Carnival Corp. (CCL) Q2 2024 Earnings Name Transcript

Carnival Corp. (CCL 8.72%)
Q2 2024 Earnings Name
Jun 25, 2024, 10:00 a.m. ET

Contents:

• Ready Remarks
• Questions and Solutions
• Name Individuals

Ready Remarks:

Operator

Greetings, and welcome to the Carnival Company and plc’s convention name. Presently, all individuals are in a listen-only mode. A quick question-and-answer session will comply with the formal presentation. [Operator instructions] As a reminder, this convention is being recorded.

It’s now my pleasure to introduce your host, Beth Roberts, senior vice chairman, investor relations. Thanks, Beth. It’s possible you’ll start.

Beth Roberts — Senior Vice President, Investor Relations

Thanks. Good morning, and welcome to our second-quarter 2024 earnings convention name. I am joined at present by our CEO, Josh Weinstein; our chief monetary officer, David Bernstein; and our chair, Micky Arison. Earlier than we start, please word that a few of our remarks on this name will likely be forward-looking.

Due to this fact, I’ll refer you to the forward-looking assertion in at present’s press launch. All references to ticket costs, web per diems, web yields, and adjusted cruise prices with out gasoline will likely be in fixed foreign money except in any other case said. References to per diems and yields will likely be on a web foundation. Our feedback might also reference cruise prices with out gasoline, EBITDA, web earnings, earnings per share, free money circulate, and ROIC, all of which will likely be on an adjusted foundation except in any other case said.

All these references are non-GAAP monetary measures outlined in our earnings press launch. A reconciliation to probably the most instantly comparable U.S. GAAP monetary measures and different related disclosures are additionally contained in our earnings press launch and in our investor presentation. Please go to our company web site the place our earnings press launch and investor presentation could be discovered.

With that, I would like to show the decision over to Josh.

Josh Weinstein — President and Chief Govt Officer

Thanks, Beth. Inside two years, we have made unbelievable strides in enhancing our industrial operations, strategically reallocating our portfolio composition, formulating progress plans, and strengthening even additional our [global team ship and shore], one of the best within the enterprise. Off the again of those efforts, we have closed one more quarter delivering information, this time throughout revenues, working earnings, buyer deposits, and reserving ranges, exceeding our steering on each measure. Yields elevated over 12% in Q2, over 1.5 factors greater than March steering, as we proceed to drive sturdy per diem progress, up over 6%.

And that is on over 10% extra passenger cruise days, which is a mix of capability progress and crusing at historic occupancy ranges. Our European manufacturers skilled extraordinary yield enchancment once more this quarter, up over 20%, whereas North America continued to enhance on final 12 months’s highs, up a wholesome 7%. We had report second-quarter adjusted EBITDA, roughly $150 million greater than steering. Encouragingly, on a per ALBD foundation to spotlight operational enchancment and even with considerably greater gasoline costs, adjusted EBITDA not solely surpassed the second quarter of 2019, it was additionally our highest second-quarter mark in over 15 years.

Coupled with flat cruise prices, excluding gasoline on a unit foundation, which David will elaborate on, we delivered $500 million extra to the underside line 12 months over 12 months and outperformed our earnings steering by $170 million. Based mostly on continued sturdy demand tendencies, we’re additionally taking over our expectations for the complete 12 months by $275 million, pushed by double-digit yield progress. Now, this may get us to double-digit ROIC this 12 months. And whereas that will likely be a powerful end result for 2024, it’s nowhere close to what our enterprise is able to delivering.

Our present reserving tendencies are a testomony to that. We’re hitting information on prime of earlier information, which clearly tells us the energy and demand we’ve been constructing is continuous into subsequent 12 months and past. Within the close to time period, pricing on bookings taken within the second quarter has continued to run significantly greater for every of the third and fourth quarters. And once more, that is on prime of report per diems final 12 months.

This energy has enabled us to take our yield steering for the 12 months by one other 75 foundation factors. We count on to ship constant mid-single-digit per diem progress by way of the steadiness of the 12 months which might mark eight consecutive quarters that we’re reaching mid-single-digit or greater per diem enhancements. Our continued concentrate on optimizing our yield curve is not only a near-term profit. We entered the second quarter with a lot much less 2024 stock to promote and have been in a position to lean much more into future durations.

Accordingly, within the final three months, not solely did we take extra bookings for post-2024 sailings than we did for in-year sailings, we set one more report for probably the most future bookings ever taken in the course of the second quarter. The unprecedented stage of demand for 2025 sailings, coupled with flat capability progress subsequent 12 months, interprets into significant pricing energy. And whereas it’s nonetheless early for 2025, each worth and occupancy are already forward of the place we have been final 12 months, leaving us ready of energy with much less stock remaining for 2025. It additionally reveals in our greater than $8 billion of buyer deposits, which shattered final 12 months’s report by $1.1 billion.

You’ve gotten heard me say this earlier than. This isn’t pent-up demand, it’s the compounding impact of constructing elevated consideration in our cruise manufacturers over time and enchancment in our yield administration strategies to translate that demand into greater ticket costs. And it’s additional proof of the energy of our shopper. Encouragingly, we’re having fun with constant progress in each repeat friends and new friends with every phase up 10% this quarter over final 12 months.

We additionally proceed to actively handle our portfolio to additional speed up our underlying execution enhancements. As beforehand introduced, early subsequent 12 months, we’ll sundown the P&O Cruises Australia model, promoting the 28-year-old Pacific Explorer and transferring P&O Australia’s two remaining vessels to Carnival Cruise Line. In fact, we’ll nonetheless retain our main presence within the Australian market, carrying over 60% of all Aussie cruisers. It’s a nice marketplace for us, particularly because the Australian summer season coincides with the Northern Hemisphere winter, enabling our seasonal ships to capitalize on two summer season durations.

And now, we get to optimize our presence on this market by consolidating into Carnival Cruise Line. Not solely will we acquire operational, administrative, and back-office scale, we’ll in the end have larger deployment flexibility in comparison with a devoted Australian model. On the identical time, this transfer will additional enhance capability for our highest returning model, bringing the entire to 9 new ships becoming a member of Carnival Cruise Line’s fleet since 2019, together with the profitable shift of three vessels from Costa Cruises. These actions, mixed with the 2 XL class ships scheduled for supply in 2027 and 2028, will develop Carnival Cruise Line’s capability by about 50% over 2019.

