Good morning. This is Beth Roberts, SVP Investor Relations. Welcome to our Fourth Quarter 2023 Earnings Conference Call. I'm joined today by our CEO, Josh Weinstein, our Chief Financial Officer, David Bernstein; and our Chair, Micky Arison. Before we begin, please note that some of our remarks on this call will be forward-looking. Therefore, I will refer you to the cautionary statement in today's press release. All references to ticket prices, net per diem, net yields and adjusted cruise costs without fuel will be in constant currency unless otherwise stated. References to per diems and yields will be on a net basis. Our comments may also reference cruise costs without fuel, EBITDA, net income, net loss, earnings per share, free cash flow and ROIC, all of which will be on an adjusted basis, unless otherwise stated. All these references are non-GAAP financial measures defined in our earnings press release. A reconciliation to the most directly comparable U.S. GAAP financial measures and other associated disclosures are also contained in our earnings press release and in our investor presentation. Please visit our corporate website where our earnings press release and investor presentation can be found. With that, I'd like to turn the call over to Josh.

Thank you, Beth. It's safe to say we ended the year on a high note and closed another quarter with record revenues, record booking levels and record customer deposits. In fact, we consistently set records in all four quarters this past year. We also achieved per diem EBITDA and net income for the fourth quarter that all exceeded the high end of our September guidance range with cruise cost ex fuel in line with expectations. Fourth quarter yields continued on a positive trajectory, significantly higher than a very strong 2019 and even higher than we had anticipated and enabled us to overcome four years of high cost inflation to deliver per unit EBITDA that eclipsed 2019, holding fuel and currency constant. It was encouraged to see both North American and European brand occupancy levels exceed 101% in the fourth quarter with per diems for our North American brands up double-digits over 2019 and our European brands just shy of a double-digit increase. We delivered per diem improvements of more than 7-points for the full year with even stronger acceleration in Q4 while closing the double-digit occupancy gap at the start of the year to reach historical levels for the second half of 2023. An absolute spending on board was consistent across all four quarters as we drove improvement in ticket prices. We delivered $85 million more to the bottom line in the fourth quarter than forecasted, which pushed us through to positive adjusted income for the year. Strong EBITDA and cash from operations also propelled us on our journey to reduce the debt load necessitated during the pause in operations. We made debt payments of $6 billion this year ago, and we still have well over $5 billion of liquidity on top of strong and improving cash flow, which will…

Thank you, Josh. I'll start today with a summary of our 2023 fourth quarter and full year results. Next, I will provide a recap of our refinancing and deleveraging efforts during 2023 and finish off with some color on our 2024 full year and first quarter December guidance. Our fourth quarter bottom line exceeded the better end of our guidance range as we outperformed our September guidance. The $85 million improvement was driven by favorability in revenue from higher ticket prices as net per diems were up over 10%, 3-points better than the midpoint of our September guidance range. In fact, fourth quarter revenues of $5.4 billion for a fourth quarter record and net yields were up nearly 8% as compared to 2019, a great way to close out the year and another indication that we do not see a slowdown in our consumers. For the full year, thanks to the tremendous efforts of our team members, ship and shore, we closed the books on 2023 with positive adjusted net income. That is a far cry from our March guidance as we delivered over $550 million to the bottom-line, which was partially offset by a drag from fuel price and currency exchange rates of over $100 million. The improvement was driven by delivering a 7.5% increase in net revenue per diem versus 2019, which was over double the 3.5% midpoint of our March guidance, while closing the double-digit occupancy GAAP at the start of the year to reach historical occupancy levels. Absolute spending per diems on board were consistent across all four quarters as we drove improvements in ticket prices on both sides of the Atlantic and ended the year with net yields of nearly 1% over 2019. Next, I will provide a recap of our refinancing and deleveraging efforts…

[Operator Instructions] Our first question comes from Steve Wieczynski with Stifel. Please proceed.

