GuruFocus -
- Full Year Revenue: $25 billion, an all-time high.
- Cash from Operations: Almost $6 billion, an all-time high.
- Fourth Quarter Net Income: Improved by over $250 million year over year, exceeding expectations by $125 million.
- Full Year Yield Increase: 11%, with a majority from higher prices.
- Fourth Quarter Yields: Up 6.7% compared to the prior year.
- Fourth Quarter Per Diems: Improved over 5% versus the prior year.
- Debt Reduction: Over $8 billion paid down from the January 2023 peak.
- Net Debt-to-EBITDA Ratio: 4.3 times, nearly a 2.5 turn improvement from 2023.
- 2025 Yield Growth Expectation: Approximately 4.2% increase.
- 2025 Cruise Costs Without Fuel per ALBD: Expected to be up approximately 3.7%.
- 2025 Net Income Guidance: Over $2.3 billion, an improvement of more than $400 million versus 2024.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Carnival Corp (NYSE:CCL) achieved record revenues for the seventh consecutive quarter, with strong booking trends and customer deposits.
- Fourth quarter net income improved by over $250 million year over year, exceeding expectations by $125 million.
- Full year revenues reached an all-time high of $25 billion, with cash from operations nearly $6 billion.
- The company achieved a 17.5% reduction in greenhouse gas emissions intensity versus 2019, on track to meet its 2026 target.
- Carnival Corp (NYSE:CCL) has paid down over $8 billion of debt since January 2023, significantly reducing interest expenses.
- Despite strong performance, the company faces potential challenges with new passenger charges in Mexico, which could impact itineraries.
- The introduction of Celebration Key will increase operating expenses, impacting year-over-year cost comparisons by about 0.5 point.
- Carnival Corp (NYSE:CCL) anticipates a 3.7% increase in cruise costs without fuel per ALBD for 2025, driven by inflation and higher advertising expenses.
- The European Union Allowance regulation will increase carbon emissions costs, impacting fuel expenses by approximately $0.03 per share.
- The company is still working to achieve investment-grade leverage metrics, with a current net debt-to-EBITDA ratio of 4.3 times.
A: Josh Weinstein, CEO: Over the last two years, we've restructured and placed the right leaders in key positions, focusing on commercial improvements in revenue management and marketing. We've increased advertising and optimized our portfolio by reallocating ships. For 2025, we plan to continue these efforts, invest in talent and tools, and enhance our destination strategy to drive onboard spending and optimize yields.
Q: David, could you break down net cruise cost ex fuel components in that 3.7% for this year? And help us think about a reasonable spread between yields and cruise costs multiyear?
A: David Bernstein, CFO: The 3.7% increase includes 0.5 points for Celebration Key expenses, 0.75 points for increased dry dock days, and 0.25 points for one-time items from 2024. The remaining 2.2 points are due to inflation and higher advertising, offset by efficiency initiatives. There's no specific rule of thumb for the spread between yields and costs, but we aim to maintain cost consciousness and drive yields higher.
Q: Celebration Key looks exciting, opening up later this summer. Where do you think you are in the customer awareness of this product?
A: Josh Weinstein, CEO: Awareness is still ramping as Celebration Key doesn't exist yet. We're building momentum and excitement, and the bookings are shaping up as expected. Once operational, we anticipate it will significantly enhance guest experiences and drive demand.
Q: Can you give us a little color around the makeup of the yield forecast for 2025? Is it possible that the 4% yield guidance might be conservative?
A: Josh Weinstein, CEO: Our 4.2% yield guidance is based on current knowledge, with most of the increase driven by pricing rather than occupancy. While last year's outperformance was special, we're in a more stable place now, and our goal is to optimize revenue as much as possible.
Q: How much of the organic growth turnaround do you think is due to industry factors versus self-help initiatives?
A: Josh Weinstein, CEO: While the industry becoming more mainstream helps, our growth is largely due to self-help initiatives. We've achieved nearly 10% yield growth on same ships, and our historic growth rates were lower than competitors. We see significant headroom for further growth, especially compared to land-based alternatives.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.