By 2028, the Carnival model will signify 37% of our portfolio, up from 29%, as we proceed to reshape our portfolio to maximise ROIC. In fact, our superb vacation spot expertise, Celebration Key, purpose-built for Carnival Cruise Line, will quickly assist that progress and bolster returns to incremental income uplift, coupled with improved gasoline effectivity given its strategic location. We’re introducing voyages to Celebration Key starting within the second half of 2025 and ramp as much as 18 ships calling Celebration Key in 2026. This quarter, we additionally delivered Queen Anne, Cunard’s fourth Queen with an incredible naming celebration in Liverpool, England, Cunard’s birthplace.

The streets of Liverpool have been walled with tens of hundreds of individuals becoming a member of the festivities as the town of Liverpool turned the ships official godparents. It was a historic second and the primary time a complete metropolis ever christened a ship. The occasion generated overwhelming protection and, as supposed, broke reserving information on the again of it. The brand new Queen is a step ahead in each manner for Cunard, whereas nonetheless retaining the DNA of British class and refinery that the model is understood for.

We loved one other high-profile naming occasion for Solar Princess in Barcelona with Godmother Hannah Waddingham of Ted Lasso fame. Solar Princess has had nice media protection main as much as and following the naming ceremony with specific concentrate on its expansive specialty eating and beverage choices and one-of-a-kind Magic Fortress expertise. Solar Princess, the primary of its class, has additionally been an enormous hit with friends as evidenced by outsized yields and excessive visitor satisfaction scores. Final however not least, we held a naming occasion for Carnival Firenze in Lengthy Seaside, California, dwelling for Carnival’s second ship that includes Enjoyable Italian Type with Godfather Jonathan Bennett, recent off his Broadway stint starring in Spamalot.

Welcoming Enjoyable Italian Type to the West Coast generated almost 2.5 billion media impressions so far, and naturally, triggered a step up in bookings. Whereas these superb new ships all contributed to the sturdy yield enchancment we generated within the second quarter, even excluding them, yields on our current fleet have been up double digits, demonstrating elementary energy on a same-ship foundation. As well as, we accomplished the rollout of Starlink this quarter, one other income uplift alternative and an actual recreation changer for our onboard connectivity expertise, enabling us to ship the identical high-speed WiFi service accessible on land all through our fleet. Not solely does this know-how present our friends with extra flexibility to remain linked, it allows our crew to remain in contact with associates and family members, and it enhances our onboard operational techniques, a win-win-win.

Additionally, our constant monitor report, our ebook place, our concentrate on industrial exercise enchancment, our portfolio administration, and the but to be realized future advantages we’ll obtain from our Celebration Key vacation spot improvement construct elevated confidence in reaching the low to mid-single-digit yield progress set out in our long-term targets. In actual fact, based mostly on our upwardly revised steering, we will likely be, on common, two-thirds of the way in which to reaching our three 2026 SEA Change targets, EBITDA per ALBD of $69, 12% ROIC, and a 20% discount in carbon depth after only one 12 months. With two years remaining, it provides us even larger confidence in reaching our targets. On the identical time, we proceed to aggressively handle down debt and curiosity expense whereas lowering the complexity of our capital construction, which David will elaborate on.

The variety of actions we have taken to enhance our steadiness sheet this quarter places us additional down the trail on our return to investment-grade credit score scores over time. It is laborious to consider, in simply over a month, it would have been two years since I had the privilege of getting into the position of CEO. I’m very happy with all we have achieved in such a short while. Credit score for our achievements go to our international staff, 160,000 sturdy.

Everybody has labored very laborious to ship one more sturdy quarter, solidifying an incredible 2024 and setting us up effectively to prime it in 2025. Equally necessary, they’ve all had a hand in delivering superb trip experiences and unforgettable happiness to three million friends but once more this quarter. To our superb staff, thanks. And naturally, we could not do it with out the assist from our superb journey agent companions and so many different stakeholders.

Because of all of you. With that, I am going to flip the decision over to David.

David Bernstein — Chief Monetary Officer

Thanks, Josh. I am going to begin at present with a abstract of our 2024 second-quarter outcomes. Subsequent, I am going to present the highlights of our third-quarter June steering and a few coloration on our improved full-year steering. Then I am going to end up with an replace on our refinancing and deleveraging efforts.

Let’s flip to the abstract of our second-quarter outcomes. Our backside line exceeded March steering by almost $170 million as we outperformed as soon as once more. The outperformance was primarily pushed by three issues. First, favorability in income value nearly $65 million as yields got here in up over 12% in comparison with the prior 12 months.

This was greater than 1.5 factors higher than March steering, pushed by nearer energy in ticket costs, in addition to onboard spending. Second, cruise value with out gasoline per accessible decrease berth day, or ALBD, got here in flat in comparison with the prior 12 months and have been 3 factors higher than March steering which was value over $85 million. Some value financial savings have been recognized in the course of the quarter, which flowed by way of as enchancment to our full-year June steering. Nevertheless, a lot of the favorability in cruise value for the second quarter was because of the timing of bills between the quarters.

And third, different operational enchancment barely offset by greater gasoline costs and foreign money have been value $20 million. Per diems for the second quarter improved 6% versus the prior 12 months, pushed on each side of the Atlantic by significantly greater ticket costs and improved onboard spending. On the identical time, our European manufacturers on their path again to historic occupancy noticed outdoors progress of their occupancy of over 10 proportion factors as in comparison with the second quarter of 2023. Our second quarter was unbelievable throughout the board with sturdy demand, delivering report revenues, report yields, report per diems, and report working earnings.

Now, one factor to spotlight about our third-quarter June steering. The optimistic tendencies we noticed within the second quarter are anticipated to proceed within the third. Yield steering for the third quarter is ready at a powerful 8%. The distinction between the yield steering for the third quarter and the second-quarter yield enchancment of over 12% is just the results of the larger occupancy alternative we had within the second quarter 2024 as we started crusing inside our historic occupancy vary within the second half of 2023.

It’s nice to see that we anticipate continued sturdy per diem progress within the third quarter, which we’re forecasting will drive the vast majority of the 8% yield enchancment. Turning to our improved full-year June steering. June steering for web earnings is $1.55 billion, an enchancment over our March steering of roughly $275 million. This enchancment was pushed by three issues.

First, three-quarters of a degree enhance in yields to roughly 10.25% based mostly on the significantly greater costs we’ve been seeing in reserving tendencies thus far this 12 months and the continued energy in demand we anticipate going ahead. All of that is anticipated to drive a rise in web income of about $190 million. Second, as I beforehand talked about, we recognized value financial savings that we circulate by way of to our full-year June steering. Nevertheless, they are going to be partially offset by greater variable compensation pushed by our forecast for improved working earnings that we’re flowing by way of $25 million of value financial savings for the complete 12 months.

