DEF: Carnival Corporation & plc Reports Record Revenues and Operating Income for 2024

Carnival Corporation & plc achieved record full-year revenues of $25 billion and operating income of $3.6 billion in 2024, marking a significant financial turnaround.

Summary

• Carnival Corporation & plc had a strong year in 2024, achieving record revenues and milestones.
• Full-year revenues reached an all-time high of $25 billion, exceeding the prior year by over 15%.
• The company reported seven consecutive quarters of record revenues.
• Operating income for the full year was a record $3.6 billion, more than 80% higher than the previous year.
• Cash from operations hit an all-time high of almost $6 billion.
• Ticket prices for 2024 were higher than 2023 across major cruise lines, with onboard spending levels increasing sequentially each quarter.
• The company experienced record booking trends and year-end customer deposits, indicating continued strong momentum.
• Debt prepayments of over $3 billion were made during 2024, bringing total prepayments to over $7 billion since the beginning of 2023.
• The debt balance was reduced by over $8 billion from its peak in January 2023, ending the year with $27.5 billion of debt.
• The adjusted return on invested capital comfortably exceeded the cost of capital at the end of 2024.
• Three new ships were welcomed in 2024: Carnival Jubilee, Sun Princess, and Queen Anne.
• Greenhouse gas emission intensity was reduced by approximately 17.5% compared to 2019, putting the company on track to achieve a 20% reduction by the end of 2026.
• Absolute greenhouse gas emissions have been lowered by almost 10% since 2019, despite a capacity growth of over 9%.

Sentiment

Score: 9

Explanation: The document expresses a highly positive sentiment due to record financial results, debt reduction, and progress on sustainability goals. The tone is optimistic and confident about the future.

Positives

• Record full-year revenues and operating income demonstrate strong financial performance.
• Significant debt reduction and prepayments improve the company's financial stability.
• Higher ticket prices and onboard spending indicate strong customer demand.
• Progress towards sustainability goals shows a commitment to environmental responsibility.
• The introduction of new ships enhances the company's offerings and attracts new customers.
• The development of exclusive cruise destinations provides unique experiences for guests.

Risks

• The document mentions the need for energy sources and technologies that do not yet exist at scale to achieve net zero emissions by 2050.
• The document mentions significant supply and cost challenges that must be resolved before alternative low GHG emission fuels become viable.

Future Outlook

The company anticipates a continuation of strong momentum, driven by record booking trends and year-end customer deposits. They are focused on reducing interest expense and rebuilding their investment-grade balance sheet.

Management Comments

• We had a strong year, setting records and achieving milestones.
• We remain laser focused on further reducing interest expense and rebuilding our investment-grade balance sheet.
• We are delivering long-term value for our shareholders through improved operational execution across our cruise lines.
• We are grateful for the efforts of our hard working and dedicated team who delivered a step change improvement in 2024 and set us up very well for 2025 and beyond, while consistently delivering unforgettable happiness to over 13 and a half million people in 2024, by providing them with extraordinary cruise vacations while honoring the integrity of every ocean we sail, place we visit and life we touch.

Industry Context

The announcement reflects a strong recovery and growth phase for Carnival Corporation & plc within the cruise industry, positioning them as a leader in innovative and sustainable cruising. This is particularly relevant given the challenges the industry has faced in recent years and the increasing focus on environmental responsibility.

Comparison to Industry Standards

• The document does not provide a direct comparison to industry standards.
• However, the mention of being included in both the S&P 500 index in the U.S. and the FTSE 250 index in the UK suggests a strong market capitalization and financial standing compared to other companies.
• The document mentions Conde Nast Travelers 2024 Mega Ship of the year in the U.S. awarded to Sun Princess, Princess Cruises next generation flagship which indicates a high standard of quality and guest experience.

Related Party Transactions

• Micky Arison, our Chair, is also the Chair, President and the indirect majority shareholder of FBA II, Inc., the general partner of Miami Heat Limited Partnership (MHLP), the owner of the Miami Heat, a professional basketball team.
• He is also the indirect shareholder of Basketball Properties, Inc., the general partner of Basketball Properties, Ltd. (BPL), which is the manager and operator of the Kaseya Center.
• In July 2021, Carnival Cruise Line entered into an amendment of the advertising and promotion agreement between Carnival Cruise Line, MHLP and BPL which extended the terms of the agreement through 2025.
• In October 2023, Carnival Cruise Line, MHLP and BPL executed an amendment to the advertising and promotion agreement which granted Carnival Cruise Line the right to feature a logo patch on Miami Heat player jerseys for one year for an additional $2 million.
• Pursuant to this agreement, as amended, Carnival Cruise Line paid $1,257,000 during fiscal 2024.
• In August 2015, Carnival Corporation entered into a nonexclusive Aircraft Lease Agreement with an owner trustee under a trust agreement with Ad Astra I, LLC (the Lease Agreement); and in August 2020, Carnival Corporation entered into a Services Agreement with Nickel Cayman Management, LLC (the Services Agreement and together with the Lease Agreement, the Aircraft Agreements).
• In March 2021, the Lease Agreement and the Services Agreement were amended to adjust the rental rate and aircraft management fee to account for substantially all flight department overhead being borne by Nickel Cayman Management, LLC following Carnival Corporations disposal of its own aircraft in December 2020.
• Under the terms of the amended Lease Agreement, Carnival Corporation leases an aircraft beneficially owned by Ad Astra I, LLC from time-to-time in exchange for an hourly rent of $7,920 plus applicable taxes, which is based on market charter rates for similar aircraft as adjusted for costs of operations borne by Carnival Corporation (i.e., fuel and line maintenance during its operation of the aircraft) and hourly service plan expenses.
• Under the terms of the amended Services Agreement, Carnival Corporation provides aircraft management services to Nickel Cayman Management, LLC with respect to the aircraft, including overseeing its operation, maintenance and staffing, and is paid an annual fee of $162,000 (which is based on market rates for similar arrangements) (the Service Fee).
• In addition, Carnival Corporation is reimbursed for operating, maintenance and personnel costs and related third party costs incurred in connection with the services (Service Costs).
• The terms of the Aircraft Agreements are for one year and they renew automatically for one-year periods, unless terminated sooner by either party upon 30 days written notice.
• During fiscal 2024, Carnival Corporation billed Ad Astra I, LLC for $1,048,000 under the Lease Agreement, and Nickel Cayman Management, LLC paid Carnival Corporation $162,000 as the Service Fee and reimbursed Carnival Corporation $2,280,000 for the Service Costs.
• Each of Ad Astra I, LLC and Nickel Cayman Management, LLC are companies directly or indirectly controlled by a trust of which Mr. Arison is a beneficiary.
• As one of the beneficiaries of the trust, Mr. Arison benefits from payments to Ad Astra I, LLC under the Lease Agreement in whole or in part.
• Mr. Arison is also an officer of Nickel Cayman Management, LLC.

Stakeholder Impact

• Shareholders benefit from improved financial performance, debt reduction, and increased shareholder value.
• Employees benefit from a focus on wellness, fair treatment, and opportunities for professional development.
• Customers benefit from enhanced cruise experiences and new destinations.
• Communities benefit from sustainable tourism practices and investments in local economies.

Next Steps

• Open Celebration Key in the summer of 2025, with an additional pier opening in the fall of 2026.
• Enhance Half Moon Cay, with a newly constructed pier expected to be ready in the summer of 2026.
• Continue to work towards achieving a 20% reduction in greenhouse gas emission intensity by the end of 2026.
• Continue to focus on further reducing interest expense and rebuilding the investment-grade balance sheet.

Key Dates