Beth Roberts, SVP of Investor Relations at Carnival Corporation & plc, introduces the First Quarter 2024 Earnings Conference Call, joined by CEO Josh Weinstein, CFO David Bernstein, and Chair Micky Arison. She reminds listeners that some remarks will be forward-looking and explains the non-GAAP financial measures that will be referenced. Josh Weinstein expresses support and sympathy for those impacted by an event at the Francis Scott Key Bridge in Baltimore and thanks first responders. He also mentions the partnership with the City and Port of Baltimore and the scheduled return of a Carnival Cruise Line ship this weekend.

The company has secured a temporary home port in Norfolk to minimize operational changes following the recent incident. The first quarter has been successful, with record revenues, bookings, and customer deposits. The company's global team has worked hard to outperform expectations and increase yields by 17%. Customer deposits beat last year's record by $1.3 billion and the company has pre-paid $1.8 billion of debt this year. Booking volumes and pricing have also reached all-time highs.

The company has experienced double-digit price increases due to limited inventory and high demand for cruises in the second, third, and fourth quarters. This is not just due to pent-up demand from previous guests, but also from efforts to attract new guests and increase repeat customers. The company's brands are seeing sustainable revenue growth and are able to maintain price integrity. The company is also focusing on building bookings for 2025 and has improved their yield management strategy with the use of YODA.

The company has three new ships that will drive increased demand and consideration for their respective brands. They are also investing in existing ships to improve the guest experience and reduce environmental impact. Additionally, they have launched a marketing campaign for their exclusive destination, Celebration Key, which is already showing promising results for future bookings. They have also announced plans for a second phase of development for Celebration Key to accommodate more ships.

Carnival Cruise Line expects increased ticket revenue and cost savings from their new destination, which will also support the growth plans for the company. They continue to prioritize investments in their highest returning brands and reducing their carbon footprint. Advertising efforts have also been successful, with new campaigns launched for their major European brands.

The success of recent marketing campaigns has contributed to the strong performance of European brands, leading to an improved outlook for the company. This has been driven by strong demand for core deployments in the Caribbean, Alaska, and Europe, resulting in an increase in yield and enabling the company to raise its full-year guidance for EBITDA and net income. The company plans to continue managing down debt and interest expense while also focusing on delivering even stronger results in 2025.

In this paragraph, David Bernstein discusses the company's first-quarter results, which exceeded their previous guidance by $100 million. This was due to higher ticket prices and lower cruise costs. Per diems also improved, with occupancy growing on both sides of the Atlantic, resulting in a mix impact on onboard revenue. Bernstein also mentions the company's strong performance in the European market and their efforts to refinance and reduce debt.

In the first quarter, the company saw an increase in onboard revenue per diems, driven by strong pre-cruise sales growth and consumer behavior onboard. The second quarter and full year guidance do not include the estimated impact of up to $10 million from a temporary change in homeport due to recent events. The company expects positive trends to continue in the second quarter, with a yield guidance of 10.5%. The full-year capacity increase is now forecasted at 4.5%, and net income for the year is expected to be $1.28 billion, an $80 million improvement from previous guidance.

The improvement in the company's financial performance was driven by higher yields and strong demand, resulting in a $250 million improvement. This was partially offset by the impact of Red Sea rerouting and higher fuel prices and currency. Cruise costs, excluding fuel, are expected to be better than previously forecasted due to cost savings. The company has also implemented a system called MAST to optimize the management of equipment and machinery across all brands and ships.

In summary, the implementation of MAST will improve efficiency and reduce costs for unplanned maintenance. The company generated significant cash flow and utilized export credit facilities to finance their new ship program at favorable interest rates. They also extended and upsized their revolving credit facility and actively managed their debt profile by repurchasing over $600 million of debt and calling existing debt. This demonstrates their commitment to maintaining an investment-grade balance sheet.

The company expects their leverage metrics to improve in the coming years due to increased EBITDA and reduced debt levels. They have received upgrades from S&P and Moody's and have extended their revolving credit facility. The company anticipates substantial free cash flow in the future, which will further reduce their leverage and benefit shareholders. During the Q&A portion of the call, the company was asked about their statement that per diem growth will be considerably higher for the remainder of the year. The analyst suggested that this may mean per diem growth of 6% or higher, compared to 5% in Q1.

The speaker is responding to a question about the recent ship orders and the possibility of future orders. They mention that first quarter booking activity was strong and that they expect per diems to continue to increase. They also confirm that they plan to order one to two ships per year starting in 2027.

The company is working on new projects for their most successful brands, but it's uncertain if there will be another ship order in 2028. The company is still focused on becoming investment-grade and the new ship orders won't impact their progress.

