Carnival Corporation has reported fourth quarter and full year 2023 earnings and provided an outlook for the full year and first quarter 2024.

Full Year 2023

• Full year revenues hit an all-time high of $21.6 billion.
• Full year cash from operations was $4.3 billion and adjusted free cash flow was $2.1 billion (see “Non-GAAP Financial Measures” below).
• U.S. GAAP net loss of $74 million and positive adjusted net income of $1 million outperformed the September guidance range (see “Non-GAAP Financial Measures” below).
• The company made debt payments of $6 billion, reducing its debt balance by $4.6 billion from its peak in the first quarter of 2023 and ended the year with $5.4 billion of liquidity.
• The company entered 2024 with its best booked position on record, for both price and occupancy

Fourth Quarter 2023

• Record fourth quarter revenues of $5.4 billion with record net per diems (in constant currency) significantly exceeding 2019 levels and above the September guidance range and record net yields (in constant currency) (see “Non-GAAP Financial Measures” below).
• Booking volumes for the two weeks around Black Friday and Cyber Monday reached an all-time high for that period.
• Total customer deposits reached a fourth quarter record of $6.4 billion, surpassing the previous fourth quarter record of $5.1 billion (as of November 30, 2022), by 25 percent.

“We ended the year on a high note with another record-breaking quarter that exceeded expectations and achieved positive full year adjusted net income. In fact, we consistently outperformed in all four quarters of the year, buoyed by a strengthening demand environment across all our brands,” commented Carnival Corporation & plc’s Chief Executive Officer Josh Weinstein.

“Net yields for the fourth quarter continued on a positive trajectory, were significantly higher than a very strong 2019 and even higher than we had anticipated, enabling us to overcome four years of high cost inflation to deliver five percent higher per unit EBITDA than 2019 (holding fuel and currency constant),” Weinstein added.

“Thanks to a strong second half of 2023, we are already tracking ahead of our plan to achieve SEA Change, our three-year financial targets calling for the highest adjusted ROIC and adjusted EBITDA per ALBD in nearly two decades. Based on our 2024 guidance, we expect to deliver another big step forward, positioning us more than halfway toward realizing all our 2026 SEA Change targets. With nearly two-thirds of 2024 on the books already, we are well positioned to obtain another year of record revenues and adjusted EBITDA,” Weinstein noted.

Fourth Quarter 2023 Results

• U.S. GAAP net loss of $48 million, or $(0.04) diluted EPS, and adjusted net loss of $90 million, or $(0.07) adjusted EPS, was above the better end of the September guidance range (see “Non-GAAP Financial Measures” below).
• Adjusted EBITDA of $946 million exceeded the September guidance range, driven by continued strength in demand, which is driving ticket prices higher (see “Non-GAAP Financial Measures” below).
• Record fourth quarter revenues of $5.4 billion, with record net per diems (in constant currency) significantly exceeding 2019 levels, and above the September guidance range and record net yields (in constant currency).
• While gross margin yields were down 4.6 percent, net yields (in constant currency) exceeded strong 2019 levels by 7.8 percent.
  • Occupancy in the fourth quarter of 2023 was over 101 percent, in line with the company’s expectations and historical levels.
  • Gross margin per diems were down 2.3 percent compared to 2019, while net per diems (in constant currency) exceeded 2019 levels by over 10 percent and were three percentage points better than the midpoint of the September guidance range.
• Cruise costs per ALBD increased 12 percent as compared to the fourth quarter of 2019. Adjusted cruise costs excluding fuel per ALBD (in constant currency) increased 11 percent compared to the fourth quarter of 2019 and were in line with September guidance (see “Non-GAAP Financial Measures” below).
• Total customer deposits reached a fourth quarter record of $6.4 billion, surpassing the previous fourth quarter record of $5.1 billion (as of November 30, 2022), by 25 percent.

Bookings 

“We entered the year with the best booked position we have ever seen, and now have nearly two-thirds of our occupancy already on the books for 2024, at considerably higher prices (in constant currency). We continue to experience strong bookings momentum across the board, with our European brands showing remarkable strength during the quarter with booking volumes running up well into the double digits at considerably higher prices (in constant currency),” Weinstein noted.

Weinstein continued, “Our yield management strategy to base load bookings is clearly working as we pull forward booking volumes on strong pricing. We continue to build on that momentum with our ongoing advertising investments and lead generation efforts, increasing support from our trade partners, and the exceptional guest experiences our team members provide onboard every day, helping to deliver millions of cruising advocates.”

Booking volumes during the fourth quarter continued at significantly elevated levels, above both prior year and 2019 comparable periods, while recent booking volumes for the two weeks around Black Friday and Cyber Monday reached an all-time high for that period. Pricing on bookings during the fourth quarter was considerably higher than prior year pricing (in constant currency).

The cumulative advanced booked position is at considerably higher prices (in constant currency) than 2023 levels, with each quarter of 2024 booked above the high end of the historical range.

2024 Outlook 

For the full year 2024, the company expects:

• Adjusted EBITDA of approximately $5.6 billion, over 30 percent growth compared to 2023
• Net yields (in constant currency) up approximately 8.5 percent compared to 2023, with full year occupancy returning to historical levels and nicely higher net per diems (in constant currency) reflecting continued strength in pricing and onboard spending
• Adjusted cruise costs excluding fuel per ALBD (in constant currency) up approximately 4.5 percent compared to 2023

For the first quarter of 2024, the company expects:

• Adjusted EBITDA of approximately $0.8 billion, more than double the first quarter of 2023
• Net yields (in constant currency) up approximately 16.5 percent compared to the first quarter of 2023 with occupancy returning to historical levels as the company closes the remaining occupancy gap in the first half of the year
• Adjusted cruise costs excluding fuel per ALBD (in constant currency) up approximately 9.5 percent compared to the first quarter of 2023 primarily due to higher occupancy levels, the timing of advertising investments and dry-dock related expenses compared to the prior year

Financing and Capital Activity

“During 2023, we made debt payments of $6 billion and ended the year with just over $30 billion of debt, which is $3 billion better than we forecasted just nine months ago during our March conference call and almost $5 billion off the first quarter peak,” noted Carnival Corporation & plc Chief Financial Officer David Bernstein.

“And looking forward, we will continue to evaluate refinancing opportunities and opportunistically prepay additional debt. Furthermore, we expect durable revenue growth to drive increases in adjusted free cash flow in 2024 and beyond, which will be the primary driver for paying down our debt balances on our path back to investment grade,” Bernstein added.

During 2023, the company generated cash from operations of $4.3 billion and adjusted free cash flow of $2.1 billion, making a significant contribution toward rebuilding the company’s financial strength.

During the fourth quarter of 2023, the company reduced its debt by another $725 million and for the full year made debt payments of $6 billion while ending the fourth quarter with $5.4 billion of liquidity, including cash and borrowings available under the revolving credit facility. In addition, the company amended an agreement with one of its credit card processors and now expects an additional $800 million to be returned during the first quarter of 2024, representing substantially all of the credit card reserves balance as of November 30, 2023.