And third, an enchancment in web curiosity expense of $60 million, pushed by our second-quarter refinancing, repricing, and debt prepayment actions. The sturdy 10.25% enchancment in 2024 yields is a results of the rise in all of the part elements, greater ticket costs, greater onboard spending, and better occupancy at historic ranges with all three elements enhancing on each side of the Atlantic. We acknowledge that even inside our industry-leading value construction, there’ll all the time be value alternatives, which we are able to concentrate on and harvest over time. Whereas we establish value financial savings alternatives in the course of the second quarter, we won’t cease there.

We are going to proceed our countless quest for larger effectivity in our value construction. I’ll end up with a abstract of our refinancing and deleveraging efforts. Through the second quarter, we generated money from operations of $2 billion and free money circulate of $1.3 billion. We took supply of 1 spectacular new ship, Queen Anne, and drew on her related export credit score facility, persevering with our technique to finance our new construct program at preferential rates of interest.

Our efforts to proactively handle our debt profile continued all through the quarter. We pay as you go $1.6 billion of secured time period mortgage services. We additionally repriced roughly $2.75 billion of the identical secured time period mortgage services. And we issued $535 million of unsecured notes due 2030, refinancing our unsecured notes due 2026, extending these maturities and lowering curiosity expense.

These transactions simplified our capital construction, diminished web curiosity expense within the second quarter by $10 million, will cut back web curiosity expense for 2024 by 55 million and 85 million on an annualized foundation. Our choice to prepay 1.6 billion of debt in the course of the second quarter was based mostly on our sturdy liquidity, our improved monetary efficiency and our optimism concerning the future. We are going to proceed to search for extra opportunistic refinancings over time. Our leverage metrics will proceed to enhance all through 2024 as our EBITDA continues to develop and our debt ranges enhance.

Utilizing our June steering EBITDA of 5.83 billion, we count on a two-turn enchancment in web debt-to-EBITDA leverage in comparison with year-end 2023, approaching 4.5 occasions and positioning us two-thirds of the way in which down the trail to put money into grade metrics. Trying ahead, we count on substantial free money circulate, pushed by our ongoing operational execution and the bottom new-build order ebook in many years to ship continued enhancements in our leverage metrics and steadiness sheet, shifting us additional down the street to rebuilding our monetary fortress whereas persevering with the method of transferring worth from debt holders again to shareholders.Now, operator, let’s open the decision for questions.

Questions & Solutions:

Operator

Thanks. We are going to now be conducting a question-and-answer session. [Operator instructions] Our first query comes from the road of Matthew Boss with JPMorgan. Please go forward along with your query.

Matt Boss — JPMorgan Chase and Firm — Analyst

Nice. Thanks and congrats on a very nice quarter.

Josh Weinstein — President and Chief Govt Officer

Thanks very a lot, Matt.

Matt Boss — JPMorgan Chase and Firm — Analyst

So, Josh, possibly might you elaborate on the worldwide momentum that you just’re seeing, notably any callouts in Europe? After which simply given the booked place for 2025, which you cited as greater than ’24 a 12 months in the past, how does that translate to the ahead development of pricing energy and simply the promotional backdrop possibly versus historic durations in your view?

Josh Weinstein — President and Chief Govt Officer

Certain. So, international momentum, I feel that is in all probability the important thing time period. It’s international momentum. And so, we’re seeing energy from our North American manufacturers, from our European manufacturers.

As you began listening to me say in all probability about six quarters in the past, variety, generally it helps and generally you bought to attend a little bit bit as a result of totally different locations come out of various conditions and totally different occasions, and that is the energy that we’re seeing proper now on this portfolio, and we’re actually hitting it on all cylinders, which is de facto gratifying. North America, the reserving curve is greater than it is ever been and Europe, it is highest within the final 15 years. So, the groups are doing a extremely good job of chatting with the buyer, pricing issues proper, and getting folks on our ships and glad. So far as 2025 goes, that is the primary 12 months that, the place we at the moment are, the place we have been in a position to cease firefighting within the short-term whereas determining the best way to additionally lengthen the reserving curve and making an attempt to do each of these issues without delay which isn’t a straightforward steadiness for income managers to must do and the manufacturers to do.

So, I do really feel like we’re firmly positioned and though it’s early days as you heard us say on the decision being forward in bookings and forward in pricing is an efficient place to be, and our staff can actually concentrate on optimizing that longer-term interval, which is strictly what they’re doing.

Matt Boss — JPMorgan Chase and Firm — Analyst

Nice coloration. Better of luck.

Josh Weinstein — President and Chief Govt Officer

Thanks.

Operator

Thanks. Our subsequent query comes from the road of Steve Wieczynski with Stifel. Please proceed along with your query.

Steven Wieczynski — Stifel Monetary Corp. — Analyst

Hey, guys. Good morning. So, Josh, look, I do know it is nonetheless early on, however your commentary round 2025 bookings is de facto encouraging at this level. And so as to add on to the final query there, I imply, might you elaborate a little bit bit extra about the place you are seeing that energy in 2025? Is the sturdy demand just about throughout the board? Or are there sure manufacturers or itineraries which might be exhibiting extra energy versus others?

Josh Weinstein — President and Chief Govt Officer

Sure. At this level, I am going to simply inform you, it is international. It is the manufacturers, and it is the deployments. So, the manufacturers are doing a unprecedented good job of getting their messages out and getting folks .

And there is a laborious — a variety of laborious work behind that throughout the industrial house. So, I would not give any shout outs a method or one other as a result of we’re seeing it so broadly.

Steven Wieczynski — Stifel Monetary Corp. — Analyst

OK. After which — yep. Sorry, David. Go forward.

David Bernstein — Chief Monetary Officer

Yeah. So, Josh additionally talked concerning the portfolio modifications we made, which ought to assist in 2025 in addition to Celebration Key. And be mindful, on prime of that, we additionally haven’t got capability enhance subsequent 12 months. It is comparatively flat.

So, I hope that ought to present us with some pricing energy in 2025 as we transfer by way of the reserving cycle.

Steven Wieczynski — Stifel Monetary Corp. — Analyst

OK. Thanks for that, David. After which second query, a bigger-picture query round capital allocation. So, based mostly on how sturdy early demand is for subsequent 12 months bookings, it simply would not seem to be there’s any slowdown at this level happening.

