WEBVTT - Carnival CEO Josh Weinstein Talks 0:00:00.120 --> 0:00:02.920 Well, Carnival reported earnings, and the stock at one point 0:00:02.960 --> 0:00:04.960 sold off more than six percent on the news. This 0:00:05.000 --> 0:00:08.480 after a key quarterly earnings forecast trailed estimates, adding to 0:00:08.560 --> 0:00:11.040 worries that a travel slow down has spread to even 0:00:11.039 --> 0:00:14.680 the most robust corner of the market. However, Carnival did 0:00:14.760 --> 0:00:18.680 boost full year profit expectations, beating Wall Street's view, suggesting 0:00:18.760 --> 0:00:22.000 any slow down may prove transitory. Do you want to 0:00:22.000 --> 0:00:24.320 point out too, the stock is down about fifteen percent 0:00:24.400 --> 0:00:26.160 so far here in twenty twenty five. 0:00:26.520 --> 0:00:29.360 Let's get some context and more detail around. 0:00:29.200 --> 0:00:31.840 The company's quarterly update. Great to have back with us, 0:00:31.960 --> 0:00:34.839 Josh Weinstein. He's president, CEO, and chief Climate Officer of 0:00:34.920 --> 0:00:39.159 Carnival Corporation, and he joins us from Carnival's headquarters in Miami. 0:00:39.520 --> 0:00:41.760 Josh, great to be talking with you. How are you 0:00:43.240 --> 0:00:43.680 very well? 0:00:43.720 --> 0:00:44.120 Thank you? 0:00:44.240 --> 0:00:45.720 How are you doing doing okay? 0:00:45.760 --> 0:00:48.440 Trying to keep up with everything that's coming at us 0:00:48.720 --> 0:00:51.000 on a daily basis, And I kind of want to 0:00:51.040 --> 0:00:53.680 start there because there is a lot coming at anyone 0:00:53.720 --> 0:00:56.960 who's running a big company like yours today, whether it's 0:00:57.000 --> 0:00:59.800 out of Washington, whether it's out of how the consumer 0:00:59.880 --> 0:01:02.840 is feeling, how would you describe the cruise business and 0:01:02.880 --> 0:01:06.039 how it compares from your last quarterly update, what has 0:01:06.120 --> 0:01:08.320 changed at all, because I know you have been very 0:01:08.319 --> 0:01:10.880 optimistic and it seems like you're still optimistic about the 0:01:10.920 --> 0:01:12.240 business based on the releases. 0:01:13.200 --> 0:01:14.559 Yeah. Yeah, absolutely. 0:01:14.600 --> 0:01:17.800 So the thing that's changed from December to today is, well, 0:01:17.880 --> 0:01:21.039 we just completed our first quarter and instead of yields 0:01:21.080 --> 0:01:23.200 being up four point seven percent, which is what we 0:01:23.240 --> 0:01:26.200 guided to, they were up seven point three percent. And 0:01:26.680 --> 0:01:30.240 so clearly things went very very well in the first quarter. 0:01:31.040 --> 0:01:34.160 Consumers love to cruise, and we've got eight brands that 0:01:34.200 --> 0:01:38.480 are purposely tied to particular demographics, particular national markets, and 0:01:38.520 --> 0:01:42.240 it serves us very very well. And so what we 0:01:42.319 --> 0:01:45.040 see is enough strength in that first quarter that we 0:01:45.080 --> 0:01:49.280 can raise our yields for the year, for our full 0:01:49.360 --> 0:01:54.440 year guidance, and that's basically saying that we're content to 0:01:54.560 --> 0:01:58.920 keep four percent plus yields for the remaining three quarters 0:01:58.960 --> 0:02:01.680 of the year despite the fact that there is you know, 0:02:01.800 --> 0:02:06.720 geopolitical macroeconomic uncertainty, which certainly wasn't on the radar when 0:02:06.760 --> 0:02:09.320 we came up with our guidance to begin with in December. 