Greetings, and welcome to the Carnival Corporation and PLC Fourth Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance, you may be placed into the question queue at any time by pressing star one on your telephone keypad. We ask that you please limit yourselves to one question, one follow-up, then return to the queue. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Beth Roberts, Senior Vice President, Investor Relations. Go ahead, Beth.

Thank you. Good morning, and welcome to our fourth quarter 2024 earnings conference call. I'm joined today by our CEO, Josh Weinstein, our Chief Financial Officer, David Bernstein, and our chair, Mickey Harrison. Before we begin, please note that some of our remarks on this call will be forward-looking. Therefore, I will refer you to the forward-looking statement in today's press release. All references to ticket prices, net per diems, 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, 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.

Thanks, Beth. We had a strong finish to an incredibly strong year. And right off the bat, I'd like to thank the efforts of our hardworking and dedicated team, the best in all of travel and leisure. They have delivered results that consistently outperformed even my own high expectations. Our global portfolio is clearly firing on all cylinders, and I am very proud of what we've been able to accomplish together. We delivered another stellar quarter to close out a phenomenal year. In fact, this was our seventh consecutive quarter achieving record revenues alongside favorable forward indicators like record booking trends and record customer deposits, indicating a continuation of the strong momentum we've been experiencing for the last two years. Fourth quarter net income improved by over $250 million year-over-year, coming in over $125 million better than expected. The outperformance was up and down the P&L and driven by strong closing demand across the portfolio, which pushed yields, per diems, EBITDA, and operating income all to new highs this year. Full-year revenues hit an all-time high of $25 billion and produced all-time high cash from operations of almost $6 billion. Robust demand delivered a full-year 2024 yield increase of 11%, with the majority of the increase attributable to higher prices. Yields finished the year nearly 250 basis points better than our original guidance, driven by a strong demand environment that we elevated throughout the year. Encouragingly, this was broad-based. For 2024, prices were up in all of our major brands and trades between mid-single-digit to mid-teen percentages. And on top of this, onboard spending levels actually accelerated sequentially each quarter throughout the year. Additionally, unit cost came in 100 basis points better than our original guidance for the year as we identified and executed upon additional cost savings initiatives and saw the benefit of an easing inflationary environment. All of this translated to an additional $700 million pickup to the bottom line compared to our December guidance and step-change improvements in our two financial metrics that form part of our 2026 sea change targets: EBITDA per ALBD and ROIC. After just one year down with two to go, we're already over 80% of the way toward achieving both of these targets, calling for a 50% increase in EBITDA per ALBD from our 2023 starting point and an ROIC of 12%, both of which would be the highest the company has seen in almost 20 years. And with ROIC ending 2024 at 11%, comfortably above our cost of capital, we're already delivering long-term value for our shareholders as we lay the foundation we'll build upon in 2025 and beyond.

At the outset, and with about two-thirds of the year already on the books, 2025 is shaping up to be another banner year, with yield growth exceeding 4%, far outpacing historical growth rates and again exceeding unit cost growth, delivering more than $400 million incrementally to the bottom line. In fact, booking trends even accelerated during the quarter. Despite less inventory for sale as compared to the same time last year, 2025 booking volumes over the quarter were actually higher year-on-year at higher prices for each quarter, including the period leading up to the election. Booking volumes for 2026 also continue to break records, reflecting sustained demand even for further out sailings. The ongoing strength in demand reinforced our record-breaking book position. Both price and occupancy are higher for each of the four quarters of 2025, and we managed to increase both our price and occupancy advantage for our 2025 book position thanks to our outstanding efforts this past quarter. I can actually now report that our North American and European segments are each at their longest advanced booking windows on record. All core deployments are also better booked at higher prices than the record levels we achieved at the same time last year. So with a good amount less inventory to sell for 2025, I cannot stress enough to our customers and trade partners that if you want to sail with us this year, book now while there's still space available. And keep in mind, our 2024 results and booked position for future sailings are being driven by improved operational execution across our brands and are essentially on a same-ship basis. Now don't get me wrong. New ships are great. In fact, we welcomed three amazing new ships in 2024. Carnival Jubilee, the third of five XL class vessels…