So, I suppose the query is, if we glance out a 12 months from now and bookings proceed to look strong, your SEA Change targets are primarily in sight, and also you’re even nearer to an funding grade ranking. I imply, is it honest to suppose you guys may very well be ready to carry the dividend again to this story? I imply, simply suppose it is one other necessary milestone and one thing that buyers have gotten extra targeted on. Thanks.

Josh Weinstein — President and Chief Govt Officer

I in all probability sound like a damaged report right here, too. Proper now our precedence is generate all that free money circulate, pay down debt, and restrengthen the steadiness sheet, and in that course of, returning worth from the debt facet to the fairness holders. I can not wait to have these conversations, however I would say that is untimely. We have got a variety of work to do.

And after we get there you will be the primary to know, Steve.

Steven Wieczynski — Stifel Monetary Corp. — Analyst

OK. Thanks, guys. Recognize it.

Josh Weinstein — President and Chief Govt Officer

All proper.

Operator

Thanks. Our subsequent query comes from the road of Patrick Scholes with Truist Securities. Please proceed along with your query.

Patrick Scholes — Truist Securities — Analyst

Hello. Good morning.

Josh Weinstein — President and Chief Govt Officer

Good morning.

Patrick Scholes — Truist Securities — Analyst

Good morning. I’ve some questions on return on invested capital. First one after which I am going to have a follow-up query. What sort of ballpark return on invested capital do you goal for Celebration Key? I ponder in case you might give us some coloration on that.

Thanks.

Josh Weinstein — President and Chief Govt Officer

Yeah. What we have talked about is you may nearly have a look at this like a brand new construct funding. And so, from a brand new construct perspective, we’re in search of not less than mid to excessive teenagers, and we would count on no much less from our land based mostly investments as effectively. And clearly, the fantastic thing about Celebration Key’s it would profit throughout dozens of ships over time not one new construct.

Patrick Scholes — Truist Securities — Analyst

OK. A follow-up query. Actually with a brand new public an current firm going public within the luxurious river house, they’re doing 30% ROIC. Now, granted, it is little bit of a distinct segment.

Would you ever rule out you people getting in that line of enterprise? I definitely might envision seaborne river cruises being fairly in style and a great crossover to your current prospects. Just a few ideas round that. Thanks.

Josh Weinstein — President and Chief Govt Officer

We have checked out river cruising prior to now, and I would not say we’ll by no means have a look at it once more. It is simply — it is a area of interest, and it is reasonably small. And for one thing like us to maneuver the needle, it’d must be fairly grand. And as you have heard me say earlier than, Patrick, I feel if we concentrate on our manufacturers and we concentrate on doing all of the issues that we do within the regular course higher, we’ll make rather more of an affect on this enterprise.

Patrick Scholes — Truist Securities — Analyst

OK. Josh, I admire it. Thanks.

Josh Weinstein — President and Chief Govt Officer

Thanks, Patrick.

Operator

Thanks. Our subsequent query comes from the road of Ben Chaiken with Mizuho. Please proceed along with your query.

Ben Chaiken — Mizuho Securities — Analyst

Hey, good morning. You are two-thirds of the way in which to your 2026 targets with two years remaining. As you consider the remaining bridge to your targets within the toggle between prices and yields, do you are feeling tied to a particular yield requirement or threshold or is there sufficient alternative in the associated fee facet to generate the working leverage essential to achieve your targets? After which associated, prices have been higher within the quarter. Are you able to possibly present a little bit extra larger specifics round what you are seeing or the place you are getting extra working leverage than anticipated? After which I’ve one fast follow-up.

Thanks.

Josh Weinstein — President and Chief Govt Officer

So, on the primary query, we’ll transfer ahead as an organization making an attempt to concentrate on each definitely producing outsized income versus our historic norms and sustaining our value management place. We set out after we set out SEA Change a primary math that may inform you from a pricing perspective after we get the occupancy again, we’re taking a look at low to mid-single-digit worth will increase on the income facet and that is definitely what I count on. And I count on that to proceed effectively past SEA Change. We additionally have to do a great job of managing the associated fee.

So, I do not suppose we’ve to tether SEA Change to anyone specific factor. It is simply doing our jobs effectively throughout the board. So far as — yeah. David, you wish to go forward?

David Bernstein — Chief Monetary Officer

Sure. So far as value is worried, within the second quarter, keep in mind, we did establish value financial savings, however the majority of the favorability was timing between the quarters. However in case you look broadly on the 12 months, we’re seeing quite a lot of alternatives within the sourcing space, different efficiencies as effectively. So, it’s broad based mostly.

There is not one anyone specific merchandise. Our groups are working laborious all throughout the board, and there are a whole lot of value financial savings objects that flowed into that full-year financial savings.

Ben Chaiken — Mizuho Securities — Analyst

Acquired it. After which, Josh, within the quarter, you introduced the P&O Australia will sundown into Carnival. You continue to have quite a lot of manufacturers throughout geographies and buyer preferences. Do you are feeling there are different areas of the portfolio you possibly can streamline and realign? Thanks.

Josh Weinstein — President and Chief Govt Officer

Yeah. P&O Cruises in Australia is a bit distinctive. It is a devoted model to an incredible market, but it surely’s a small market. And so, the flexibility to essentially develop a single supply market model of that measurement just isn’t very possible.

And so, we’ll get a variety of operational synergy out of the strikes that we made with P&O Australia. We have been taking a look at our portfolio administration for the final couple of years as you recognize shifting ships from one model to a different, retiring ships, formulating our progress plans. We’ll proceed to do this. There’s nothing on the horizon, but it surely’s one thing we do on a really frequent foundation to strive to determine the best way to optimize over time.

Ben Chaiken — Mizuho Securities — Analyst

Acquired it. Thanks.

Operator

Thanks. Our subsequent query comes from the road of Robin Farley with UBS. Please proceed along with your query.

Robin Farley — UBS — Analyst

Nice. Thanks. The commentary has been very useful. Thanks in addressing a variety of the issues on the market, particularly I feel exhibiting that slide you will have exhibiting the momentum in This fall pricing specifically.

So, thanks for giving that extra readability. Only one query. There have been some headlines on the market about among the Greek Islands limiting the variety of ships which may name subsequent 12 months. It is not even clear whether or not that is official or simply one thing that’s being thought-about.

Are you able to simply put some context round that, whether or not that may simply be altering itinerary to go someplace on a Tuesday reasonably than a Wednesday, proper, versus not with the ability to go there in any respect. In different phrases, is there something, after we take into consideration there’s been totally different itinerary modifications within the final 12 months or so, that so looking forward to subsequent 12 months, is that something that we must be fascinated by? Thanks.

