Release Date: March 21, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Carnival Corp (CCL, Financial) achieved a robust 7.3% yield increase, surpassing yield guidance and building on last year's 17% improvement.
- The company reported a near doubling of operating income for the quarter, with EBITDA reaching $1.2 billion, marking a 40% year-over-year increase.
- Carnival Corp (CCL) has successfully increased its earnings guidance for the year by $185 million, driven by strong first-quarter results.
- The company is on track to meet its 2026 financial targets one year early, with ROIC expected to hit 12% and EBITDA per ALBD more than 50% higher than two years ago.
- Carnival Corp (CCL) has made significant progress in refinancing efforts, reducing interest expenses by $100 million for the year and lowering its average cash interest rate to 4.6%.
Negative Points
- Despite strong performance, Carnival Corp (CCL) acknowledges heightened macroeconomic and geopolitical volatility, which could impact future results.
- The company faces increased dry-dock costs due to unplanned dry docks, which have affected cruise costs without fuel per ALBD.
- Carnival Corp (CCL) has a significant amount of debt, ending the quarter with $27 billion in total debt, although efforts are being made to reduce this.
- The company has limited capacity growth, with only three ships on order over the next four years, which may constrain future revenue growth opportunities.
- Carnival Corp (CCL) is not immune to potential consumer demand fluctuations, as indicated by the cautious approach to maintaining yield guidance for the remainder of the year.
Q & A Highlights
Q: Can you provide more color on consumer demand trends since the fourth quarter?
A: Josh Weinstein, CEO, noted that the wave season was a success, setting a record for bookings for future years. The company entered the wave season with historic occupancy and pricing, which they used to their advantage. They took price and are well set up for the rest of the year, maintaining yield guidance over 4%. The brands are doing a good job in tackling the current environment.
Q: Can you clarify the impact of lower ALBDs from dry docks on the guidance?
A: David Bernstein, CFO, explained that the flow-through to the year was a combination of yield from the first quarter and $100 million of interest expense savings. The reduction in ALBDs due to extra dry docks covered up the cost savings achieved, which is why the full amount from Q1 did not flow into the full year.
Q: Are there any differences in consumer behavior between Europe and America, or between drive-to and fly-to markets?
A: Josh Weinstein, CEO, stated that Europe has been driving forward nicely, outperforming North America. The portfolio approach works well against the backdrop of different consumer behaviors, and the company is well-positioned to cater to various price points and preferences.
Q: How do you perceive the industry's willingness to hold price if consumer demand slows?
A: Josh Weinstein, CEO, emphasized that Carnival is executing its strategy and is better booked than ever. With no capacity growth, the company is in an enviable position to manage pricing effectively. The industry overall is on solid ground, with leaders doing good things for their brands.
Q: What are the structural improvement opportunities across your brands?
A: Josh Weinstein, CEO, highlighted that most brands have multiple points of improvement in the medium term, primarily due to revenue growth. The trajectory for brands is positive, with significant progress being made on the revenue side, and there is plenty of runway for further growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
