8-K: Carnival Corporation & plc Announces Record First Quarter Revenues and All-Time High Booking Levels

Carnival Corporation & plc reported record first-quarter revenues and all-time high booking volumes, exceeding expectations and raising full-year guidance.

Summary

• Carnival Corporation & plc announced record first-quarter revenues of $5.4 billion, driven by strong demand and higher ticket prices.
• The company's net yields and net per diems significantly exceeded 2023 levels, both in constant currency.
• The first quarter adjusted net loss was better than December guidance, with a nearly $500 million improvement compared to 2023.
• Booking volumes reached an all-time high, with prices considerably higher year-over-year.
• Full-year 2024 net yield guidance was raised by over a point to approximately 9.5 percent compared to 2023.
• Adjusted cruise costs excluding fuel guidance improved by $35 million compared to December guidance.
• Total customer deposits reached a first-quarter record of $7.0 billion, surpassing the previous record by $1.3 billion.
• The company redeemed its remaining second lien debt and upsized its revolving facility by $400 million.
• Carnival ordered two new excel-class ships, scheduled for delivery in 2027 and 2028.

Sentiment

Score: 9

Explanation: The document is highly positive, with record revenues, strong booking volumes, and improved financial guidance. The company is clearly performing well and is optimistic about the future. There are some minor negative impacts from the Red Sea rerouting and the Baltimore bridge incident, but these are relatively small compared to the overall positive results.

Positives

• Record first quarter revenues and booking volumes indicate strong demand for Carnival's cruises.
• Improved net yields and per diems demonstrate the company's ability to increase revenue per passenger.
• The company's adjusted net loss was better than expected, showing improved profitability.
• Increased customer deposits signal strong future demand and cash flow.
• Debt reduction and refinancing activities improve the company's financial stability.
• The order of new ships demonstrates confidence in future growth.
• The company is making progress on its sustainability goals, with a projected 18 percent reduction in GHG emission intensity in 2024 compared to 2019.

Negatives

• The company reported a U.S. GAAP net loss of $214 million for the first quarter.
• Cruise costs per available lower berth day (ALBD) increased by 7.9 percent compared to 2023.
• The Red Sea rerouting is expected to negatively impact adjusted EBITDA and adjusted net income by up to $130 million or $0.09 adjusted EPS through November 2024.
• The Francis Scott Key Bridge incident in Baltimore is expected to have a $10 million negative impact on both adjusted EBITDA and adjusted net income for the full year 2024.

Risks

• Geopolitical uncertainty, war, inflation, and higher fuel prices could negatively impact demand for cruises.
• Pandemics could have a significant negative impact on the company's financial condition and operations.
• Incidents involving ships, guests, or the cruise industry could lead to reputational damage.
• Changes in laws and regulations could be costly and lead to litigation.
• Climate change and related regulations could adversely affect the business.
• Breaches in data security and technology failures could negatively impact operations.
• The company's substantial debt could adversely affect its financial health and operating flexibility.
• Fluctuations in foreign currency exchange rates may adversely impact financial results.

Future Outlook

The company expects net yields to be up approximately 9.5 percent for the full year 2024 compared to 2023, and adjusted EBITDA of approximately $5.63 billion, over 30 percent growth compared to 2023. For the second quarter of 2024, the company expects net yields to be up approximately 10.5 percent compared to 2023 levels and adjusted EBITDA of approximately $1.05 billion, over 50 percent growth compared to the second quarter of 2023.

Management Comments

• This has been a fantastic start to the year. We delivered another strong quarter that outperformed guidance on every measure, while concluding a monumental wave season that achieved all-time high booking volumes at considerably higher prices, commented Carnival Corporation & plcs Chief Executive Officer Josh Weinstein.
• These results are a continuation of the strong demand we have been generating across our brands and all core deployments, leading to an upward revision of full year expectations by more than a point of incremental yield improvement and setting us up nicely to deliver a nearly double-digit improvement in net yields, Weinstein added.
• With much of this year on the books, we have even greater conviction in delivering record revenues and EBITDA, along with a step change improvement in operating performance, and have begun turning more of our attention to delivering an even stronger 2025, Weinstein noted.
• Continued execution coupled with strengthening demand for our brands is driving increased confidence in our ongoing performance. We are pleased this has been recognized by S&P and Moodys with their recent upgrades, as well as the recent upsizing and two-year extension of our revolving credit facility, noted Carnival Corporation & plcs Chief Financial Officer David Bernstein.
• Looking forward over the next several years, we expect our robust revenue growth, responsible approach to capital investment, and ongoing efforts to refinance debt at favorable rates to deliver substantial free cash flow which will significantly reduce our leverage and build shareholder value, Bernstein added.

Industry Context

The strong results and increased guidance suggest that the cruise industry is experiencing a robust recovery in demand, with Carnival positioned to benefit from this trend. The company's focus on new ship orders and sustainability initiatives aligns with broader industry trends.

Comparison to Industry Standards

• Carnival's record booking volumes and increased pricing are a positive sign compared to industry peers, indicating strong demand for their offerings.
• The company's focus on new, efficient ships, such as the excel-class and LNG-powered vessels, aligns with industry trends towards sustainability and cost efficiency.
• The company's debt reduction and refinancing efforts are a positive step compared to some competitors who may still be struggling with high debt levels.
• The company's adjusted EBITDA of $871 million for the first quarter is a strong result compared to other cruise operators, indicating strong operational performance.
• The company's net yield increase of over 17 percent significantly exceeds the industry average, demonstrating strong pricing power and demand.

Stakeholder Impact

• Shareholders will benefit from the company's strong financial performance and increased guidance.
• Employees may benefit from the company's growth and success.
• Customers will benefit from the company's new ships and improved offerings.
• Suppliers may benefit from the company's increased demand and growth.
• Creditors will benefit from the company's debt reduction and improved financial stability.

Next Steps

• The company will continue to focus on delivering record revenues and EBITDA.
• The company will continue to manage its debt profile and refinance debt at favorable rates.
• The company will continue to implement its sustainability initiatives.
• The company will take delivery of two new ships in 2027 and 2028.

Key Dates

Keywords

cruise, revenue, booking, yield, EBITDA, debt, sustainability, newbuild, customer deposits, net per diems