Josh Weinstein — President and Chief Govt Officer

Certain. So, clearly, we’ve a fantastic relationship with Greece and its native communities, and it is our job to verify we’re doing issues sustainably. In actual fact, a variety of the information that is come up recently, these islands have had caps in place for a few years, and we work with them and we’ve labored with them. We’ll proceed to work with them as we are able to actually determine the best way to coincide with their wants as effectively.

I imply, that is our job. So, I do not count on something extremely disruptive. We — sadly for us, that is simply par for the course, proper? We do that on a regular basis in plenty of locations, and you have seen it work efficiently in locations like Dubrovnik. And we’ll proceed to companion with native communities who need our financial profit and transfer on.

It is a comparatively — I imply, if you need context, simply so you recognize, it is a comparatively small a part of our general combine. You are speaking low-single-digit percentages, but it surely’s necessary to us. And we wish to present up, and we wish to present up effectively.

Robin Farley — UBS — Analyst

OK, nice. Thanks. And only one follow-up. I feel final quarter, you may need given the totally different proportion progress for new-to-brand versus new-to-cruise general.

Is that one thing you may give a little bit bit extra coloration on this quarter as effectively? Thanks.

Josh Weinstein — President and Chief Govt Officer

Certain. New-to-cruise was up 10%, new-to-brand was up a little bit bit much less about 6%. So, we’re just about shifting ahead with all elements and as you heard, model repeaters can also be up 10%.

Robin Farley — UBS — Analyst

Nice. Thanks.

Josh Weinstein — President and Chief Govt Officer

No downside.

Operator

Thanks. Our subsequent query comes from the road of James Hardiman with Citi. Please proceed along with your query.

James Hardiman — Citi — Analyst

Hey, good morning. Thanks for taking my query. So, only a level of clarification, you talked about identical ship yields being up double digits. Are you able to assist us with how a lot of that’s pricing? Clearly, you are getting some occupancy profit there.

After which kind of I suppose the bigger-picture query there’s you have had mid-single-digit per diem progress for eight quarters. You do not suppose it is pent-up demand. It sounds such as you made that time a few occasions, Josh. When and why do you suppose that in the end decelerates? Thanks.

Josh Weinstein — President and Chief Govt Officer

Certain. So, on the identical fleet, it is nearly 50-50 between worth and occupancy. It is a little bit bit extra occupancy than worth, however the per diems are there as effectively, which is de facto gratifying to see. So far as when our progress has to finish, I would not offer you a timeline for that.

I feel all the issues that we have been speaking about for the final two years are nonetheless in course of. And we nonetheless have a variety of room to develop and ensuring we’re doing the proper issues so far as our inventive advertising and marketing to achieve the proper folks, the efficiency advertising and marketing and ensuring we’re getting in entrance of the proper folks in the proper methods getting them to click on by way of and ebook with us, ebook with our commerce companions. The one great point I would say is whether or not it is a 25-year-old ship with 2,000 friends or it is one in every of our latest with 5,500 friends, folks love what we truly do. And we truly ship on board, and that is OK.

Some coming again. So, I do not see a pure ending level so long as we’re targeted on these issues.

David Bernstein — Chief Monetary Officer

And let me add to that as a result of we’re nonetheless in great worth in comparison with land based mostly options. And so, as we proceed to shut that worth hole, and lift the value, we should always have the ability to proceed the development over time. And on prime of that, understand that, as Josh, I feel, talked about on his final name, the service ranges on land-based resorts have deteriorated. And on our ships, we’re doing a fantastic job holding our visitor satisfaction ranges up.

And folks — it is a trouble free trip, and folks like to cruise. And so, we count on to maintain demand era’s efforts excessive. And hopefully, we are able to proceed to see worth enhancements. And as Josh stated, costs are up in 2025 in our ebook place, and we count on to see that proceed.

James Hardiman — Citi — Analyst

Acquired it. After which kind of as a follow-up alongside the identical strains, proper, as we take into consideration Europe versus NAA per diems. Clearly, Europe had an enormous occupancy tailwind within the final couple of quarters, and it looks as if that’s now dissipating. You’ve got guided per diems to be up, I feel, at that mid-single-digit vary for every of the following few quarters.

Any manner we might kind of slice the Europe versus North America as we take into consideration per diems? Are they stunning comparable as we transfer ahead? Or is one stronger than the opposite? Thanks.

Josh Weinstein — President and Chief Govt Officer

Certain. I would not peg it in anyone specific quarter, given that there is all the time noise within the factor that you just’re evaluating. However I would say that we count on each North America and EU to point out up on pricing over time within the regular course. I feel it is notably gratifying frankly that the EU manufacturers not solely have been in a position to truly atone for the occupancy, however to take action at considerably greater per diems means it is working.

And so — and I would say the identical factor for North America. I imply, sure, the per diems are a little bit bit decrease, however on the finish of the day, they’ve recovered faster, and so they’re nonetheless sustaining mid-single-digit pricing. So, I feel that bodes very effectively for the long run.

James Hardiman — Citi — Analyst

Acquired it. A lot appreciated.

Josh Weinstein — President and Chief Govt Officer

Thanks, James.

Operator

Thanks. Our subsequent query comes from the road of Brandt Montour with Barclays. Please proceed along with your query.

Brandt Montour — Barclays — Analyst

Hey, good morning, everyone. Thanks for taking my query, and congratulations on the quarter. Josh, I used to be questioning possibly you may elaborate a little bit bit on the income administration technique for ’25. I do know you will have already.

My query is extra on the reserving curve size, the non-compulsory reserving curve size. You are forward once more on subsequent 12 months’s reserving curve. However is there a sure level the place you are feeling like you do not wish to go any additional than that and it isn’t essentially optimum? How do you consider that?

Josh Weinstein — President and Chief Govt Officer

Yeah, yeah. So, thanks, Brandt, for the congratulations. One hundred percent, I do really feel that manner. But additionally be mindful, we offer you up a really rolled up quantity after we say our occupancy is X and our reserving curve is the farthest out in historical past.

Once we undergo this with our groups and what they do every day, it’s ship by ship, crusing by crusing, model by model to determine what that optimum level is. And it might very effectively be that, over time for many causes, you are not going to listen to me say general that we’re growing the reserving curve. And that is OK. Our purpose is to not get it so long as doable.

