.2 points really was a combination of inflation and higher advertising that Josh mentioned, partially offset by efficiency initiatives and other leveraging our scale throughout the company. Those are really the 4 key components that make up the 3.7. As far as the difference, I don't think there's any rule of thumb here. I really do believe we can continue. As you saw in 2024, it was 3 times, but that was a recovery story. Our guidance has a 0.5 point difference between a yield improvement and a cost improvement. Keep in mind that a point a yield is worth almost double what a point of cost is. There is leverage there in and of itself. We will work hard to continue to maintain our cost consciousness.

Speaker Change: One time items that we benefited from in 2024, and then the remaining 2.2 points really was a combination of.

Speaker Change: Inflation and higher advertising that Josh mentioned.

Speaker Change: Partially offset by efficiency initiatives and other leveraging our scale throughout the company. So those are really the four key components that make up the three seven.

Speaker Change: As far as the difference you know I don't think there's any rule of thumb here I really do believe we can you know.

Can you as you saw.

'twenty 'twenty four it was three times, but that was a recovery story.

Speaker Change: Our guidance has a half a point difference between the yield improvement.

Speaker Change: And our cost improvement and keep in mind that a point of yield is worth almost double what our point of cost is.

Speaker Change: So there is leverage there isn't enough of it.

But we will work hard to continue to maintain our cost consciousness and as Josh talked about.

David Bernstein: As Josh talked about, all the things we're investing in advertising and revenue management should help drive yields higher over time, as well as the destination strategy. We do expect to see a continued improvement in margin.

Speaker Change: The things, we're investing in advertising and revenue management should help drive yields higher over time as well as the destination strategy. So we do expect to see a continued improvement in margins.

Matthew Boss: Great color. Best of luck.

Speaker Change: Great color best of luck.

Operator 1: Thank you. Next question is coming from Ben Chaiken from Mizuho Securities. Your line is now live.

Speaker Change: Thank you next question is coming from Ben Chaiken from Mizuho Securities. Your line is that a lot.

Ben Chaiken: Hey, thanks for taking my questions. Celebration Key looks pretty exciting opening up later this summer. Where do you think you are in the customer awareness of this product? Do you think it's well understood, appreciated by customers, or is that marketing and awareness still ramping? I have one follow-up. Thanks.

Ben Chaiken: Hey, Thanks for taking my questions.

Ben Chaiken: Celebration keel, it's pretty exciting opening up later this summer where do you think you are in the customer awareness of this product or do you think it's well understood or appreciated by customers or is it still or is that marketing kind of like and then an awareness still ramping and then I have one follow up thanks.

Josh Weinstein: Sure. Thanks, Ben. Definitely still ramping. It doesn't exist yet. We are definitely building momentum there. We're building excitement. We're getting the response that we expected with respect to how the bookings are shaping up, which is good to see. It's still early days. I think the really exciting part is once we're in there really operating and having guests enjoy these experiences and optimizing what we do and how we do it takes off from there because right now it's make-believe. We got to let everything get in place, and then I think it'll help tremendously.

Speaker Change: Thanks, Matt definitely still still ramping I mean, it doesn't exist yet.

Speaker Change: So we are definitely building momentum there we're building excitement we're getting.

Speaker Change: The response that we expected with respect to how the bookings are shaping up which is good to see but it's still early days I think the really exciting part is once were once we're in there are really operating and having guests enjoy these experiences in optimizing what we do and how we do it.

Speaker Change: It takes off from there because right now to make believe so we've got a we've got to let everything.

Speaker Change: Get in place and then I think it will help tremendously.

Ben Chaiken: Got it. Understood. In the release and call transcript, you referenced an enhanced destination strategy. Can we open this up a little bit? Does this refer to Celebration Key or was this a little bit of a teaser to additional opportunities to prod guests with differentiated Carnival-owned operated destinations? I know you mentioned a pier at Half Moon Cay, I believe. Just trying to understand the magnitude and direction of the strategy. Thanks.

Got it understood and then and then in the release and call.

Speaker Change: Script, you referenced an enhanced destination strategy.

Speaker Change: Can we open this up a little bit does this refer to celebration key or was this a little bit of a teaser to an additional traditional opportunities to provide guests with differentiated carnival owned operated destination. I know you mentioned appear at half Moon Cay I believe I'm, just trying to understand the magnitude and direction of the strategy. Thanks.

Josh Weinstein: Yeah. Let's take a step back from any one particular destination. I think what I've seen for a long time now, for several years, that I think some are doing better than others and better than us, is turning their own destinations into something that not only guests, but non-cruisers look at and decide, That's going to help tilt my vacation decision to take a cruise because the destination itself looks amazing, is an amazing experience, and I can only do it on a cruise. We have not historically, I think, done a good enough job in raising the level of awareness on the amazing destinations that we have and that are in the pipeline. When it comes to Celebration Key, we're getting a head start because we're doing it before the location exists.

So, let's take a step back from any one particular destination I think.

<unk> seen for a long time now for several years and I think some are doing better than others and better than us is turning their own destinations into something that not only gas, but non cruisers look at and decide that's going to help tilt my vacation decision to take a cruise because the destination itself looks at.

Amazing is an amazing experience and I can only do it on a cruise and we have not historically I think done a good enough job in raising the level of awareness on the amazing destinations that we have and that are in the pipeline. So when it comes to celebration key we're getting a head start because were doing it before the the location exists.

Josh Weinstein: When you think about the change to RelaxAway for Half Moon Cay, it is beautiful. It is one of the most stunning destinations in the world. Yet, if you're not a cruiser, you don't know anything about it. You're not looking for it. We're going to change that dynamic. With RelaxAway, what we're trying to convey to people who don't cruise is really the vibe of the experience that they can get. The great thing about it is we're leaning into that natural beauty, which is going to be different from Celebration Key. Celebration Key, as we said, that is the ultimate beach day. Right? RelaxAway is all about the idyllic. It's being in a tropical paradise, and we're going to be able to marry those two things together.

Speaker Change: When you think about the change to relax away for half Moon Cay.

It is beautiful it is one of the most stunning destinations in the world and yet if you're not a cruiser you don't know anything about it youre not looking for it.

And we're going to change that dynamic and with relax away. What we're trying to convey to people who don't cruise is it's really the five of the experience that they can get and the great thing about it is we're leaning into that natural beauty, which is going to be different from celebration cake celebration key as we said that is the ultimate Beach day right.

