- Revenue: Almost $8 billion, up $1 billion from last year.
- EBITDA: Exceeded $2.8 billion, up $600 million from last year and $160 million over guidance.
- Net Income: Over 60% more than the previous year.
- ROIC: Achieved double-digit ROIC as of the end of the third quarter.
- Full-Year Yield Guidance: Increased for the third time this year.
- 2024 Ticket Revenue: Around 99% already on the books.
- Expected Full-Year EBITDA: $6 billion, $600 million above prior peak and $400 million above original guidance.
- Expected Full-Year ROIC: 10.5%, 1.5 points better than original December guidance.
- Third Quarter Customer Deposits: Record $7 billion.
- Net Income (Q3): Exceeded June guidance by $170 million.
- Yields (Q3): Up 8.7% compared to the prior year.
- Cruise Costs Without Fuel (Q3): Improved nearly 5 percentage points better than June guidance.
- Per Diems (Q3): Improved at least 6% versus the prior year.
- Occupancy (European Brands, Q3): Growth of 5 percentage points compared to Q3 2023.
- Fourth Quarter Yield Guidance: Growth set at 5% over the prior year.
- Full-Year Net Income Guidance: $1.76 billion, a $210 million improvement over June guidance.
- Full-Year Yield Improvement: 10.4%.
- Debt Prepayments: $625 million since June, totaling $7.3 billion since the beginning of 2023.
- Revolving Credit Facility: Upsized by nearly $500 million, bringing total undrawn commitment to $3 billion.
- Expected Full-Year EBITDA: $6 billion.
- Net Debt-to-EBITDA Leverage: Expected to approach 4.5x by year-end 2024.
Release Date: September 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Carnival Corp (CCL, Financial) reported record revenue of almost $8 billion for Q3 2024, surpassing last year's record by $1 billion.
- Record EBITDA of $2.8 billion, up $600 million from last year and $160 million over guidance.
- Net income increased by over 60% compared to the previous year, achieving double-digit ROIC.
- Strong demand enabled an increase in full-year yield guidance for the third time in 2024.
- Record customer deposits of nearly $7 billion, driven by strong bookings for 2024, 2025, and 2026.
Negative Points
- Cruise costs without fuel per available lower berth day (ALBD) are expected to rise by 8% in Q4 2024.
- Higher dry dock days and advertising expenses are impacting cost comparisons for Q4 2024.
- Operating expenses for the new Bahamian destination, Celebration Key, will impact year-over-year cost comparisons by about 0.5 points in 2025.
- An increase of 17% in dry dock days for 2025 will impact cost comparisons by about 0.75 points.
- Despite strong performance, there are concerns about potential impacts from the ongoing conflict in the Middle East.
Q & A Highlights
Q: Josh, on the continued momentum, maybe could you elaborate on the stronger base of business for 2025 and the record start to 2026 that you cited? Maybe if you could touch on volume and pricing trends that you're currently seeing across regions and maybe specifically in Europe?
A: Sure. So I'm probably broad-based is the best way to talk about the strength and what we're seeing on '25. The book position is higher for both North America and our European brands, and that's consistent across the quarters as well. So we're positioned very well. Our brands have been doing a great job of pulling forward the booking curve and now we get to take price, which is the goal. So it's very encouraging. We are we're about two-thirds booked when you look at next 12 months. So we're in a pretty enviable place.
Q: So maybe just a follow-up would be on the balance sheet. If you could speak to capital priorities from here, just given the free cash flow generation and some of the changes that you've made?
A: So basically, our priority one, two, and three is debt reduction, where you have the goal of becoming investment grade, and we do expect to see both the reduction in our debt levels as well as the improvement in our EBITDA, achieve investment-grade metrics as part of our SEA Change program towards the end of 2026. And so we've got plenty of time to think about other alternatives beyond that.
Q: If we kind of think about the fourth quarter yield guidance, it looks to us like it might be a little bit lower versus the implied guidance for the fourth quarter back in -- that you gave back in June. So just wondering if there's anything from a -- whether it's a pricing perspective or any geography or brand, it is showing any -- I don't want to use the word softness, but I guess I have to use that word or weakening in pricing during the fourth quarter? Or are you guys just taking a more conservative view around onboard spending over the next couple of months?
A: Actually, I'm not sure your math, but there was really no change from where we were in June guidance when it comes to the fourth quarter on the yield side. We always said -- when we came out with our guidance, frankly, in December, we were challenged a lot, particularly in the fourth quarter, and people didn't think we'd be able to actually reach breakeven year over year because the fourth quarter of '23 was so strong. So now we're talking about 5%, we feel good about that.
Q: I know it's too early to give guidance for 2025 but -- Let me just ask it this way, which I think is harmless. Given everything you're saying about the booked position for 2025 and even 2026 being at record levels, is it fair to say that you're off to a better start for 2025 than a typical year?
A: So we are starting off even better for '25 than we did for 2024, which is shaping up to be a record year. We are higher in occupancy, and we're higher in price and the brands are doing a great job of really trying to optimize that booking curve and revenue generation. So that's not guidance, but it's a point in time, and that's where we are.
Q: On the cost side, EBITDA flow-through has been stronger than expected. It was almost 60%. Costs have been better generally for the majority of the year. Can you talk about some of the cost saves, margin opportunities you're finding? Is this simply better leveraging a fleet that is now leaner subsequent to some of the asset sales over the past few years? Or is it cost that you're actively pulling out of the business or both?
A: No, it's not cost that we're pulling out of the business. I mean what we're seeing is hundreds of small items across the board, across many brands, things like crew travel savings, other port savings opportunities as well as a lot of sourcing savings, cost innovation better leveraging our scale across all the brands. And that probably represented about half of the $100 million cost savings that we roll through for the full year.
Q: Higher level, you folded P&O Australia into the Carnival brand this year. I know it was somewhat smaller scale, but do you think there's other opportunities to streamline the portfolio in a similar way going forward?
A: I'd never say never take things off the table. I think this is one of those decisions that just made a lot of sense and something that we felt pretty passionately about executing quickly. We'll continue to review our portfolio brand-by-brand, ship-by-ship. But right now, we feel real good about how we're entering 2025.
Q: I wanted to dig into some of the cost commentary you gave us, David. So 3.5% growth for this year, that seems like it's getting better, obviously, with some cost saves and maybe better inflation. I think you called out about 0.5 point next year for Celebration Key and another 75 bps from dry docks. I guess, are there any call-outs on the other side of that equation? I don't think our starting point should be in that 5% range if we were to just take the 3.5% this year and add those 2% callouts. Maybe talk us through sort of what the base level of inflation is as we think about 2025 and any other sort of positive factors that will help offset some of the negative ones for next year?
A: Well, it's -- if you know exactly what inflation is going to be over the next 15 months, let me know, but we're still trying to figure that out. There is some level of inflation that continues in our business. We'll include that within our guidance when we provided in December plus, we continue to work on cost-saving opportunities. As I said in the June call, even though we have the best cost metrics in the business. We still believe there are opportunities in our business to further leverage our scale and to work through those opportunities as we did in the second and the third quarter, and we'll continue to do so. And we'll include some of that in our guidance, which will offset some of inflation. So -- but stay tuned. The two things that I gave in my prepared remarks were relative to the dry docks and the cost of Celebration Key are pretty well fixed at this point. And so we wanted to highlight those in the prepared remarks.
Q: Maybe speak to one of the questions that we keep getting is the potential for the widening conflict in the Middle East to negatively impact your business. I mean I -- to some degree, it would seem to help that much of that region was already vacated in 2024. I guess the hope was that, that would be a '25 tailwind. That now seems off the
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