I have never been more excited about these prospects. As we begin to unfold this multiyear strategy with the opening of Celebration Key in just about six months, this will be by far our largest and most carnival-centric destination in our portfolio with five awesome portals built for fun, from family-friendly to exclusive beach club experiences. Not only will Celebration Key be the closest destination in our portfolio, saving fuel costs and reducing greenhouse gas emissions, the only way you can get to Celebration Key is on one of our cruises. Moreover, we just recently announced a change that signals more about the shift in our destination asset strategy. Half Moon Key, the highly rated and award-winning exclusive Bahamian destination known for beautiful beaches and crisp clear waters, is being renamed Relax Away Half Moon Key to better reflect the experience guests can expect as they are immersed in this tropical paradise. Enhancements, lunch venues, a variety of bars, and other features created with intentionality to reinforce this destination's natural beauty and pristine appeal. Ready in summer of 2026, a newly constructed pier on the north side will allow two ships to dock, including Carnival's XL class ships that will be able to visit the private island for the first time. We'll be positioning these jewels of the Caribbean with consumers in a way that will encourage guests to actively seek out these specific destinations offered exclusively by our brands, and many of Carnival Cruise Lines itineraries will feature both Relax Away Half Moon Key and Celebration Key, providing guests with complimentary experiences enjoying both the idyllic and the ultimate beach days. We believe developing and promoting these unique assets will help us cast the net wider and capture even more new-to-cruise demand. We're already in flight with preparation for…

Thank you, Josh. I'll start today with a summary of our 2024 fourth quarter results. Next, I will provide an update on our refinancing and deleveraging efforts. Then I'll finish up with some color on our 2025 full-year December guidance. Let's turn to the summary of our fourth quarter results. Net income exceeded September guidance by $126 million as we outperformed once again. The outperformance was essentially driven by three things. First, favorability in revenue worth $77 million as yields came in up 6.7% compared to the prior year. This was 1.7 points better than September guidance driven by close-in strength in ticket prices as well as strong onboard spending. Second, cruise costs without fuel per available lower berth date or ALBD came in up 7.4% compared to the prior year. This was six-tenths of a point better than September guidance, which was worth $13 million. And third, favorability in interest expense, other income and expense, and tax expense, all of which were partially offset by higher fuel prices, netted to a $38 million improvement. Per diems for the fourth quarter improved over 5% versus the prior year, which I would remind you were up over 10% last year, with improvements on both sides of the Atlantic driven by higher ticket prices and improved onboard spending. Strong demand allowed us to once again report records, delivering fourth-quarter record revenues, record yields, record per diems, record adjusted EBITDA, and record customer deposits. Next, I will provide an update on our refinancing and deleveraging efforts. Our full-year 2024 yield improvement of 11% was over three times our 3.5% cost increase. This drove improved margins and cash flow, which resulted in our strong EBITDA of $6.1 billion and cash from operations of about $6 billion. All of this propelled us on our journey…

Certainly. We'll now be conducting a question and answer session. First question today is coming from Matthew Boss from JPMorgan. Your line is now live.

Great. Thanks. And congrats on another great quarter. Thank you very much, Matt. So, Josh, could you elaborate on the foundation that you've laid over the last two years which you think has positioned the company to capitalize on the current demand that you're seeing? And with 2025 shaping up to be another banner year, could you speak to initiatives across the organization to take share, optimize yields, and drive onboard spending in 2025 and beyond?

