The conference call begins with the operator welcoming participants and introducing Beth Roberts, the Senior Vice President of Investor Relations. Beth then introduces CEO Josh Weinstein, CFO David Bernstein, and Chair Micky Arison. She mentions that some remarks will be forward-looking and refers listeners to the forward-looking statement in the press release. She notes that specific financial references will be in constant currency and adjusted bases. Josh Weinstein thanks Beth and expresses sympathy for those impacted by Hurricane Helene before stating that the company is exceeding 2024 expectations as September ends.

The paragraph highlights the company's exceptional financial performance and strong growth trajectory. In the third quarter, they set multiple records with revenues nearing $8 billion and EBITDA exceeding $2.8 billion, driven by high-margin yield growth rather than capacity growth. Net income increased significantly, and they achieved double-digit ROIC. The company also upgraded its full-year yield and cost guidance, expecting record EBITDA of $6 billion for 2024. Looking forward, strong demand and effective management have positioned them for continued success in 2025, with high occupancy and pricing across all brands, driven by effective demand generation and base loading strategies.

The paragraph highlights the strong financial performance and positive outlook for the company's cruise bookings and onboard revenue. Over the last three months, booked 2025 positions have increased in price advantage compared to the previous year, and nearly half of 2025 is already booked. Record booking volumes for 2026 sailings have been achieved, and onboard spending levels have risen significantly. The company's fleet will see new additions, including the Sun Princess and Star Princess, and existing ships are undergoing major modernizations. Additionally, the introduction of the new Bahamian destination, Celebration Key, is expected to provide further revenue boosts, with its full potential emerging by 2026.

In 2026, a new two-berth pier will be introduced at Half Moon Cay, a highly rated Caribbean private island, making it accessible to larger ships and reducing fuel costs and environmental impact. The company plans to unveil more about Half Moon Cay soon and will increase marketing efforts in the fourth quarter, which have already driven significant web visit and search increases. Their marketing and partnerships with travel agents have helped attract more new and repeat cruise guests, improving their market share over land-based vacations. Financially, they aim to improve their investment grade and reduce debt, with a limited order book of just three ships scheduled from 2025 to 2028, positioning them to match demand with capacity effectively and boost EBITDA.

The paragraph discusses the company's significant financial progress, highlighting strong free cash flow and debt reduction that improved leverage metrics, with a notable two-turn improvement in debt to EBITDA within nine months. It mentions a doubling of revenue and a transition from negative EBITDA to an anticipated $6 billion high in just two years, attributing these achievements to the global team's exceptional performance. The team has also provided nearly 4 million guests with extraordinary cruise vacations while maintaining responsible environmental practices. The paragraph ends with David Bernstein summarizing the third quarter results, stating net income exceeded guidance by $170 million due to higher revenue driven by increased ticket prices and onboard spending.

In the third quarter, cruise costs without fuel improved slightly and were better than expected, saving over $125 million. Cost-saving measures, easing inflation, and timing of expenses contributed to these improvements, benefiting the annual guidance. Per diem rates rose by at least 6% due to higher ticket prices and onboard spending, while European brands saw a 5 percentage point occupancy increase compared to the previous year. The third quarter achieved record revenues, yields, per diems, and operating income due to strong demand. For the fourth quarter, positive trends are expected to continue with a 5% yield growth over the prior year, although the growth rate is slower compared to the third quarter due to tougher comparisons. Cruise costs without fuel per available lower berth day are anticipated to rise by 8%, similar to the first quarter of 2024.

The paragraph discusses the financial impacts and projections for a cruise company over various quarters and provides specific details about increased costs due to dry dock days and planned advertising. Costs have shifted between quarters, but the overall yearly cruise cost per ALBD should be considered rather than quarterly changes. For 2024, cruise costs are expected to fluctuate by quarters, eventually rising by about 8% in the fourth quarter. Improved full-year September guidance shows net income set at $1.76 billion, driven by higher yields, reductions in costs, and benefits from fuel pricing and currency. For 2025, a 7% capacity increase is forecasted, and higher pricing is anticipated due to less remaining inventory and the introduction of Celebration Key in the Bahamas.