Speaker Change: That's a way is all about the idea that it's being in a tropical paradise, and we're gonna be able to marry those two things together. So people on the same crews will be able to get both experiences that are very very different and exclusive to us and so we're going to raise our game there and there's more things that we can do without heavy investment with some of the destinations that we own.

Josh Weinstein: People on the same cruise will be able to get both experiences that are very different and exclusive to us. We're going to raise our game there. There's more things that we can do without heavy investment with some of the destinations that we own to make that part of that more exclusive collection. Early days, but we're pretty excited about it.

Speaker Change: Make that part of that more exclusive collection. So early days, but we're pretty excited about it.

Ben Chaiken: Very helpful. Thanks.

Speaker Change: Very helpful. Thanks.

Operator 1: Thank you. Next question is coming from Steve Wieczynski from Stifel. Your line is now live.

Speaker Change: Thank you next question is coming from Steve Rosinski from Stifel. Your line is now live.

Steve Wieczynski: Hey, guys. Good morning. Happy holidays to all you guys. Josh or David, if we think about the yield guidance for 2025, just based on the fact that you're two-thirds booked already for next year, it seems like you have strong pricing momentum across pretty much all your geographies. I know you'll hate that I say this, it seems like the 4% or approximate 4% yield guidance to us might end up being conservative when we have this same call a year from now. I guess the question is, can you give us a little color around the makeup of that yield forecast? It seems like you could be taking a conservative view around whether it's onboard trends, whether it's the close-in pricing opportunity.

Steve Rosinski: Yeah, Hey, guys good morning happy.

Speaker Change: Happy holidays to tell you guys.

Speaker Change: So Josh David if we think about the yield guidance for 2025.

Speaker Change: Just based on the fact that Europe, two thirds booked already for next year.

Seems like you have strong pricing momentum across pretty much all your geographies.

Speaker Change: No you'll hate that I'll say this but it seems like the 4% or approximately 4% yield guidance do you have to us might end up being conservative.

When we have the same call a year from now so I guess the question is can you give us a little color around the makeup of that yield forecast and maybe it doesn't seem like you could be taking a conservative view around.

Speaker Change: Whether it's onboard trends, whether it's the close in pricing opportunity.

Steve Wieczynski: If I ask that question another way, if we think about your initial yield guidance last year, which I think was 8.5%, and it ended up closer to about 11%, what did you guys underestimate for 2024? Thanks.

Speaker Change: And if I ask that question another way I mean, if we think about the your initial yield guidance last year, which I think was eight 5% and it ended up.

Speaker Change: Ended up closer to about 11% what did you guys underestimate for for 2024.

Josh Weinstein: Hey, Steve. Well, first of all, we were a little worried you weren't first in the queue, so we were going to literally call 911 to make sure you were okay. Glad to hear your voice.

Speaker Change: Well first of all we were a little worried you weren't first in the queue. So we're going to literally call nine one wanted to make sure you were you were okay.

Speaker Change: Glad to hear your voice.

Steve Wieczynski: All good.

Josh Weinstein: Good. Look, our goal is to give guidance based on what we know, and it's certainly something that we want to meet and obviously work hard to achieve. Last year, I meant what I said in my prepared remarks. I think it was a fantastic year by the whole team. That outperformance, I would argue, was pretty special. Also argue that 250 basis points of yield on top of a base of 8.5% proportionally is not 2.5% on top of 4.2%. We have a very good handle, I think, on where we are today, much more so than last year even because we're already back up in full at the full occupancy percentage, more or less, that we always get. If you remember, the H1 of the year was still a catch-up, which is why 5 points of our improvement in yields last year was occupancy.

Speaker Change: Good good good.

Speaker Change: Look our goal is to give guidance based on what we know.

Speaker Change: And it's certainly something that we want to meet and obviously work hard to exceed.

Speaker Change: Last year I meant what I said in my prepared remarks, I think it was a fantastic year by the whole team that outperformance.

Speaker Change: I would argue was pretty pretty special.

Speaker Change: Also argue that 250 basis points of yield on top of a base of two of eight 5%.

Speaker Change: Proportionally as is.

Two 5% on top of four 2%.

Speaker Change: So we have a very good handle I think on where we are today much more so than last year, even because we're already back up and full already at the full occupancy percentage more or less if we always get and if you remember the first half of the year, we're still in catch up which is about five points of our improvement in yields last year was.

Josh Weinstein: I think we're in a more stable place than we were. Well, the onboard spends have been fantastic. There's no doubt about it. We're working hard to continue that trend. When you look at the 4.2%, there's a little bit for occupancy, but it's all price, right? Outside of a little bit of occupancy, it's price. It is a combination of the ticket side and the onboard side continuing. We'll work hard to optimize as much as we can. I promise you, our goal is the same as yours, which is get as much revenue as we can.

Speaker Change: Occupancy so I think we're in a more stable place than we were.

Speaker Change: Well the onboard expense have been fantastic, there's no doubt about it and we're working hard to continue that trend and when you look at the four 2%.

There is a little bit for occupancy, but it's all price right outside of a little bit of occupancy its price and it is a combination of the ticket side and the onboard spud continuing.

We work hard to optimize as much as we can I promise you. Our goal is the same as yours, which is get as much revenue as we can.

Steve Wieczynski: Okay, that's good color. Then Josh, if we look at slide 17, about SEA Change. You noted your EBITDA per ALBD is going to be hopefully achieved in 2025. If we look at your ROIC targets, we look at even the carbon reduction target, I mean, it's almost like you're going to potentially hit those as well next year. I guess the question is, and I know you're going to hate this, but do you start to think about laying out another set of long-range financial targets at some point? To us, it seems like those SEA Change targets really were important pillars and gave the investment community something to really rally behind. Just trying to get a little bit more color is how you're thinking about the long-term opportunities here.

Speaker Change: Okay. That's good color and then Josh if we look at slide.

Josh Weinstein: Slide 17.

Speaker Change: You know about sea change you noted your EBITDA per L. B D. It's going to.

Speaker Change: Hopefully achieved in 2025, but if we look at your ROIC targets, we look at the even the carbon reduction target I mean, it's almost like youre going to hit those potentially hit those as well next year. So.

Speaker Change: I guess the question is do you see.

Speaker Change: And I know you're going to hate this but do you start to think about laying out another.