Yep. Thanks for the question, Matt. I guess if we look back at the last two years, probably the biggest thing was just doing a bit of restructuring as we've talked about in the past and getting the right leaders in place, leading the brands, and those leaders are a fantastic group of people leading fantastic brands. On the commercial focus side, which we've been talking about for the last few years, right, it is scrutiny expectations around how we're improving in the revenue management space, in the marketing space, considerations at top-of-funnel stuff all the way down to closing the bookings. The amount of advertising that we've ramped up really just to get us closer to where the rest of the market is, I think it's helping to pay dividends. You know, everything from making sure our brands have great relationships with the trade to investing in our own capabilities. Probably the last thing about the foundation would be the portfolio management. You know, we've been actively managing the portfolio and allocating ships differently, moving vessels, winding up a brand in the case of P&O Australia. I think it's setting ourselves up to really put the assets where the highest returns are in the immediate term while we help all the brands who aren't yet where I think they should be get to those levels. So with respect to 2025 and what are the things that we got that are gonna continue our progress, you know, at a base level, it's a continuation of all those things in the commercial space and having those great brand leaders really lean in even further. You know, we're investing in our people. We're investing in our tools, our revenue management tools to make sure that we are utilizing the technology effectively to optimize the yields. The destination strategy that you already heard in the prepared remarks, I think that's gonna be a tailwind continues for a really long time, and we're really looking forward to that. As far as the OBR onboard spending, you know, we've got runway there. I mean, we've got a good amount of runway to continue the progress we've been making around pulling forward the spend as everybody knows opens up the second wallet and the more people spend before they get on the cruise, the more they spend on the cruise. So our brands are, again, working hard to continue that, and we're nowhere near what the cap could be on those types of efforts. So I'm pretty enthusiastic as you could probably tell.

I can tell. I can tell. And then David, maybe just quick. If you could just break down net cruise cost ex-fuel components and that 3.7% for this year. But I think more so, how best to think about maybe a reasonable spread between yields and cruise cost multiyear. If there's maybe a back-of-the-envelope rule of thumb multiyear.

Yeah. So I did my notes talk about the 3.7% because just briefly, the expenses relating to Celebration Key were a half a point. Increase in dry dock days was three-quarters of a point. I also said about a quarter of a point was the one-time items that we benefited from in 2024. And then the remaining 2.2 points really was a combination of inflation and higher advertising that Josh mentioned, partially offset by efficiency initiatives and other leveraging, you know, our scale throughout the company. So those are really the four key components, and it's up to 3.7%. As far as the difference, you know, I don't think there's any rule of thumb here. I really do believe we can, you know, continue as you saw, in 2024, it was three times, but that was a recovery story. Our guidance has a half a point difference between the yield improvement and a cost improvement. Keep in mind that a point to yield is worth, you know, almost double what a point of cost is. So there is leverage there in and of itself. But we will work hard to continue to maintain our cost consciousness. And as Josh talked about, you know, all the things we're investing in in advertising and revenue management should help drive yields higher over time as well as the continued improvement in margins.

Great color. Best of luck.

Thank you. Next question is coming from Ben Chaiken from Azero Securities. Your line is now live.

Hey. Thanks for taking my questions. Celebration Key looks pretty exciting opening up later this summer. Do you think you are in the customer awareness of this product? Like, do you think it's well understood, appreciated, by customers? Or is it still or is that marketing kind of, like, and then and awareness still ramping and then thanks.

Sure. Thanks, Ben. I definitely still ramping. I mean, it doesn't exist yet. So we are definitely building momentum. We're building excitement. We're getting the response that we expected with respect to how the bookings are shaping up, which is good to see. But it's still early days. I think the really exciting part is once we're in there really operating and having guests enjoy these experiences and optimizing what we do and how we do it, it takes off from there because right now it's make-believe. So we gotta let everything get in place, and then I think it'll help tremendously.

Got it. Understood. And then in the release and call transcript, you referenced an enhanced destination strategy. Can we open this up a little bit? Does this refer to Celebration Key? Is this a little bit of a teaser to additional opportunities to provide guests with differentiated, you know, Carnival-owned operated destinations? I know you mentioned the Pier at Half Moon Cay, I believe. Just trying to understand the magnitude and direction of the strategy. Thanks.

