Q2 2025 Carnival Corp & PLC Earnings Call

[music].

Operator: Greetings, welcome to the Carnival Corporation PLC's second quarter 2025 earnings call. At this time, all participants are in listen-only mode. A brief question and answer session will follow the formal presentation.

Greetings and welcome to the Carnival Corporation and plc second quarter 2025 earnings call.

At this time, all participants are in listen only mode.

A brief question and answer session will follow the formal presentation.

Operator: If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Just a reminder, this conference is being recorded.

If anyone should require operator assistance during the conference. Please press star zero from your telephone keypad.

As a reminder, this conference is being recorded.

Beth Roberts: It is now my pleasure to introduce your host, Beth Roberts, Senior Vice President, Investor Relations. Thank you, Beth. You may now begin. Thank you.

Speaker Change: It is now my pleasure to introduce your host Beth Roberts Senior Vice President of Investor Relations. Thank you Betsy you may now begin.

Joshua Weinstein: Good morning and welcome to our second quarter 2025 earnings conference call.

Speaker Change: Thank you good morning, and welcome to our second quarter 2025 earnings Conference call I'm joined today by our CEO, Josh Weinstein, our CFO, David Bernstein, and our chairman Micky Arison.

Joshua Weinstein: I'm joined today by our CEO, Josh Weinstein, our CFO, David Bernstein, and our Chair, McIarist.

Joshua Weinstein: Before we begin, please note that some of our remarks on this call will be forward-looking. Therefore, I will refer you to the forward-looking statement in today's press release. All references to ticket prices, yields, and cruise costs without fuel will be in constant currency unless otherwise stated. References to yields will be on a net basis. References to cruise costs without fuel, EBITDA, net income, ROIC, and related statistics, for all, will be on an adjusted basis unless otherwise stated. All these references are non-GAAP financial measures defined in our earnings press release. A reconciliation to the most directly comparable U.S.

Speaker Change: Before we begin please note that some of our remarks on this call will be forward looking therefore, I will refer you to the forward looking statement in today's press release, all references to ticket prices yields and cruise costs without fuel will be in constant currency unless otherwise stated references to yields will be on a net basis references to cruise costs.

Speaker Change: Without fuel EBITDA net income otherwise see in the latest statistics for all will be on an adjusted basis unless otherwise stated all these references are non-GAAP financial measure as defined in our earnings press release, a reconciliation to the most directly comparable U S. GAAP financial measures and other associated disclosures are also contain.

Joshua Weinstein: GAAP financial measures and other associated disclosures are also contained in our earnings press release and in our investor presentation.

Speaker Change: And in our earnings press release and in our Investor presentation.

Joshua Weinstein: Please visit our corporate website where our earnings press release and investor presentation can be found.

Speaker Change: Please visit our corporate website, where our earnings press release and Investor presentation can be found.

Joshua Weinstein: With that, I'd like to turn the call over to Josh. Thanks, Beth.

Josh Weinstein: With that I'd like to turn the call over to Josh.

Joshua Weinstein: Before we begin, I'd like to take a moment to address the conflict in the Middle East. The Escalation of the Past Two Weeks culminating over the last few days has been Swift. While we certainly hope for a quick and peaceful resolution, and it has not yet had any discernible impact on our business, This is all unfolding too quickly in real time to try to project how it could impact our future. Like many others, we will actively monitor the situation over the coming days and weeks to evaluate its potential effects on our business and provide updates as needed.

Josh Weinstein: Thanks, Beth before we begin I'd like to take a moment to address the conflict in the middle East.

Josh Weinstein: The escalation of the past two weeks, culminating over the last few days.

Josh Weinstein: Has been Swift.

Josh Weinstein: Well, we certainly hope for a quick and peaceful resolution and it has not yet had any discernible impact on our business. This is all unfolding too quickly in real time to try to project, how it could impact our future business like many others, we will actively monitor the situation over the coming days and weeks.

Josh Weinstein: To evaluate its potential effects on our business and provide updates as needed.

Joshua Weinstein: In the interim, our thoughts and prayers are for the safety of all innocent civilians and for the brave men and women of the U.S. Armed Forces who work tirelessly to protect the United States of America.

Josh Weinstein: The interim.

Josh Weinstein: Our thoughts and prayers are for the safety of all innocent civilians.

Josh Weinstein: For the Brave men and women of the U S. Armed forces, who worked tirelessly to protect the United States of America.