Yes. Hi, guys. Good morning, and happy holidays to all of you. So Josh or David, if we think about the yield guidance for the year, just based on the fact that your occupancy should return to somewhat normal levels and then pricing has momentum at this point, it seems to be pretty strong or healthy across the majority of your geographies. It seems like that plus 8.5% yield guidance might end up being somewhat conservative when we have this call a year from now. So, I guess the question is can you give us a little color about more than makeup of your yield forecast. So it seems like, you might be taking a somewhat conservative view around onboard trends and then potentially underestimating the opportunity around, taking close in pricing. Thanks.

Hi, Steve. Happy holidays to you too. So, I hope you're right. I look forward to the call in a year. Look, we've given our good faith estimate on how we're seeing the world right now. We come in with a good amount of visibility because of how well booked we are and as you said we have seen accelerating momentum in the volume and the price, so we're very, very pleased with the trajectory that we've been seeing. Obviously this is also before Wave. We do have a little bit of a disadvantage of doing this in December versus end of January, into February. So, all I can tell you is we've baked in what we what we see and we always want to outperform and obviously that's a given. So I think best thing I can tell you is we'll talk in March with Wave under our belt up. Having said that, Wave hasn't ended since last year, so we'll continue to ride it as long as we can.

Let me ask that a different way than Josh. So if we think about what you guys are embedding in terms of onboard, is it fair to assume you are being pretty conservative with the way onboard should shake out in 2024? Basically meaning, you potentially could see a little bit of a slowdown in onboard or are you still, guys, kind of assuming that onboard remains as robust as it has been?

Yes. We're coming off a great performance when it comes to onboard and we expect our onboard per diems to be increasing in 2024 versus 2023. Brands are doing a real good job of pulling forward more spend providing differentiated experiences, so we absolutely expect an increase in 2024 versus 2023.

Okay. Got you. Then real quick, one more question, if I could, David, in terms of the cost, you give some pretty good color around the impact to the - everything's going into the first quarter and why it's so high. As we think about the rest of the year, the cadence of costs, I think you said we think about the third - the second quarter through the fourth quarter, those should all be around 3%. I try to make sure I heard that right. And if there is anything in 2Q through 4Q that we should be thinking about that might move one of those quarters one way or the other.

Yes, no. So I was not trying to give individual guidance for each quarter. What I was trying to do is say that that three quarters collectively together would average 3%. We will see some, you know, year-over-year differences versus 2023. You know, a great example of that is that the dry dock days will be down in second quarter, but there'll be up in fourth. So there will be differences. There's also advertising seasonalization differences in other things. So I was not trying to say 3% every quarter - just 3% on average for the three.

Okay. That is great. Thank you very much, guys. Happy holidays. Appreciate it and great quarter.

Thank you very much. Take care, Steve.

Our next question comes from Brandt Montour with Barclays. Please proceed.

Great. Thanks, everyone, and congratulations on the results this morning. So Josh you gave us an update on the Sea Change long-term targets and the drastic improvement toward that target and that you've made so far in 2023 and then 2024 expected. And I guess you know, fuel has been a nice tailwind. If you take fuel out and maybe you just focus on your yield growth target within 24 guidance. Is that in line with your internal expectations for that that three year ramp or how do you think about it?

Yes, I think it's fair to say that, you know, when we talked about it in June, for the first time, and we laid out, you know, what will it take? We talked about the fact that - excuse me, getting back to - historical occupancy. We expect pretty much all of that in 2024 versus 20 - where we were in 2023. And that's you know, as far as we can tell, that's exactly how it's going to play out. And on top of that, we predict price that we estimate pricing to be up low to mid-single-digits every year 2024, 2025, 2026. And so you know, we feel like we are we entered the year a little bit ahead, given how we ended the second half of 2023 and we’ll keep pushing forward.

Okay, great. Thanks for that. And then you said you were two-thirds books for 2024. That struck me as incredibly impressive. I mean, if you give us a sense of what that would have been in, in prior years, but also, the crux of the question is, did that base loading strategy, do you think that impacted your pricing meaningfully versus what it would have been if you had just kept the sort of historical booking curve? And then as you go into January and wave season, you ever been this book so it has that changed your strategy with pricing as you move through wave?