Set of long range financial targets at some point.

Speaker Change: To us it seems like those sea change targets really were important pillars and gave the investment community is something to really rally behind so im just trying to get a little bit more color as to how youre thinking about the long term opportunities here, yes look when we get there I can I can tell you that whether we whether we do it on the same day or whether it.

Josh Weinstein: Yeah. When we get there, I can tell you that whether we do it on the same day or whether we wait a quarter to catch our breath, I can promise you, I like the concept of longer-term targets that we set for ourselves and we set for our investors so you can understand what we think our trajectory should be. I can motivate my team internally to rally around what I think we should be expecting of ourselves. Yes, you can expect that to happen when we get there. I'd love nothing more to get to where we say we're going to be in 2026 SEA Change targets early. We need about, what is it, USD 100 million of operating income to get to the ROIC. Carbon will be harder.

Speaker Change: We wait a quarter to catch our breath I can promise you I like the concept of longer term targets that we set for ourselves and we set for our investors. So you can understand what we think our trajectory should be and I can motivate my team internally to rally around what I think we should be expecting of ourselves. So yes, you can expect that to happen.

Speaker Change: When when we get there.

I would love nothing more to get to where we were.

Speaker Change: Or would you say, we're going to be in 2000 2060 change targets early.

Speaker Change: We need about 100 million Bucks.

Speaker Change: Operating income to get to the ROIC carbon it'll be harder we have a pretty good.

Josh Weinstein: We have a pretty good understanding of where we are, but getting to 19% is pretty good, and we'll see what happens.

Speaker Change: Understanding of where we are but.

Speaker Change: Getting to 19%.

Speaker Change: It's pretty good and let's see what happens.

Steve Wieczynski: Okay, got you. Real quick, housekeeping-wise, David, is there anything we should think about in terms of cadence of costs? Obviously, we've got the Q1 NCC guide, but anything else through the rest of the year we should think about?

Speaker Change: Okay Gotcha.

Speaker Change: Real quick housekeeping wise, David is there anything that we should think about in terms of cadence of costs. Obviously, we've got the first quarter NCC guide, but anything else through the rest of the year, we should think about.

David Bernstein: As you can imagine, it is tough in terms of seasonalization between quarters. The guidance I would give you is that in Q2, we do expect higher dry dock days. I wouldn't be surprised if the Q2 and Q3 were, call it 1.5 to 2 points above the full-year average, and the Q4 is lower. That's about the best initial guidance I can give you. We too will probably see some changes because this guidance presumes we've made every decision on all advertising and everything else between the quarters. Just take it as a forecast.

David: So as you can imagine is tough in terms of season realization between quarters, but the guidance that we gave you is that in the second quarter. We do expect higher dry dock days, so I wouldn't be surprised if the second and third quarter, where call. It one and a half to two points above the full year average in the fourth quarter.

Speaker Change: There is lower.

Speaker Change: That's about the best initial guidance I can give you.

Speaker Change: But we too.

Speaker Change: We'll probably see some changes because this guidance presumes. We've made every decision on all advertising and everything else between the quarters. So just take it as a forecast okay. Thanks, guys happy holidays.

Steve Wieczynski: Okay. Thanks, guys. Happy holidays.

David Bernstein: You too, sir.

Speaker Change: Sure.

Operator 1: Thank you. Next question is coming from Robin Farley from UBS. Your line is now live.

Speaker Change: Thank you. The next question is coming from Robin Farley from UBS. Your line is my life.

Robin Farley: Great. Thank you. Obviously fantastic guidance here, better than expected. I did want to ask about two things just to get a feel for whether these things are in your guidance or how much they're in your guidance and whether this will be additional upside. First is Celebration Key you mentioned, obviously expected to be very successful and a driver, you're not really able to see at this point what it would add really to ticket price or onboard spend. I'm just wondering if you could help us understand how much or really how little you may have in your yield guidance today for Celebration Key. I know in your cruise cost guidance it's at 50 basis points. How much is it in your yield guidance at the moment? Thanks.

Speaker Change: Great. Thank you, obviously, a fantastic guidance here.

Speaker Change: And there was unexpected I did want to ask about two things just to get a feel for whether these things are in your guidance or how much they're in your guidance and whether this would be additional upside for.

Speaker Change: The first is celebration key you mentioned, obviously you expect it to be very successful and a driver, but you're not really able to see at this point, what I would add really to ticket price or onboard spend so I'm. Just wondering if you could help us understand how much you really how little you may have in your yield guidance today for celebration key I know in your crew.

Speaker Change: Cost guidance is that 50 basis points.

Speaker Change: Is it in your yield guidance at the moment. Thanks, Yeah. Thanks Robyn.

Josh Weinstein: Yeah. Thanks, Robyn. It is in our guidance, but I'll give you some magnitude of just what touches Celebration Key this year, and it's only 5% of our total sailings in 2025. It's not that much. When we get to 2026 and we're on kind of a full-year run rate basis, you're talking about 15% plus. It'll be more meaningful for the company overall. Nonetheless, I'm not going to say what it is, but we're happy to say that when we look at our bookings in Q4 for Carnival, we are seeing the premium that we expected to see, which is good to see.

Speaker Change: So it is in our guidance, but I'll give you some magnitude of just what touches celebration this year and it's only 5% of our total sailings in 2025, so it's not that much when we get to 2026 somewhere around kind of a full year run rate basis, you're talking about 15% plus so so it'll be more.

Speaker Change: Meaningful for the company overall.

Speaker Change: Nonetheless, I'm not going to say what it is but we're happy to say that when we look at our bookings in the fourth quarter for Carnival. We are seeing the premium that we expected to see which is good news.

Robin Farley: Okay, great. Thank you. Also in your EPS guidance, I think that you have $3 billion in debt that's callable next year. I hope I'm getting this number right. I assume that you're not factoring in the lower interest cost from some of that very expensive debt. If that were redone at maybe what some other things this year have been done at, could that be $0.20 or $0.25 of sort of upside in annual interest expense savings? Is that kind of the ballpark to think about potential upside?

Speaker Change: Okay, great. Thank you and then also in your EPS guidance.

Speaker Change: I think that Youll have $3 billion in debt. That's callable next year I hope Im getting this number right, but it is.

And I assume that youre not factoring in the lower interest costs from some of that very expensive debt.

