Carnival Corp. CEO says Wave season rolled right into spring

Wave season isn’t over yet for Carnival Corp., CEO Josh Weinstein told investors during the company’s second-quarter earnings call on Monday. 

The world’s largest cruise company reached an all-time high in total bookings for future cruises, consumer deposits and revenue in the quarter. The company is also seeing a boost in sales from the trade, he said. 

“Remarkably, we are still experiencing a phenomenal Wave season which started early, gained strength and is still going strong midway through the year,” said Weinstein. 

Sales volume from travel agencies was up 45% year over year, which comes as the company increases its training, engagement and support activities. Meanwhile, Carnival Corp. has also grown its sales and sales support staff by more than 50% in recent months, he said.

Carnival Corp. reported a net loss of $407 million and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $681 million, both of which were better than the company’s Q2 forecast.  

The company’s operating income was $120 million, but interest expense of $542 million pushed Carnival into the red. The company had to borrow billions of dollars during the pandemic, and as a result has $31.9 billion in long-term debt, up from $9.1 billion in 2019.

With occupancy at 98%, up from 91% in Q1, Carnival Corp. said it set a record with $4.9 billion in revenue. Total customer deposits reached an all-time high of $7.2 billion as of May 31, up from the previous record of $6 billion as of May 31, 2019.

Carnival Corp. outperformed its Q2 expectations for revenue, adjusted EBITDA and the bottom line as the company pushed ticket prices above 2019 levels and onboard revenue remained high.

Weinstein said Carnival Corp. also exceeded its 2019 level for new-to-cruise and new-to-brand guests in the second quarter, which he said was in part due to the company’s decision to beef up advertising spending. 

CFO David Bernstein said the company will further increase spending on advertising by two-tenths of a percentage point, which he believes will benefit the company by “multiple times the investment” and slow down expected inflationary pressure.  

Carnival Corp. also rolled out a set of performance targets called the SEA Change Program designed to help the company reach financial goals like an increase in EBITDA and return on invested capital while reducing carbon emissions by 2026. 

Truist Securities analyst Patrick Scholes said he anticipated Q2 earnings would come in better than expected, but added that Q2 was not a “blow-out” quarter. Occupancy was 98%, but Truist was projecting 98.8%.

Source: Read Full Article