So this is playing out as we would expect it to play out by pulling forward all the volume it gives us better, better control over our pricing environment and our ability to keep pricing at an elevated level? And so it's literally playing out as it should? It is we are you know, we are 10 points higher than we were you know, when we entered the Q1 of 2024, 10 points higher year-over-year. It's higher than 2019 as well - which is a very long normalized booking window. And it's important that we do that, right? I mean, let's keep in mind, you know, being 10 points above last year is good progress, but we expect to end our occupancy significantly higher than last year, but that's all feeding into the strategy and pricing is playing along as I tried to say in my notes, I'm not sure how clear it was. You know, when we entered the fourth quarter of this year, we were about 10 points higher than prior year in the occupancy position and prices were higher. As we made our way through the quarter, we've managed to pretty much keep that occupancy advantage and prices on everything that's booked is now considerably higher. So it is working the way we anticipated.

Crystal clear. Thanks.

Excellent. Thanks.

Our next question comes from James Hardiman with Citi. Please proceed.

Hi, good morning, guys. Thanks for taking my question. So, I'm going to ask, I think, Steve's question in a slightly different way. There was a lot of conjecture that you would only give first quarter guidance similar to last year. Obviously, your peers are at a bit of an advantage because they get that first month of Wave as they try to assess what the demand environment looks like. Obviously, you gave us the full year guide anyway. As we interpret that guide then take us through that thought process and whether or not that plays into sort of your level of conservatism being effectively ahead of Wave?

Yes. Well, we are effectively back to normal. This is what we used to do before the last few years, and I think it was quite important that we get back into this cadence. Now, good news, we are highest book we've ever been. So we do have more visibility than even we had before 2020. So I think that's setting us up well to be able to be in a pretty good position to give you this preliminary guidance for 2024. Obviously, we have - I have high expectations in my brands and what I expect them to achieve, including during Wave. And you got to remember, the whole focus of Wave this year, we have the benefit of being able to focus on different things. Last year in Wave, a lot of what we were trying to accomplish and our brands we're trying to accomplish was just filling the ships because we are in such a different position from an occupancy perspective. This time, we actually get to go through Wave and really be more strategic in how we are trying to advance the needle, not just on the short term, but on the longer term. So I think it sets us up well. And I keep asking David to change the fiscal year-end and like can we please start on January 1, like everybody else. But apparently, that's a lot of work. So we're not going to do that.

Got it. And then there was a comment in the prepared remarks about not only are you seeing better new-to-cruise numbers, but better new-to-brand numbers relative to 2019. Josh, you talked about having confidence in your brands, but that latter point seems like a big one, right? So much of the conversation just seems to be about the cruise industry, but maybe talk to what you think might be a carnival specific story as in terms of improving consideration among people that are already into cruise?

I think our brands are doing phenomenally and really understanding who that target audience is and how to speak to them with their creative marketing and then on the performance side, just making sure that, that consideration and awareness gets converted into bookings. So we gave - I said in my prepared remarks, we've got several campaigns that are either started or about to start. We've got a few examples you can click through on the prepared materials of slides that have been put up. They're doing a great job of captivating the market. And I think getting cut through not just with new-to-brand and new-to-cruise on the value that we have. And fortunately for us as much as we've improved on the pricing front in 2023, it's still a big gap versus land. So all of those things are winded our backs and I expect more of that over time.

Got it. Thanks guys, and good luck doing with.

Thank you.

Our next question comes from Jaime Katz with Morningstar. Please proceed.

Good morning. Thank you. I'm hoping you can talk a little bit about changes to the sourcing strategy. I know it shifted back a little bit more to North American cruisers in the last couple of years. But given the strength in the European market or the fact that they might be closing the gap, should we expect that to move back to a normal mix?

Well, yes - good morning, Jaime. So I think we should kind of take a step back and think about our portfolio and how we operate. We've got dedicated brands to European markets but P&O Cruises in the U.K. and AIDA in Germany, Costa, not just for Italy but really Italy, Spain, and France. And all of those are either the biggest in their market or the second biggest in the case of Costco across the Mediterranean. And we didn't deviate from our strategy when it comes to our dedicated market brands. And so they have continued to view those markets as the right thing to be in the long-term and we absolutely support that and we're starting to see the strength of that really come through as we've started talking about the last few quarters. With respect to our North American brands, Carnival has been and will continue to be America's Cruise Line and they're not going to cover off the ball. And there hasn't been not much dramatic change when it comes to sourcing for Holland, America and Princess other than the fact that for Princess they had so much sourcing that was really geared towards markets that have been slow to open in Asia, et cetera. So we've repositioned. We've done a bit of that but I think we're very well positioned to take the strength of the European consumer and the U.K. consumer and continue to ride that into 2024.