Yeah. So let's take a step back from any one particular destination. I think what I've seen for a long time now for several years, and I think some are doing better than others, and better than us, is turning their own destinations into something that not only guests but non-cruisers look at and decide that's gonna help tilt my vacation decision to take a cruise. Because the destination itself looks amazing, is an amazing experience, I can only do it on a cruise. And we have not historically, I think, done a good enough job in raising the level of awareness of the amazing destinations that we have and that are in the pipeline. So when it comes to Celebration Key, we're getting a head start because we're doing it before the location exists. When you think about the change to Relax Away for Half Moon Cay, it is beautiful. It is one of the most stunning destinations in the world. And yet, if you're not a cruiser, you don't know anything about it. You're not looking for it. And we're gonna change that dynamic. And with Relax Away, what we're trying to convey to people who don't cruise is really the vibe of the experience that they can get. And the great thing about it is we're leaning into that natural beauty, which is going to be different from Celebration Key. Celebration Key, as we said, that is the ultimate beach day. Right? Relax Away is all about the idyllic. It's being in a tropical paradise, and we're gonna be able to marry those two things together. So people on the same cruise will be able to get both experiences that are very, very different and exclusive to us. And so we're gonna raise our game there. There's more things that we can do without heavy investment with some of the destinations that we own to make that part of that more exclusive collection. So early days, but we're pretty excited about it.

Helpful. Thanks.

Thank you. Next question is coming from Steve Wieczynski from Stifel. Your line is now live.

Yeah. Hey, guys. Good morning. Happy holidays to all you guys. So Josh or David, if we think about the yield guidance for 2025, just based on the fact that you're two-thirds booked already for next year, it seems like you have strong pricing momentum across pretty much all your geographies. I know you'll hate that I'll say this, but it seems like the approximate 4% yield guidance might end up being conservative when we have this same call a year from now. So I guess the question is, can you give us color around the makeup of that yield forecast? And maybe, Dustin, it seems like you could be taking a conservative view around whether it's onboard trends, whether it's the close-in pricing opportunity. And if I ask that question the other way, I mean, if we think about your initial yield guidance last year, which I think was 8.5% and it ended up closer to about 11%, what did you guys underestimate for 2024? Thanks.

Hey, Steve. Well, first of all, we were a little worried you weren't first in the queue, so we were gonna literally call 911 to make sure you were okay. So glad to hear your voice. All good. Good. Good. Good. You know, look, our goal is to give guidance based on what we know. And it's certainly something that we want to meet and obviously work hard to exceed. Last year, I meant what I said in my prepared remarks. I think it was a fantastic year by the whole team. That outperformance was, I would argue, pretty special. And, you know, also argue that 250 basis points of yield on top of a base of 8.5% proportionally is not 2.5% on top of 4.2%. So we have a very good handle, I think, on where we are today. Much more so than last year even because we're already back up in full occupancy percentage more or less that we always get. If you remember, the first half of the year, we still catch up, which is like five points of our improvement in yields last year. Was occupancy. I think we're in a more stable place than we were. You know, well, the onboard spends have been fantastic. There's no doubt about it, and we're working hard to continue that trend. And when you look at the 4.2%, you know, there's a little bit for occupancy, but it's all price. Right? Outside of a little bit of occupancy, it's price, and it is a combination of the ticket side and the onboard spot continuing. And we'll work hard to optimize as much as we can. I promise you, our goal is the same as yours. Is get as much revenue as we can.

Okay. That's good color. And then, Josh, if we look at slide seventeen, you know about SeaChange. You noted your EBITDA per ALBD, you know, it's gonna be hopefully achieved in 2025. You know, but if we look at your ROIC targets, we look at the even carbon reduction target, I mean, it's almost like you're gonna hit those potentially hit those as well next year. So you know, I guess the question is, do you start to think about laying out another set of long-range financial targets, you know, at some point? To us, it seems like those sea change targets really were important pillars and gave the investment community something to really rally behind. So I'm trying to get a little bit more color on how you're thinking about the long-term opportunities here.

Yeah. No. Look. When we get there, I can tell you that whether we do it on the same day or whether we wait a quarter to catch our breath, I can promise you I like the concept of longer-term targets that we set for ourselves and we set for our investors so you can understand what we think our trajectory should be. And I can motivate my team internally to rally around what I think we should be expecting of ourselves. So, yes, you can expect that to happen when we get there. And look, I'd love nothing more than to get to where we say we're gonna be in 2026 sea change targets early. You know, we need about a hundred million bucks of operating income to get to the ROIC. Carbon will be harder. We have a pretty good understanding of where we are, but getting to 19% is pretty good, and we'll see what happens.

