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 due to 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: Paid down over $8 billion of debt from the 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 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 (NYSE:CCL) PLC (NYSE:CUK) achieved record revenues for the seventh consecutive quarter, with strong booking trends and customer deposits indicating continued momentum.
- 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 reported a full year 2024 yield increase of 11%, driven largely by higher prices across all major brands.
- Carnival PLC (NYSE:CUK) made significant progress in reducing debt, paying down over $8 billion in under two years, and improving leverage metrics.
- Despite strong financial performance, Carnival PLC (NYSE:CUK) faces potential challenges with new passenger charges in Mexico, which could impact itineraries.
- The company anticipates increased operating expenses in 2025 due to the introduction of Celebration Key and an increase in dry dock days.
- There is uncertainty regarding the impact of European Union Allowance regulations, which could increase fuel expenses.
- Carnival PLC (NYSE:CUK) acknowledges the need for continued investment in marketing and revenue management to sustain growth.
- The company is still working towards achieving its 2026 SEA Change targets, with some goals like carbon reduction proving challenging.
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 ramped up advertising and strengthened trade relationships. Our portfolio management has been strategic, reallocating ships for optimal returns. For 2025, we continue these efforts, investing in people and tools, enhancing destination strategies, and optimizing onboard spending.
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, 0.25 points for one-time items from 2024, and 2.2 points from inflation and higher advertising, offset by efficiency initiatives. There's no fixed rule for the spread between yields and costs, but we aim to maintain cost consciousness while driving yields higher through advertising and revenue management.
Q: Celebration Key looks pretty 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 booking response is positive. Once operational, we expect it to significantly enhance guest experiences and drive demand.
Q: Can you give us a little color around the makeup of the yield forecast for 2025? Does it seem conservative given the strong pricing momentum?
A: Josh Weinstein, CEO: Our 4.2% yield guidance is based on current knowledge, with most of the increase driven by price rather than occupancy. While last year's outperformance was special, we're now in a more stable position with full occupancy, and we continue to optimize revenue.
Q: How much of the organic growth is due to industry factors versus self-help initiatives?
A: Josh Weinstein, CEO: While the industry's mainstream growth is beneficial, our 10% yield increase on same ships indicates significant self-help. Historically, our growth rates lagged competitors, but we're now aligned or leading, suggesting substantial headroom for further improvement.
Q: Regarding the new passenger charges in Mexico, is it a done deal? What percentage of your itineraries stop in Mexico?
A: Josh Weinstein, CEO: It's not a done deal. We're in discussions with the Mexican government to address the proposed tax, which affects less than 5% of our itineraries. We aim to resolve this without impacting our operations.
Q: Can you discuss the potential for additional upside from refinancing debt in 2025?
A: David Bernstein, CFO: We expect to address callable high-interest debt in the first half of 2025, which could lead to interest savings. While some savings are included in our forecast, successful refinancing could provide further upside.
Q: How should we think about the long-term strategic investment in destinations like Celebration Key?
A: Josh Weinstein, CEO: Investments in destinations like Celebration Key and RelaxAway, Half Moon Cay are strategic for enhancing guest experiences and returns. While these are significant projects, future investments will be evaluated based on their potential to support improved returns.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.