Okay. And then there was a lot of positive commentary obviously on this call. So, I'm curious if there's anything left out there that concerns you that you would like to share with the audience. Thanks.

No. Great question. No. Thank you though.

Okay. You're welcome. Thanks. Happy holidays.

You too.

Our next question comes from Patrick Scholes with Truist. Please proceed.

Hi. Good morning, everyone.

Good morning, Patrick.

Good morning. Josh, I am not going to ask you if you are planning on hedging bill this time. But I…

Yes. Thank you, Patrick.

Sometimes you should listen to us, sometimes not but here we are, I want to hear from you. You know what plans of late - especially around Black Friday, Cyber Monday you've seen with new-to-cruise. Is that becoming a larger part of the booking mix? And if so, what would be the impact on your margins. I mentioned new-to-cruise typically call the 800 number of books direct which probably saves you travel agency commissions. If you just talks about those trends and the potential impact on revenues and costs. Thank you.

Thank you. So candidly, I don't have - been literally for the period that you're referencing the Cyber Monday and Black Friday. I don't have a breakdown of new-to-cruise versus new-to-brand versus brand loyalists. I do have the fourth quarter obviously which includes some of that where our new-to-cruise is obviously up significantly year-over-year 51%. And so you know that is - that is part of the strategy, right, taking oh, that was sale for me. I'm sorry, that was sale. But taking a greater share of folks who have never cruised before is part of the strategy to increase overall demand get them in our pipeline and allow us to raise pricing over time for frankly, everybody. With respect to what's the most cost efficient. Obviously, coming direct on the web is always going to be the most cost effective. I wouldn't make a categorization though that new-to-cruise comes in a particular way because it really depends on the characteristic of the new-to-cruise guest themselves what brand it is, what's the itinerary length, et cetera. Now clearly a lot of new-to-cruise will over index on the shorter cruises because they're trying it out for the first time and that lends itself to maybe also a younger crowd which is more comfortable just playing around on the net and doing things direct. But I mean, frankly speaking, historically, and I expect this to continue, our trade partners are absolutely critical in driving new-to-cruise to us. And we've relied on them for decades to do that. And we will rely on them for decades more and they have done a great job of really catching up to where we've been in the curve and year-over-year they're showing great strength as well.

Okay, Thank you very much.

Thanks, Patrick.

Our next question comes from Robin Farley with UBS. Please proceed.

Great, Thank you. I wanted to circle back to your yield guidance and just looking at the recovery and occupancy to normal - to previous levels being maybe 600 to 700 basis points kind of implies that your per diem guidance is maybe less than 2% growth. So I just - I don't know if I'm doing the math wrong there if there's anything to clarify. And then also, you've talked about the price on the books for next year being considerably higher, but your yield guidance for the year. It's just nicely higher, which I think the David Bernstein glossary is like a would be a deceleration - any help.

So I'm laughing at the glossary keep going Robin

If I - if I remember if I'm interpreting the glossary correctly, I think that implies sort of a deceleration in the price there. So just - is that just because the onward growth rate while up is lower, and so that brings like considerably a higher price to just nicely higher yield, or maybe my glossary definition is wrong, but maybe you could help us with that and with the math on the per diems to begin with. Thanks.

Okay, thanks, Robin. Well, actually, you know, David said it in the prepared remarks. I thought he said it pretty well. So David, you want to repeat what you said?