Okay. Gotcha. And real quick housekeeping-wise, David, is there anything we should think about in terms of the cadence of costs? Obviously, we've got the first quarter NCC guide, but anything else through the rest of the year we should about?

So as you can imagine, it is tough in terms of seasonalization because between quarters. But, you know, the guidance I would give you is that in the second quarter, we do expect higher dry dock days. So I wouldn't be surprised if the second and third quarters were, call it, one point five to two points above the full-year average in the fourth quarter as lower. That's about the best initial guidance I can give you. But we too will probably see some changes because, you know, this guidance presumes we've made every decision on all advertising and everything else between the quarters. So just take it as a forecast.

Okay. Thanks, guys. Happy holidays.

Thank you. Next question is coming from Robin Farley from UBS. Your line is now live.

Great. Thank you. Obviously, fantastic guidance here. And better than expected. I did want to ask about two things just to get a feel for whether these things are in your guidance or how much they're in your guidance and whether this would be additional upside. First is, you know, Celebration Key, you mentioned obviously expected to be very successful and a driver, but you're not really able to see at this point what it would add really to ticket price or onboard spend. So I'm just wondering if you could help us understand how much and really how little you may have in your yield guidance today for Celebration Key. I know in your cruise cost guidance, it's that fifty basis point. How much is it in your yield guidance at the moment? Thanks.

Yeah. Thanks, Robin. So it is in our guidance, but I'll give you some magnitude of just what touches Celebration Key this year. And it's only 5% of our total sailings in 2025. So it's not that much. When we get to 2026, and we're on kind of a full-year run rate basis, you're talking about 15% plus. So it will be more meaningful for the company overall. Nonetheless, I'm not gonna say what it is, but we're happy to say that we look at our bookings in the fourth quarter for Carnival, we are seeing the premium that we expected to see. Just get this.

Okay. Great. Thank you. And then also in your EPS guidance, I think that you have three billion in debt that's callable next year. I hope I'm getting this number right, but it's and I assume that you're not factoring in the lower interest cost from some of that very expensive debt. If that were redone at maybe what some other things this year have been done at, could that be, you know, twenty or twenty-five cents of sort of upside in annual interest expense savings? Is that kind of the ballpark to think about potential upside?

So twenty to twenty-five cents. Twenty cents would be two hundred and eighty million dollars because it's zero point one four dollars per penny. So just keep that in mind. I'm not sure what you were thinking of. I will say that there is opportunity on the refinancings. We do expect to address those two double-digit interest rate debts that you're referring to. The most callable, as you said, in the first half of the year. There will be some additional savings. We will look at that throughout the year. We did include just a bit of interest savings in our forecast, but, you know, because we're not sure what the market will bring in terms of interest rates to us. So there is hopefully, we'll have a number of successful transactions this year, which will provide some upside for it should say, some lower interest expense.

Okay. Great. Thanks very much.

Thank you. Next question is coming from James Hardiman from Citi. Your line is now live.

Hey. Good morning. So I wanted to ask maybe a big picture question. Obviously, not a whole lot of capacity being added here, and so much of the growth story is organic, obviously. And so I guess my first question is, how much of that organic turnaround do you think it's a function of sort of factors taking place in the industry versus, I don't know, self-help? Right? You listed obviously a whole bunch of things that you're doing brand by brand. I'm ultimately trying to figure out sort of the sustainability of this organic growth that we're seeing right now.

