Greetings, and welcome to the Carnival Corporation Plc Third Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Beth Roberts, Senior Vice President, Investor Relations. Thank you. You may begin.

Thank you. Good morning, and welcome to our third quarter 2024 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 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. Before I begin, I'd like to express my support and heartfelt sympathy for all those impacted by Hurricane Helene this past week. Our thoughts and prayers are with you. With that, I'll turn to our prepared remarks. As September comes to an end and we closed out the year, I am happy to report that we are delivering well in excess of 2024 expectations. We've also built an even stronger base of business for 2025, and we're off to an unprecedented start to 2026. Our third quarter by all accounts was phenomenal, breaking multiple records and outperforming on every measure. Revenues hit an all-time high of almost $8 billion, a $1 billion more than last year's record levels. Record EBITDA exceeded $2.8 billion, up $600 million over last year and $160 million over guidance and we delivered over 60% more net income than the year prior, achieving double-digit ROIC as of the end of our third quarter. These improvements were driven by high-margin same-ship yield growth across all major brands, not driven by capacity growth. And it resulted in EBITDA and operating income on a unit basis of 20% and 26%, respectively to levels we've not seen in the last 15 years. Strong demand enabled us to increase our full year yield guidance for the third time this year. And consistent with our historical emphasis on efficiency, we also improved our cost guidance, which enabled us to drive more revenue to the bottom-line with around 99% of our 2024 ticket revenue already on the books were poised to deliver record EBITDA of $6 billion, almost $600 million above our prior peak and $400 million above the original guidance we set in December. ROIC is expected to end the year at 10.5%, 1.5 points better than our original December…

Thank you, Josh. I'll start today with a summary of our 2024 third quarter results. Next, I will provide the highlights of our fourth quarter September guidance, some color on our improved full year guidance, along with a few other things to consider for 2025, then I'll finish up with an update on our refinancing and deleveraging efforts. Let's turn to the summary of our third quarter results. Net income exceeded June guidance by $170 million as we outperformed once again. The outperformance was essentially driven by two things; first, favorability in revenue were $40 million as yields came in up 8.7% compared to the prior year. This was 0.7 point better than June guidance, driven by close-in strength in ticket prices as well as onboard and other spending. Second, cruise costs without fuel for available lower berth day or ALBD, improved slightly compared to the prior year and were nearly 5 percentage points better than June guidance, which was worth over $125 million. The third quarter benefited from cost-saving opportunities, accelerated easing of inflationary pressures, benefits from one-time items and the timing of expenses between the quarters. Most of the third quarter cruise cost benefits will flow through as an improvement to our full year September guidance. Per diems for the third quarter improved at least 6% versus the prior year driven by higher ticket prices and improved onboard spending on both sides of the Atlantic. At same time, our European brands on the path back to higher occupancy levels saw outsized growth in occupancy of 5 percentage points as compared to the third quarter of 2023. For the third quarter, we reported record-setting operating results with strong demand, delivering record revenues, record yields, record per diems and record operating income. Now two things to highlight about our fourth…

[Operator Instructions] Our first question comes from the line of Matthew Boss with JPMorgan. Please proceed with your question.

Great. Thanks. And congrats on another really nice quarter.

Thanks, Matt.

So Josh, on the continued momentum, maybe could you elaborate on the stronger base of business for 2025 and the record start to 2026 that you cited? Maybe if you could touch on volume and pricing trends that you're currently seeing across regions and maybe specifically in Europe?

Sure. So I'm probably broad-based is the best way to talk about the strength and what we're seeing on 2025. The book position is higher for both North America and our European brands, and that's consistent across the quarters as well. So we're positioned very well. Our brands have been doing a great job of pulling forward the booking curve and now we get to take price, which is the goal. So it's very encouraging. We are we're about two-thirds booked when you look at next 12 months. So we're in a pretty enviable place. Matt, do you have a follow-up?

Yes, thanks. So maybe just a follow-up would be on the balance sheet. If you could speak to capital priorities from here, just given the free cash flow generation and some of the changes that you've made?

