Carnival Corporation & plc (CCL)
Q1 2009 Earnings Call Transcript
Mar 24, 2009 10:00 a.m. ET

Executives

Howard S. Frank - Vice Chairman and Chief Operating Officer
David Bernstein - Senior Vice President and Chief Financial Officer
Micky Arison - Chairman and Chief Executive Officer
Beth Roberts - Vice President of Investor Relations

Analysts

Steve Kent – Goldman, Sachs & Co.
Timothy Conder – Wells Fargo
Robin Farley – UBS
Assia Georgieva - Infinity Research
Steve Wieczynski – Stifel Nicolaus & Co.
Janet Brashear - Sanford C. Bernstein & Co.
Bart Ware
Simon Mezzanotte - Societe Generale
David Leibowitz – Horizon Asset Management
Jamie Rollo - Morgan Stanley
Nick Thomas – RBS
Richard Lyall - John W. Bristol & Co.

Presentation

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the first quarter earnings call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. At that time, if you have a question, please press the “1” followed by the “4” on your telephone. If, at any time during the conference, you need to reach an operator, please press “*0”. As a reminder, this conference is being recorded, Tuesday, March 24, 2009.

I would now like to turn the conference over to Howard Frank, Vice Chairman, Chief Operating Officer. Please go ahead, sir.

Howard S. Frank

Good morning, everyone. This is Howard Frank. I am here this morning in Miami with Micky Arison, our Chairman and Chief Executive Officer; David Bernstein, our Chief Financial Officer; and Beth Roberts, our Vice President of Investor Relations.

I will have some general comments to make, but first, I''m going to turn it over to David to provide some of the color on our first quarter of 2009. David?

David Bernstein

Thank you, Howard. I will begin the conference call by reading the forward-looking statement. During this conference call, we will make certain forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties or other factors which may cause the actual results, performances or achievements of Carnival to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. For further information, please see Carnival''s earnings press release and its filings with the Securities and Exchange Commission.

For the first quarter 2009, our earnings per share were $0.33 versus 2008 where it was $0.30 per share. Achieving higher quarterly earnings in an economic climate like this is a testimony to the fact that we have the best and most experienced brand management teams in the industry.

The first quarter came in above the midpoint of our December guidance by $0.12 per share. This was driven by a few things. Our revenue yields came in toward the better part of the range, declining 5.2% in constant dollars versus our December guidance of down 5% to 7%, which was worth $0.02 per share. A variety of cost saving measures and timing of certain expenses benefited us to the tune of $0.06 per share as our employee ownership culture, which tends to lead to incredibly tight cost controls, continues to pay dividends.

Lower fuel prices in the first quarter were worth $0.02 a share and various other items were also worth about $0.02 per share.

Looking at our first-quarter operating results versus the prior year. Our capacity increased 2.3% for the first quarter, with the majority of the increase going to our European brands. The European brands grew 6.2% while our North American brands grew 1.9%. As I previously mentioned, overall net revenue yields in local currency declined 5.2% in the first quarter versus the prior year.

Now let''s take a look at the two components of net revenue yields. For net ticket yields, we saw a yield decline of 5% in local currency. Our North American brands were down 3.9%, driven primarily by declines in other exotic itineraries. Yields in the Caribbean held up reasonably well for the first quarter compared to the prior year. Our European brands experienced a 7.8% lower local currency ticket yields on higher capacity, driven by declines in all itineraries.

For net onboard and other yields, we reported a yield decline of 5.8% in local currency. We saw declines in all our major brands around the world, a trend which we had anticipated in our previous guidance. Net onboard yields for spa and bar were actually up in the first quarter versus the prior year, while casino, shore excursions, shops and photo were down.