Yes. So, keep in mind that 2019 was the high watermark for occupancy, and we look back to like 2005, and the historical occupancy levels were in the range of 104% to 107%. So what we're saying is we will be solidly back to historical occupancy levels, but we weren't saying we're going to be back to the high watermark of 2019. So keep that in mind. The other thing about considerably higher versus the nicely higher. Keep in mind that you know, last March when we gave guidance, you know, we had thought that our expectation for per diem increases was about 3.5%, and we round up to 7.5%. So we saw some very strong pricing in the back half of the year, and as a result of that on a year-over-year comparison basis, you know, a book position may be considerably higher, but what we're looking to see is at least nicely higher pricing on a per diem basis built into our guidance. So when you put those two factors together hopefully you can understand how we built our guidance.

Yes. And the only thing I would add - let me just have one thing, Robin, which is our focus is on generating the most revenue possible when that ship leaves on its cruise. And that can be a combination of optimizing that price and occupancy relationship. So there's no magic to getting back to 2019, high watermark of 107% and we play in the fringes. We play in that 104% to 107% to make sure that when you combine that ending point along with the pricing, it's the happiest we can be.

Understood that occupancy right that you don't manage to a certain occupancy once you're in that range, but just the that the price comment that you're - what you're seeing on the books being considerably up versus the nicely up does seem to imply like a bit. You'd be expecting a deceleration from current levels. And so I mean, maybe the answer is you're just being conservative, but I just if that if that's correct, and interpreting considerably moving to nicely as being a lower rate of growth. So that's I guess that's what I'm trying to clarify?

One thing to stress, right, we just came up with a fourth quarter, which everybody's loss over real quick but it was up 10.5 in price. That's what we're going to lap you know when we get through 2024. If you think about our booked business, we have the most to go in the fourth quarter. Not surprisingly, it's the farthest out. So as we build towards that and we cycle through the first quarter in the second quarter, we're the most booked. We just have to fill and get over a larger hurdle, which we expect to do. But we have to take that whole thing into the equation when we're giving full year guidance.

That makes perfect sense. Thank you. Thank you. And then just one last clarification. On your SEA Change, on the expense side you've talked about the three year being up low single-digit in like 2024, 2025, 2026 each year, this year of - or 2024 guidance up 4.5%, you know, probably above low single-digit kind of implies very, very low expense growth in 2025 and 2026. Is that how we should think about in other words, there's not a change in your - the three year average would be up low single-digit, even though it's a bit more in 2024 than I would suggest. And again, possibly you're just being conservative, but I don't know if you had a thought on how we should think about how much better that would be in 2020 would have to be in 2025 and 2026 to keep your SEA Change expense target? Thank you.

Sure. So, you know, when we were presenting a SEA Change program, I guess it was you know, in June, we were talking about the fact that low single-digits, but I did say we'd have some outsized impacts in 2024 due to occupancy, both on the yield and on the cost. So the 4.5% I also had indicated that occupancy would probably cost 0.5 to two points this year. So we are you know, in that low-single digits, equation that was built into the model. So I feel like we are very well positioned and as Josh indicated, we're ahead of where we expected to be on our way towards achieving those targets.

I would say, Robin…

Great. Thank you.

I didn't think we get end to the call without you trying to get ahead of 2024 guidance and looking at 2025.

Well, they almost didn't get the last five minutes of the call. I'm glad I got it in. So thank you.

Thank you, Robin. No problem.

Our next question comes from Dan Politzer with Wells Fargo. Please proceed.

Hi, good morning, everyone. And thanks for taking my questions. It just actually wanted to touch on the fourth quarter a little bit more. The up-tick in revenues on pricing certainly was impressive. Can you maybe unpack that a little bit more? I mean, was that really just you know, the carnival centric line? Or was it Europe or North America more broadly? Or was this you know, alternatively, related to your strategy of more base loading and maybe benefiting from some of the compression we've seen?

Yes. This was portfolio wide. So we're very pleased with where we were we headed into the fourth quarter. Dave, I don't know if you want to give any color?

Yes. No, I mean, you're right. It was all brands and we saw strength in bookings. And our brands did a great job. Yield managing the revenue and taking price up. And so as a result of that, you saw the end result.

Got it and then, Grand Bahama, I know you've started to talk a little bit more about that. Are there any parameters you can give us there in terms of capacity per day amenities? The Capex or return profile you're looking at? And also I know you've started to see some booking activity that's going there. Are you receiving premiums on those bookings? I think you mentioned like hundreds of sailings in the release.