So basically, our priority one, two and three is debt reduction, where you have the goal of becoming investment grade, and we do expect to see both the reduction in our debt levels as well as the improvement in our EBITDA, achieve investment-grade metrics as part of our SEA Change program towards the end of 2026. And so we've got plenty of time to think about other alternatives beyond that.

Great. Congrats, again. Best of luck.

Thank you.

Thank you.

Thank you. Our next question comes from the line of Steve Wieczynski with Stifel. Please proceed with your question.

Yes, hi, guys. Good morning. And congratulations on the strong quarter and the outlook. So Josh or David, this might be some of a shortsighted question. And David, you touched on this a little bit in your prepared remarks. But if we kind of think about the fourth quarter yield guidance, it looks to us like it might be a little bit lower versus the implied guidance for the fourth quarter back in -- that you gave back in June. So just wondering if there's anything from a -- whether it's a pricing perspective or any geography or brand, it is showing any -- I don't want to use the word softness, but I guess I have to use that word or weakening in pricing during the fourth quarter? Or are you guys just taking a more conservative view around onboard spending over the next couple of months?

Yes. Hi, Steve, this is Josh. Actually, I'm not sure your math, but there was really no change from where we were in June guidance when it comes to the fourth quarter on the yield side. We always said -- when we came out with our guidance, frankly, in December, we were challenged a lot, particularly in the fourth quarter, and people didn't think we'd be able to actually reach breakeven year-over-year because the fourth quarter of 2023 was so strong. So now we're talking about 5%, and we feel good about that.

Okay. Got you. And then, Josh, I want to ask about the 2025 and 2026 bookings, and you talked how you're already 50% booked for next year and in a pretty good position, it seems like already for 2026. So just wondering if you think about your booking window. Has it expanded too much? We're saying that differently? Are you nearing a point where you might start leaving -- you might be leaving money on the table if demand kind of stays status quo from here? And then following up on that question, just wondering if you've seen demand accelerate for bookings, maybe more in late 2025 and 2026 that are going to be touching celebration key?

Sure. So as -- the great point on the booking curve, the goal is not an ever-increasing booking curve. It's to maximize the revenue that we're going to generate by the time we sell. I would say this is a brand-by-brand, itinerary-by-itinerary buildup. And I would say that almost all of our brands are pretty much -- are higher year-over-year. There's one that's not, and that's an active decision to pull back because we want to make sure we're not leaving price on the table, exactly to your point. So despite the fact that overall, we're in a record position, we are looking at that, obviously, with a lot more clinical eye and making sure we're doing the right thing to optimize that revenue. When it comes to Celebration Key, clearly, there's a premium and it's going to benefit us, in particular, if the 2026 ongoing story when we get to ramp up to about 20 ships, which is going to be pretty fantastic. And the fact that we're doing all of this that we've been able to talk about with 2024 and even into the first half of 2025, it's got nothing to do with Celebration Key. This is just based on the natural demand and all the commercial activities that we're doing and delivering on board, and that's supporting real strong revenue increases.

Got you. Thanks for that, Josh. Really appreciate it. Congrats, guys.

Thank you. Our next question comes from the line of Robin Farley with UBS. Please proceed with your question.

Great. Thank you. I know it's too early to give guidance for 2025 but...

You're going to ask anyway -- but you're going to ask anyway.

Let me just ask it this way, which I think is harmless. Given everything you're saying about the booked position for 2025 and even 2026 being at record levels, is it fair to say that you're off to a better start for 2025 than a typical year? So hopefully, that's an innocent way to ask it. And then I also did just want to clarify on the expense. David, I heard what you mentioned the $25 million of expense that that was sort of borrowed from -- will show up in Q4 that that kind of shifted $25 million. But was there a separate amount, and I apologize if I missed this, it was a onetime cost saves this year that we should think about coming back in 2025? I just wanted to catch what that amount was and even what it was for. If you would share that. Thanks.

Okay. So I will actually very directly answer your question. So we are starting off even better for 2025 than we did for 2024, which is shaping up to be a record year. We are higher in occupancy, and we're higher in price and the brands doing a great job of really trying to optimize that booking curve and revenue generation. So that's not guidance, but it's a point in time, and that's where we are.