Yeah. Hey, James. How you doing? Man, I wish I could tell you, you know, what the scientific answer to your question is about the industry overall versus us. I think the industry being more mainstream along with us is certainly a fantastic thing for everybody. And I don't want to discount that. But I meant what I said about same ship sales. You know, we got almost 10% yields on the same ship. And if you look at our history, our historic growth rate on revenue was significantly lower than our cruise competitor set. When you look I don't know what they're gonna do next year, but when you look at this year, we're right in the mix and or at the top. So I feel very good that our trajectory is changing for us versus what we had been accustomed to, and it means we've got a pretty good amount of headroom as we look forward because people should be paying more for our experiences. Not only vis a vis our cruise competitors, but I'm talking about vis a vis the experience gap, you know, that exists on what we do versus what land offers. What we call the price to experience ratio is just remarkably skewed. And we should be getting a lot more versus what land competitors do. And I think it's probably a pretty good sign that I'm right about that and the potential when you think about Disney. It basically says we're gonna underinvest in things we have in the past, but we're gonna double down on cruise. They see the value of that as well. So I think we're in good company, and we've got a lot of self-help along the way.

Got it. And then guess along those same lines, although in a lot of ways, I'm asking previous questions in a different way, but you finished 2024 with per diems up north of 5%. The guidance for the year, I guess, yield guidance is 4 to know, there's some occupancy in there. And then, you know, first quarter is 4.6. So we're going five plus to 4.6 something lower. I guess from our perspective, right, Celebration Key, which comes on in the back half, should actually help with some acceleration. I guess, is there anything quantifiable that we should be thinking about that would weigh on per diems as we work our way through the year? You know, maybe an itinerary, geographical mix issue or is this just, you know, you get some version of this question every quarter. Right? Is this just sort of conservatism the further out you look?

I get my same answers that we've been giving. Right? We're trying to be as transparent as we can be with everyone on the call and everyone who's not on the call. You know, we haven't been through Wave yet. We will although it's been a remarkable ride two years, it feels like Wave hasn't stopped since, you know, summer of 2022. But we haven't been there yet, and so we'll see what that brings us. And we'll talk again in March.

Appreciate it.

Thank you. Next question is coming from Patrick Scholes from Truist. Your line is now live. Patrick, perhaps your phone is on mute.

Hi. Good morning. Can you hear me?

Yes. Yes. Yes.

Great. Great. Thank you. I'd like to ask a little bit about Mexico for my first question, you know, some news out there lately regarding additional passenger charges on that. Josh, do you think this is a done deal? Or is there any chance that that may not go through at this point? And then specifically for your folks, for your ships, you know, what percentage of your itineraries do make a stop at a port in Mexico? That's my first question. Thank you.

Yep. So right off the bat, no. I do not think it is a done deal. You know, we've spent dealing with this with the folks in Mexico for the last few weeks. We were not consulted. No one was consulted when this was passed. It's pretty clear to me. I have a lot of respect for the president and what she's doing. But she was misinformed, not informed, and no one was thinking through the ramifications of what they were suggesting. And there's a reason why cruise is in transit historically. As opposed to people who fly into Mexico and stay there for several days. So it's already been pushed off to July first. We're not satisfied with that. We want to have good dialogue with the government and explain all the benefits that we bring to Mexico, which are significant, and it doesn't take much to tweak itineraries to effectively erase what the proposed tax is on the industry. And so I feel we are engaged in those conversations. We hope to have more after the New Year, but it's definitely not settled. And we have nothing in the forecast for these changes for the tax, just so everybody knows. Nothing for the year. As far as what the impact would be, for 2025, you know, assuming it did go into place and we made no changes, starting in July of 2025 with less than 5% of our itineraries for the year for the rest of the year.

Okay. Thank you. Certainly, a fluid situation. And then a follow-up question is on the year-over-year growth rate in your passenger ticket revenues versus year-over-year growth rate in your commissions, transportation, and other. The past several quarters, those growth rates sort of moved in line or lockstep. This most recent quarter, you did have a noticeable increase in passenger ticket revenue percentages higher than the commissions paid out. You know, are you starting to see more book direct or anything to read in? Right. Thank you.

Patrick, we should talk after the call. I thought it was a pretty close I thought it was a tenth of a percent or something. It's very close. Oh, okay. Revenue. Okay. I come up a little bit different. We'll talk about that after the call. But anything else to consider?

Nothing else to consider. I mean, that's the numbers you know do vary a little bit from quarter to quarter because of currency and the amount of ARC mix that we have. But nothing significant otherwise.