Speaker Change: <unk> redone at maybe what some other things. This year has been done that could that be 20, or 25 cents of sort of upside than annual.

Interest expense savings is that kind of a ballpark to think about potential upside.

David Bernstein: $0.20 to $0.25. $0.20 would be $280 million because it's $0.14 per penny. Just keep that in mind. I'm not sure what you were thinking of. I will say that there is opportunity on the refinancings. We do expect to address those 2 double-digit interest rate debts that you're referring to. They're both callable, as you said, in H1 of the year. There will be some additional savings. We will look at that throughout the year. We did include just a bit of interest savings in our forecast, because we're not sure what the market will bring in terms of interest rates to us. Hopefully we'll have a number of successful transactions this year, which will provide some upside for, I should say, some lower interest expense.

Speaker Change: So 'twenty to 'twenty, five 'twenty would be $280 million because its 14th.

Speaker Change: Her penny so just keep that in mind I'm not sure. What what you were thinking of I will say that there is opportunity on the refinancings.

Speaker Change: We do expect to address those two.

Speaker Change: Double digit interest rate debts that you're referring to they're both callable as you said in the first half of the year there will be some additional savings we do it we will look at that throughout the year. We did include just a bit of saving interest savings in our forecast, but because we're not sure what the market will bring in terms of interest rates.

Speaker Change: Yes.

Speaker Change: So there is hopefully we will have a number of successful transactions this year, which will provide some upside for I should say some lower interest expense.

Robin Farley: Okay, great. Thanks very much.

Speaker Change: Okay, great. Thank you very much thanks.

David Bernstein: Thanks, Robin.

Speaker Change: Thanks, Rob.

Operator 1: Thank you. Next question is coming from James Hardiman from Citi.

Speaker Change: Thank you. Your next question is coming from James Hardiman from Citi. Your line is now live.

Speaker Change: Yeah.

James Hardiman: Hey, good morning. I wanted to ask maybe a big picture question. Obviously, not a whole lot of capacity being added here, and so much of this growth story is organic, obviously. I guess my first question is, how much of that organic turnaround do you think is a function of factors taking place in the industry versus, I don't know, self-help, right? You listed, obviously, a whole bunch of things that you're doing brand by brand. I'm ultimately trying to figure out the sustainability of this organic growth that we're seeing right now.

James Hardiman: Hey, good morning.

James Hardiman: So I wanted to ask maybe a big picture question, obviously, not a whole lot of capacity being added here and so so much of this growth.

James Hardiman: Growth story as is.

James Hardiman: As organic obviously.

So I guess my first question is how much of that organic turnaround.

James Hardiman: It's a function of sort of factors taking place in the industry versus I don't know self help right. You listed obviously, a whole bunch of things that youre doing brand by brand.

James Hardiman: I'm ultimately trying to figure out sort of the sustainability of this organic growth that we're seeing right now.

David Bernstein: Yeah. Hey, James. How you doing? Man, I wish I could tell you what the scientific answer to your question is about the industry overall versus us. I think the industry being more mainstream along with us is certainly a fantastic thing for everybody, and I don't want to discount that, but I meant what I said about same-ship sales. We got almost 10% yield on same ship, and if you look at our history, our historic growth rates on revenue are significantly lower than our cruise competitor set. I don't know what they're going to do next year, but when you look at this year, we're right in the mix and we're at the top. I feel very good that our trajectory is changing for us versus what we had been accustomed to.

James Hardiman: Yes, Hey, James How're you doing.

Speaker Change: I wish I could tell you with a scientific answer to your question is about the industry overall versus US I think I think the industry being more mainstream along with US are certainly a fantastic thing for everybody and I don't want to discount that but.

James Hardiman: I meant what I said about same ship sales.

Speaker Change: We got almost 10% yields.

James Hardiman: On same ship and.

James Hardiman: Yes.

Speaker Change: If you look at our history, our historic growth rates on revenue are significantly lower than our crews competitor set.

James Hardiman: And when you look I don't know what theyre going to do next year, but when you look at this year.

James Hardiman: We're right in the mix and at the top so.

James Hardiman: I feel very good that our trajectory is changing for us versus what we had been accustomed to and that means we've got a pretty good amount of headroom as we look forward because people should be paying more for our experiences.

David Bernstein: It means we've got a good amount of headroom as we look forward because people should be paying more for our experiences. Not only vis-a-vis our cruise competitors, but I'm talking about vis-a-vis the experience gap that exists on what we do versus what land offers. What we call the price to experience ratio is just remarkably skewed, and we should be getting a lot more, versus what land competitors do. I think it's probably a pretty good sign that I'm right about that and the potential when you think about Disney basically saying, we're going to under-invest in things that we have in the past, but we're going to double down on cruise. They see the value of that as well. I think we're in good company, and we've got a lot of self-help along the way.

James Hardiman: Not only vis vis our crews competitors, but I'm talking about vis vis the experience gap.

James Hardiman: No.

James Hardiman: That exists on what we do versus what land offers what we call the price to experience ratio is just remarkably skewed.

We should be getting a lot more versus what competitors do it I think it's probably a pretty good sign.

James Hardiman: That I'm right about that and the potential where do you think about Disney.

James Hardiman: Basically, saying, we're going to underinvest in things that we have in the past, but we're going to double down on crews they see the value of that as well. So I think we're in good company and we've got a lot of self help along the way.

James Hardiman: Got it. Then, I guess along those same lines, although, I guess in a lot of ways I'm asking previous questions in a different way, but you finished 2024 with per diems up north of 5%. The guidance for the year, I guess yield guidance is 4.2%. There's some occupancy in there. Q1 is 4.6%. We're going 5-plus to 4.6% to something lower. I guess from our perspective, Celebration Key, which comes on in the H2, should actually help with some acceleration. I guess, is there anything quantifiable that we should be thinking about that would weigh on per diems as we work our way through the year? Maybe, an itinerary geographical mix issue, or you get some version of this question every quarter, right? Is this just conservatism the further out you look?

James Hardiman: Got it and then.

James Hardiman: I guess, along those same lines, although I guess in a lot of ways I'm asking from previous questions in a different way but.

You finished 24 per Dms up north of 5%.

James Hardiman: The guidance for the year because yield guidance is for two theres some occupancy in there.

James Hardiman: And then you know first quarter is $4 six that we're going five plus 462.

James Hardiman: Lower.