Okay. Thanks.

As far as the second question is concerned, yes, there were a couple of reasons why we reduced cost by the full point of the year. One included some onetime benefits, wasn't huge, probably about $20 million of the $100 million related to some pension credits and a few other little things for the year.

Okay, Great. Thank you.

Thanks, Robin.

Thank you. Our next question comes from the line of Ben Chaiken with Mizuho Securities. Please proceed with your question.

Hi. Good morning. On the cost side, EBITDA flow-through has been stronger than expected. It was almost 60%. Costs have been better generally for the majority of the year. Can you talk about some of the cost saves, margin opportunities you're finding? Is this simply better leveraging a fleet that is now leaner subsequent to some of the asset sales over the past few years? Or is it cost that you're actively pulling out of the business or both? Thanks.

No, it's not cost that we're pulling out of the business. I mean what we're seeing is hundreds of small items across the board, across many brands, things like crew travel savings, other port savings opportunities as well as a lot of sourcing savings, cost innovation better leveraging our scale across all the brands. And that probably represented about half of the $100 million cost savings that we roll through for the full year.

Got it. That's helpful. And then I guess for Josh, higher level, you folded P&O Australia into the Carnival brand this year. I know it was somewhat smaller scale, but do you think there's other opportunities to streamline the portfolio in a similar way going forward? Thanks.

Yes. I'd never say never take things off the table. I think this is one of those decisions that just made a lot of sense and something that we felt pretty passionately about executing quickly. We'll continue to review our portfolio brand-by-brand, ship-by-ship. But right now, we feel real good about how we're entering 2025.

Thanks.

Thank you.

Thank you. Our next question comes from the line of James Hardiman with Citi. Please proceed with your question.

Hi. Good morning. I wanted to dig into some of the cost commentary you gave us, David. So 3.5% growth for this year, that seems like it's getting better, obviously, with some cost saves and maybe better inflation. I think you called out about 0.5 point next year for Celebration Key and another 75 bps from dry-docks. I guess, are there any call-outs on the other side of that equation? I don't think our starting point should be in that 5% range if we were to just take the 3.5% this year and add those 2% callouts. Maybe talk us through sort of what the base level of inflation is as we think about 2025 and any other sort of positive factors that will help offset some of the negative ones for next year?

Well, it's if you know exactly what inflation is going to be over the next 15 months, let me know, but we're still trying to figure that out. There is some level of inflation that continues in our business. We'll include that within our guidance when we provided in December Plus, we continue to work on cost-saving opportunities. As I said in the June call, even though we have the best cost metrics in the business. We still believe there are opportunities in our business to further leverage our scale and to work through those opportunities as we did in the second and the third quarter, and we'll continue to do so. And we'll include some of that in our guidance, which will offset some of inflation. So -- but stay tuned. The two things that I gave in my prepared remarks were relative to the dry-docks and the cost of Celebration Key are pretty well fixed at this point. And so we wanted to highlight those in the prepared remarks.

Got it. And then obviously, it sounds like everything is going pretty well from a demand perspective. Maybe speak to one of the questions that we keep getting is the potential for the widening conflict in the Middle East to negatively impact your business. I mean I -- to some degree, it would seem to help that much of that region was already vacated in 2024. I guess the hope was that, that would be a '25 tailwind. That now seems off the table. But just maybe speak to how, if at all, you expect that region to impact your business next year?

So we weren't banking on it getting better and hope to god it doesn't get worse -- thoughts -- everybody in the Middle East region and hoping for peace. But our business isn't really contingent on it. It's not a major source market for us, and we're not going to the region. So unless it were to escalate to something significantly wider than the Middle East, our ships are mobile, and we're in source markets that are phenomenal for us with lots of potential.

Got it. Thanks, guys.

Thank you.

Thank you. Our next question comes from the line of Patrick Scholes with Truist Securities. Please proceed with your question.

Hi guys. Good morning everyone. My first question, you talked about dry docks increasing next year. Can you give us a little more possible granularity on dry dock increases or decreases for perhaps some quarters by quarter for next year modeling purposes? Thank you.