0:02:09.200 --> 0:02:12.440 And yet investors seem to be at least initially disappointed 0:02:12.480 --> 0:02:16.520 over your second quarter even a forecast. Your forecast was 0:02:16.639 --> 0:02:18.880 one point three to two billion in the second quarter, 0:02:18.919 --> 0:02:21.040 and as it expected one point three to five billion. 0:02:21.440 --> 0:02:22.960 Should they be disappointed? 0:02:24.760 --> 0:02:27.359 You know what, I guess I'll answer by saying, our 0:02:27.480 --> 0:02:31.320 December guidance was basically saying we're going to be about 0:02:32.200 --> 0:02:34.160 was it a buck seventy give or take for the year? 0:02:34.200 --> 0:02:37.000 On EPs we just came out with guidance said buck 0:02:37.000 --> 0:02:40.919 eighty three. We all performed on revenue yields on board 0:02:41.120 --> 0:02:43.560 on board trends are really really healthy with our with 0:02:43.600 --> 0:02:46.400 our consumers. So I would argue that we should be 0:02:46.480 --> 0:02:49.200 higher than where we were in December since our results 0:02:49.200 --> 0:02:51.320 are better than where we were in December. 0:02:51.320 --> 0:02:53.600 But that's really up to h up to the street. 0:02:53.680 --> 0:02:56.639 Our job is to deliver and hopefully over deliver, which 0:02:56.639 --> 0:02:57.800 is what we did in the first quarter. 0:02:58.639 --> 0:03:00.680 So Josh, let's talk a little bit more that consumer 0:03:00.720 --> 0:03:02.880 because in the press release you noted that Carnival's not 0:03:02.960 --> 0:03:07.480 completely immune from heightened macroeconomic and geopolitical volatility, and you're 0:03:07.520 --> 0:03:10.440 still taking up earnings expectations for the year. You remain 0:03:10.520 --> 0:03:12.880 on track to have another stellar year across the entire 0:03:13.000 --> 0:03:17.600 brand of cruises. Why are we hearing then from airlines 0:03:18.280 --> 0:03:21.640 that consumers are pulling back? Why are we not seeing 0:03:21.680 --> 0:03:22.800 that in your business? 0:03:24.080 --> 0:03:27.320 Well, I think there's a couple of things to differentiate. 0:03:27.400 --> 0:03:31.560 First of all, airlines aren't just for holidays. Airlines are 0:03:31.600 --> 0:03:36.480 business travel. It is holidays, it's conferences, it's government travel. 0:03:37.080 --> 0:03:41.040 We are really holidays, We are vacations. So we're in 0:03:41.080 --> 0:03:43.800 a different bucket than where than where airlines are. 0:03:43.840 --> 0:03:46.559 You know, we came in to twenty twenty. 0:03:46.280 --> 0:03:48.920 Five the best book position we've ever been in at 0:03:49.000 --> 0:03:52.080 higher prices. We came out at the end of the 0:03:52.120 --> 0:03:58.000 first quarter still being in line with record occupancy percentage 0:03:58.040 --> 0:04:01.720 and price is still nicely higher. We're eighty percent book 0:04:01.760 --> 0:04:05.440 for the year, and so we have relatively limited inventory 0:04:05.520 --> 0:04:08.240 to sell when it comes to twenty twenty five. At 0:04:08.280 --> 0:04:10.960 the same time, our guests and our brands aren't just 0:04:11.000 --> 0:04:13.400 focused on in year. You know, we just came out 0:04:13.400 --> 0:04:15.120 of the first quart of the wave period, which is 0:04:15.160 --> 0:04:18.520 considered the traditional big push for selling, and we set 0:04:18.560 --> 0:04:21.600 a record for the most volume we've ever done during 0:04:21.680 --> 0:04:24.960 wave for future years out, so people aren't just thinking 0:04:25.000 --> 0:04:26.920 about the short term. They're thinking about the long term, 0:04:26.960 --> 0:04:28.760 which is exactly what we're doing as a company. 