Speaker 1: Well, Carnival reported earnings, and the stock at one point
Speaker 1: sold off more than six percent on the news. This
Speaker 1: after a key quarterly earnings forecast trailed estimates, adding to
Speaker 1: worries that a travel slow down has spread to even
Speaker 1: the most robust corner of the market. However, Carnival did
Speaker 1: boost full year profit expectations, beating Wall Street's view, suggesting
Speaker 1: any slow down may prove transitory. Do you want to
Speaker 1: point out too, the stock is down about fifteen percent
Speaker 1: so far here in twenty twenty five.
Speaker 2: Let's get some context and more detail around.
Speaker 1: The company's quarterly update. Great to have back with us,
Speaker 1: Josh Weinstein. He's president, CEO, and chief Climate Officer of
Speaker 1: Carnival Corporation, and he joins us from Carnival's headquarters in Miami.
Speaker 2: Josh, great to be talking with you. How are you
Speaker 2: very well?
Speaker 3: Thank you?
Speaker 2: How are you doing doing okay?
Speaker 1: Trying to keep up with everything that's coming at us
Speaker 1: on a daily basis, And I kind of want to
Speaker 1: start there because there is a lot coming at anyone
Speaker 1: who's running a big company like yours today, whether it's
Speaker 1: out of Washington, whether it's out of how the consumer
Speaker 1: is feeling, how would you describe the cruise business and
Speaker 1: how it compares from your last quarterly update, what has
Speaker 1: changed at all, because I know you have been very
Speaker 1: optimistic and it seems like you're still optimistic about the
Speaker 1: business based on the releases.
Speaker 3: Yeah. Yeah, absolutely.
Speaker 4: So the thing that's changed from December to today is, well,
Speaker 4: we just completed our first quarter and instead of yields
Speaker 4: being up four point seven percent, which is what we
Speaker 4: guided to, they were up seven point three percent. And
Speaker 4: so clearly things went very very well in the first quarter.
Speaker 4: Consumers love to cruise, and we've got eight brands that
Speaker 4: are purposely tied to particular demographics, particular national markets, and
Speaker 4: it serves us very very well. And so what we
Speaker 4: see is enough strength in that first quarter that we
Speaker 4: can raise our yields for the year, for our full
Speaker 4: year guidance, and that's basically saying that we're content to
Speaker 4: keep four percent plus yields for the remaining three quarters
Speaker 4: of the year despite the fact that there is you know,
Speaker 4: geopolitical macroeconomic uncertainty, which certainly wasn't on the radar when
Speaker 4: we came up with our guidance to begin with in December.
Speaker 1: And yet investors seem to be at least initially disappointed
Speaker 1: over your second quarter even a forecast. Your forecast was
Speaker 1: one point three to two billion in the second quarter,
Speaker 1: and as it expected one point three to five billion.
Speaker 2: Should they be disappointed?
Speaker 4: You know what, I guess I'll answer by saying, our
Speaker 4: December guidance was basically saying we're going to be about
Speaker 4: was it a buck seventy give or take for the year?
Speaker 4: On EPs we just came out with guidance said buck
Speaker 4: eighty three. We all performed on revenue yields on board
Speaker 4: on board trends are really really healthy with our with
Speaker 4: our consumers. So I would argue that we should be
Speaker 4: higher than where we were in December since our results
Speaker 4: are better than where we were in December.
Speaker 3: But that's really up to h up to the street.
Speaker 4: Our job is to deliver and hopefully over deliver, which
Speaker 4: is what we did in the first quarter.
Speaker 5: So Josh, let's talk a little bit more that consumer
Speaker 5: because in the press release you noted that Carnival's not
Speaker 5: completely immune from heightened macroeconomic and geopolitical volatility, and you're
Speaker 5: still taking up earnings expectations for the year. You remain
Speaker 5: on track to have another stellar year across the entire
Speaker 5: brand of cruises. Why are we hearing then from airlines
Speaker 5: that consumers are pulling back? Why are we not seeing
Speaker 5: that in your business?
Speaker 4: Well, I think there's a couple of things to differentiate.
Speaker 4: First of all, airlines aren't just for holidays. Airlines are
Speaker 4: business travel. It is holidays, it's conferences, it's government travel.
Speaker 4: We are really holidays, We are vacations. So we're in
Speaker 4: a different bucket than where than where airlines are.
Speaker 3: You know, we came in to twenty twenty.
Speaker 4: Five the best book position we've ever been in at
Speaker 4: higher prices. We came out at the end of the
Speaker 4: first quarter still being in line with record occupancy percentage
Speaker 4: and price is still nicely higher. We're eighty percent book
Speaker 4: for the year, and so we have relatively limited inventory
Speaker 4: to sell when it comes to twenty twenty five. At
Speaker 4: the same time, our guests and our brands aren't just
Speaker 4: focused on in year. You know, we just came out
Speaker 4: of the first quart of the wave period, which is
Speaker 4: considered the traditional big push for selling, and we set
Speaker 4: a record for the most volume we've ever done during
Speaker 4: wave for future years out, so people aren't just thinking
Speaker 4: about the short term. They're thinking about the long term,
Speaker 4: which is exactly what we're doing as a company.