Okay. Thank you for the clarification.

Thank you. Next question today is coming from David Katz from Jefferies. Your line is now live.

Hi, afternoon. Thank you for taking my question. Covered a lot already. I wanted to get a sense for the cost side of the equation. Right? And know, the variability within there, right? The degree to which know, and what would have to happen for you to turn out a little bit better on the cost increases that you may have built into your guidance. And then I have a quick follow-up.

Yeah. So if we're talking about the full year, you know, and the 3.7%, you know, the thing that is likely to change over time is most likely to be the efficiencies we find in the magnitude of those efficiencies. We are constantly working hard. We have lots of ideas out there. It is always very difficult to figure out the exact timing. And we did build quite a bit into our guidance and into our forecast. We continue to work hard to improve on those. And so last year, we were able to exceed what our expectations were. And we'll work hard to try to do better this year, but it's very hard on the timing of all these items. Plus, you know, we built in inflation something a little bit less than 3%. And trying to get that number perfect. I mean, if you know absolutely in every category what inflation will be in 2025, let me know because we did the best we could. But I'm sure some of those pieces are gonna be off. As I always say, there's only one thing I know about every forecast, it's wrong. I just don't know by how much and in what direction.

Well said. I wanted to follow up just on the leverage side of things. When I look back historically, at you know, where the company has operated, you know, obviously, making good progress today, but you know, should we be thinking about the two times or better, you know, as a long-term aspirational target? Is that still achievable?

Well, that's for a proud former treasurer of the company. It's not a target we have for ourselves right now. Know, our target right now is to investment-grade metrics, which is three and a half times. How strong we wanna rebuild that fortress, that's still up for a decision, you know, do we need to be an A-minus rated company again bordering on A, which is, you know, some of the situations we found ourselves in, I could argue no, we don't need to. Do we wanna be a solid investment grade? Absolutely. So as we get closer to that metric, know, we're obviously gonna be having conversations with our board to really set out what we think the right balance is between that balance sheet strength, investing in ourselves, investing in our shareholder returns via dividends or buybacks will remain to be seen. What the formal being when. But that all goes into the mix, but I'd say nobody should be thinking about a two-time as a target we're setting for ourselves.

Thank you very much. Appreciate it.

Thank you. Next question today is coming from Jaime Katz from Morningstar. Your line is now live.

Hey, good morning. Thank you for taking my questions. First, I'm hoping that you guys can talk a little bit about wave season. I guess I'm trying to understand how to think about balancing filling the rest of 2025 with pulling forward more demand from 2026 and whether or not one is a better strategy than the other without giving too much competitive information away. You know, is there a way to, I guess, bundle even less than you are bundling now and, you know, maybe promote less in order to optimize pricing? Thanks.

Yeah. Thanks. So it's a little bit of a hard question to answer. You know, we are actively and have been actively selling 2025 and 2026 for some time as you might have picked up in the prepared remarks, we actually just had a record this past quarter for booking activity for the further year out, so 2026 in this case. So I think our brands are actually when it comes to revenue management optimizing the shape of the curve, they're doing a pretty solid job across the board, which doesn't mean there's not a lot of room for improvement, but a pretty solid job. So everyone's hitting wave in slightly different positions with respect to how much they're booked for 2025 and in what quarters. So I'd say it's a case-by-case decision about how they're gonna be tackling Wave. I would say everybody does promotions and wave. Everyone. It's how you get people interested in cruising during this critical period. But will remind you, we did promotions last year. In which? And we ended up with 11% yields. So the promotional tactics and tools that we use, they're healthy. And they're part of the process that we go through.

And then the other question I have is a little bit of a longer-term strategic question. Right? We know what the costs are affiliated with Celebration Key this summer, but I suspect this isn't a one-and-done project. So is there some non-newbuild CapEx we should be thinking of, like, level that will be in these brand-building projects longer term that might be higher than it was in the past?