0:04:29.400 --> 0:04:31.200 But are you noticing any change in the tone of 0:04:31.240 --> 0:04:33.719 the bookings, the pace of the bookings, or perhaps even 0:04:33.839 --> 0:04:36.800 people canceling because of their own uncertainty. I understand there's 0:04:36.839 --> 0:04:40.160 this difference between discretionary spend and business spend, but after all, 0:04:40.200 --> 0:04:43.120 discretionary is discretionary, and that's often the first thing to 0:04:43.160 --> 0:04:44.560 go if people are feeling uncertain. 0:04:45.720 --> 0:04:48.680 Yeah, you know, we haven't seen any noticeable change in 0:04:48.720 --> 0:04:52.680 trends on cancelations. Certainly, as we mentioned on the call. 0:04:52.839 --> 0:04:55.480 You know, there were ups and downs over the first quarter. 0:04:55.480 --> 0:04:58.839 There's ups and downs all the time, but we got 0:04:58.880 --> 0:05:02.400 through our period at pretty much the highest point that 0:05:02.440 --> 0:05:04.320 you can get at, at least for us in our history, 0:05:04.920 --> 0:05:06.599 and we feel good about. 0:05:06.440 --> 0:05:07.920 The position that puts us in. 0:05:08.440 --> 0:05:11.279 Like I said onboard spending, you know, it's up about 0:05:11.279 --> 0:05:13.800 ten percent year over year in the first quarter. That's 0:05:13.800 --> 0:05:17.120 an acceleration of year over year performance versus where we 0:05:17.120 --> 0:05:19.560 were in the fourth quarter, and at least into the 0:05:19.600 --> 0:05:21.960 first couple of weeks of March. With cruises that have ended, 0:05:22.480 --> 0:05:25.400 we really haven't seen a slowdown in that consumer behavior, 0:05:25.440 --> 0:05:27.719 that onboard spending. And so you know, at the end 0:05:27.760 --> 0:05:30.919 of the day, people in good times and bad times, 0:05:31.320 --> 0:05:32.599 they take holiday, they. 0:05:32.440 --> 0:05:33.760 Take a break. They need a break. 0:05:33.920 --> 0:05:37.040 You could argue in bad times they need that break 0:05:37.120 --> 0:05:38.800 even more than they do in the good times. 0:05:39.680 --> 0:05:41.440 And that's what cruising is. It's a break. 0:05:41.480 --> 0:05:43.599 It's a way to relax, to get away from things, 0:05:43.720 --> 0:05:45.880 enjoy time with friends and family. That's what people pay 0:05:45.960 --> 0:05:49.520 for now. And when you line up cruise versus other 0:05:49.640 --> 0:05:53.080 vacation alternatives, frustrating as it is for me as a 0:05:53.120 --> 0:05:56.120 CEO of a cruise company, we're a great value. And 0:05:56.160 --> 0:06:00.000 the fact is if people are getting concerned, if there's uncertainty, 0:06:00.200 --> 0:06:03.120 noise in the background, people are searching for more value 0:06:03.240 --> 0:06:06.600 for their money, and that's exactly what we do. So 0:06:06.640 --> 0:06:08.320 it plays very well into our strength. 0:06:08.600 --> 0:06:11.320 So just for the record, I could go on a 0:06:11.360 --> 0:06:13.000 cruise for about a month right now because I need 0:06:13.000 --> 0:06:13.359 a break. 