So I don't have all that detailed handy, Patrick. But if you call Beth, I'm sure she can provide that to you.

Okay. Beth, we will call you. Thank you. And then second, I see there's some news out about a new cruise pier at Half Moon Cay. Do you have any longer-term plans above and beyond just a pier for Half Moon Cay, such as water parks and the like down the road?

So well, I'll give you a yes and a no. So, do we have more plans? Absolutely. Do we want a water park? Absolutely not. So the difference between Celebration Key and what we're building at -- and pardon me, the difference between Half Moon Cay and what we're building a Celebration Key is Celebration Key is really about 5 portals of fun and looking to be that entertainment center. What we have at Half Moon Cay is one of the most naturally beautiful white sand Beach, Crescent Shape islands in the Caribbean. And that's a true private destination and something that we want to enhance. And we will be talking about that more over the coming months. I won't steal Christine's thunder, but good things coming that are going to make that in a pretty amazing destination and of itself for a completely different reason.

Great. Sounds great. Thank you.

Thank you. Our next question comes from the line of Brandt Montour with Barclays. Please proceed with your question.

Good morning everybody. Thanks for taking my questions. So just starting off, we haven't really touched on SEA Change and your 3-year targets there. We kind of got a little bit of an update in the release. I guess the question is, Josh, with this new '24 full year guidance, obviously, we can calculate the progress you're making, and we can look at that number and sort of imply some KPIs yields cost to get to those targets. And it's implying a pretty narrow spread between those two. And would give us the sense that if we harken back to your – what you gave us in the Investor Day, what you were thinking for per diems that were sustainable and costs that were sustainable that we would think you could do better? So I guess if you could just – I know that, that was a long-winded way of asking the same question that you've already gotten twice. But if you could just give us a sense for how you think about the business in the current operating environment given all the positive commentary you've said today vis-à-vis those longer-term targets?

Well, I think the teams around the world are doing a phenomenal job. And if you think about – in December, we were saying up 8.5 points on percent on yields, up 4.5% cost, which gets us to 9% ROIC. And now we're seeing up almost 10.5% on yield, only up 3.5% on cost. It gets us to 10.5% on ROIC. So clearly, we're outperforming the expectations. It gets us about 75% of the way there for two of the metrics, the EBITDA per ALBD and the ROIC after one year with 2 years remaining and carbon is progressing as expected. We're about 50% there after one year. So the teams aren't doing all those things to make targets. They're doing those things to make their guests happy and provide great business results and the outcome that's going to be hitting those targets. Do I want to hit them early? Yes, do I want to get further than that? Absolutely. But we'll take that in stride, and we'll probably talk more when we get to December guidance, and you could put that in context where we'll end in 2025 and then take it from there.

Okay. Thanks for that. And then just a follow-up, maybe, Josh, if you could address the broader land-based leisure demand environment, what we're seeing elsewhere is not what cruise has seen, we see steady, slow somewhat softer normalization. We don't get any of that from you in your commentary today. I guess, we understand why it's happening, but if the rest of the world is narrowing a little bit toward narrowing your, let's say, your gap from the top. Do you see any of that affecting your consumers' behavior and willingness to spend and pricing sensitivity?

We are still a remarkable value to land-based alternatives. And maybe land-base is softening because we're doing better. Who knows? You have to ask them that. I can't tell you their business. But we have a tremendous value. We are doing a better job of getting our word out better marketing, more eyes on the industry, more eyes on us. Our new-to-cruise this past quarter was up about 17% year-over-year. That's not an accident. That's because our brands are really focused on driving that demand profile. So I don't have a crystal ball, and I can't tell you what the world is going to look like a year from now, two years from now. But I can tell you if we keep focusing on commercial execution and doing the right things and doing them better, then there's a long runway because the one thing that's never been a question is can we execute on board and deliver a great experience. And that's always been the case. It's just a matter of how we convince people to come with us who have never have, and I think we're doing a good job on that.

Great. Congrats on the quarter.

Thank you. I guess, I'd be remiss if I didn't shout out the travel agents because all they do is amplify our voice in a tremendous way. And so that success that we're seeing in building that demand profile is really hand-in-hand with their success, and we appreciate their efforts.