Joshua Weinstein: Turning to our business. another quarter on the books, and another set of phenomenal results. This marks eight quarters in a row we've achieved record revenues on record yield. We also hit new second-quarter highs for EBITDA and operating income, both in total and on a per ALBD basis, while customer deposits also reached an all-time high. Year over year, EBITDA was up 26%, operating income increased by 67%. and net income more than tripled as we continue to benefit from our focus on commercial execution. Net income came in $185 million better than guidance as we outperformed across the board.

Josh Weinstein: Turning to our business.

Josh Weinstein: Another quarter on the books and another set of phenomenal results.

Josh Weinstein: This marks eight quarters in a row, we have achieved record revenues on record yields.

Josh Weinstein: We also hit new second quarter highs for EBITDA and operating income both in total and on a per a L. B day basis, while customer deposits also reached an all time high.

Josh Weinstein: Year over year EBITDA was up 26%.

Josh Weinstein: Operating income increased by 67%.

Josh Weinstein: Net income more than tripled as we continue to benefit from our focus on commercial execution.

Josh Weinstein: Net income came in at $185 million better than guidance as we outperformed across the board.

Joshua Weinstein: Yields grew by almost six and a half percent, beating our guidance by 200. Both ticket and on board equally outperformed on very strong closing demand, reaffirming the strength of our consumer. Unit costs also came in 200 basis points better than expected on timing between the course. This was yet another quarter with EBITDA margins up significantly year over year. You know, investors often ask me, Can margins get above 2019 levels? Well, as I've always answered, I never thought of 2019 as a ceiling. And we've now proven that out. Last quarter EBITDA margins were 140 basis points above 2019 and this quarter they were 200 basis points higher.

Josh Weinstein: Yields grew by almost 6.5% beating.

Josh Weinstein: Beating our guidance by 200 basis points.

Josh Weinstein: Both ticket and onboard equally outperformed a very strong close in demand reaffirming the strength of our consumer.

Josh Weinstein: Unit costs also came in 200 basis points better than expected on timing between the quarters.

Josh Weinstein: This was yet another quarter with EBITDA margins up significantly year over year.

Josh Weinstein: Investors often ask me can margins get above 2019 levels well as I've always answered I never thought of 2019 as a ceiling and we've now proven that out laugh.

Josh Weinstein: Last quarter EBITA margins were 140 basis points above 2019, and this quarter. They were 200 basis points higher in fact, this past quarter's margins were the highest we've achieved in nearly 20 years.

Joshua Weinstein: In fact, this past quarter's margins were the highest we've achieved in nearly 20 years. This consistently strong performance significantly accelerated progress towards our 2026 sea change target. In December, we telegraphed being able to hit our 50% EBITDA per ALBD growth target at the end of 2025. In March, we said that we expected our 12% return on invested capital target to also materialize at the end of 2020. And now we can advise that through the hard work of our amazing global team, we met and exceeded both of these targets a full 18 months ahead of schedule.

Josh Weinstein: This consistently strong performance significantly accelerated progress towards our 2026 C change targets.

Josh Weinstein: In December.

Josh Weinstein: We telegraphed being able to hit our 50% EBITDA for a L. B D growth target at the end of 'twenty five.

Josh Weinstein: In March we said that we expected our 12% return on invested capital target to also materialized at the end of 2025.

Josh Weinstein: And now we can advise that through the hard work of our amazing global team, we met and exceeded both of these targets a full 18 months ahead of schedule.

Joshua Weinstein: We were able to deliver trailing 12-month EBITDA per birthday, 52% above our 2023 baseline, and our ROIC surpassed 12.5%, more than doubling in less than two years. This was no small feat, given these are both the highest levels this company has seen in nearly 20 years.

Josh Weinstein: We were able to deliver trailing 12 months EBITDA per berth day, 52% above our 20th twenty-three baseline.

Josh Weinstein: And our Rois see surpassed 12.5% more than doubling in less than two years.

Josh Weinstein: Now this was no small feat given these are both the highest levels. This company has seen in nearly 20 years.

Joshua Weinstein: Not to be forgotten is our third 2026 commitment to reduce our carbon intensity by 20% as compared to 2019. I'm very pleased to report we have also just met this target as well. This is not only great for the environment. It's also great for our bottom line. Again, thanks to each of our phenomenal team members, we topped these milestones in half the time originally expected. And even better news, we have so much more potential to take our margins, returns, and results even higher.