The speaker, Josh Weinstein, is discussing the company's focus on improving all areas of their commercial operations and seeing progress in advertising, revenue management, onboard execution, and deployment planning. He mentions some upcoming strategic assets that will be beneficial, but emphasizes the importance of each brand performing to the best of their abilities. When asked about the per diem growth for 2024, he mentions the base building that occurred in the previous year and the current favorable pricing environment.

The speaker discusses the company's strategy for the upcoming year and how it has improved compared to the previous year. They mention the benefits of having a more normal environment to work in and being able to focus on long-term strategies rather than just filling short-term gaps. They also touch on the recovery of their European brands compared to their North American brands, specifically in terms of occupancy, ticket sales, and onboard activities. The European brands have seen a significant increase in occupancy in the first half of the year.

The company experienced a normalization in the second half of last year, with positive trends in pricing, onboard spending, and occupancy. The European brands are driving yield improvement without sacrificing price. The first quarter saw better than expected occupancy, and the company is focused on achieving a balance between occupancy and price for optimal yield. The historical range for occupancy is 104-107, and the company is not providing a specific estimate for the full year. The first quarter saw a beat in both occupancy and price.

The speaker expects the company to perform well in both price and occupancy every quarter. They mention that the occupancy opportunity in 2024 is heavily weighted towards the first half, and the brands are being thoughtful about introducing more families. They also note that the current demand strength is not just pent-up demand, and there may be a secular story building in the industry. They mention that per diems are ahead of the long-term algo, and it is uncertain how long this demand growth will last.

The company's yield guidance for the year has been revised to increase by 100 basis points due to increased visibility and strong booking numbers. The focus is now shifting towards onboard experiences and advertising to attract new customers. The cruise industry is expected to continue performing well due to the value and experience gap compared to land-based options.

The company is seeing an increase in onboard revenue on both sides of the Atlantic and is optimistic about the rest of the year. They are seeing positive trends in pre-cruise sales and are confident in their guidance. They are also focused on optimizing ticket and onboard spending. Despite some noise about Q4 slowing down, the company is actually experiencing an acceleration in both volume and price.

The speaker asks about the booking trends for 2025 and whether there has been a change in who is booking and what type of itineraries are being booked. The response is that the revenue management and booking curve has improved across the board, with an increase in new-to-cruise guests. The opening of Celebration key in 2025 is also expected to have a positive impact.

Josh Weinstein, CEO of a travel company, is asked about what motivates consumers to book their services. He explains that there hasn't been a significant change in consumer behavior, but rather their company has improved their advertising and revenue management strategies. Additionally, the company is benefiting from positive reviews from satisfied customers who are now able to fully experience their services after a four-year hiatus. This has helped to attract new customers and support future growth.

The speaker is responding to a question about the timing of expenses in the first quarter. He says that there may be a slight decrease in expenses in the third quarter compared to the fourth, but nothing significant. The next question is about the current trends at Carnival and AIDA brands. The speaker says that these brands have fully recovered and are performing well, and they serve as a roadmap for the other brands to follow in terms of revenue management, deployment planning, and marketing.

The brands owned by the company are improving, with the top performing brands leading the way. The company is sharing learnings and practices among all brands to improve overall return on invested capital. The company is confident in meeting their targets for 2026 and beyond, with a focus on commercial space. The company also expects pricing power to increase with the opening of Celebration Key, but emphasizes the importance of revenue management and maintaining consistent pricing throughout the booking curve. Some brands have been successful in this strategy, while others are now starting to improve.

The speaker discusses the potential for continued success with the development of Celebration Key and mentions an expected increase in ticket prices and onboard spending. They also mention the benefits of creating an island close to many home ports and the potential for upselling on the island.

The company is planning to combine private beach club with the Celebration Key development in Grand Bahama. They will also offer overwater cabanas for rent, as well as food and retail opportunities. Phase one will cover a quarter of the property, with phase two bringing in additional revenue opportunities. The first quarter had better costs than expected due to timing, and the full-year cost guide is around 5% with the back half also at 5%. Some of the difference is due to dry dock days and timing between quarters.

The speaker discusses the increase in dry dock expenses in the first quarter and advises to look at the full-year perspective when judging the company. They clarify that the first and fourth quarters are the heavy dry dock quarters. The next question asks about the strong ticket prices and the impact of new ships on pricing. The speaker confirms that the new ships do get a premium and the company manages the premium brand by brand.

The success of a new ship depends on where it is placed and the overall brand strategy. While new ships are important, the focus is also on increasing per diems on the rest of the fleet. The company has seen an increase in brand repeaters and expects this to contribute to long-term demand. The ideal frequency for cruisers is every three to four years.

The speaker discusses the goal of attracting a large number of customers to continue using their services in the next few years. They thank the participants and end the conference call.

This summary was generated with AI and may contain some inaccuracies.