Carnival Corporation Ltd. Common Shares

Greetings and welcome to the Carnival Corporation and PLC's conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Beth Roberts, Senior Vice President, Investor Relations. Thank you, Beth. You may begin.

Thank you. Good morning and welcome to our first quarter 2025 earnings conference call. I'm joined today by our CEO, Josh Weinstein, our Chief Financial Officer, David Bernstein, and our Chair, Mickey Arison. Before we begin, please note that some of our remarks on this call will be forward-looking. Therefore, I will refer you to the forward-looking statement in today's press release. All references to ticket prices, yields, and cruise costs without fuel will be in constant currency unless otherwise stated. References to yields will be on a net basis. References to cruise costs without fuel, EBITDA, net income, and ROIC will be on an adjusted basis unless otherwise stated. All of these references are non-GAAP financial measures defined in our earnings press release. A reconciliation to the most directly comparable U.S. GAAP financial measures and other associated disclosures are also contained in our earnings press release and in our investor presentation. please visit our corporate website where our earnings press release and investor presentation can be found. With that, I'd like to turn the call over to Josh.

Thanks, Beth. Once again, we delivered a fantastic quarter, this time hitting first quarter high watermarks for revenue, EBITDA, EBITDA per ALBD, operating income, and customer deposits. Net income came in more than $170 million better than guidance as we outperformed across the board, led by incredibly strong demand throughout our portfolio. We achieved a robust 7.3% yield increase, smashing our yield guidance on top of last year's 17% yield improvement. Both ticket and on board equally outperformed on very strong close-in demand, which speaks to the strength of our consumer. Unit costs also came in better than expected, mainly due to timing between the quarters. This resulted in a near doubling of operating income for the quarter and EBITDA that reached $1.2 billion, approaching a 40% year-over-year increase. Operating margins and EBITDA margins each improved over 400 basis points year-over-year, with both of these now surpassing 2019 levels. For the full year, and despite heightened macroeconomic and geopolitical volatility since providing our December guidance, we are taking up yields by half a point to 4.7% based on our strong first quarter results while affirming yield expectations for the remainder of the year. In addition, David and our finance team stepped up our refinancing efforts, which will bring another approximately $100 million to the bottom line this year alone. Combined, this successful execution has enabled us to take up our earnings guidance for the year by $185 million. 2025 remains on track to be another very strong year for our brands, with yield growth far outpacing historical growth rates and nicely exceeding unit cost growth, delivering approximately $600 million incrementally to the bottom line, more than a 30% improvement from 2024. And that is essentially on flat capacity growth. Achieving our March guidance will also result in reaching both of our 2026 sea change financial targets one year early, with ROIC hitting 12% and EBITDA per ALBD more than 50% higher than just two years ago, taking each of these two metrics to levels not seen in the better part of 20 years. At the same time, we're also closing in on our 2026 greenhouse gas target, with an over 19% reduction in carbon intensity compared to 2019. We're generating demand well in excess of our very limited inventory remaining, which has been driving strong pricing for the remainder of the year while also building demand for future years. In fact, we're at historical high prices across all core programs for 2025 and all quarters of the year, while booking volumes for 2026 sailings and beyond taken during the first quarter, also reached an all-time high. We were very well positioned going into Wave this year, and we exited with over 80% of the year on the books at higher prices and with a booking curve that is still the farthest out on record. We have no plans to let up anytime soon. As we foreshadowed on the last call, we kicked off new marketing campaigns across all major brands during Wave season, to fuel more broad-based consideration for cruise travel and keep the strong momentum going. Costa kicked up the volume at the San Remo Music Festival, among Italy's most renowned music events, which was watched by over two-thirds of Italy's television audience, featuring a live performance onboard Costa Toscana. Carnival Cruise Line was also a standout at the Oscars, selected along with a few other household names, for a themed promo honoring stunt performers and featuring a daring skydive into a pool onboard Carnival Celebration. Of course, Carnival Cruise Line has clearly amped up the volume around Celebration Key, which was showcased while lighting the iconic New Year's Eve ball drop in Times Square and continued through the Super Bowl in New Orleans, featuring our celebrity chef partners Emeril Lagasse and Guy Fieri, as well as brand ambassador, Shaquille O'Neal. These two events alone captured over 5 billion impressions across paid, earned, and owned media. And Carnival's adorable wave campaign, Flip, Lost in Paradise, was