The operator introduces the speakers for the conference call and reminds participants that the call is being recorded. Beth Roberts, Senior Vice President of Investor Relations, begins the call and introduces the CEO, CFO, and Chair of Carnival Corporation & plc. She also mentions that some remarks will be forward-looking and references non-GAAP financial measures. Josh Weinstein, the CEO, then speaks about the company's progress in improving commercial operations, reallocating their portfolio, and strengthening their team.

The company has achieved record-breaking results in the second quarter, surpassing expectations in revenue, operating income, customer deposits, and booking levels. The yields have increased significantly, particularly in the European brand with a 20% improvement. Adjusted EBITDA also reached a record high, surpassing the second quarter of 2019 and marking the highest second quarter in over 15 years. The company expects to reach double-digit return on invested capital this year and has seen strong demand for bookings in the third and fourth quarters, with pricing running considerably higher than last year's record per diems.

The company's strong yield guidance has allowed them to achieve consistent growth and set records for future bookings. This, along with flat capacity growth and high customer deposits, demonstrates the strength of their consumer base. The company is also actively managing their portfolio by sunsetting one brand and transferring two vessels to another brand.

The company will continue to dominate the Australian market by consolidating into Carnival Cruise Line, which will bring operational and deployment flexibility. This will also increase Carnival Cruise Line's capacity by 50% by 2028, and the brand will represent 37% of the company's portfolio. The company's new destination, Celebration Key, will support this growth and generate increased revenue and fuel efficiency. The company also recently delivered Cunard's fourth Queen, Queen Anne, with a historic naming celebration in Liverpool, England. The event generated significant media coverage and boosted bookings for the ship.

The paragraph discusses the success of Cunard's new Queen ship and the naming events for Sun Princess and Carnival Firenze. These events generated significant media coverage and increased bookings. The existing fleet also saw a double-digit increase in yields, and the rollout of Starlink technology has improved onboard connectivity for guests and crew. Overall, these developments have contributed to a strong second quarter for the company.

The article discusses the company's positive performance and growth in the second quarter of 2024, highlighting their consistent track record, focus on commercial activity improvement, portfolio management, and future benefits from their destination development. The company's upwardly revised guidance puts them two-thirds of the way towards achieving their long-term targets, including EBITDA, ROIC, and carbon intensity reduction. They have also taken actions to improve their balance sheet and are on track to return to investment grade credit ratings. The CEO credits the company's success to their global team and thanks them for delivering strong results and unforgettable experiences to 3 million guests. The article then transitions to a summary of the company's second quarter financial results.

The paragraph discusses the highlights of the company's third quarter June guidance, including an outperformance of nearly $170 million and three main factors contributing to this outperformance. These factors include favorability in revenue, flat cruise costs, and other operational improvements. Additionally, the company saw a 6% improvement in per diems and a 10 percentage point increase in occupancy for their European brands. The positive trends from the second quarter are expected to continue in the third quarter with a strong 8% yield guidance.

The difference in yield guidance for the third quarter compared to the second quarter is due to increased occupancy opportunities in the second quarter. The company expects strong per diem growth in the third quarter, leading to an 8% yield improvement. The full year June guidance for net income has improved by $275 million, driven by higher prices and demand. Cost savings and improvements in net interest expense also contribute to this improvement. The strong 10.25% improvement in 2024 yields is a result of higher ticket prices, onboard spending, and occupancy at historical levels. The company will continue to identify cost saving opportunities in the future.

In summary, the company has been focused on improving their cost structure and has successfully generated cash and free cash flow in the second quarter. They have also proactively managed their debt by prepaying and repricing loans, as well as issuing new notes. These actions have simplified their capital structure and reduced net interest expenses. The company plans to continue looking for opportunities to refinance and improve their leverage metrics in the future.

The company expects to see strong free cash flow and improvements in their financial metrics due to their operational execution and low newbuild order book. They also mention the transfer of value from debt holders to shareholders. The call for questions is opened and the first question is about global momentum and any notable trends in Europe. The CEO responds by stating that they are seeing strength in all of their brands globally and that diversity is helping their portfolio. The booking curve in North America and Europe is at its highest levels in years. The teams are doing a good job of pricing and attracting customers.

In 2025, the company has been able to balance short-term firefighting with extending the booking curve, resulting in a strong position for the future. The team is focused on optimizing the longer-term period and the company is currently ahead in bookings and pricing, which is a good place to be. The strength in bookings is seen globally across all brands and deployments, with the portfolio modifications and Celebration Key also contributing to the positive outlook for 2025. Additionally, there will be no capacity increase next year.

The speaker, Josh Weinstein, is asked about the company's pricing power and capital allocation. He responds by saying that their priority is to generate free cash flow, pay down debt, and strengthen the balance sheet before considering bringing back the dividend. He also mentions that it is premature to discuss this and that they have a lot of work to do. The next question is about the return on invested capital for Celebration Key, to which Weinstein responds that it could be seen as a newbuild investment.

The speaker discusses the company's progress towards their 2026 targets and the potential for operating leverage to reach those goals. They mention that costs were better in the quarter and provide some specifics on where they are seeing more operating leverage than expected. The speaker also mentions the potential for the company to enter the luxury river cruise market in the future.