Thank you. Our next question comes from the line of Conor Cunningham with Melius Research. Please proceed with your question.

Everyone, thank you. Maybe sticking with that -- the comments on new-to-cruise. Can you -- I mean, look at your 2025 bookings, are you seeing new-to-cruise and new-to-brand accelerate? And if you could just touch on just the younger demographic. I think I asked you that last quarter, but it just -- it seems like a pretty big megatrend for you over the long-term? Thanks.

Well, sorry, I just got distracted -- as far as what the demand profile is for the future bookings, we don't really talk about that in advance, but we're happy to talk about it when we get to our results, and we can talk about what the breakdown is for the profile of folks who sailed. But suffice it to say, everything I'm saying is not ending in 2024 with respect to our efforts to keep optimizing and keep getting better at execution, keep driving that demand profile and casting that net as widely as we can. We have almost no capacity growth. So all of that increased demand is just going to result in who wants pay the most to get on our ships, and that's what we're driving for.

Yes.

Okay.

And as far as the average age is concerned, I think we touched on this last quarter. I mean if you look back at all of our brands over the last 10, 12 years or so, the average age for most of the brands really hasn't changed. Now of course, the repeat guest who sailed a decade ago or 10 years old, but the average age of our guests. So we are attracting a lot of new young people and some of our brands like Carnival Cruise Lines has an average age of like 41 years old. So that's a brand, obviously, millennials these days are, I think it's 43 or 44 years old or younger. And that does represent half the -- over half the population in the United States. But Carnival has got over half of its guests for millennials because the average age is 41 or younger.

But I would say -- I think I said this on either the last call or the call before, we love boomers, right? And we love Gen X. I mean, it is -- if you think about our portfolio approach, we have brands like Holland America, like Cunard where that is where they're trying to push that demand profile because it's folks a very good income, a very good retirement base and a lot of time to take cruises that can go 14 nights, 21 nights world cruises. So we love the fact that we're pushing harder into that millennial generation, and we're getting that interest and that demand profile. But we don't want that to the exclusion of really leaning into the other generations for what we have to offer.

Helpful. On Celebration Key, I know you've gotten a lot of questions on that. Just it is opening in mid of next year. Is it creating the halo effect that you would have expected? Like are people asking for -- or maybe they're asking a little bit different. I think you mentioned 19 ships are going to touch there. Like are those ones selling out quicker than you would have expected reverse relative to history in general? Thank you.

Unfortunately, because every carnival ship is going, there's no test case. But -- so yes, we are seeing a premium for it. We are seeing people that are seeking it out. And the good thing is it hasn't even opened yet. So we think the rubber is really going to hit the road once we can deliver the experience and really show people what it can do.

Appreciate. Thank you.

Thank you.

Thank you. Our next question comes from the line of David Katz with Jefferies. Please proceed with your question.

Hi. Good morning, everyone. Thanks for taking my question.

Hi.

Hi. I appreciate all the details so far. And it's interesting when we look across our coverage, there are some smaller pockets of weakness that consumers have started to demonstrate here and there. And this is a broadly based positive quarter and I just wanted to double-click on the issue of are there any small pockets, any areas of consumer behavior that we should just keep an eye on as we go forward that are, again, embedded in what appears to be a pretty broad-based strong quarter and outlook?

Yes. No, I appreciate the question. I guess I'm happy that I just have to say no. What we're seeing is, in fact, broad-based. We're seeing that demand for all the brands pretty much across the portfolio. What we're seeing it in the booking trends that we've talked about, the onboard spending. The onboard spending levels were 7% up year-over-year. That's off the top of my head. Am I off by a point?

Something like that more than this second quarter, so…

6.7% -- onboard per diems were 6.7% year-over-year, which is an acceleration versus the increase that we saw in second quarter versus the prior year. So, all things that you look at is our -- is that demand profile changing or the state of the consumer changing. I can't speak to macroeconomics, because there's a lot going on in the world, but at least with what we have to offer people are happy to pay and to participate and we think that's a great thing. And we think that goes back to all the things that we've been talking about for the last two years about where we want to focus and make sure that we are doing a better and better job as time goes on.