0:06:13.360 --> 0:06:15.760 But we'd love to have you. We'd love to have you. 0:06:16.080 --> 0:06:18.520 Having said that, what about in terms of pricing, are 0:06:18.560 --> 0:06:22.359 you guys able to maintain pricing? Nothing changing in that regard, 0:06:22.480 --> 0:06:26.520 either for the first quarter or even for the outlook 0:06:26.560 --> 0:06:27.400 for the second quarter. 0:06:28.680 --> 0:06:31.119 Yeah, you know, so, like I said, the first quarter, 0:06:31.320 --> 0:06:33.280 you know, our yields year over year, we're up over 0:06:33.320 --> 0:06:36.240 seven percent, and over a two year period, we're talking 0:06:36.240 --> 0:06:38.440 about twenty four percent higher yields. 0:06:38.560 --> 0:06:40.000 Yeah, for the first quarter. 0:06:40.680 --> 0:06:42.799 When we look at the rest of the year queues 0:06:42.839 --> 0:06:45.720 two through four, we're projecting a little bit over four 0:06:45.800 --> 0:06:49.640 percent yield improvement year over year for that nine month 0:06:49.680 --> 0:06:53.080 period remainder of the year. So you know, look, it's 0:06:53.160 --> 0:06:55.520 hard going, right, It's not like anything is easy, and 0:06:55.560 --> 0:06:56.400 we got to work hard. 0:06:56.440 --> 0:06:57.720 Our brands work hard. 0:06:57.520 --> 0:06:59.760 To make that become a reality, and they do it 0:07:00.200 --> 0:07:03.840 good revenue management techniques, through the great advertising that they're doing, 0:07:03.920 --> 0:07:07.440 and then ultimately delivering onboard experiences that people want to 0:07:07.480 --> 0:07:09.560 pay for. And then they get off of our ships 0:07:09.920 --> 0:07:12.600 and they tell their friends and family how amazing it is, 0:07:12.640 --> 0:07:13.360 and we get more. 0:07:14.240 --> 0:07:15.920 Hey, one of the things we wanted to ask you 0:07:16.280 --> 0:07:19.960 is something that in late February, the US Commerce Secretary 0:07:19.960 --> 0:07:22.400 of Howard Lutnik, he made some comments about how US 0:07:22.440 --> 0:07:25.760 based cruise companies Josh should be paying taxes even on 0:07:25.840 --> 0:07:27.200 ships that are registered abroad. 0:07:27.440 --> 0:07:28.239 We saw your. 0:07:28.080 --> 0:07:31.800 Stock, along with everybody in the major creuse space, sell 0:07:31.840 --> 0:07:34.400 off on his words, even though analysts indicated the worry 0:07:34.400 --> 0:07:35.120 may be overblown. 0:07:35.120 --> 0:07:37.680 They said, we've heard this before over the years. Is 0:07:37.720 --> 0:07:40.840 it overblown? Are you talking with a Trump administration about this? 0:07:40.920 --> 0:07:44.080 And if there was a US registration change, what would 0:07:44.120 --> 0:07:47.000 that mean for you guys? 0:07:46.760 --> 0:07:50.440 So clearly we're operating in the confines of US laws 0:07:50.520 --> 0:07:54.080 as well we should shipping. International shipping is based on 0:07:54.480 --> 0:07:56.880 very specific tax regimes that are set up in the 0:07:56.960 --> 0:07:59.200 US and all over the world, and effectively it's based 0:07:59.240 --> 0:07:59.960 on reciprocet. 0:08:00.480 --> 0:08:00.600 Uh. 0:08:00.640 --> 0:08:02.400 So we feel like we're we're in a good place. 0:08:02.480 --> 0:08:04.720 We're doing what we should be doing. Having said that, 0:08:05.280 --> 0:08:09.000 anything out of the administration, including Secretary Lutnik, we certainly 0:08:09.040 --> 0:08:12.480 take seriously, and we're working hard to understand what the 0:08:12.520 --> 0:08:15.120 concerns are and and and how we can address them. 0:08:15.120 --> 0:08:18.280 If any there's really nothing, there's nothing to report on 0:08:18.720 --> 0:08:21.840 from my perspective as far as you know what that. 0:08:21.720 --> 0:08:23.480 Means or where things could be going. 