It is to generate as a lot income as humanly doable by the point the ship leaves for crusing. And so, there’s lots that goes into that blend. It is not simply base loading, however what worth are you base loading it at, how are you managing your metas towards one another, the balconies versus the insides. I imply, so many variables go into it on an in depth foundation and the output is what we speak about on this name.

So, the groups are very a lot aligned. Optimization doesn’t imply elongation, it means optimization.

Brandt Montour — Barclays — Analyst

That is tremendous useful. My follow-up is on three manufacturers, Costa, Princess, and Holland America. These are three that we have been watching you guys speak about in your — in kind of enhancing ROICs throughout these three manufacturers. I do know that you have been targeted on them.

How would you describe the success or versus your personal benchmarks on these three manufacturers enchancment? And are any three of them outperforming the others at this level alongside these tips?

Josh Weinstein — President and Chief Govt Officer

Certain. Properly, I am going to begin with the truth that each single one in every of them is exhibiting vital enchancment 12 months over 12 months in ROIC which I would count on. They have been all coming from a distinct start line again within the pre-pause world. So, one in every of them is definitely above the place they have been, one in every of them is at the place they have been and one in every of them is beneath the place they have been.

However I would say it is a little bit bit irrelevant due to the model that is truly greater. I count on it to be even greater as a result of 2019 wasn’t excellent for them. So, from my perspective, the excellent news in that is none of them but are at 12% ROIC. All of them have the potential to do this and we have got plans in place for them to do this over time.

So, progress throughout the board.

Brandt Montour — Barclays — Analyst

Wonderful. Thanks a lot.

Operator

Thanks. Our subsequent query comes from the road of Conor Cunningham with Melius Analysis. Please proceed along with your query.

Conor Cunningham — Melius Analysis — Analyst

Hello, everybody. Thanks. Simply on the, I feel, you stated 10% new-to-cruise. I used to be curious in case you might discuss a little bit bit about simply the altering demographics of your prospects usually.

How a lot is the youthful demographic participating with the venture or product? Is there something that they are doing totally different than prior generations? Thanks.

Josh Weinstein — President and Chief Govt Officer

Certain. Properly, that is a deep query, proper? So, everyone is participating in another way than they did 5 and 10 years in the past as a result of everyone is getting extra comfy with all the things digital and all the things on-line. So, that is a shift that is not nearly millennials, it is about society. And in relation to our combine, we have got manufacturers that is perhaps one or two years youthful at common age than they have been earlier than the pandemic.

We have got some that is perhaps a 12 months older. Within the grand scheme of issues, it isn’t an enormous swing. We have got — and also you additionally bought to recollect with us, we have got manufacturers that actually do cater to a youthful era like a Carnival, like an AIDA. And they are going to be outsized in our portfolio combine in relation to attracting millennials.

We do not simply need millennials although. I can not say it strongly sufficient, a model like Holland America, a model like Cunard, it’s taking part in in a spot the place they want and need folks that have money and time, which usually results in an older crowd, a crowd that has time on their fingers as a result of possibly they are not working anymore. And so, I am very glad that we’re getting a broad church as a result of we’re throughout the board. However make no mistake we’re pleased with our combine, and we’re glad to take many of us within the boomer era and Gen X, Gen Y, Gen Z, you identify it.

So, we wish all of it.

Conor Cunningham — Melius Analysis — Analyst

OK. Recognize it. After which on the P&O Australia model being sunsetting, simply as you consolidate that into Carnival, is there any affect on the P&L or any funding wanted to love throughout that transition time? Simply curious like because it goes away is there doubtlessly value headwind related to it? Thanks.

Josh Weinstein — President and Chief Govt Officer

Certain. We’ll — for us, we’ll do some minimal capex funding totally on the ships to get the IP stacks aligned to Carnival Cruise Line. However from a visitor expertise standpoint, we do not have to do a lot with these ships, and so they’re nice for that market. We clearly have on this specific occasion as a result of we’re successfully sunsetting a model.

There are some one-time prices that we’re absorbing, but it surely’s actually fairly small. So, nothing actually vital to talk of.

David Bernstein — Chief Monetary Officer

And on the flip facet, there will be some operational efficiencies, which can even save prices on the P&L as effectively.

Josh Weinstein — President and Chief Govt Officer

Yeah.

Conor Cunningham — Melius Analysis — Analyst

Thanks.

Operator

Thanks. Our subsequent query comes from the road of Assia Georgieva with Infinity Analysis. Please proceed along with your query.

Assia Georgieva — Infinity Analysis — Analyst

Good morning. Good morning, guys. Wonderful quarter, actually glad, excuse me, for what you will have achieved. I had two fast questions.

The primary one is extra on the exterior or aggressive setting. As David and Beth, you guys know, we do that actually intensive pricing surveys, that are quantitative and we comply with about 95% of the non-public and public firms. So, we’re seeing some discounting out of one in every of your opponents into This fall and probably into Q1 2025. And likewise seeing kind of encroaching in your territory by one other model that could be a non-public one.

Would you, Josh, David, Beth, be prepared to remark as to how these exterior pressures might carry a possible threat towards the winter season?

Josh Weinstein — President and Chief Govt Officer

I imply — so, thanks for the sort phrases for us. As you heard, we gave you our forecast for successfully for every of the quarters by providing you with the third quarter and the complete 12 months. So, you possibly can see we’re anticipating continued progress, continued mid-single-digit kind of worth enhancements over time. With respect to anyone competitor within the cruise house — since you bought to recollect we’re not simply competing with cruise firms, we’re competing with trip firms to get the traveler fascinated by taking their trip with us.

None of it must be disruptive to us within the grand scheme of issues. Given our measurement and scope, given the energy of our manufacturers, given the continued focus that our manufacturers have in differentiating themselves even additional and offering superb experiences, it is actually our job to carry out it doesn’t matter what some anonymous model, which I’ve a sense I do know which one you are speaking about, the way you described it, how they select to function. And if we have seen this in markets all around the world. And but right here we’re with report revenues, report per diems, and actually nice momentum.

Assia Georgieva — Infinity Analysis — Analyst

Thanks, Josh. And a fast follow-up query. You described each ticket worth and occupancy being tailwinds in Q2. And I feel, once more, with Europe being considerably slower on the uptake in 2023, ought to we count on a continued profit from greater occupancies, particularly out of the European sourced passenger in Q3? Or will we consider that going into This fall, Q1 and probably subsequent 12 months, that profit will begin to subside a little bit bit simply due to the catch up that is been occurring?