Perfect. And if I can, just as my follow-up, are you able to observe or record any trade-down dynamics where part of the demand you're seeing is a consumer who's traded out of something else into a cruise vacation?

No, nothing that we've seen that says that. I mean I think it's the opposite. It's -- we're doing a better job of convincing them. This is something they want to do, not because they're trading down from something, but that they want to experience what we have to offer.

Okay. And I apologize for the questions, my ratings speech mix up.

No, no. I think they were good. They were good questions. I think they're good questions.

Very fair. Congrats on the quarter.

Yes.

Thank you. Our next question comes from the line of Jaime Katz with Morningstar. Please proceed with your question.

Hi. Good morning. I'm curious if you have any update on, I guess, the Chinese consumer? Is it trending as you would like or Asia Pacific in general? Just because the data that's been coming out of the region has been a little bit lumpy, and it was obviously something that was pretty meaningful prior to the pandemic? Thanks.

Yes. Hi, Jaime. It wasn't very meaningful for us prior to the pandemic and the grand scheme of things. It was a few percentage points of our capacity that was really dedicated to China. We have, as I've been pretty open about, I'm ecstatic that it's reopened to international cruising. I wanted to be very successful for our competitors, but it's not something that we're pursuing at this time and have not. With respect to the region overall, when it comes to Japan, Taiwan and other regions, that's going well. People like cruising with us before, and they continue to enjoy it now.

Yes. I was just curious if there was any movement with them with outbound travel more so than anything else. As far as occupancy in the European brands, is there a little bit of room left in that for upside? Or has the gap sort of closed on that?

I mean overall, we're back to historical norms, which is a range. It's not a number. And I'd say all of our brands to varying degrees, have the ability to maybe addressed a little higher here and there. It's not going to be a big driver of our improvement as we look forward. It's really going to be from driving price, which is where we're focused. But there's always an opportunity to make some tweaks and find some more occupancy.

And I don't think you guys had mentioned anything on any hurricane impact, but any insight to the cost of that disruption if you have it, would be helpful? Thanks.

Yes. I mean ours is -- it's insignificant compared to the impact that it's having on the region, which, first and foremost, we should take a second to just think about. But putting that aside, it's a few million dollars for us. It's not anything of significance.

Excellent. Thanks.

Thank you. Our next question comes from the line of Assia Georgieva with Infinity Research. Please proceed with your question.

Good morning guys. Congratulations on a great quarter. And I'll just delve into the few quick questions that I have. Occupancy is still not fully caught up relative to fiscal 2019. Isn't that by itself already a yield opportunity?

Yes, like I said, we operate in a range for occupancy, and we are within our range, but there's certainly the opportunity to push that a little bit more. It's just not going to be the biggest driver of how we can improve the revenue picture going forward.

And maybe a quick question for David. Fuel costs seem to be a little bit -- well, quite a bit higher relative to what we were estimating because we track for 180, 380 MGO. Could that possibly be related to shore power in the Baltics, Denmark, Germany ports that are offering shore power Sweden, et cetera. Is that part of the play there?

No, because our shore power, when we buy it, is actually not included in the fuel expense, it's included in port expenses because we purchased it at the port. So, that would not have been an impact. So, I'm not sure what you're looking at and what you're tracking. But Beth can give you some websites to look at, which maybe will improve your tracking overall.

That would be great and Beth, I'm sorry, I'll bother you on this one. And basically, the -- my second question, given the acceleration in EBITDA generation and how far ahead you're with the SEA Change program? Is it possible at this point to order a sister ship for 2027, 2028 delivery, whether it's for a Princess brand or Carnival brand?

No, I mean, our order book is set through 2028. We feel very good about that. And as you know, we did order what we call Project ACE, which is next generation for Carnival, what -- that doesn't start until 2029. So, the focus of all that EBITDA generation is really its cash flow and we're going to use the headroom with a reduced capital expenditures to pay down debt.

So, Josh, in terms of the debt tranches, we're going after the highest cost of debt, correct?

Well, as long as it's got a good NPV if we want to pay it down. So there's a lot of factors -- yes, go ahead.