Josh Weinstein: Not to be forgotten is our third 20 twenty-six commitment to reduce our carbon intensity by 20% as compared to 2019.

Josh Weinstein: I'm very pleased to report we have also just met this target as well. This is not only great for the environment. It's also great for our bottom line.

Josh Weinstein: Again thanks.

Speaker Change: Thanks to each of our phenomenal team members, we talk these milestones and half the time originally expected.

Speaker Change: And even better news, we have so much more potential to take our margins returns and results even higher.

Joshua Weinstein: So, with our 2026 targets in the rearview mirror, we anticipate setting new targets in early Q2 next year, and I look forward to raising the bar even higher. In the short term, this outperformance has also enabled us to take up our full year guidance again. This includes raising our yield guidance to 5% based on our strong second quarter results while affirming yield expectations for the remainder of the year. Cumulatively, that will take our yields up 16% across 2024 and 2025. In a world of heightened volatility, the amazing cruise experiences our portfolio of cruise brands deliver at a truly exceptional value simply stand out.

Speaker Change: So with our 2026 targets in the rearview mirror, we anticipate setting new targets in early Q2 next year and I look forward to raising the bar even higher.

Speaker Change: In the short term. This outperformance has also enabled us to take up our full year guidance again.

Speaker Change: This includes raising our yield guidance to 5% based on our strong second quarter results, while affirming yield expectations for the remainder of the year.

Speaker Change: Cumulatively.

Speaker Change: That will take our yields up 16% across 'twenty 'twenty, four and 'twenty 'twenty five.

Speaker Change: In a world of heightened volatility the amazing cruise experiences our portfolio of cruise brands deliver a truly exceptional value.

Speaker Change: Please stand out it's enabled us to deliver two consecutive quarters that were significantly better than expected.

Joshua Weinstein: It's enabled us to deliver two consecutive quarters that were significantly better than expected and maintain strong 4% yield growth in the back half of the year, consistent with our original guidance in December, which I would remind you was given well before much of 2025's macroeconomic and geopolitical turbulence had surfaced. Now, Would the second half of the year have been even stronger, but for all of this noise? Absolutely. No excuses, though. We need to deal in the realities of the world we live in.

Speaker Change: And maintained strong 4% yield growth in the back half of the year consistent with our original guidance in December which I would remind you was given well before much of 'twenty 'twenty fives macroeconomic and geopolitical turbulence had surfaced.

Speaker Change: No.

Speaker Change: With the second half of the year have been even stronger but for all of this noise absolutely no excuses, though.

Speaker Change: We need to deal and the realities of the World We live in.

Joshua Weinstein: And while it's proving to be a fairly unpredictable place of late, we are well positioned and clearly will do our best to meet or exceed guidance, taking another significant step forward for the We also continue to set ourselves up well for 2020. Our book position is in line with last year's record levels and at historically high prices. Our elongated advanced booking window and limited capacity growth give us flexibility to patiently take price. And our sharpened yield management tools are helping us optimize our performance in the current environment. Our strong results, book position, and outlook are a testament to the success of our ongoing strategy to deliver same-ship, high-margin revenue growth.

Speaker Change: And while it's proving to be a fairly unpredictable place of late.

Speaker Change: We are well positioned and clearly we will do our best to meet or exceed guidance, taking another significant step forward for the company.

Speaker Change: We also continue to set ourselves up well for 2026 or.

Speaker Change: Our book position is in line with last year's record levels and at historically high prices.

Speaker Change: Our our long dated advance booking window and limited capacity growth give us flexibility to patiently take price and our sharpened yield management tools are helping us optimize our performance in the current environment.

Speaker Change: Our strong results book position and outlook are a testament to the success of our ongoing strategy to deliver same ship high margin revenue growth.

Joshua Weinstein: We remain focused on achieving yield improvement by driving demand that outpaces our supply, and we have a lot more in store to keep our strong momentum going.

Speaker Change: We remain focused on achieving yield improvement by driving demand that outpaces, our supply and we have a lot more in store to keep our strong momentum going.

Joshua Weinstein: We are counting down the days to the opening of Celebration Key, which is now less than a month away. with the largest lagoons in the Caribbean at over 275,000 surface square feet, multiple times that of any other private cruise destination in existence or in construction. Over one and a half miles of white sand beach and the world's largest swim-up bar and largest sand castle, we are gearing up to deliver even more fantastic experiences for Carnival guests than ever before.