Speaker 5: But are you noticing any change in the tone of
Speaker 5: the bookings, the pace of the bookings, or perhaps even
Speaker 5: people canceling because of their own uncertainty. I understand there's
Speaker 5: this difference between discretionary spend and business spend, but after all,
Speaker 5: discretionary is discretionary, and that's often the first thing to
Speaker 5: go if people are feeling uncertain.
Speaker 4: Yeah, you know, we haven't seen any noticeable change in
Speaker 4: trends on cancelations. Certainly, as we mentioned on the call.
Speaker 4: You know, there were ups and downs over the first quarter.
Speaker 4: There's ups and downs all the time, but we got
Speaker 4: through our period at pretty much the highest point that
Speaker 4: you can get at, at least for us in our history,
Speaker 4: and we feel good about.
Speaker 3: The position that puts us in.
Speaker 4: Like I said onboard spending, you know, it's up about
Speaker 4: ten percent year over year in the first quarter. That's
Speaker 4: an acceleration of year over year performance versus where we
Speaker 4: were in the fourth quarter, and at least into the
Speaker 4: first couple of weeks of March. With cruises that have ended,
Speaker 4: we really haven't seen a slowdown in that consumer behavior,
Speaker 4: that onboard spending. And so you know, at the end
Speaker 4: of the day, people in good times and bad times,
Speaker 4: they take holiday, they.
Speaker 3: Take a break. They need a break.
Speaker 4: You could argue in bad times they need that break
Speaker 4: even more than they do in the good times.
Speaker 3: And that's what cruising is. It's a break.
Speaker 4: It's a way to relax, to get away from things,
Speaker 4: enjoy time with friends and family. That's what people pay
Speaker 4: for now. And when you line up cruise versus other
Speaker 4: vacation alternatives, frustrating as it is for me as a
Speaker 4: CEO of a cruise company, we're a great value. And
Speaker 4: the fact is if people are getting concerned, if there's uncertainty,
Speaker 4: noise in the background, people are searching for more value
Speaker 4: for their money, and that's exactly what we do. So
Speaker 4: it plays very well into our strength.
Speaker 1: So just for the record, I could go on a
Speaker 1: cruise for about a month right now because I need
Speaker 1: a break.
Speaker 3: But we'd love to have you. We'd love to have you.
Speaker 1: Having said that, what about in terms of pricing, are
Speaker 1: you guys able to maintain pricing? Nothing changing in that regard,
Speaker 1: either for the first quarter or even for the outlook
Speaker 1: for the second quarter.
Speaker 4: Yeah, you know, so, like I said, the first quarter,
Speaker 4: you know, our yields year over year, we're up over
Speaker 4: seven percent, and over a two year period, we're talking
Speaker 4: about twenty four percent higher yields.
Speaker 3: Yeah, for the first quarter.
Speaker 4: When we look at the rest of the year queues
Speaker 4: two through four, we're projecting a little bit over four
Speaker 4: percent yield improvement year over year for that nine month
Speaker 4: period remainder of the year. So you know, look, it's
Speaker 4: hard going, right, It's not like anything is easy, and
Speaker 4: we got to work hard.
Speaker 3: Our brands work hard.
Speaker 4: To make that become a reality, and they do it
Speaker 4: good revenue management techniques, through the great advertising that they're doing,
Speaker 4: and then ultimately delivering onboard experiences that people want to
Speaker 4: pay for. And then they get off of our ships
Speaker 4: and they tell their friends and family how amazing it is,
Speaker 4: and we get more.
Speaker 1: Hey, one of the things we wanted to ask you
Speaker 1: is something that in late February, the US Commerce Secretary
Speaker 1: of Howard Lutnik, he made some comments about how US
Speaker 1: based cruise companies Josh should be paying taxes even on
Speaker 1: ships that are registered abroad.
Speaker 2: We saw your.
Speaker 1: Stock, along with everybody in the major creuse space, sell
Speaker 1: off on his words, even though analysts indicated the worry
Speaker 1: may be overblown.
Speaker 2: They said, we've heard this before over the years. Is
Speaker 2: it overblown? Are you talking with a Trump administration about this?
Speaker 1: And if there was a US registration change, what would
Speaker 1: that mean for you guys?
Speaker 4: So clearly we're operating in the confines of US laws
Speaker 4: as well we should shipping. International shipping is based on
Speaker 4: very specific tax regimes that are set up in the
Speaker 4: US and all over the world, and effectively it's based
Speaker 4: on reciprocet.
Speaker 1: Uh.
Speaker 4: So we feel like we're we're in a good place.
Speaker 4: We're doing what we should be doing. Having said that,
Speaker 4: anything out of the administration, including Secretary Lutnik, we certainly
Speaker 4: take seriously, and we're working hard to understand what the
Speaker 4: concerns are and and and how we can address them.
Speaker 4: If any there's really nothing, there's nothing to report on
Speaker 4: from my perspective as far as you know what that.