I was going to say it's really a combination of three things that we look at. One is the cost of the debt. And we do have two double-digit issuances out there. Both are callable in 2025. So that should help our overall -- when we -- we'll look at refinancing those in the early part of next year. We also look at the maturity towers. We're well set through 2026 on maturity towers. They're very well managed. But the towers in 2027 and 2028, we'll be looking at refinancing some of that as well as looking at secured versus unsecured debt, because our goal is to get to be completely unsecured, but we'll manage that over time as we move forward.

And David, that was basically my question, has cost versus secured towers. So it's a balancing act, I imagine?

Correct.

All right. And lastly, if I may ask somebody is encroaching on your Galveston, Texas port and building a terminal there. What do you think about that? They already have a presence in Miami and are doing Port Canaveral, et cetera, an unnamed competitor, who do not have to report to us on ROIC or other metrics? How do you feel about sort of the -- what I call the encroachment?

I don't think about it as an encroachment. We are 2% of the overall vacation market. And if it's the company, I think you're talking about, it's a small part of the overall cruise market growing, but small. And so there's -- the demand profile as long as we do our jobs with our world-class portfolio of brands will be just fine. I got to cut you off though, you did three questions, and the operator only said one. Sorry.

Thank you. Our next question comes from the line of Dan Politzer with Wells Fargo. Please proceed with your question.

Hi, good morning everyone. Thanks for taking my question. Josh, I do want to follow-up on the fourth quarter yield comment. I know you mentioned that there really wasn't much if any -- actually, any change to your prior guide. But as we think about the third quarter came in better, David, cited better close-in demand and on board driving the beat. I mean is there any reason that wouldn't be in the cards for the fourth quarter? Or are there near-term demand hiccups or noise, whether it's a new cycle or election that could be maybe driving additional conservatism?

Look, we try to give you our best estimate of what's going to happen. And do we always try to outperform? Absolutely. That's the goal. There's nothing in particular about the fourth quarter other than what other than what you said. I mean right, the next month. A lot of attention is going to be focused on something other than what's normal. It happens every four years. So we'll see kind of impact that has. But the business is still going strong, and we expect a lot of ourselves.

Yes. And also keep in mind, with 99% of the ticket revenue for the for the gear already on the books, there's not a lot left to sell, yes.

Right. No, that makes sense. And then just for my follow-up. In a couple of weeks, you're hosting some investors at Board, Sun Princess. Any way to kind of think about maybe framework and maybe kind of the key topics we should focus on? It seems like there's a lot progress on SEA Change, your Celebration Key, maybe some of these cost opportunities or savings from easing inflation. But what are the kind of the key high-level focus points we should be thinking about? Thanks.

Look, it's been -- it's been about 15 months since we got together for the first time to talk about what our priorities were and announced SEA Change. And think it's a good opportunity for us to just kind of level set on where we are and everything. And hopefully, as you see it, the way we see it, which is the progress that we're making across board. We also get an opportunity to showcase the Princess brand and specifically the Sun Princess, which is just a true game changer for Princess. And I'd say for the premium market, she's a remarkable ship and the team on board does a remarkable job. And you also get an opportunity, not just to hear from me, but he and David, but you'll be able to hear from the President of that brand and to actually meet the presidents of pretty much all of our brands who will be there with us. So, good opportunity for you to get a little bit more educated and inundated by all things Carnival Corporation.

That's great. Thanks so much and congrats on a nice quarter.

Thanks a lot Daniel.

Thank you. Our next question comes from the line of Chris Stathoulopoulos with SIG. Please proceed with your question.

Good morning. Thanks for taking my question. So Josh, I'm going to ask the demand question here in a different way. As we think about global travel and tourism and think about different segments, if you will, within the ecosystem, so lodging, airlines, hearing is sort of a different dynamic here as we think about demand, certainly within lodging, lower to middle income consumer, some concerns around price sensitivity little bit of a mixed bag in airlines. In Cruise Lines, this is unique here with what feels like this sort of persistent demand and just kind of ongoing momentum, if you if you will. Now I was wondering could rank order or think about the moving pieces as to the why. So there's the new-to-cruise piece, I would say perhaps a later reopening of certain markets, strong U.S. dollar, discount to land-based trips, base-loading. Just if you could help us provide -- provide some context as we think about the moving parts of demand here. There's still some debate around whether this is any pent-up demand here, which I think is just not the case? Or what -- is this actual base load going forward? Thanks.

