Carnival CEO discusses record cruise demand

Carnival is seeing record demand for its cruises. Investors are rocking Carnival's boat in a good way, sending the stock sailing up 7.9% after the cruise line operator posted a surprise profit for the second quarter. So Wall Street had been expecting Carnival to lose $0.10 per share, not gain 11 cents per share. It also beat revenue expectations by $90,000,000 and boosted full year profit guidance on strong demand. Carnival reported total customer deposits reached an all time high of 8.3 billion, an all time high, not just pre pandemic high. And it's already seeing record booking volumes for 2025 sailings. So let's bring in Carnival president and CEO, Josh Weinstein. As we said earlier, Wall Street really got this wrong. You swung to a profit. What brought you there? You know, thanks for having me, Liz. What brought us here is the strength of our brands and the strength of our consumers. And the fact is I was just listening to your to your piece talking about value cruising our brands. We are a value when you stack us up against other options out there. Even though we've been successful in taking our pricing up over the last six quarters, seven quarters, we're still a value and people see that and they're looking for value and they're looking for great service and we haven't skimped on service. So we're giving them the best of both worlds. You also raised your full year guidance. Is that a little, I don't want to say dangerous to do, but you've only posted profits in two different quarters since 2020. I mean, these tides can turn, can they? Not sure they can. But the one thing about our business is we now have great visibility once again. You know, the vast majority of our business is on the books. We've had incredible momentum. So when you look at this second quarter, not only were the results fantastic, we're talking about 12% yield increases year over year. The bookings set yet another record and that's just record on top of record. And the great news is not only do we have great pricing for what we booked for the third and fourth quarter well over what we were doing a year ago, but the volume of bookings that we had for 2025 for the further out year is the most we've ever had for a far out year in the second quarter. So, so we're really the brands are doing a phenomenal job of tapping into the demand for what we have to offer. People aren't procrastinating their booking ahead. That's pretty amazing. But as far as the balance sheet, this was one of your goals when you took over to get this thing back into shape. You ended the second quarter with 4.6 billion in cash. I believe in liquidity. You were quoted in the report saying that looking forward, you expect substantial free cash flow driven by ongoing operational execution. Can you put a value on substantial free cash flow? When we came up with our with our targets last June, our three-year targets, what where are we going to be at the end of 2026? What we basically told told our investors is, you know look 2024 is going to be a year be a year where we have tremendous improvement and we have a lot of capacity in this year. So we're not going to have that much opportunity to pay down debt. Well, little did I know, we're outperforming. And so we are paying down debt. It'll probably be $2 billion year over year by the time all is said and done, which gives our leverage down to about four and 1/2 times by the end of this year. And then when you look forward, because we only have one ship being delivered in 2025 and 0 in 2026, that will literally give us billions each year that we are going to take. And we're going to pay down the debt and start that process or continue rebalancing and getting the value back from the debt holders and back to the equity holders. Feels like you're going to be crimped for space on these cruises. Does that mean you have pricing power and are you going to raise prices? Well, that, that has been our focus. It's been our focus for the last two years and that will continue to be our focus. We have moderate capacity growth which is intentional. We can improve same store sales. As a matter of fact in the in the second quarter for example, if you stripped out all of the new ships that we had this year versus last year, our yield still went up over 10%, same store sales. So we have great demand. We have great brands in great markets with great consumers and they are they are responding as as they should because of the value and the experience that we can give. Investors are responding. The stock right now looking very healthy, up nearly 8%. Josh, it's good to see you. Thank you very much. Thank you, Liz. Nice to see.