James Hardiman: I guess from our perspective, right celebration key which comes on in the back half should should actually help with some acceleration.

Speaker Change: Is there anything quantifiable.

Speaker Change: That we should be thinking about that would weigh on.

Speaker Change: Per Dms as we work our way through the year maybe in <unk>.

Aerie geographical mix issue.

Speaker Change: Or is this just you know.

Speaker Change: You get some version of this question every quarter right is this just sort of conservatism. The further out you look.

Speaker Change:

David Bernstein: The same answers that we've been giving. We're trying to be as transparent as we can be with everyone on the call and everyone who's not on the call. We haven't been through Wave yet. We will. Although it's been a remarkable ride for two years, it feels like Wave hasn't stopped since summer of 2022. We haven't been there yet. We'll see what that brings us and we'll talk again in March.

Speaker Change: Yes.

Speaker Change: Same answers that we've been giving right we're trying to be as transparent as we can be with everyone on the call and everyone who's not on the call. We havent been through wave yet we will although although it's been a remarkable ride for two years it feels like wave hasn't stopped since.

Summer of 2022.

Speaker Change: But we haven't been there yet and so we'll see what that brings us and we'll talk again in March.

James Hardiman: Got it. Appreciate it.

Speaker Change: Got it I appreciate it.

Operator 1: Thank you. Next question is coming from Patrick Scholes from Truist. Your line is now live. Patrick, perhaps your phone is on mute.

Speaker Change: Thank you. Your next question is coming from Patrick Schultz from Truest July this is ally.

Speaker Change: Patrick perhaps your phone is on mute.

Patrick Scholes: Hi. Good morning. Can you hear me?

Speaker Change: Hi, Good morning can you hear me Patrick.

Operator 1: Yes, Patrick.

Patrick Scholes: Great. Thank you. I wanted to ask a little bit about Mexico for my first question. Some news out there lately, regarding additional passenger charges on that. Josh, do you think this is a done deal? Is there any chance that may not go through at this point? Specifically for your folks, for your ships, what percentage of your itineraries do make a stop at a port in Mexico? Now that is my first question. Thank you.

Speaker Change: Great great. Thank you.

Speaker Change: I'd like to ask a little bit.

Mexico for my first question some news out there lately.

Speaker Change: Guarded.

Speaker Change: All passenger charges on that.

Speaker Change: Do you just you think Dod deal.

Speaker Change: Or is there any chance that that may not go through at this point and then.

Speaker Change: Quickly for your folks for your.

For your shifts what percentage of your.

Speaker Change: Itineraries do make a stop at.

A port in Mexico. That's my first question. Thank you.

Josh Weinstein: Yep. Right off the bat, no, I do not think it is a done deal. We've been dealing with this with the folks in Mexico for the last few weeks. We were not consulted. No one was consulted when this was passed. It's pretty clear to me. I have a lot of respect for the president and what she's doing. She was misinformed, not informed, and no one was thinking through the ramifications of what they were suggesting. There's a reason why cruise is in transit historically, as opposed to people who fly into Mexico and stay there for several days. It's already been pushed off to 1 July. We're not satisfied with that.

Speaker Change: So right off the bat no I do not think it is a done deal.

Speaker Change: We've been.

Speaker Change: Dealing with this with the folks in Mexico for the last few weeks, we were not consulted.

No one was consulted witness.

Pass it was pretty it's pretty clear to me I have a lot of respect for the precedent and what she is doing.

Speaker Change: But she was misinformed not informed.

Speaker Change: And no one of them is making through the ramifications of what they were suggesting and Theres a reason why cruises in transit historically.

Speaker Change: As opposed to people, who fly into Mexico and stay there for several days. So it's already been pushed off the July 1st we're not satisfied with that we want to have good dialogue with the government and explain all the benefits that we bring to Mexico, which are significant and it doesn't take much.

Josh Weinstein: We want to have good dialogue with the government and explain all the benefits that we bring to Mexico, which are significant, and it doesn't take much to tweak itineraries to effectively erase what the proposed tax is on the industry. I feel we are engaged in those conversations. We hope to have more after the new year, but it's definitely not settled, and we have nothing in the forecast for these changes for the tax, just so everybody knows. Nothing for the year. As far as what the impact would be for 2025, assuming it did go into place and we made no changes starting in July of 2025, it's less than 5% of our itineraries for the year. For the rest of the year.

Speaker Change: To tweak itineraries to effectively erase would be.

Proposed tax is on the industry and so I feel.

Speaker Change: We are engaged in those conversations we hope to have more after after the new year, but it's definitely not settled and we have nothing in the forecast for these changes for the for the tax just so everybody knows.

Speaker Change: Nothing for the year as far as.

Speaker Change: As far as what what the impact would be.

Speaker Change: For 2000 2025, assuming it did go into place and we made no changes.

Speaker Change: Starting in July.

Speaker Change: 2025, it's less than 5% of our itineraries.

Speaker Change: For the year.

Speaker Change: Okay.

Patrick Scholes: Okay. Thank you. Certainly a bit of a fluid situation. A follow-up question is on the year-over-year growth rate in your passenger ticket revenues versus year-over-year growth rate in your commissions, transportation, and other. The past several quarters, those growth rates sort of moved in line or lockstep. This most recent quarter, you did have a noticeable increase in passenger ticket revenue percentages higher than the commissions paid out. Are you starting to see more book direct or anything to read into that? Thank you.

Okay. Thank you certainly.

Speaker Change: The fluid situation and then a follow up question.

Speaker Change: On the.

Speaker Change: Year over year growth rate in your passenger ticket revenues versus year over year growth rate in your commissions transportation and other.

Past several quarters those growth rates sort of move.

In line or lockstep. This most recent quarter you did have a noticeable.

Speaker Change: The increase in passenger ticket revenue percentages higher than.

Speaker Change: The commission paid out are you starting to see.

Speaker Change: Seeing more book direct or anything to read in there.

Speaker Change: Thank you.

David Bernstein: Patrick, we should talk after the call. I thought it was 0.1% or something. It was very close.

Speaker Change: Patrick.

Speaker Change: We should talk after the call I thought it was a pretty close there was a 10th of a percent or something is very close.

Patrick Scholes: Oh, okay.

David Bernstein: Revenue.

Speaker Change: Revenue.