a hit, getting huge cut through with marketing KPIs up across the board. If our marketing team managed to get that kind of traction around what is still computer-generated animation, I look forward to four months from now when all five portals built for fun at Celebration Key are open for our guests and can be showcased. We're on track for our July opening and executing our ramp up plan into the fourth quarter as our team settles into these new operations and focuses on delivering the kind of phenomenal experience our guests have come to expect from our exclusive destinations. Relax Away Half Moon Key is also on schedule for the second half of 2026. We've already begun to increase our marketing around this enhanced and rebranded jewel in the Caribbean. And we'll have more to come on our plans to increase awareness and consideration for our brands as we leverage our underexposed portfolio of Caribbean destinations. Turning to Alaska, We just announced an expansion and renovation project to Denali Lodge, one of our nine owned and operated hotel properties, building on this unmatched strategic advantage for Holland America and Princess Cruises. Enhancements will include the addition of 120 new guest rooms and suites, room remodelings, additional food and beverage venues, and improvements to public spaces and nature trails. Our brand's land-sea packages are a huge draw for new-to-cruise guests and truly the best way to experience the greatness of Alaska. We also just completed the first of seven AIDA ships to undergo our AIDA Evolution Program. AIDA Diva is now sailing from Rome, having just returned from a seven-week dry dock with many added features that our German guests have come to love on AIDA's newer vessels. This includes over half a dozen new bar and dining venues, new suites, and equipment upgrades to enhance fuel efficiency. Aida Luna will start her evolution later this year, followed by Aida Bella and Aida Mar in 2026. We also further progressed on optimizing our portfolio. Just this month, we completed the sunsetting of our P&O Cruises Australia brand by folding its two remaining ships into Carnival Cruise Line. We also consolidated our Seabourn fleet with a sale of Seabourn Sojourn. While we were not actively looking to sell the ship, the offer was in the best interest of our shareholders. The sale leaves Seabourn well positioned with a phenomenal fleet of three ultra-luxury ocean vessels and two recently launched ultra luxury expedition ships, which comprises one of the most modern fleets in the industry at an average age of just over seven years. Now turning back to the business, and as you can see from our first quarter outperformance, onboard spending and booking levels, we have proven to be incredibly resilient to the volatility around the globe. Having said that, Even with our resilience and strong visibility, given that so much of 2025 is already on the books, we aren't taking the current backdrop lightly. We will be working hard to achieve these results. Thankfully, our team is nimble and agile. Characteristics, as you know, we honed so well over the first half of this decade, leaving us better positioned to manage through whatever comes our way. We have strong, well-recognized brands that are number one or two in every major market for cruise, often tailored specifically to phenomenal national markets such as the US, Germany, and the UK, markets that are deep and under-penetrated. We are delivering amazing vacation experiences every day in a time when people all over the world are placing increasing importance on experiences, particularly those spent with friends and family. And on top of that, we are still a ridiculously amazing value compared to land-based alternatives. While we have been chipping away at the price gap to land-based alternatives, the price to experience ratio of cruising versus those other options remains massively disproportionate. While somewhat frustrating, and while still a big opportunity over the coming years, this huge value for money is also truly a strength when people are looking to make their vacation dollars go even further. And it's about to get even better with the opening of Celebration Key, our marquee port in the Caribbean, which will give our guests yet another reason to come cruise with us. We have been making huge strides on rebuilding our financial fortress as we close in on investment grade leverage metrics. We have well managed near term maturity towers and no new ships for delivery in 2026, which gives us a good amount of headroom to continue paying down debt. In fact, we have just three ships on order over the next four years. further supporting our ability to reach investment grade leverage metrics within 2026. Simply put, we are well positioned for the future and are pushing forward with intention. I'll end by saying thanks to our travel agent partners, loyal guests, investors, destination partners, and other stakeholders who have contributed greatly to our results. And of course, A special thank you to each of our team members for driving out performance once again. But most important for our long-term success, thank you to each and every team member for delivering unforgettable happiness to our guests by providing them with extraordinary cruise vacations while honoring the integrity of every ocean we sail, place we visit, and life we touch. With that, I'll turn the call over to David.