Josh Weinstein — President and Chief Govt Officer

Yeah. If you happen to recall final 12 months and also you truly heard David earlier on the decision, we principally bought again to historic occupancy ranges within the second half of final 12 months. So, there’s a little bit bit extra alternative on the occupancy facet, definitely in Q3 the place we have been a little bit farther behind in that vary than we have been by the point we bought to This fall. However actually, as we transfer ahead into 2025 and past, we bought to get the demand to maintain that momentum up on the mid-single-digit kind of worth will increase that we wish to push for.

There’ll all the time be alternatives on the fringes, however as you have heard me say earlier than, the rationale why we’re not providing you with steering on occupancy with specificity is we wish to guarantee that our manufacturers are doing the proper factor in managing the income and managing the curve and never merely making an attempt to make an occupancy goal to the purpose or decimal level on the expense of doing one thing they should not be doing with the pricing. So, our purpose may be very a lot how will we generate probably the most yield over time, which is that mixture of the value and occupancy and ensuring we form of nail the dismount there.

Assia Georgieva — Infinity Analysis — Analyst

And, Josh, that makes complete sense, particularly on the occupancy steering. I perceive and admire it. So, good luck. We’re anticipating nice issues in September.

Josh Weinstein — President and Chief Govt Officer

Thanks very a lot.

Operator

Thanks. Our subsequent query comes from the road of Jaime Katz with Morningstar. Please proceed along with your query.

Jaime Katz — Morningstar — Analyst

Hello, guys. Good morning. I’ve a fast query. On condition that the setting has been so sturdy for you guys, what retains you up at evening? Is it regulatory threat? Is there some ESG threat? Is it nothing proper now? Simply curious to listen to kind of the opposite facet of the tack.

Thanks.

Josh Weinstein — President and Chief Govt Officer

Pay attention, we bought by way of 2020, and I bought three youngsters, so not a lot retains me up at evening. With regards to this, I imply, something inside our management, I really feel very comfy that the staff, we are able to handle all of it, frankly. And so, I do not fear a lot about Black Swan since you actually cannot spend your life frightened about Black Swan otherwise you’ll have a depressing life. So, our angle is we bought to maintain performing.

We’ll take what folks throw at us and the world throws at us, and we’ll adapt and modify what we have to do as wanted and transfer on. And the best half about this enterprise from that perspective is we’re cell. And when you will have that mobility, it provides you a variety of flexibility to determine issues out.

Jaime Katz — Morningstar — Analyst

That is all I bought. Thanks.

Josh Weinstein — President and Chief Govt Officer

Thanks.

Operator

Thanks. Our subsequent query comes from the road of Dan Politzer with Wells Fargo. Please proceed along with your query.

Dan Politzer — Wells Fargo Securities — Analyst

Hey, good morning, everybody. Thanks for taking my query. First one on Celebration Key, Josh, you talked about you are ramping up there 18 ships calling on port there in 2026. Are you able to possibly discuss concerning the uplift that you just’re anticipating, whether or not it is within the type of ticket costs, onboard spend? I do know you talked about gasoline.

After which to what extent is that this constructed into these SEA Change targets, which you are already monitoring effectively forward of at this level? Thanks.

Josh Weinstein — President and Chief Govt Officer

Certain. Yeah, thanks, Dan. So, you nailed the three elements which might be going to essentially be the issues that drive the returns on Celebration Key. It’ll be incremental worth due to the demand.

It’ll be incremental spending on the island, which we name onboard spending on this circumstance, and gasoline financial savings due to its location. We’re not breaking these out for folks. However sure, to reply your query, that did issue into actually 2026 profit for us as we predict — as we’re considering by way of that three-year plan. It is pretty minimal for subsequent 12 months in relation to the uplift as a result of it is a pretty insignificant quantity of our general capability that is hitting it as we ramp in beginning within the second half of subsequent 12 months.

However these have been the three elements, yeah.

Dan Politzer — Wells Fargo Securities — Analyst

Acquired it. After which only for my follow-up, by way of value for subsequent 12 months and acknowledging it is nonetheless very early, however as you consider that advertising and marketing and promoting part, on the one hand, you do not have a ton of capability progress. However with Celebration Key beginning to opening within the again finish of the 12 months, how ought to we form of take into consideration that line merchandise relative to 2024?

David Bernstein — Chief Monetary Officer

So, it clearly is from a price perspective, Celebration Key will add value, however hopefully and we do anticipate that it is going to be a fantastic return and the advantages on the income and the onboard spend facet and the gasoline financial savings facet. So, it’s — we’re not managing to any specific line merchandise. We’re managing to our working earnings and our backside line. And we’re not afraid to put money into Celebration Key to make it a fantastic success.

Whereas we’re on the associated fee for 2025, I suppose the one different factor I would add on that entrance is we do additionally — we introduced the AIDA evolution program and people ships will likely be going into dry dock. So, we can even see a rise in dry-dock days in 2025 versus ’24, which can even have a corresponding affect on value.

Josh Weinstein — President and Chief Govt Officer

And in the end although, we’re doing that for the proper causes as we — I feel I can not keep in mind if we talked about this on the final name or not. I feel we did. AIDA is one in every of our highest returning manufacturers and we have gushed about them for a very long time, and that is going to make vital enhancements to their current fleet, which is a superb funding for us as a result of we are able to get outsized returns on these investments. After which to your — I feel you have been asking a query about promoting particularly as effectively.

You are proper, we’d have flat capability progress, however keep in mind we’re promoting cruises that transcend the present 12 months. We’re considering effectively into the long run as our manufacturers do attempt to optimize no matter that reserving curve is for that individual model. I wouldn’t have a mandate or a cap or a ground on our spending for promoting, proper? The bottom line is what are we spending it on? How is it going to be efficient? Is it going to generate incremental and outsized income for no matter that initiative is perhaps within the advertising and marketing house? And we undergo these plans with our manufacturers, not solely yearly as a part of the planning course of, however all year long I am speaking to my president to verify we’re being considerate. And so, there is not any — there really is not any predetermined end result.

I feel as you have seen we’ve considerably stepped up the place we have been earlier than the pandemic to the place we at the moment are. It has been working. It has been serving to to assist the outcomes that we have talked about at present and the momentum that we have got. And we’ll proceed to take a look at it critically.

Dan Politzer — Wells Fargo Securities — Analyst

Acquired it. After which simply very — one final very fast clarification. David, I do know you talked about returning to IG metrics. I simply wish to guarantee that there is not any change in your purpose of getting again to IG, an funding grade credit standing?