Patrick Scholes: Okay. I was talking about something a little bit different, but we'll talk about that after-

Okay, I'll talk about a little bit different we'll talk we'll talk about that after the call.

David Bernstein: Yeah

Patrick Scholes: the call. Anything else to.

But anything anything else did too.

David Bernstein: Nothing else.

Patrick Scholes: Note for those-

Speaker Change: Nothing to add.

David Bernstein: consider. The numbers, as you know, do vary a little bit from quarter to quarter because of currency and the amount of air-sea mix that we have. Nothing significant otherwise.

Speaker Change: Consider the numbers as you know do vary a little bit from quarter to quarter because of currency and the amount of.

Speaker Change: <unk> mix that we have.

Speaker Change: But nothing significant otherwise.

Patrick Scholes: Okay. Thank you for the clarification.

Speaker Change: Okay. Thank you for the clarification.

Josh Weinstein: Thanks, Patrick.

Speaker Change: Thanks, Patrick.

Operator 1: Thank you. Next question today is coming from David Katz from Jefferies. Your line is now live.

Speaker Change: Thank you. Your next question today is coming from David Katz from Jefferies. Your line is now live.

David Katz: Hi. Afternoon. Thank you for taking my question. Covered a lot already. I wanted to get a sense for the cost side of the equation, right? The variability within there, right? The degree to which, and what would have to happen for you to turn out a little bit better on the cost increases that you may have built into your guidance. I have a quick follow-up.

Hi afternoon covered thank you for taking my question covered a lot already I wanted to get a sense for the cost side of the equation right.

David Katz: The variability within there right the degree to which you know and what would have to happen for you to turn out a little bit better.

David Katz: On the cost increases that you may have built into your guidance.

David Katz: And then I have a quick follow up.

David Bernstein: Yeah. If we're talking about the full year and the 3.7%, the thing that is likely to change over time is most likely to be the efficiencies we find and the magnitude of those efficiencies. We are constantly working hard. We have lots of ideas out there. It is always very difficult to figure out the exact timing, and we did build quite a bit into our guidance and into our forecast. We continue to work hard to improve on those. Last year, we were able to exceed what our expectations were. We'll work hard to try to do better this year. It's very hard on the timing of all these items. Plus, we built in inflation something a little bit less than 3% and trying to get that number perfect.

David Katz: Yes.

If we're talking about the full year.

David Katz: And the three 7%.

David Katz: Right.

David Katz: The thing that is likely to change over time.

David Katz: <unk> is most likely to be the efficiencies we find in the magnitude of those efficiencies.

David Katz: We're constantly working hard we have lots of ideas out there. It is always very difficult to figure out.

David Katz: The exact timing and we did build quite a bit into our guidance and into our forecast.

David Katz: But we continue to work hard to improve on those and so last year, we were able to exceed our expectations were.

David Katz: And we will work hard to try to do better this year, but it's very hard on the timing of all these items.

David Katz: Plus.

David Katz: We built in inflation, something a little bit less than 3% and triangle.

David Katz: To get that number perfect I mean, if you know absolutely in every category, where the inflation will be in 2025, let me now because we did the best we could.

David Bernstein: If you know absolutely in every category what inflation will be in 2025, let me know, because we did the best we could. I'm sure some of those pieces are going to be off. As I always say, there's only one thing I know about every forecast. It's wrong. I just don't know by how much and in what direction.

David Katz: But I am sure.

David Katz: Some of those pieces are going to be a loss as I always say, there's only one thing I know about every forecast it's wrong I, just don't know by how much and in what direction.

David Katz: Yeah.

David Katz: Well said. I wanted to follow up just on the leverage side of things. When I look back historically at where the company has operated, obviously making good progress today, but should we be thinking about the 2x or better as a long-term aspirational target? Is that still achievable?

Speaker Change: Well said I wanted to follow up just on the leverage side of things when I look back historically.

Speaker Change: Where the company has operated.

Obviously, making good progress today, but should we be thinking about the two times or better.

Speaker Change: As a long term aspirational target is that still achievable.

Josh Weinstein: Well, as a proud former treasurer of the company, it's not a target we have for ourselves right now. Our target right now is get to investment-grade metrics, which is at the 3.5x. How strong we want to rebuild that fortress, that's up for a decision. Do we need to be an A-minus rated company again, bordering on A, which is some of the situations we found ourselves in? I could argue, no, we don't need to. Do we want to be a solid investment grade? Absolutely. As we get closer to that metric, we're obviously going to be having conversations with our board to really set out what we think the right balance is between that balance sheet strength, investing in ourselves, investing in our shareholder returns via dividends or buybacks. Well, remains to be seen what the form will be and when.

Speaker Change: Well.

Speaker Change: I'm proud of former treasurer of the company.

Speaker Change: It's not a target we have for ourselves right now our target right now is get to an investment grade metrics, which is at the three five times, how strong we want to rebuild that fortress.

That's still up for.

Speaker Change: Thats up for a decision.

Do we need to be.

Speaker Change: An a minus rated company again bordering on a which is some of the some of the situations. We found ourselves in and I could argue no we don't need to.

Speaker Change: Do we want to be a solid investment grade absolutely. So as we get closer to closer to that metric.

Obviously going to be having conversations with our board.

Speaker Change: Really set out what we think the right balances between that balance sheet strength investing in ourselves investing in our in our shareholder returns via dividends or buybacks will remains to be seen.

Speaker Change: With the formal being wet but that all goes into the mix, but I would say nobody should be thinking about a two time theres a target we're setting for ourselves.

Josh Weinstein: That all goes into the mix, but I'd say nobody should be thinking about a 2x as a target we're setting for ourselves.

David Bernstein: Thank you very much. Appreciate it.

Thank you very much I appreciate it.

Josh Weinstein: Yep. Pleasure.

Operator 1: Thank you. Next question today is coming from Jaime Katz from Morgan Stanley, I'm sorry, from Morningstar. Your line is now live.

Speaker Change: Thank you. Your next question today is coming from Jamie Katz from Morgan Stanley I'm, sorry from Morningstar. Your line is that life.

Jaime Katz: Hey, good morning. Thank you for taking my questions. First, I'm hoping that you guys can talk a little bit about wave season. I guess I'm trying to understand how to think about balancing filling the rest of 2025 with pulling forward more demand from 2026, and whether or not one is a better strategy than the other. Without giving too much competitive information away, is there a way to, I guess, bundle even less than you are bundling now and maybe promote less in order to optimize pricing? Thanks.

