Along with many cruise lines, Carnival Corporation reported a highly successful wave season in its financial results for Q1 2024, along with outlooks for Q2 and the full year.
The corporation which owns Carnival Cruise Line, Princess Cruises, Holland America Line and Seabourn, reported record Q1 revenues of $5.4 billion, with record net yields and net per diems (daily spend) significantly exceeding 2023 levels.
"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 & plc's 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.
According to a press release, Carnival improved its first-quarter bottom line by nearly $500 million compared to 2023 due to continued strength in demand. Booking volumes hit an all-time high, and total customer deposits reached a Q1 record of $7.0 billion, surpassing the previous first-quarter record by $1.3 billion.
The company ordered its first new builds in five years, the tenth and eleventh in its Excel class, which are scheduled to be delivered to Carnival Cruise Line in 2027 and 2028.
The Globe and Mail reports, "While the key volume metric of passenger cruise days unfortunately missed, we were impressed that Carnival still beat analysts' revenue expectations this quarter. With operating margin outperformance, EPS also beat. Looking ahead, full-year adjusted EBITDA guidance was in line with Wall Street Consensus estimates."
First Quarter 2024 Results
- Cash from operations was $1.8 billion, and operating income was $276 million.
- Adjusted net loss was better than December guidance. U.S. GAAP net loss of $214 million, or $(0.17) diluted EPS, and adjusted net loss of $180 million, or $(0.14) adjusted EPS (see "Non-GAAP Financial Measures" below).
- Adjusted EBITDA of $871 million exceeded December guidance by over $70 million (see "Non-GAAP Financial Measures" below).
- Record first quarter revenues of $5.4 billion, with record net yields (in constant currency) and record net per diems (in constant currency) both significantly exceeding 2023 levels.
- Gross margin yields nearly doubled compared to 2023 and net yields (in constant currency) significantly exceeded 2023 levels by over 17 percent.
- Gross margin per diems increased 73 percent compared to 2023 levels and net per diems (in constant currency) were up nearly five percent, significantly exceeding strong prior year levels.
- Onboard revenue per diems were higher than 2023 for the company's North America and Australia ("NAA") segment as well as its Europe segment. On a consolidated basis, onboard revenue per diems reflected a mix impact due to the increased weighting of its Europe segment driven by its higher occupancy growth.
- Cruise costs per available lower berth day ("ALBD") increased 7.9 percent compared to 2023. Adjusted cruise costs excluding fuel per ALBD (in constant currency) were better than December guidance due to the timing of expenses between the quarters and up 7.3 percent compared to 2023 (see "Non-GAAP Financial Measures" below).
- Total customer deposits reached a first quarter record of $7.0 billion, surpassing the previous first quarter record by $1.3 billion ($5.7 billion as of February 28, 2023).
Bookings
The company had a "robust start" to its wave season, with record booking volumes for all future sailings that exceeded expectations. The first quarter booking volumes achieved considerably higher prices (in constant currency) than last year, as less inventory was remaining for sale at the start of the year. This is in line with the company's strategy of pulling the booking curve forward.
"In fact, pricing (in constant currency) on bookings for the remainder of the year for the company's NAA segment was considerably higher compared to the prior year, with its Europe segment up double digits," Carnival stated.
"We are enjoying a phenomenal wave season with strength across all major deployments and brands. Even with less inventory available for the remainder of the year, booking volumes hit an all-time high, driven by demand for 2025 sailings and beyond. Our brands have demonstrated continued success creating demand that outstrips available capacity translating into higher prices (in constant currency) and a further elongation in the booking curve," Weinstein noted.
The Globe and Mail said, "Carnival's annualized revenue growth of 154% over the last two years is above its five-year trend, suggesting some bright spots as the world emerged from COVID lockdowns and restrictions. We can better understand the company's revenue dynamics by analyzing its number of passenger cruise days, which reached 23.5 million in the latest quarter. Over the last two years, Carnival's passenger cruise days averaged 1,189% year-on-year growth."
"While Carnival had been particularly bullish on the expansion of its fleet last year, this year has seen a shift towards growth," reports CruiseHive. "While the news is mostly positive from Carnival Corporation, the company continues to be affected by events worldwide. With the collapse of the Francis Scott Key Bridge in Baltimore, both Carnival Legend and Carnival Pride will be redirected to different ports, which is estimated to have a potential $10 million impact on Carnival’s financial results."
2024 Outlook
Francis Scott Key Bridge in Baltimore:
"Given the timing of yesterday's event in Baltimore and the temporary change in homeport, our guidance does not include the current estimated impact of up to $10 million on both adjusted EBITDA and adjusted net income for the full year 2024," Carnival shared.
- The company's full-year 2024 guidance includes a projected net yield increase of approximately 9.5% compared to 2023. Adjusted EBITDA is expected to grow by over 30% compared to 2023 despite the impact of the Red Sea rerouting, which is estimated to cause a loss of approximately $130 million.
- In the second quarter of 2024, the company expects net yields to increase by approximately 10.5% compared to 2023 levels, with an adjusted EBITDA of roughly $1.05 billion, over 50% growth compared to the second quarter of 2023.
