Carnival Corporation & plc (CCL) Q3 2022 Earnings Call Transcript

For the period ending August 31, 2022

September 30, 2022 10:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Josh Weinstein

Good morning. This is Josh Weinstein. Welcome to our third quarter 2022 business update conference call, my first as CEO. I’m joined today telephonically by our Chair, Micky Arison. And with me here in our Miami offices are Chief Financial Officer, David Bernstein; and our Senior Vice President of Investor Relations, Beth Roberts.

Before I begin, please note that some of our remarks on this call will be forward-looking. Therefore, I must refer you to the cautionary statement in today’s press release.

Our business continues on a positive trajectory. We’ve been closing the gap to 2019 as we put a stake in the ground internally and shifted from return to service to a relentless focus on return to strong profitability. The occupancy gap to 2019 has reduced from over 50 points in Q1 to less than 30 points in Q3. At the same time, our capacity in service has gone from approximately 60% in Q1 to over 90% in Q3. In fact, in the month of August, we achieved almost 90% occupancy at higher constant dollar revenue per diem despite the impact of future cruise credits. And the differential in adjusted cruise costs, excluding fuel per ALBD, has reduced from over $25 in Q1 down to $10 in Q3. As a result, we were able to generate over $300 million of adjusted EBITDA in the third quarter, overcoming a near doubling in fuel prices.

We expect these favorable trends to continue as we finish up 2022 and head into 2023. And while we expect breakeven to slightly negative fourth quarter EBITDA given the seasonality of revenues and our increasing investment in advertising to drive revenue yield in 2023, we do expect second half EBITDA overall to be positive. We’ve also been making strategic changes to our fleet composition that will pay dividends over time. Our global fleet of 91 ships has never been better positioned, thanks to the exiting of 23 smaller, less efficient ships and taking delivery of 9 large and very efficient ships. While we’ll all be four years older than we were in 2019, next year, the average age of our fleet will actually be a year younger than in 2019 at 12 years. It also means our average berth count per ship is increasing nearly 20%, the largest amongst our public peers. We expect benefits of this profile to include a fleet with 10% higher fuel efficiency, 6% more efficiency in remaining operating costs, a richer cabin mix and larger overall platforms to deliver onboard experiences and generate associated revenues.