Carnival beats Q2 forecasts, raises full-year guidance, rosy on 2025

Shares rose 5% at market open.

Full-year EPS guidance went to approximately $1.18, above March guidance of 98 cents and Wall Street's $1.01 consensus.

Second quarter

Q2 adjusted net income of $134m, or 11 cents per share, outperformed March guidance by nearly $170m, thanks to pricing/onboard spending and the timing of expenses. Wall Street had been expecting a 2-cent per share loss. US GAAP net income was $92m, or 7 cents/share, an increase of nearly $500m compared to 2023.

Revenues reached a record $5.8b, higher than the consensus $5.68b forecast. Net yields, up 12%, and net per diems, up 6% (both in constant currency), topped 2023 and were records.

Adjusted cruise costs excluding fuel per available lower berth day (in constant currency) were in line with the prior year and better than March guidance in part due to cost savings with most of the favorability driven by the timing of expenses between quarters.

Occupancy rose six points to 104%.

Customer deposits at all-time high

The cumulative booked position for the remainder of 2024 continues to be the best on record in both price (constant currency) and occupancy. And bookings for full year 2025 are even higher than 2024 in both price (constant currency) and occupancy.

Total customer deposits reached an all-time high of $8.3b, surpassing the previous record by $1.1b ($7.2b as of May 31, 2023).

'We have made incredible strides in improving our commercial operations, strategically reallocating our portfolio composition and formulating growth plans, while strengthening even further our global team ... delivering records, this time across revenues, operating income, customer deposits and booking levels, exceeding our guidance on every measure,' CEO Josh Weinstein said.

2024 net yields forecast to top 10%

'Based on continued strong demand trends, we are taking up our expectations for the year with net yields now forecasted to top 10% and propelling us towards double-digit returns on invested capital.'

With this upwardly revised guidance, Carnival will be on average around two-thirds of the way to achieving its three 2026 SEA Change targets after just one year, Weinstein added.

Full-year outlook

With less inventory remaining for sale in 2024, the company achieved considerably higher prices on bookings taken during Q2. Pricing for both North America and Australia ('NAA') and Europe segments is running ahead of the prior year in Q3 and Q4.

Driven by efforts to elongate the booking curve and favorable pricing trends, Carnival's cumulative booked position for the remainder of 2024 continues to be the best on record, with occupancy still 'nicely above' 2023 levels at 'considerably' higher prices (constant currency).

For the full year Carnival projects net yields (constant currency) to be up 10.25% from 2023. Adjusted cruise costs excluding fuel per ALBD are forecast to be approximately 0.5 percentage points better than March guidance.

Third quarter guidance

Net yields (in constant currency) are expected to be up approximately 8% compared to 2023, with adjusted cruise costs excluding fuel per ALBD up approximately 4.5% from Q3 last year.

Adjusted EPS of $1.15 is forecast, a nickel higher than the Wall Street consensus.

Debt and liquidity

The company ended the quarter with $29.3b in debt and $4.6b of liquidity.

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