Speaker 3: Means or where things could be going.
Speaker 4: But we'll we'll we'll stay on our guard and do
Speaker 4: whatever we need to do to make sure we're we're
Speaker 4: staying on the right side of policy.
Speaker 5: Josh, why don't you register in the US? Is it
Speaker 5: regulatory reasons, is it tax reasons, is it labor reasons?
Speaker 5: Is it all of the above. Why don't you register
Speaker 5: in the US?
Speaker 3: Yeah, it's just not that simple.
Speaker 4: You don't just take a ship and all of a sudden,
Speaker 4: ship you can't just switch to US registry. It's it's
Speaker 4: just not that simple. And and really it's a it's.
Speaker 3: A it's a.
Speaker 4: People to go to school for classes for this right
Speaker 4: about international shipping and what what it means, how it works.
Speaker 4: And it's been in place for much longer than I've
Speaker 4: been alive, and so you know, we could we can
Speaker 4: do a separate session on that, but but suffice it
Speaker 4: to say, it's a regime that is that is well founded,
Speaker 4: and it's where we are right now, all right, So.
Speaker 1: It's not something that we should think about. I mean,
Speaker 1: it can be done, though, right, What is the it
Speaker 1: in terms of registering in the United States?
Speaker 4: It's honestly not that simple based on how US law works,
Speaker 4: It's just not that simple.
Speaker 2: Okay.
Speaker 1: Would that be a conversation though, then to have with
Speaker 1: the Trump administration Josh and say, listen, guys, if it
Speaker 1: was simpler, I mean, they're all about making things simpler, right, efficient.
Speaker 2: Is there a conversation to be had.
Speaker 3: Oh, we're happy to talk to the administration truly.
Speaker 2: Okay, okay, hey listen.
Speaker 1: One of the things we wanted to talk to you
Speaker 1: about in a big way, and I've seen it firsthand,
Speaker 1: is the island destinations that you guys have and it
Speaker 1: seems to be a continued, you know, move for you
Speaker 1: guys and expansion. You open Celebration Key this July. This
Speaker 1: is in Grand Bahama Island. How do these island destinations?
Speaker 1: We've talked to you about it, but it continues to
Speaker 1: be something we find really interesting. How does it fit
Speaker 1: into the North American cruise strategy and how important it
Speaker 1: is I always think about to the top line, the
Speaker 1: profitability picture.
Speaker 3: Yeah.
Speaker 4: So for us, what we're doing with Celebration Key, which
Speaker 4: opens in July, it's a bit of a first for us.
Speaker 4: Even though we have a wonderful footprint around the Caribbean,
Speaker 4: we've really we've we've built and created these destinations really
Speaker 4: as a service to our brands and something that's supportive
Speaker 4: of and really supplemental to what brands are doing and
Speaker 4: leading with with a cruise experience that makes them so loved.
Speaker 4: What we're doing with Celebration Key, which doesn't even exist yet,
Speaker 4: and yet it's captivated the audience and captivated the imagination
Speaker 4: of carnival cruisers and others. Is we want to also
Speaker 4: lead with destination as a driver of consideration, of a
Speaker 4: driver for people saying I need to go on Carnival
Speaker 4: Cruise Line because I'll get to go to Celebration Key
Speaker 4: or because I'll get to go to relax Away half
Speaker 4: Moon Key because it's the only way to get there.
Speaker 4: And so we believe that there's a tremendous amount of
Speaker 4: untapped value there in revenue generation, as well as the
Speaker 4: fact that these destinations are built close to the United States.
Speaker 4: Hence we consume less fuel in order to get there,
Speaker 4: which saves money is obviously good for the planet.
Speaker 1: Hey listen, twenty seconds left here. What is your most
Speaker 1: popular destination? Where do most people want to go and
Speaker 1: what kind of trip?
Speaker 4: Woll we carry thirteen million people last year. They want
Speaker 4: they want to go to a lot of places. I'd say,
Speaker 4: if you're going to ask me what's my top that
Speaker 4: I've ever been to, I got to say, you got
Speaker 4: to go on a cruise to Alaska and you got
Speaker 4: to go with Princess Hall in America or a Carnival
Speaker 4: because they do it in an amazing way and QNR
Speaker 4: for those who are looking for the for the luxury end.
Speaker 3: But if you want to see.
Speaker 4: The Great State, the only way to do it is
Speaker 4: with a great brand that can take you on both
Speaker 4: c and with our land experiences. Because we've got hotels
Speaker 4: and motor coaches and glass dome railcars and you name it,
Speaker 4: we got it up in Alaska.
Speaker 1: I just want to go somewhere where I get a
Speaker 1: cocktail with like a little umbrella in it.
Speaker 4: I just I'm that we also serve cocktails with umbrella
Speaker 4: when we go to Alaska.
Speaker 2: Josh, thank you so much. Always appreciate the time you
Speaker 2: give us. Be well, Be well.
Speaker 1: Josh Weinstein, President, CEO, and Chief Climate Office of Carnival Corporation,
Speaker 1: joining us from Carnival's headquarters in Miami.