The company anticipates positive returns from Celebration Key, though operating expenses will slightly impact cost comparisons. An increase in dry dock days in 2025 will also affect costs. They report a record third-quarter EBITDA of $2.8 billion and efforts to manage debt have led to $625 million in prepayments since June, totaling $7.3 billion for the year. They've increased their credit facility to $3 billion. The company expects continued improvement in leverage metrics through growing EBITDA and reduced debt, anticipating strong free cash flow and better financial stability. They express confidence in shifting value from debt holders to shareholders. The operator then opens the call for questions.

In the paragraph, Matthew Boss congratulates Josh Weinstein on a strong quarter and asks about the positive business momentum for 2025 and the strong start for 2026. Josh Weinstein explains that both North American and European brands are well-positioned, with higher booking rates and the ability to increase prices. He mentions that two-thirds of bookings for the next 12 months are secured. Matthew Boss then inquires about capital priorities, and David Bernstein emphasizes that debt reduction is their main focus, aiming for investment-grade metrics by the end of 2026. Steve Wieczynski also congratulates them on the strong performance and outlook.

In the paragraph, Steve questions Josh Weinstein and David about the fourth quarter yield guidance, noting it seems lower compared to June's implied guidance. Steve inquires if any pricing, geographic, or brand factors might be causing a perceived softness or weakening in pricing for the fourth quarter, or if a conservative outlook on onboard spending is being adopted. Josh responds that there is no change in yield guidance from June and that they always anticipated challenges in achieving break-even year-over-year for the strong fourth quarter of 2023. He reassures that they are now expecting a 5% yield and are confident about it. Steve then asks about the 2025 and 2026 bookings, noting they are already 50% booked for next year and seemingly well-positioned for 2026. He questions if the booking window has expanded too much, potentially leaving money on the table, and whether there has been an acceleration in demand for late 2025 and 2026 bookings related to the celebration key. Josh is asked to respond.

The paragraph discusses the company's strategy for optimizing revenue by managing their booking curve on a brand-by-brand and itinerary-by-itinerary basis. Despite being in a record position overall, the company is making deliberate decisions, even pulling back bookings for one brand to avoid leaving money on the table. The premium associated with Celebration Key is expected to benefit them, particularly when they ramp up to about 20 ships by 2026. Current strong revenue increases are attributed to natural demand and commercial activities, not related to Celebration Key. The speaker, Steve Wieczynski, thanks Josh for the information, and then Robin Farley from UBS asks if the better booking positions for 2025 and 2026 suggest a stronger start for 2025 compared to a typical year. Josh Weinstein acknowledges her question and anticipates a clarification on expenses.

In the paragraph, various financial figures and projections for a company are discussed. David Bernstein addresses questions about the company's expenses, mentioning a $25 million expense that will appear in Q4. He also confirms there was a onetime cost-saving of about $20 million from pension credits and other minor items, which will not recur in 2025. Josh Weinstein highlights the company's positive outlook for 2025, with higher occupancy and pricing contributing to what is expected to be a record year. Additionally, Ben Chaiken inquires about the company's cost savings and margin improvements, attributing some of these to better fleet management following asset sales. David Bernstein clarifies that the cost improvements are not from actively pulling out costs but rather better leverage of the existing fleet.

The paragraph reports a conversation where Ben Chaiken inquires about the potential for further streamlining within Carnival's portfolio, beyond the recent integration of P&O Australia with the Carnival brand. Josh Weinstein explains that while they are open to future opportunities, the decision to integrate P&O Australia was particularly fitting and executed quickly. He states they will continue to evaluate their portfolio and ships but are currently optimistic about their position going into 2025. The conversation then shifts to James Hardiman, who questions David about cost growth expectations for the year and the impact of specific factors on costs for 2025, such as Celebration Key and dry-docks. David is asked to provide an overview of base-level inflation and other variables that could influence costs positively or negatively.

