Carnival Corp. Reports Third Quarter Earnings; Record Operating Income – Cruise Industry News

Carnival Corporation announced financial results for the third quarter 2024 and provided an updated outlook for the full year and an outlook for fourth quarter 2024.

• Third quarter net income was $1.7 billion, an increase of over 60 percent compared to 2023 and adjusted net income¹ outperformed June guidance by $170 million.
• Third quarter revenues hit an all-time high of $7.9 billion, up $1.0 billion compared to the prior year.
• Record operating income of $2.2 billion exceeded 2023 levels by $554 million.
• As a result of strong demand and cost saving opportunities, raised its full year 2024 adjusted EBITDA¹ guidance to approximately $6.0 billion, up over 40 percent compared to 2023 and better than June guidance by nearly $200 million.
• The cumulative advanced booked position for full year 2025 is above the previous 2024 record with prices (in constant currency) ahead of prior year.

“We delivered a phenomenal third quarter, breaking operational records and outperforming across the board. Our strong improvements were led by high-margin, same-ship yield growth, driving a 26 percent improvement in unit operating income, the highest level we have reached in fifteen years,” commented Carnival Corporation & plc’s Chief Executive Officer Josh Weinstein.

“We are poised to deliver record operating performance for full year 2024, with adjusted EBITDA now expected to cross $6 billion and adjusted return on invested capital¹ to be approximately 10.5 percent. Strong demand enabled us to increase our full year yield guidance for the third time this year and we improved our cost guidance driving more revenue to the bottom line,” Weinstein added.

“Looking forward, the momentum continues as our enhanced commercial execution drives demand well in excess of our capacity growth, leaving us well positioned with an even stronger base of business for 2025, a record start to 2026 and firmly on the path toward our SEA Change targets,” Weinstein noted.

Third Quarter 2024 Results

• Net income was $1.7 billion, or $1.26 diluted EPS, an increase of $662 million compared to 2023. Adjusted net income of $1.8 billion, or $1.27 adjusted EPS¹, was higher than June guidance by $170 million driven by outperformance in both yield and cost.
• Record operating income of $2.2 billion exceeded 2023 levels by $554 million or 34 percent.
• Record adjusted EBITDA of $2.8 billion increased over 25 percent compared to 2023 and outperformed June guidance by $160 million.
• Third quarter revenues hit an all-time high of $7.9 billion, with record net yields¹ (in constant currency) and record net per diems¹ (in constant currency) both significantly exceeding 2023 levels.
• Gross margin yields increased by 19 percent compared to 2023 and net yields (in constant currency) exceeded 2023 levels by 8.7 percent.
  • Gross margin per diems were up 16 percent compared to 2023. Net per diems (in constant currency) were up nearly 6 percent compared to 2023 with both ticket prices and onboard spending up mid-single digits.
• Cruise costs per available lower berth day (“ALBD”) increased 3.4 percent compared to 2023. Adjusted cruise costs excluding fuel per ALBD¹ (in constant currency) decreased compared to 2023 and were significantly better than June guidance driven by cost saving opportunities, accelerated easing of inflationary pressures, benefits from one-time items and the timing of expenses between the quarters.
• Total customer deposits reached a third quarter record of $6.8 billion, surpassing the previous third quarter record of $6.3 billion as of August 31, 2023, despite lower capacity growth.

Bookings

“With nearly half of 2025 booked and less inventory remaining for sale than the prior year, we are leveraging strong demand to achieve record ticket pricing (in constant currency). Our brands continue to deliver robust bookings momentum, with all our brands ahead on price for 2025 sailings, based on the success of their demand generation efforts along with the exciting offerings and unparalleled experiences we consistently provide our guests. Likewise, 2026 is off to an unprecedented start achieving record booking volumes in the last three months,” Weinstein noted.

During the third quarter, booking volumes remained robust for 2025 sailings at higher prices (in constant currency) compared to the prior year.

The cumulative advanced booked position for full year 2025 is above the previous 2024 record with prices (in constant currency) ahead of prior year.

2024 Outlook

For the full year 2024, the company expects:

• Net yields (in constant currency) up approximately 10.4 percent compared to 2023, better than June guidance, based on continued strength in demand.
• Adjusted cruise costs excluding fuel per ALBD (in constant currency) up approximately 3.5 percent compared to 2023, approximately 1 percentage point better than June guidance driven by cost saving opportunities, accelerated easing of inflationary pressures and benefits from one-time items.
• Adjusted EBITDA of approximately $6.0 billion, up over 40 percent compared to 2023 and better than June guidance by nearly $200 million.
• Adjusted return on invested capital (“ROIC”) of approximately 10.5 percent, an improvement of approximately 5.0 percentage points compared to 2023 and half a point better than June guidance.

For the fourth quarter of 2024, the company expects:

• Net yields (in constant currency) up approximately 5.0 percent compared to particularly strong 2023 levels.
• Adjusted cruise costs excluding fuel per ALBD (in constant currency) up approximately 8.0 percent compared to the fourth quarter of 2023 due primarily to higher dry-dock days and higher investment in advertising.
• Adjusted EBITDA of approximately $1.14 billion, up 20 percent compared to the fourth quarter of 2023.

Financing and Capital Activity

“We have continued to improve our leverage metrics and balance sheet with strong cash generation and continued debt reduction. We are pleased these efforts were recognized by both S&P and Moody’s with their recent credit rating upgrades. For 2024, we expect better than a two turn improvement in net debt to adjusted EBITDA¹ compared to 2023, approaching 4.5x, well on our way to investment grade. In fact, this year’s adjusted free cash flow¹ is expected to be over $3.0 billion,” commented Carnival Corporation & plc’s Chief Financial Officer David Bernstein.

The company continued its efforts to proactively manage its debt profile. Since June 2024, the company prepaid another $625 million of debt, bringing its total prepayments to $7.3 billion since the beginning of 2023. Additionally, the company has now fully utilized the accordion feature of its revolving credit facility, increasing the borrowing capacity by nearly $500 million and bringing the total undrawn commitment to $3.0 billion. The company ended the quarter with $4.5 billion of liquidity, including cash and borrowings available under the revolving credit facility.

During the third quarter, Fitch initiated its coverage of the company with a BB credit rating with a positive outlook. The company is now rated by all three major internationally recognized rating agencies. Additionally, S&P upgraded its credit rating to BB with a stable outlook and Moody’s upgraded to B1 with a positive outlook. The company believes this is a testament to its improved leverage metrics and continuing journey to investment grade ratings.

The company continues to strategically direct new capacity towards its highest returning brand with the recent order of three additional ships to Carnival Cruise Line for delivery in 2029, 2031 and 2033. These ships will become the largest ships in the company’s fleet and will carry more passengers than any other cruise ship to date. The company is following through on its measured capacity growth strategy of one to two ships per year on average, including just three ships scheduled for delivery through 2028. This will enable the company to utilize its substantial free cash flow to strategically improve its balance sheet by significantly reducing its leverage levels over the next several years.

The company obtained a new export credit facility, bringing its total committed financings related to ship deliveries to $3.4 billion, continuing its strategy to finance its newbuild program at preferential interest rates.