Yes. Yes. Well, let me start with that we have it's tiny in the grand scheme of things still. I mean, we're because you're talking about Carnival Cruise Line, which doesn't have a lot of short programs et cetera with it. They don't really start booking. So it's a tiny amount now. We'll give color as we get 2024 in that respect. So we'll come back to that. With respect to your other points, we've said this is this is a big investment. This is half a billion dollar type of investment. And we can do that obviously, in 2025. We only have one ship. And we have none in 2026. So we think this is the right way to optimize our resources and really benefit the Carnival brand and you've heard us say 18 ships from day one. So we are very, very excited about that. I don't want to get ahead. I really want to do a good job of disciplining myself to not get ahead of Christine Duffy, who really wants to and should talk about what this experience is going to be like and more to come in 2024. And I can't wait for you to listen to Christine and hear all about it.

Got it. And then just if I could squeeze in, one quick housekeeping, Panorama that was I think out of service a little bit in the fourth quarter in the first quarter. Is there any way to just quantify the impact of that?

In the grand scheme of things, it's probably a couple of pennies …

…between, like maybe one penny in the fourth quarter and a couple in the first.

Got it. Thanks so much and happy holidays.

Thanks, Frank. We have time for one last question.

We have a question from Assia Georgieva with Infinity Research. Please proceed.

Congratulations guys on a great Q4. So happy that we're back to looking at deals as opposed to per diems in the 10.5% was a great metric, but the 7.8% I like better. So I apologize. But again, I wanted just to finally get back to where we're looking at the more usual metrics. Given that we have a very healthy outlook in terms of yields in Q1, Q2 drydocks, I think I at least understand well. So we have a good view into EBITDA throughout the year. David, would you mind taking us through sort of the debt and interest expense burdens that you may be trying to modify including as part of the C-change program by fiscal year-end 2024.

Sure. So to start with, you saw our interest expense guidance in the press release. It was close to $100 million less than 2023. And keep in mind that while we did pay down quite a bit of debt, the average balance for the year is for 2024 is probably like $2.5 billion less than 2023. So that will lower interest expense by $200 million, but also keep in mind that we have less cash on the books and with declining interest income rates that probably is offsetting the savings by about $100 million. So, that's why it's a net decline of about $100 million in interest expense on a year-over-year basis. Looking at the debt level, I actually said this in my notes, in 2024, we are looking at about - I think it's $2.1 billion of scheduled maturities. But we will be replacing that debt with the $2.3 billion of export credits that we take on. So - but in addition to that, we have built in some prepayments of debt into our guidance. And as I said, we are evaluating that. So we do expect to see debt to go down in 2024. However, we do expect to see strong deleveraging from a metrics perspective because our EBITDA grows substantially. So our debt to EBITDA will also improve.

Makes perfect sense. And just as a quick follow-up before I ask my second question, if I may. Would we be looking at the refinancing as opposed to repayment?

So we are looking at both. As far as we expect to continue to prepay debt and to continue the deleveraging. But on top of that, we also expect to look at some potential refinancing which really would drive the interest cost down. And so we'll see how - what opportunities are presented to us in 2024. And if it makes sense, we'll take advantage of them.

That sounds great. And so, if I can ask my second question, and I don't think anyone has touched on this. Given geopolitical pressures, and we are comparing - used to be comparing 2023 to 2019 when we have St. Petersburg, which clearly the Eastern Baltics have been kind of off the books. Now we have an issue with the Middle East and cusp the scanner, I believe, is in the Persian Gulf, but will be one of the ships that will have to come back to Europe in going through a straight that is have been targeted by Yemeni military cells. Any thoughts on this or?

Obviously, our first priority is going to be safety and we have - that's already on our radar screen and we've got Middle East mitigation plan should we need it, but keep in mind this is months away. And so we'll do the right thing. But there's always something. I hate to say it that way, but there is always something, and our brand…

I've been around long enough, 26 years. So there is always something Josh, I agree.

Yes. So, all right, I think with that we do have to end it, but I'd say Happy Holidays to everybody, and thank you very much. Have a good new year.

That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines. Have a great day. Thank you.