0:08:23.800 --> 0:08:27.120 But we'll we'll we'll stay on our guard and do 0:08:27.200 --> 0:08:29.320 whatever we need to do to make sure we're we're 0:08:29.360 --> 0:08:32.120 staying on the right side of policy. 0:08:32.960 --> 0:08:36.199 Josh, why don't you register in the US? Is it 0:08:36.679 --> 0:08:40.840 regulatory reasons, is it tax reasons, is it labor reasons? 0:08:40.960 --> 0:08:43.000 Is it all of the above. Why don't you register 0:08:43.080 --> 0:08:43.600 in the US? 0:08:43.960 --> 0:08:46.120 Yeah, it's just not that simple. 0:08:46.160 --> 0:08:47.679 You don't just take a ship and all of a sudden, 0:08:47.679 --> 0:08:50.600 ship you can't just switch to US registry. It's it's 0:08:50.640 --> 0:08:53.520 just not that simple. And and really it's a it's. 0:08:53.400 --> 0:08:55.120 A it's a. 0:08:54.720 --> 0:08:56.800 People to go to school for classes for this right 0:08:56.880 --> 0:09:00.240 about international shipping and what what it means, how it works. 0:09:00.559 --> 0:09:03.800 And it's been in place for much longer than I've 0:09:03.800 --> 0:09:06.800 been alive, and so you know, we could we can 0:09:06.880 --> 0:09:09.079 do a separate session on that, but but suffice it 0:09:09.160 --> 0:09:13.040 to say, it's a regime that is that is well founded, 0:09:13.080 --> 0:09:16.360 and it's where we are right now, all right, So. 0:09:16.320 --> 0:09:19.000 It's not something that we should think about. I mean, 0:09:19.200 --> 0:09:23.520 it can be done, though, right, What is the it 0:09:24.520 --> 0:09:26.560 in terms of registering in the United States? 0:09:27.559 --> 0:09:30.880 It's honestly not that simple based on how US law works, 0:09:30.720 --> 0:09:32.120 It's just not that simple. 0:09:32.360 --> 0:09:32.720 Okay. 0:09:33.080 --> 0:09:35.080 Would that be a conversation though, then to have with 0:09:35.080 --> 0:09:37.480 the Trump administration Josh and say, listen, guys, if it 0:09:37.559 --> 0:09:41.960 was simpler, I mean, they're all about making things simpler, right, efficient. 0:09:42.480 --> 0:09:44.040 Is there a conversation to be had. 0:09:45.080 --> 0:09:47.240 Oh, we're happy to talk to the administration truly. 0:09:47.400 --> 0:09:49.160 Okay, okay, hey listen. 0:09:49.240 --> 0:09:50.440 One of the things we wanted to talk to you 0:09:50.440 --> 0:09:52.880 about in a big way, and I've seen it firsthand, 0:09:53.120 --> 0:09:55.560 is the island destinations that you guys have and it 0:09:55.600 --> 0:09:58.400 seems to be a continued, you know, move for you 0:09:58.480 --> 0:10:02.079 guys and expansion. You open Celebration Key this July. This 0:10:02.160 --> 0:10:06.240 is in Grand Bahama Island. How do these island destinations? 0:10:06.240 --> 0:10:07.920 We've talked to you about it, but it continues to 0:10:07.920 --> 0:10:10.280 be something we find really interesting. How does it fit 0:10:10.320 --> 0:10:12.920 into the North American cruise strategy and how important it 0:10:13.000 --> 0:10:14.839 is I always think about to the top line, the 0:10:14.880 --> 0:10:16.280 profitability picture. 