Carnival Cruise (CCL) - Q3 2025 Earnings Call
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Call Details
Call Title: Carnival Corporation and PLC Q3 2025 Earnings Results Conference Call
Date Held: September 29, 2025
Management Team Members Present:
Josh Weinstein, Chief Executive Officer
David Bernstein, Chief Financial Officer
Mickey Arison, Chair
Call Summary
Financial Performance
Carnival Cruise reported a record net income of $2 billion, which is a 10% improvement over pre-pandemic benchmarks. CEO Josh Weinstein stated, “This quarter, we also achieved all-time high net income.”
Both operating income and EBITDA reached their highest levels in two decades, providing evidence of strong operational execution amid a 600% increase in net interest expense compared to 2019.
The quarter saw a 4.6% increase in yield, outperforming guidance by over a point. According to Weinstein, this improvement was due to “strength in both close-in demand and onboard spending.”
Customer deposits reached $7.1 billion, a record for the third quarter, attributed to higher ticket prices and increased pre-cruise revenue.
The company achieved a Return on Invested Capital (ROIC) of 13%, a significant milestone last reached nearly 20 years ago. Weinstein enthused, “This is the first time since 2007 that returns have reached this level.”
The leverage ratio improved to 3.6 times net debt to EBITDA, indicating a strong move toward investment-grade metrics, with a target of under three times in the future.
Overall, the quarter’s outperformance allowed Carnival to increase its full-year guidance for the third time in 2025, solidifying enhanced expectations for ongoing profitability.
Guidance
The updated guidance for net income stands at approximately $2.9 billion, translating to $2.14 per share, which is a $235 million improvement over previous guidance.
Yield guidance for Q4 remains unchanged but is anticipated to maintain similar performance due to strong ticket pricing trends.
Bernstein noted that for the full-year performance, the company will benefit from three cents per share from interest expense improvements and one cent from improved fuel prices.
The capacity for 2026 is projected to grow by only 0.8%, with nearly half of the year already booked at higher prices, indicating robust demand.
The launch of the new Carnival Rewards Loyalty Program in June 2026 is expected to impact yields by about 50 basis points, but benefits are anticipated to offset this impact with stronger customer engagement.
Bernstein highlighted, “While planning for 2026, we are also expecting significant cost impacts due to the new loyalty program and ongoing destination development initiatives.”
Capital Allocation
The recent redemption notice for outstanding convertible notes using $500 million of cash signals a significant reduction in debt and demonstrates Carnival’s commitment to strong capital management.
Carnival’s refinancing efforts resulted in nearly $2.5 billion trimmed from secured debt and a reduction in interest expenses that are favorable for future cash flow.
The company plans to return capital to shareholders soon, as it approaches a leverage point of 3.5 times, which permits a dual focus on capital return alongside continued debt reduction.
CEO Weinstein stated, “Once we get to that 3.5 times, we can walk and chew gum; we can do both.” This indicates a potential for dividends alongside buybacks.
The management noted a strategy to carefully balance capital expenditures with shareholder returns as operational efficiency improves.
Improvements in the company’s balance sheet have been recognized with a recent credit rating upgrade from Moody’s, suggesting a strong financial health outlook.
Macro & Demand Trends
The company reported improvements in booking trends, with a notable surge in future sales, adding confidence about continued demand growth through 2026.
CEO Weinstein mentioned, “Booking trends have continued to improve since our last update,” reflecting strong growth prospects in both North America and Europe.
The demand for cruises from Celebration Key has been described as transformative, with 2.8 million guests forecasted to visit next year, pushing usage rates significantly upwards.
Competition in the cruise sector remains fierce, yet Carnival’s diversified portfolio and strategic destination investments position it strongly against alternatives.
The company is focusing on converting more land-based travelers to cruises by enhancing the overall guest experience and providing unique offerings.
The response to new developments, especially for their Caribbean destinations, has been overwhelmingly positive, drawing immense media attention.
Product Updates
The introduction of the Star Princess into the fleet is expected to enhance overall customer experience, as it represents a significant addition to Carnival’s offerings.