Jamie Katz: Hey, good morning, Thank you for taking my questions.

Jamie Katz: First I am hoping that you guys can talk a little bit about wave season, I guess I'm trying to understand how to think about balancing killing the rest of 2025 with pulling forward more demand from 2026, and whether or not one is.

Jamie Katz: A better strategy than the other without giving too much competitive information away is there a way to I guess.

Jamie Katz: Bundle, even less than you are bundling now and maybe promote less.

Jamie Katz: In order to optimize pricing thanks.

Josh Weinstein: Yeah. Thanks. It's a little bit of a hard question to answer. We are actively and have been actively selling 2025 and 2026 for some time. As you might have picked up in the prepared remarks, we actually just set a record this past quarter for booking activity for the further year out, so 2026 in this case. I think our brands are actually, when it comes to revenue management and optimizing the shape of the curve, they're doing a pretty solid job across the board, which doesn't mean there's not a lot of room for improvement, but a pretty solid job. Everyone's hitting wave in slightly different positions with respect to how much they're booked for 2025 and in what quarters. I'd say it's a case-by-case decision about how they're going to be tackling wave. I would say everybody does promotions in wave. Everyone.

Jamie Katz: Yeah. Thanks so.

Speaker Change: It's a little bit of a hard question to answer.

Speaker Change: <unk> actively and have been actively selling 2025 and 2026 for some time as you as you might have picked up in the prepared remarks, we actually just had a record.

Speaker Change: This past quarter for booking activity for the further year out for 2026 in this case. So I think our brands are actually when it comes to revenue management and optimizing the shape of the curve they.

Speaker Change: We're doing a pretty solid job across the board, which doesn't mean, there's not a lot of room for improvement, but a pretty solid job so everyone's hitting.

Speaker Change: Wave.

Speaker Change: In slightly different positions with respect to how much they are booked for 2025 quarters.

Speaker Change: Quarters, So I'd say, it's a case by case decision about how theyre going to be tackling wave I would say everybody does promotions and wave.

Josh Weinstein: It's how you get people interested in cruising during this critical period. I would remind you, we did promotions last year in wave, and we ended up with 11% yields. The promotional tactics and tools that we use, they're healthy, and they're part of the process that we go through.

Speaker Change: It's how you get people interested in incursion. During this critical period, but I will remind you we did promotions last year and we ended up with 11% yields.

Speaker Change: So so the promotional.

Speaker Change: Tactics and tools that we use are they are healthy.

Speaker Change: And they are part of the process that we go through.

Jaime Katz: Yeah. The other question I have is a little bit of a longer-term strategic question. We know what the costs are associated with Celebration Key this summer, but I suspect this isn't a one-and-done project. Is there some non-new build CapEx we should be thinking of, like level that will be in these brand-building projects longer term that might be higher than it was in the past?

Yeah.

And then the other question I have is a little bit of a law.

Speaker Change: Term strategic question right, we know what the costs are affiliated with them.

Speaker Change: Celebration key this summer but.

Speaker Change: I suspect that this isn't a one and one and done project. So is there some non new build capex, we should be thinking of like level that will be in the us.

Speaker Change: In these brand building projects longer term that might be higher than it was in the past.

Josh Weinstein: That's a fair question. I think if you think about the things that we've been investing in outside of the new build Celebration Key, the Pier at Half Moon Cay, AIDA Evolution, which is their midship refurbishment plan. Much to Carnival's chagrin, AIDA is pretty much neck and neck with Carnival for highest returning brand in our portfolio. We're making the right investments in non-new build to continue the momentum that we have. As far as what the ultimate level is on a run rate basis goes, I don't have a number for you that I'd stick to that says over the next six years or seven years, this is what you should expect. Clearly, we're making these investments on the basis that they are going to support the improved returns that we demand of ourselves. It's about $600 million for Celebration Key, as we've talked about.

Speaker Change: That's a fair question I think if you think about the things that we've been investing outside of outside of the Newbuild celebration.

Speaker Change: Here half Moon Cay.

Speaker Change: How EDA evolutions, right, which is their mid ship refurbishment plan.

Speaker Change: He is.

Speaker Change: There's much to carnival chagrin, Aida is pretty much neck and neck with carnival for highest returning brands in our portfolio, we're making the right investments and non newbuild to continue the momentum that we have as far as what the ultimate level is on a run rate basis goes.

Speaker Change: We don't I don't have a number for you that that I'd stick to this is over the next six years or seven years. This is what you should expect but clearly we're making these investments on the basis that they are going to support the improved returns that we demand of ourselves.

So it's about 600 million for celebration key as we've talked about it's another few hundred million dollars for what we're doing at relax away half Moon Cay.

Josh Weinstein: It's another few hundred million for what we're doing at RelaxAway, Half Moon Cay. AIDA Evolution, for any one particular ship that they're going through this process, you're talking about tens of millions, but we think it's tens of millions that really is going to be a boost for a brand that is incredibly high returning. I don't know, David, if you want to add any more color.

Speaker Change: And I eat evolution for any one particular ship that theyre going through this process you are talking about tens of millions, but we think it's tens of millions that really is going to be a boost for a brand that is incredibly high return.

Speaker Change: No.

Speaker Change: David if you want to add any more color yeah. The only thing I'd say is I mean, you're so you saw in the press release, what our number was for 2025.

David Bernstein: Yeah, the only thing I'd say is, you saw in the press release what our number was for 2025. In all likelihood, it's going to be something similar to that going forward, but it's hard to say exactly what it will be every single year because there's so many bigger decisions that we'll be making over time, which will make up that number.

Speaker Change: In all likelihood, it's going to be something similar to that going forward, but it's hard to say exactly what it will be every single year.

Speaker Change: Because there's so many bigger decisions that we'll be making over time, which will make up that number.

Josh Weinstein: One thing I would say about the destination side is Celebration Key and Half Moon Cay are a little bit unique in the scope and size of what we're doing. The other destinations we have in our footprint, they're amazing, and we will spend some money over time to do some things and make the experience better and better opportunity for us to generate returns. I don't see, other than maybe a continued expansion of Celebration Key, as we've already been talking about through the end of this decade, I'm not sure I see on the horizon anything that I'd flag for you right now as out of the blue that we'd be talking about in six months or a year.

