Carnival Boosts Profit Forecast, Sees 'Record Demand'

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00:00Out with earnings this morning, record revenue, adjusted earnings per share for the third quarter

00:04beat the average analyst estimate. The company raised its full year earnings forecast for the

00:09third straight quarter. You cited a record pace for forward bookings and improving net yields.

00:14What's going on with the stock today? Why are people selling?

00:18I don't know. You know, to be honest with you, you gave some of the headlines and truly it's only

00:23it's only some of the headlines. I mean, we did set a record for demand for our yield,

00:28and that was across North American brands and European brands, both coming in four percent higher

00:34year over year, which is great consistency. We also saw that that improvement was driven both by the

00:40ticket pricing and onboard spending. So so all the trends that we have are really quite positive,

00:46and it's all helped lead to 13 percent ROIC, something we haven't seen since got about 20 years

00:54now. The highest operating income in EBITDA on a per unit basis that we've seen in 20 years,

00:59record net income. So so the teams are working hard and delivering, over delivering, and we'll

01:05continue to try to do that. We're going to talk about all of that. Stiefel, an analyst over at

01:09Stiefel pointing to a lower than expected fourth quarter net yields guidance. It's a measure of the

01:14amount of revenue you earn per available lower birthday. Are you just being conservative with this

01:19guidance? Because it sounds like things are going pretty well. Yeah, things are going pretty well.

01:24It's consistent to what we said the guidance would be back in June, if you backed into what the fourth

01:29quarter would be. As a matter of fact, we kept the second half overall consistent to where we were in

01:35December because we did experience a lot of volatility over the first half of the year, given

01:40macroeconomic geopolitical events. But what we saw is, you know, we've outperformed every single quarter,

01:45and that includes the third quarter, and we're going to work hard to try to outperform again.

01:49We're projecting yields in the fourth quarter that demand to be, you know, nicely over four percent,

01:54just like we ended the third quarter. So the trajectory is the trajectory is good.

01:59Josh, great to have you here. And I'm looking at your share price for the year up almost 18 percent,

02:03so easily outperforming the broader market. I mean, what's going on with the consumer? You guys track

02:09the ins and outs of it in terms of bookings, what the spend is on the ship when they get off the ship.

02:14So I'm just curious, how do you characterize the consumer and who's going on, who's jumping on

02:21board with you guys? So I'd say the consumer is strong. I think that's a pretty consistent word

02:28that we've been using for the past couple of years. And yes, we do see ebbs and flows and we

02:32see gyrations in the backdrop and the macroeconomics. But at the end of the day, what we have to offer

02:38is a very, very amazing value to what you can get by doing any other type of holiday,

02:46any other type of vacation. And people pay for it. And the great thing is, even though they're

02:50paying more for our experiences than they did last year and the year before and the year before that,

02:55the gap to land-based vacations is still huge. And so if there is a weakness and pullback in consumer

03:03sentiment, that bodes very well for us because people are looking to stretch their dollar even

03:09further and figuring out how do I get an amazing holiday because I need one and spend, you know,

03:15as thoughtfully as I possibly can. And we turn out very well when you line us up against the

03:21alternatives. What's cool about talking with you, and I know Carnival is your big brand, but I mean,

03:25you have multiple brands and I know you've consolidated in terms of some of the groupings,

03:29but you talked about positive momentum on all of the brands, or is there one in particular that

03:35you're really seeing some standout activity? Well, you know, we have, as I said in my notes

03:42this morning, we have an internal leaderboard, obviously, with our eight world-class brands,

03:47and we encourage the competition and everybody sees who's on top and who's marching forward. And,

03:52you know, the two strongest brands on top of our leaderboard of returns are Carnival Cruise

03:56Line, which is America's Cruise Line, and Aida Cruises, which is the equivalent in Germany.

04:03And the great thing is, as strong as they are and as high as they are, they're looking over their

04:07shoulder because everybody is making improvement year over year. And that stretches across both North

04:13America and Europe as well. And the great thing is, despite the fact that we're showing so much

04:18improvement, only about half of our brands are back to where they were in returns since before our pause,

04:25before 2020, only half of them are at their historical peak. So I know the latent demand,

04:32pardon me, the latent potential that is in our brands. And they are marching forward at pace,

04:39and you can see the results on a consolidated basis for the corporation.

04:44Josh, one of the things we always talk about is, and we have folks here who are,

04:48they do one cruise, they do another cruise, they do another cruise. And I've been on a Carnival

04:53ship where I'm- You're talking about Charlie Powell.

04:54I am, I am. But I've been on an elevator where I've talked to people in the elevator and they're

04:58like, yeah, you know, this is our 10th cruise or our fifth cruise. I am curious, what's the mix

05:03between new passengers who are experiencing Carnival for the first time versus those who are coming

05:09back for a second, third, fourth, fifth, whatever time on one of your ships?

05:14Yeah, so I'll speak holistically, and then I can get a little bit more specific. But holistically,

05:20we got about a third of our guests at any one time are going to be new to cruise. And the remainder

05:25is going to be a mix of brand loyalists and those who cruise in general, and they might go on various

05:29brands and they're back on board one of our ships, one of our brands. It really is dependent on the

05:36profile of the brand and the cruise, because there is a huge difference between a three-nighter,

05:41quick getaway for the weekend out of Miami and going on a Cunard ship for 120-night world cruise.

05:47And you can imagine there's much more loyal guests on the 120-nighter and much more first-timers on a

05:52three-night weekend type of getaway. And the thing to keep in mind for us, because we have very,

05:59very measured capacity growth, we have no new ships next year. We only have one new ship a year for the

06:04next several years thereafter, going to Carnival Cruise Line and then shifting a little bit to Aida as well.

06:10Our capacity profile is such that we're not looking for first-timers because we need first-timers to

06:18fill this hole that we see on the horizon. We're in very strong shape and we're looking for loyalists

06:24and newcomers alike and whoever wants to spend what we're looking to charge to get on our ships.

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