Celebration Key has opened successfully, generating over 1.5 billion media impressions, indicating the strength of the marketing campaign focused on this new destination.
The enhancements made in existing Caribbean destinations and the plans for new piers further establish Carnival’s competitive edge in the cruise industry.
Cruise lines are focusing on sustainable operational practices, which include improving ship efficiency and investing in green technologies for better fuel savings.
The AIDA Evolution Program continues to modernize older ships, contributing to improved passenger experiences and operational capacity.
Future upgrades across the fleet further emphasize Carnival’s commitment to operational excellence and guest satisfaction, enhancing long-term brand loyalty.
NOTABLE QUOTES
“This was a truly outstanding quarter...surpassing our pre-pause benchmark by nearly 10%.” - Josh Weinstein
“Unit costs beat guidance by one and a half points on continued cost discipline.” - Josh Weinstein
“We have much more opportunity to increase same-ship yields and further close the unbelievable value gap to land-based alternatives.” - Josh Weinstein
“Celebration Key is as phenomenal as we expected and open to rave reviews.” - Josh Weinstein
“We expect word of mouth will continue to build with 2.8 million guests visiting Celebration Key next year.” - Josh Weinstein
“This year, the overwhelming majority of capacity will be at brands delivering double-digit returns.” - Josh Weinstein
“Given the progress we have made, and while still a top priority, it is great to say that debt reduction no longer has to be priority one, two, and three.” - David Bernstein
“We are forecasting a capacity increase of just 0.8% compared to 2025.” - David Bernstein
“We are excited about the opportunities ahead as we create shareholder value through continued progress on profitability and returns.” - Josh Weinstein
“We can start returning cash to shareholders as we get to that 3.5 times leverage metric.” - Josh Weinstein
Q&A SUMMARY
Q: Robin Farley (UBS), “Can you clarify your forward bookings commentary regarding historic prices?”
A: Josh Weinstein responded, “Both North America and Europe are at extraordinary record high levels... Things are looking great on both sides of the Atlantic across the brands.”
Q: Brant Montour (Barclays), “Are you seeing any behavioral shifts from your core consumers?”
A: Josh noted, “We booked 8% more in the third quarter of 2025 than in the third quarter of 2024... we’re pushing ahead very well.”
Q: Steve Wisinski (Steve Fuller), “How are your thoughts on 2026 evolving compared to a few months back?”
A: Weinstein mentioned that they feel positive about 2026, noting record bookings and stable market conditions, stating, “The strength of our diversified portfolio has really been playing out.”
Q: James Hardiman (Citi), “Can you clarify your bookings position?”
A: David Bernstein explained that the commentary was focused on 2026 bookings, emphasizing their growth compared to the previous year.
Q: Matthew Ball (J.P. Morgan), “What opportunities for yield improvements remain?”
A: Weinstein replied, “There’s nothing magic about the occupancy number...we know we can get occupancy, it’s about maximizing total revenue.”
Q: Connor Cunningham (Milius Research Alliance), “Can you elaborate on the performance of your laggard brands?”
A: Weinstein explained that while some brands have improved, they still have the potential to rise even higher, stating, “There’s no glaring hole... progress is good.”
Q: Lizzy Dove (Goldman Sachs Asset Management), “How do you evaluate the need for new ships versus refurbishments?”
A: Weinstein indicated that they are actively considering refurbishments similar to the AIDA program to maximize existing fleet assets.
Q: David Katz (Jefferies), “Will leverage have to be below three times before substantial capital returns?”
A: Bernstein clarified that they can begin returns when leverage metrics reach 3.5 times, which is foreseen soon.
Q: Sharon Zachfield (William Blair), “What feedback have you received from Celebration Key?”
A: Weinstein shared, “We are making tweaks... to scheduling, shading, and food offerings to enhance guest experience.”
Q: Vincipio (Cleveland Research), “How are you addressing occupancy levels going forward?”
A: Weinstein concluded confidently by stating, “There is opportunity for our brands to improve on occupancy while focusing on total revenue.”
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