In the paragraph, David Bernstein discusses the uncertainty surrounding future inflation and its impact on the business, noting that inflation levels will be factored into their December guidance. He mentions ongoing cost-saving efforts that will offset some inflation effects. James Hardiman raises a question about the potential negative impact of the Middle East conflict on their business. Josh Weinstein responds by saying they were not relying on an improvement in the region and that the conflict is not significantly affecting their business. He notes that their ships are not deployed in the Middle East and that their primary markets remain robust.

In the paragraph, Patrick Scholes from Truist Securities asks about next year's dry dock plans and additional developments at Half Moon Cay. David Bernstein mentions he doesn't have detailed dry dock information on hand but suggests contacting Beth for specifics. Josh Weinstein confirms there are more plans for Half Moon Cay but clarifies there won't be a water park. Instead, they aim to enhance the island's natural beauty, contrasting it with the entertainment-focused Celebration Key. Future enhancements will be discussed more in the coming months. The operator then moves on to a question from Brandt Montour with Barclays.

The paragraph discusses progress towards SEA Change's 3-year targets, specifically focusing on financial metrics like yield, cost, and Return on Invested Capital (ROIC). Josh Weinstein notes that the company has surpassed expectations with higher yields and lower costs, boosting their ROIC significantly. They are about 75% towards their goals for EBITDA per ALBD and ROIC after one year, with two years remaining, and around 50% towards their carbon target. Weinstein emphasizes that the company's actions are aimed at satisfying guests and achieving strong business results, rather than merely meeting targets. He expresses optimism about potentially hitting these targets ahead of schedule and possibly exceeding them.

In the paragraph, Brandt Montour asks Josh Weinstein about the broader land-based leisure demand environment, noting a softer normalization and questioning if this trend may affect consumer behavior and pricing sensitivity for cruises. Josh Weinstein responds that cruises continue to offer a remarkable value compared to land-based alternatives and suggests that the land-based sector may be softening because the cruise industry is performing well. He highlights increased marketing efforts and a 17% year-over-year rise in new cruise customers as evidence of strong demand. While Weinstein doesn't predict the future market, he emphasizes the importance of continued focus on commercial execution and improving customer outreach to sustain growth. Montour congratulates Weinstein on the successful quarter.

In this paragraph, the speaker acknowledges the crucial role of travel agents in their success, emphasizing the strong partnership and appreciation for their efforts. Conor Cunningham from Melius Research then asks about the trends in new-to-cruise and younger demographics for 2025 bookings. Josh Weinstein responds that they generally do not disclose future booking details in advance but assures continued efforts to drive demand and optimize performance. David Bernstein adds that the average age of guests has remained stable over the past 10-12 years, despite repeat guests aging.

The paragraph discusses the success of Carnival Cruise Lines in attracting younger guests, with an average age of 41 years old, indicating a strong appeal to millennials. Despite this, Josh Weinstein emphasizes the importance of catering to all generations, including boomers and Gen X, through different brands like Holland America and Cunard, which are popular among older demographics due to their longer and more luxurious cruise options. The discussion also touches on the anticipated opening of Celebration Key next year, noting that there is already substantial interest and premium associated with it, even though it hasn’t yet started operating.

In the paragraph, David Katz from Jefferies asks Josh Weinstein if there are any small areas of consumer weakness amid an otherwise strong quarter and outlook. Josh Weinstein responds that they are not seeing any significant consumer behavior issues, noting broad-based demand across all brands and an increase in onboard spending. David Bernstein confirms an onboard spending increase of 6.7% year-over-year, which is an improvement from the previous quarter. Both emphasize that despite global macroeconomic uncertainties, consumers are still willing to spend, reflecting positively on their offerings.

In the paragraph, Josh Weinstein addresses questions from David Katz and Jaime Katz regarding trade-down dynamics in cruise vacations and the status of the Chinese and Asia Pacific cruise markets. Weinstein clarifies that their increased demand isn't due to consumers downgrading from other types of vacations but rather an improved desire for cruise experiences. He also mentions that the Chinese market wasn't a significant part of their business before the pandemic and that they aren't focusing on it currently, although international cruising in China has reopened. He adds that the rest of the Asia Pacific region, including Japan and Taiwan, is experiencing steady demand for cruises.