Well, I guess, the most affirmative thing I'll say is completely agree with you, it's not pent-up demand anymore. We've been sailing for over three years now. So I don't -- I think that, that is coming down. I'm not going to answer your question by rank ordering, but I would say that when it comes to all of industry. I think we're all doing a pretty good job at that demand generation and creation and getting awareness, getting people interested in cruising who maybe have never thought about it before. With respect to us, there is a lot of activity going on at all of our brands to really just try to do better and better blocking and tackling when it comes to the commercial operations, right, generating new creative, generating more eyeballs in performance marketing looking for and then being looked at by the right potential customer, driving people to our trade partners, driving people to our websites, doing everything we can to just get the word out and get them interested. And I think that's part of what's driving us in a pretty significant way.

Okay. And then as my follow-up, David, so my math here, I have about a point and a quarter on the adjusted NCCs for next year, and we can come up with our own assumptions, as you said, on inflation. But as we think about the other moving pieces here, puts and takes, on the advertising side. I know I think that's expected to be elevated in 4Q. Is there a reason? Or how should we think about next year? And do we need this level of advertising per ALBD to continue? Is it part of the base load book plan? Or can we expect that to sort of get softer, if you will, as that initiative continues to take hold. Thanks.

Yes. So the advertising as well as many other decisions are things that we really need to talk about over the next month or two in the planning process, which we're in the midst of doing. And we'll give guidance in December relative to all of those items. It would be premature for us to be making a decision today exactly what we want to do, particularly for next summer or the back half of next year in advertising. So we'll give you more insight into that in three months.

I'd just add a couple of things. One is, remember, we just talked about a record-setting 2026 booking period. So we're not just booking for the short-term. We're booking for the long-term and advertising is a combination of getting people to consider things for the longer-term and getting the ships filled as we need to in the shorter-term. So the metric of just looking at it on an ALBD basis is, it's useful for benchmarking, but it's not too scientific. It's really about how much bookings we want to generate and how we think we need to spend to go get it. And I think we're doing a good job. And when you do look at rest of the benchmark basis, even though we're higher than we were back in 2019, and I think a couple of percent higher year-over-year, we're still quite a bit lower than most if not everyone. So we'll continue to be thoughtful about it and do what we think we need to do to drive the business. I think we got time for one more – yes, thank you. I think we've got time for one more if there are any more, operator?

Thank you. Our final question comes from the line of Fred Wightman with Wolfe Research. Please proceed with your question.

Hi, guys. Thanks for squeezing me in. I just wanted to come back to new-to-cruise, Josh. I think you said that was up 17% this quarter. Last quarter, that was up 10%. So it's a pretty big acceleration per brand that's as big as you guys are. Can you touch on -- what drove that? Was there a reallocation of some of the ad spend? And maybe how you think strategically that could sort of increase that penetration step from 2% to something larger as a percentage of total vacation spend? Thanks.

Yes. So there's no one thing that's going to be the answer for driving new-to-cruise either. It is that same combination of better advertising, the trade doing a great job, better usability of our websites. I'd say Alaska in particular for this past year was off the charts. It was absolutely phenomenal, and that tends to skew higher to new-to-cruise because -- if you're going to go to Alaska, which everybody should go do, the only way you can go see it is by a cruise ship to really appreciate it. And the only way you should do that is by one of our brands because they do it amazingly, and we have more permits for Glacier Bay than anybody else, and we have the shoreside footprint that nobody else has and can replicate. So that has served us very, very well. And I'd say it's the same things that you've heard me talk about in the past quarters that hopefully, I'll continue to talk about in the quarters to come about just doing the basics better.

Thank you.

I appreciate it. Well, thank you, everybody, for joining us and look forward to talking again in a few months for those of you that I don't see next week. Take care.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.