0:10:17.640 --> 0:10:17.840 Yeah. 0:10:17.880 --> 0:10:20.720 So for us, what we're doing with Celebration Key, which 0:10:20.760 --> 0:10:23.720 opens in July, it's a bit of a first for us. 0:10:23.800 --> 0:10:26.520 Even though we have a wonderful footprint around the Caribbean, 0:10:26.880 --> 0:10:31.280 we've really we've we've built and created these destinations really 0:10:31.320 --> 0:10:34.199 as a service to our brands and something that's supportive 0:10:34.280 --> 0:10:37.840 of and really supplemental to what brands are doing and 0:10:37.920 --> 0:10:41.440 leading with with a cruise experience that makes them so loved. 0:10:42.120 --> 0:10:45.440 What we're doing with Celebration Key, which doesn't even exist yet, 0:10:45.520 --> 0:10:49.440 and yet it's captivated the audience and captivated the imagination 0:10:49.600 --> 0:10:54.040 of carnival cruisers and others. Is we want to also 0:10:54.280 --> 0:10:58.000 lead with destination as a driver of consideration, of a 0:10:58.080 --> 0:11:00.400 driver for people saying I need to go on Carnival 0:11:00.440 --> 0:11:03.520 Cruise Line because I'll get to go to Celebration Key 0:11:03.880 --> 0:11:06.800 or because I'll get to go to relax Away half 0:11:06.880 --> 0:11:08.880 Moon Key because it's the only way to get there. 0:11:09.600 --> 0:11:12.200 And so we believe that there's a tremendous amount of 0:11:12.280 --> 0:11:16.120 untapped value there in revenue generation, as well as the 0:11:16.120 --> 0:11:19.400 fact that these destinations are built close to the United States. 0:11:19.400 --> 0:11:22.040 Hence we consume less fuel in order to get there, 0:11:22.080 --> 0:11:23.960 which saves money is obviously good for the planet. 0:11:24.240 --> 0:11:26.600 Hey listen, twenty seconds left here. What is your most 0:11:26.640 --> 0:11:29.320 popular destination? Where do most people want to go and 0:11:29.360 --> 0:11:30.200 what kind of trip? 0:11:30.960 --> 0:11:33.280 Woll we carry thirteen million people last year. They want 0:11:33.360 --> 0:11:35.640 they want to go to a lot of places. I'd say, 0:11:35.640 --> 0:11:37.439 if you're going to ask me what's my top that 0:11:37.480 --> 0:11:39.200 I've ever been to, I got to say, you got 0:11:39.200 --> 0:11:41.240 to go on a cruise to Alaska and you got 0:11:41.240 --> 0:11:43.320 to go with Princess Hall in America or a Carnival 0:11:43.360 --> 0:11:45.480 because they do it in an amazing way and QNR 0:11:45.600 --> 0:11:47.840 for those who are looking for the for the luxury end. 0:11:48.280 --> 0:11:49.240 But if you want to see. 0:11:49.120 --> 0:11:51.040 The Great State, the only way to do it is 0:11:51.040 --> 0:11:52.760 with a great brand that can take you on both 0:11:53.000 --> 0:11:56.199 c and with our land experiences. Because we've got hotels 0:11:56.200 --> 0:11:59.520 and motor coaches and glass dome railcars and you name it, 0:11:59.559 --> 0:12:00.760 we got it up in Alaska. 0:12:00.880 --> 0:12:02.200 I just want to go somewhere where I get a 0:12:02.200 --> 0:12:04.079 cocktail with like a little umbrella in it. 0:12:04.160 --> 0:12:06.880 I just I'm that we also serve cocktails with umbrella 0:12:06.960 --> 0:12:08.040 when we go to Alaska. 0:12:08.840 --> 0:12:11.600 Josh, thank you so much. Always appreciate the time you 0:12:11.640 --> 0:12:12.719 give us. Be well, Be well. 0:12:12.800 --> 0:12:16.200 Josh Weinstein, President, CEO, and Chief Climate Office of Carnival Corporation, 0:12:16.559 --> 0:12:18.840 joining us from Carnival's headquarters in Miami.