During the discussion, Josh Weinstein acknowledged that while European brands have returned to historical occupancy levels, there might still be minor opportunities to increase occupancy, though it won't significantly drive improvement. Instead, the focus is on driving price enhancements. He also noted that the company's financial impact from recent hurricanes is negligible, amounting to just a few million dollars. Assia Georgieva highlighted that current occupancy has not yet matched fiscal 2019 levels, suggesting further yield opportunities. Josh reaffirmed the potential to slightly push occupancy within their operational range but emphasized price improvements as the primary revenue driver. Additionally, there was a brief mention of fuel costs being higher than estimates.

The paragraph discusses financial aspects related to a company's operations and future plans. David Bernstein clarifies that shore power expenses are categorized under port expenses, not fuel costs. Assia Georgieva asks about the possibility of ordering new ships for future delivery, to which Josh Weinstein responds that their order book is set through 2028, with plans extending to 2029 for a new project. The focus is on using generated cash flow to reduce debt. Josh and David Bernstein explain that their strategy for debt repayment includes targeting high-cost debt issuances that are callable in 2025 and managing maturity towers effectively through 2026.

In the paragraph, Assia Georgieva inquires about refinancing and the balance between secured versus unsecured debt for towers in 2027 and 2028. David Bernstein confirms it's a balancing act to decide between cost and secured towers. Georgieva then asks about a new competitor building a terminal in Galveston, Texas. Josh Weinstein responds that he doesn't view it as encroachment, noting that as long as their brands perform well, the company should be fine. Finally, Dan Politzer from Wells Fargo questions potential fourth-quarter yield impacts, particularly in light of better-than-expected third-quarter demand and asks if there are any near-term demand hiccups or conservatism due to external factors like news cycles or elections.

In the paragraph, Josh Weinstein and David Bernstein discuss their business expectations and performance, mentioning that 99% of their ticket revenue for the year is already secured. They note that the fourth quarter could see some unusual attention due to external factors that occur every four years. In a follow-up, Dan Politzer asks about the upcoming investor event aboard the Sun Princess and the key topics of discussion. Weinstein highlights that the meeting will provide a status update on their priorities, including the SEA Change initiative, and will showcase the Sun Princess ship and the progress made in their business. The event will also offer an opportunity to hear from various brand presidents.

In the paragraph, Chris Stathoulopoulos from SIG asks Josh Weinstein about the ongoing strong demand in the cruise industry compared to other travel sectors, attributing it to factors like new customers, later market reopenings, strong U.S. dollar, and pricing advantages over land-based trips. Weinstein agrees there's no longer pent-up demand, given that cruises have been operating for over three years. He declines to rank the factors but acknowledges the overall health and momentum of the cruise industry.

The paragraph discusses efforts in demand generation and marketing to raise awareness and interest in cruises, even among people who haven't considered it before. It highlights various strategies, including performance marketing, driving traffic to trade partners and websites, and generally increasing visibility. Chris Stathoulopoulos inquires about future advertising expenses and their necessity. David Bernstein responds that advertising and other decisions will be made during the ongoing planning process, with more information to be provided in December. Josh Weinstein adds that additional factors will be considered.

The paragraph discusses the company's successful strategy in booking for both the short-term and long-term, emphasizing that advertising efforts aim to balance immediate and future bookings. The metric of "ALBD basis" (available lower berth day) is useful for benchmarking but not definitive. The company's bookings and spending strategies are considered effective, with a notable rise in bookings and improved performance compared to 2019. The conversation shifts to Fred Wightman from Wolfe Research, who asks about a significant increase in new-to-cruise bookings from 10% to 17% this quarter. Josh Weinstein attributes this growth to a combination of factors, including better advertising, improved website usability, and the exceptional performance of Alaska cruises.

The paragraph highlights the exceptional experience of cruising to Alaska, emphasizing that it’s best appreciated via cruise ship, particularly those from their brands due to their superior service and exclusive permits for Glacier Bay. The speaker asserts their brand’s unique advantages and superior performance in delivering this experience. The call concludes with expressions of gratitude and a look forward to future conversations.

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