Josh Weinstein, CEO of a cruise company, discusses the company's focus on generating revenue and maintaining cost leadership. He expects low to mid-single-digit price increases and cost management to continue beyond a recent change. CFO David Bernstein adds that cost savings are broad-based and result from various efficiencies. The company recently announced the sunset of a brand in Australia, as it is a small market and not feasible to grow. This move will bring operational synergy.

The speaker discusses the company's portfolio management and their plans for optimizing it in the future. They also address concerns about potential restrictions on ships visiting Greek islands, stating that they have a good relationship with Greece and work with local communities to ensure sustainable practices. They do not expect any major disruptions.

In this paragraph, the speaker discusses the success of their company's partnership with local communities, citing an example in Dubrovnik. They mention that this is a relatively small part of their overall mix, but it is important to them and they want to show up well. The speaker then answers a follow-up question about the percentage growth for new-to-brand and new-to-cruise, stating that both are up, as well as brand repeaters. The next question asks about the double-digit growth in same ship yields and the speaker clarifies that it is almost 50-50 between price and occupancy. When asked about when this growth will end, the speaker declines to give a timeline.

The company is still in the process of implementing their marketing strategies to reach the right audience and increase bookings. They are confident in the value they offer compared to land-based alternatives and expect to see continued demand and price improvements. Per diems are expected to be up in the mid-single-digit range for both Europe and North America in the coming quarters.

Josh Weinstein discusses the strength of North America and EU in terms of pricing and occupancy. He believes that both regions will continue to improve in the future. He also mentions the importance of revenue management strategy for 2025 and how the optimal booking curve length is determined on a ship by ship, sailing by sailing, and brand by brand basis.

The speaker explains that the company's goal is not to increase the booking curve, but to generate as much revenue as possible before the ship sets sail. They mention various factors that affect revenue, such as base loading and managing prices for different types of rooms. The speaker also discusses the success of three brands in improving their ROIC (Return on Invested Capital).

During a conference call, a question was asked about the changing demographics of the cruise company's customers. The CEO mentioned that there has been a shift towards more digital engagement among all age groups, not just millennials. The company has noticed a slight change in the average age of their customers, but they still cater to a diverse range of age groups. The company is happy with their current mix of customers and welcomes people from all generations.

The speaker asks about the impact of consolidating the P&O Australia brand into Carnival and any potential costs associated with it. The company representatives state that minimal investment will be needed for IP stacks, but there may be some one-time costs. They also mention potential operational efficiencies. The speaker then asks about external competitive pressures and potential risks for the winter season, to which the company representatives do not provide a direct answer.

The speaker discusses the forecast for the company's performance in the coming quarters, expecting continued progress and mid-single-digit price improvements. They also mention competition in the cruise space and the strength of their brands. In response to a question about occupancy, the speaker notes that there may be a continued benefit in Q3 due to slower uptake in Europe, but it may subside in Q4 and beyond due to catching up from last year.

The speaker is discussing the company's future plans and goals, including price increases and managing occupancy. They mention not giving occupancy guidance due to focusing on yield and not sacrificing pricing. The next question asks about potential risks, but the speaker is confident in the team's ability to handle any challenges and not worry about uncontrollable factors.

Josh Weinstein, CEO of a mobile business, discusses the benefits of mobility and flexibility in his company. He also mentions the potential for growth and increased returns with the addition of Celebration Key, a new port that will be visited by 18 ships in 2026. The uplift in revenue will come from higher ticket prices, increased onboard spending, and fuel savings due to the port's location. These factors have been factored into the company's three-year plan for growth. However, the impact on revenue will be minimal in the first year as the port is still ramping up.

The speaker is discussing the potential cost for next year, acknowledging that it is still early to determine exact numbers. They mention that the opening of Celebration Key will add cost, but it is expected to bring in revenue and other benefits. They also mention the AIDA evolution program and increased drydock days in 2025, which will impact costs. The speaker emphasizes that they are not managing to a specific line item, but rather to overall operating income and bottom line. They also mention that there is no set budget for advertising, but it will depend on what the money is being spent on.

The speaker discusses the effectiveness of their marketing initiatives and how they generate revenue. They also mention their goal of returning to an investment grade credit rating and the progress they have made on their balance sheet. Approximately 15% of their debt is variable rate.

In the earnings release, a 100 basis point reduction in interest rates is expected to benefit the company by $23 million in the back half of the year and double that for the full year. The company is in an improving credit environment and expects future interest rates to come down due to both rate cuts and lower credit spreads. They also plan to do refinancings to further reduce interest expenses. The company is focused on performance marketing and constantly adapting to changes in the consumer landscape. This is not a new initiative, but a continuous effort to stay ahead of the curve. Different brands within the company have different sources and segments, so the approach to performance marketing is tailored to each brand.

The speaker discusses the tension between cutting costs and investing in demand creation within Carnival's six operating units. They mention the importance of being a cost leader while also reinvesting in the business, such as increasing marketing spend and improving onboard experiences. They do not have a specific metric for this, but it has been successful in generating revenue.

The speaker discusses the company's financial goals and acknowledges that there is still room for improvement in their operating margin and EBITDA margins. The team is working towards achieving these goals through both cost-cutting and increasing revenue. The call concludes with the speaker thanking everyone for participating.

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