Speaker Change: One thing I would say about the destination site is celebration key and half Moon Cay are a little bit unique in the scope and size of what we're doing.

Speaker Change: The other destinations we have in our footprint there are amazing and we will spend some money over time to do some things and make the experience better and better opportunity for us to generate returns, but I don't see other than maybe a continued expansion of celebration key as we've already been talking about through the end of this decade I'm not sure I see on the horizon or anything.

Speaker Change: That I would flag for you right now is kind of out of the blue.

That we'd be talking about in.

Speaker Change: Six months earlier.

Jaime Katz: Great. Thank you.

Great. Thank you.

Operator 1: Thanks.

Last day.

Speaker Change: Next question.

Jaime Katz: One more.

Operator 1: Go ahead, I'm sorry.

Speaker Change: Go ahead I'm sorry.

David Bernstein: Yeah, we'll just take one more question. We're approaching an hour.

Speaker Change: Yes, let's just take one more question where appropriate.

Operator 1: Sure thing. Our final question today is coming from Brandt Montour from Barclays. Your line is now live.

Speaker Change: Sure thing our final question today is coming from Brent I'm on tour from Barclays. Your line is that right.

Brandt Montour: Good morning, everybody. Thanks for taking my question, and congratulations on the results today. You're welcome. The first question is on the booking curve. Josh, I don't know if this is an easy one to answer, but if you try to take forecasting out of it and you're just focusing on your booking curve today versus how your bookings looked at the same time last year, does the pricing look any less robust than this time last year, perhaps tougher comps or anything else that you would highlight?

Brent: Good morning, everybody. Thanks for taking my question and congratulations on the results today.

Speaker Change: So the first question.

So my first question is on the booking curve, Josh and I don't know if this is an easy one to answer but when you when you're trying to take the forecasting out of it and you're just focusing on your booking curve today versus the way or versus how you are booking your bookings looked at the same time last year.

Speaker Change: Pricing look.

Speaker Change: The less robust than this time last year, perhaps tougher comps or anything else that you would highlight.

Josh Weinstein: Well, it's certainly tougher comps this year than it was last year. The brands are, as I said, though, in the prepared remarks, we're basically at a higher occupancy at a higher price point, and that's across all 4 quarters. I think the brands are doing a good job of continuing the momentum and optimizing that curve. It probably doesn't answer the question the way you'd like it to, but we'll see where that shakes out. We gave you our view of yields as of now, and we'll update you as there's things to update.

Speaker Change: Well I mean, it's certainly tougher comps this year than it was last year the brands are.

Speaker Change: As I've said, though in the prepared remarks.

Speaker Change: We're basically at a higher occupancy at a higher price point and that's across all four quarters.

Speaker Change: So I think the brands are doing a good job of continuing the momentum and optimizing.

Speaker Change: Optimizing that.

Speaker Change: That curve so it probably doesn't answer the question the way you'd like it to but.

Speaker Change: We'll see where that where that shakes out we gave you our our view of yields as of now.

Update you as this thing was to update.

Brandt Montour: Okay, great. Thanks. Just a quick housekeeping. The Red Sea had something like $130 million impact last year. How much of that, effectively, do you get back in 2025, and how should we think about the timing of it and the cadence and where it would show up in the comps?

Speaker Change: Okay, great. Thanks, and then just a quick housekeeping the Red Sea had a something like a $130 million impact last year, how much of that.

Actively do you get back in 2005 and sort of how should we think about the timing of it and the cadence and where it would kind of show up in the comps.

Josh Weinstein: I think when it all shook out, it was probably a little less than $100 million at the end of the day, as we did our analysis for 2024. I think the thing about year over year for 2025 that people need to keep in mind is it's not a huge spring back. The reason why is, if you think about this time last year, we had already sold our world cruises. People were already on them before the Red Sea became a thing. We had to scramble. We did everything we had to do. It cost us $90 million. This year, we're in a different place, which is we knowingly took Red Sea out of the equation back in February, March for 2025, which meant we had to sell cruises that weren't necessarily as attractive to sell because you can't go through the Red Sea.

Speaker Change: So I think what it all shake out it was probably a little less than $100 million at the end of the day as we did our analysis for 2024 I think the thing about year over year for 25 that people need to keep in mind, it's not a huge spring back and the reason why.

Speaker Change: If you think about this time last year, we had already sold our world cruises people, who are already on them before.

Speaker Change: Before the Red Sea became a thing.

Speaker Change: We had to scramble we did everything we had to do a cost of $90 million. This year. We're in a different place, which is we knowingly took <unk> out of the equation back in.

Speaker Change: February March for 2025, which meant we had to sell cruises that werent necessarily as attractive to sell because you can't go through the Red Sea.

Josh Weinstein: From a year-over-year, it's a different kind of pain point that we had to deal with, and we've dealt with, and it's in our numbers. It means that what you'd love to see is this bounce back and we're whole and we move forward. I don't think 2025 versus 2024 is really the year that we'll see that. The normalization is now, 2026 versus 2025 will be on an apples-to-apples basis.

So from a year over year, it's a different kind of a pain point that we had to deal with.

Speaker Change: We've dealt with and it's in our numbers.

Speaker Change: It means that.

Speaker Change: We'd love to see us kind of this bounce back and were a hole and we move forward.

Speaker Change: I don't think 25 versus 24 is really the year that we will see that the normalization is now and so 26 versus 25 will be on an apples to apples basis.

Brandt Montour: Okay, lower yields offsetting no disruption this year.

Because of lower yields offsetting no disruption this year.

Josh Weinstein: Yeah. More or less in high level, yeah. I think that's fair.

Speaker Change: Our lesson in high level, Yeah, that's fair, Okay, alright, Congrats again guys. Thanks.

Brandt Montour: Okay. All right. Congrats again, guys. Thanks.

Josh Weinstein: Thanks very much, Brent. Okay, with that, I think we're over time. I'd say happy holidays and wishing everybody on the call nothing but good health and happiness in 2025. Thanks very much for joining.

Speaker Change: Very much grant okay. So with that I think we're over time, so I would say.

Speaker Change: Happy holidays, and wishing everybody on the call nothing but.

Speaker Change: Good health and happiness in 2025, thanks very much for joining.

Operator 1: Thank you. That does conclude today's teleconference. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Speaker Change: Thank you that does conclude today's teleconference. You may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.