David Bernstein — Chief Monetary Officer

No modifications. We are able to management the metrics. We will not management the selections of the ranking businesses.

Dan Politzer — Wells Fargo Securities — Analyst

Acquired it. Thanks a lot.

Josh Weinstein — President and Chief Govt Officer

Thanks.

Operator

Thanks. Our subsequent query comes from the road of David Katz with Jefferies. Please proceed along with your query.

David Katz — Jefferies — Analyst

Good morning, everybody. Thanks for taking my query. I wished to comply with on to that. Properly, primary, congrats on the quarter.

I wished to simply comply with on on the final query with respect to the steadiness sheet. And look, I feel we in all probability all progressed by way of a interval the place we’re anticipating possibly a fee minimize. Nonetheless, you make some excellent progress with respect to that steadiness sheet. Are you able to assist us possibly shed a little bit mild past simply the apparent straightforward math round what a fee minimize might or would do for you in progressing that steadiness sheet?

David Bernstein — Chief Monetary Officer

Properly, to start out with, in case you have a look at our entire portfolio, about 15% of our debt profile is variable fee debt. So, as you noticed within the earnings launch, I feel it is at a 100-basis-point discount in rates of interest would profit the again half of the 12 months, I feel, was 23 million, or for the complete 12 months, it is double that. However actually, from a fee minimize perspective, we’re in an setting the place, for us, we’re an enhancing credit score. And hopefully, our rate of interest — our future rates of interest will come down not simply due to fee cuts however due to the enhancing credit score and the decrease credit score spreads.

And on prime of that, we might count on to do some refinancings. And people refinancings ought to drive our curiosity expense down. So, we do have some excellent alternatives that we’re taking a look at sooner or later, which must be web current worth optimistic. And we’ll preserve evaluating that, and you will hear extra about refinancing over time.

David Katz — Jefferies — Analyst

Recognize that. And if I’ll follow-up shortly, simply going again, Josh, to one of many stuff you talked about that is a bit extra particular, efficiency advertising and marketing, which was, I consider, a comparatively new initiative. May you give us an replace on the place that’s, the way it’s performed, what’s subsequent, and many others., please?

Josh Weinstein — President and Chief Govt Officer

Certain. So, simply to make clear, it wasn’t a brand new initiative. It was simply extra focus and making certain we had the proper sources, the proper capabilities, and the proper approaches. So, that is — I would be shocked if we’re ever at a cut-off date the place we’re not speaking about efficiency advertising and marketing and the way will we preserve progressing it.

I imply, the world modifications round us, which goes to dictate we have got to all the time be nimble in fascinated by how will we adapt to that shopper and the way that shopper goes to see issues and digest issues and ensuring we’re truly being as forward-thinking as we are able to to remain forward of that curve. So, so far as the way it occurs, it definitely doesn’t occur from me. It would not occur from a centralized company group in Miami as a result of totally different manufacturers are sourcing from totally different supply markets, totally different segments, and many others. So, our six working items actually have groups which might be targeted on that for his or her manufacturers to verify we’re doing it as optimally as we are able to.

David Katz — Jefferies — Analyst

OK. Thanks.

Josh Weinstein — President and Chief Govt Officer

Thanks. I feel we have got time for another, operator.

Operator

Thanks. Our subsequent query comes from the road of Sharon Zackfia with William Blair. Please proceed along with your query.

Sharon Zackfia — William Blair and Firm — Analyst

Hello. Good morning. I am satisfied you are going alphabetical order on these calls. I suppose, I wished to ask about form of the stress between garnering or harvesting value financial savings versus reinvesting in demand creation and the way you consider that? I imply, Josh, you touched on totally different parts of demand creation, however I imply, traditionally, Carnival has been often called form of the associated fee chief.

Is there a chance as you harvest these value financial savings to form of zap extra of that hole within the advertising and marketing spend per berth that Carnival does relative to the competitors? And the way far are you prepared to go there?

Josh Weinstein — President and Chief Govt Officer

Yeah, positive. So, as you heard, so we wish to proceed to be the associated fee chief. I feel they are not –they do not must be mutually unique although. And so, we’ve been bringing extra value into reinvesting within the enterprise.

And it isn’t simply our advertising and marketing, it has been our advertising and marketing. I feel it is what 18% per ALBD versus pre-17% to 18% per ALBD since earlier than the pandemic. So, definitely we see the worth of that. But when you consider our onboard expertise and ensuring we’re offering superb meals options and companies, we’re reinvesting in bandwidth.

We’re spending extra on bandwidth than we ever have, and it is producing outsized returns as a result of folks love the service. It is land like and it is one thing persons are prepared to pay for. So, there’s examples up and down the P&L the place we’re very glad to reinvest to drive the proper behaviors to get the income that we’re in search of. I haven’t got a metric.

I haven’t got a metric that claims that is how a lot we’ll do in any specific quarter or any specific 12 months. I imply, clearly, our working margin, we nonetheless bought work to do. Our EBITDA margins, if we get to June steering, it is going to be a few five-point bump from final 12 months, and it leaves us a number of factors wanting the place we have been in 2019. So, we bought extra work to do, and so the staff may be very targeted on it.

And that can come from each side although to your level. It will not simply be reducing prices. We bought to verify we’re doing the proper issues to drive that income.

Sharon Zackfia — William Blair and Firm — Analyst

Thanks.

Josh Weinstein — President and Chief Govt Officer

OK. Properly, thanks, everyone, for becoming a member of the decision at present and stay up for speaking to you once more in September. Thanks.

Operator

[Operator signoff]

Period: 0 minutes

Name individuals:

Beth Roberts — Senior Vice President, Investor Relations

Josh Weinstein — President and Chief Govt Officer

David Bernstein — Chief Monetary Officer

Matt Boss — JPMorgan Chase and Firm — Analyst

Steven Wieczynski — Stifel Monetary Corp. — Analyst

Steve Wieczynski — Stifel Monetary Corp. — Analyst

Patrick Scholes — Truist Securities — Analyst

Ben Chaiken — Mizuho Securities — Analyst

Robin Farley — UBS — Analyst

James Hardiman — Citi — Analyst

Brandt Montour — Barclays — Analyst

Conor Cunningham — Melius Analysis — Analyst

Assia Georgieva — Infinity Analysis — Analyst

Jaime Katz — Morningstar — Analyst

Dan Politzer — Wells Fargo Securities — Analyst

David Katz — Jefferies — Analyst

Sharon Zackfia — William Blair and Firm — Analyst

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