That's a fair question. I think if you think about things that we've been investing in outside of the new build, Celebration Key, Appear at Half Moon Key, Aida Evolutions, which is their mid-shift refurbishment plan. And Aida is much to Carnival's chagrin, Aida is pretty much neck and neck with Carnival for the highest returning brand in our portfolio. We're making the right investments in non-new builds to continue the momentum that we have. As far as what the ultimate level is on a run-rate basis goes, you know, I don't have a number for you that I'd stick to that says over the next six years or seven years, this is what you should expect. But clearly, we're making these investments on the basis that they are gonna support the improved returns that we demand of ourselves. So about $600 million for Celebration Key as we've talked about. Another few hundred million for what we're doing at Relax Away, Half Moon Key. And Aida evolutions, you know, for any one particular ship that they're going through this process, you're talking about, you know, tens of millions, but we think it's tens of millions that really is gonna be a boost for a brand that is incredibly high returning. So I don't know, David, if you wanna add any more color?

Yeah. The only thing I'd say is, I mean, you saw in the press release what our number was for 2025. In all likelihood, it's gonna be something similar to that going forward, but it's hard to say exactly what it will be every single year. Because there are so many bigger decisions that we'll be making over time which will make up that number.

One thing I would say about the destination side is Celebration Key and Happy New Year are a little bit unique in the scope and size of what we're doing. The other destinations we have in our footprint, they're amazing. And we will spend some money over time to do some things and make the experience better and better opportunity for us to generate returns. But I don't see other than maybe a continued expansion or celebration key as we've already been talking about through the end of this decade, I'm not sure I on the horizon anything that I'd flag for you right now is kind of out of the that we'd be talking about in six months or a year.

Great. Thank you.

Thank you. Next question is coming from Brandt Montour from Barclays. Your line is now live.

Hey, good morning, everybody. Thanks for taking my question and congratulations on the results today. So the first question you're welcome. So the first question is on the booking curve. Josh, and I don't know if this is an easy one to answer. But when you try to take forecasting out of it and you just focus in on your booking curve today versus the way or versus how your bookings looked at the same time last year, does the pricing look any less robust than this time last year, perhaps tougher comps or anything else that you would highlight?

Well, I mean, it's certainly tougher comps this year than it was last year. The brands are, you know, as I said, though, in the prepared remarks, we're basically at a higher occupancy at a higher price point and that's across all four quarters. So I think the brands are doing a good job of continuing the momentum and optimizing that curve. So it probably doesn't answer the question the way you'd like it to, but we'll see where that shakes out. We gave you our view of yields as of now and we'll update you as there's things to update.

Okay. Great. Thanks. And then just a quick housekeeping. The Red Sea had something like a hundred and thirty million dollar impact last year. How much of that effectively do you get back in 2025 and sort of how should we think about the timing of it and the cadence and where it would kind of show up in the comps?

Yep. So I think when it all shook out, it was probably a little less than a hundred million dollars, you know, at the end of the day as we did our analysis for 2024. I think the thing about year-over-year for 2025 that people need to keep in mind is it's not a huge springback. And the reason why is if you think about this time last year, we had already sold our world cruises. People were already on them before the Red Sea became a thing. We had to scramble. We did everything we had to do. It cost us ninety million dollars. This year, we're in a different place, which is we knowingly took Red Sea out of the equation, you know, back in February, March for 2025, which meant we had to sell cruises that weren't necessarily as attractive to sell because you can't go through the Red Sea. And so from a year-over it's a different kind of pain point that we had to deal with. And we dealt with, and it's in our numbers. But it means that, you know, what you'd love to see is kind of this bounce back and we're whole and we move forward. I don't think 2025 versus 2024 is really the year that we'll see that. The normalization is now and so 2026 versus 2025 will be on an apples-to-apples basis.

Because the lower yields offsetting no disruption this year?

More or less in high level. Yeah. I think that's fair.

Alright. Congrats again, guys. Thanks.

Thanks very much, Brandt. Okay. So with that, I think we're overtime. So I'd say happy holidays and wish everybody on the call nothing but good health and happiness in 2025. Thanks much for joining.

Thank you. That does conclude today's teleconference. You may disconnect your line at this time, and have a wonderful day. Thank you for your participation today.