Josh Weinstein: We are counting down the days to the opening of celebration kit, which is now less than a month away.

Josh Weinstein: With the largest lagoons and the Caribbean at over 275000 surface square feet multiple times that of any other private cruise destination in existence or in construction.

Josh Weinstein: Over one and a half miles of white sand beach, and the world's largest swim up bar and largest sand castle, we are gearing up to deliver even more fantastic experiences for carnival guests than ever before.

Joshua Weinstein: We are on schedule to welcome our first ship, Carnival Vista, on July 19th and intentionally ramp up from there into the fourth quarter so that we can make sure the guest experience is as extraordinary as possible from the start. You know, it's gratifying to see that already Celebration Key is consistently ranked among the most searched cruise destinations on Google, and it hasn't even opened yet. We fully expect the buzz around it to only build once our five portals built for fun begin welcoming guests to our expertly curated ultimate beach day. Once complete, we'll be augmenting our marketing materials with live footage and imagery from this amazing destination.

Josh Weinstein: We are on schedule to welcome our first ship Carnival Vista on July 19th and intentionally ramp up from there into the fourth quarter. So that we can make sure. The guests experience is as extraordinary as possible from the start.

Josh Weinstein: It's gratifying to see that already celebration key is consistently ranked among the most searched cruise destinations on Google and it hasn't even opened yet we fully expect the buzz around it to only build once our five portals built for fun begin welcoming guests who are expertly curated.

Speaker Change: Ultimate Beach day.

Josh Weinstein: Once complete will be augmenting our marketing materials with live foot addition imagery from this amazing destination and of course word of mouth from over 2 million guests annually will amplify our share of voice.

Joshua Weinstein: And of course, word of mouth from over 2 million guests annually will amplify our share of voice.

Joshua Weinstein: We're also on track for the mid-2026 opening of a significant expansion at Relax Away, Half Moon Key, our pristine Caribbean oasis. This spectacular tropical paradise, already ranked among the best private islands in the Caribbean, invites our guests to enjoy an idyllic beach day full of white sand, turquoise waters, refreshing ocean breezes, delicious food, tropical drinks, and opportunities galore to do exactly as its new name invites you to do, relax. We've shaped many itineraries that combine these perfectly paired destinations in order to provide our guests with both the ultimate and the idyllic beach days, all on one vacation.

Josh Weinstein: We're also on track for the mid twenties 26 opening of a significant expansion at relax away half Moon Cay are pristine Caribbean Oasis.

Josh Weinstein: This spectacular tropical Paradise already ranked among the best private islands in the Caribbean.

Josh Weinstein: Invites our guests to enjoy and idyllic Beach day full of white sand turquoise waters refreshing ocean breezes delicious food tropical drinks and opportunities galore to do exactly as its new name invites you to do.

Josh Weinstein: Relax.

Josh Weinstein: We've shaped many itineraries that combined these perfectly paired destinations in order to provide our guests with both the ultimate.

Josh Weinstein: And the idea like Beach days, all one vacation.

Joshua Weinstein: During the quarter, we also announced another meaningful expansion and enhancement to our beautiful destination, Mahogany Bay in Roatan, Honduras. already rated one of the highest destinations in the Caribbean. Upgrades will include a large pool with a swim up bar, a beautiful new private beach club and doubling the beach line to almost half a mile.

Josh Weinstein: During the quarter, we also announced another meaningful expansion and enhancement to our beautiful destination mahogany Bay in Roatan Honduras.

Josh Weinstein: Already rated one of the highest destinations in the Caribbean upgrades will include a large pool with the swim up bar, a beautiful new private Beach club and doubling the beach line to almost half a mile.

Joshua Weinstein: This destination will be renamed Isla Tropical and, along with Celebration Cay and Relax Away Half Moon Cay, as the pinnacle of our seven Caribbean gems, marketed as the Paradise Collection. You know, as beaches are the number one destination for vacationing Americans, it is no accident that this is central to our destination strategy. Our seven Caribbean gems collectively provide miles upon miles of some of the most beautiful beaches in the world. by making targeted incremental investments and stepping up our marketing efforts across this portfolio. We believe we have a significant opportunity to further monetize these strategic assets by using them to drive consumer consideration and conversion, taking share from land-based alternatives.

Josh Weinstein: This destination will be renamed East to let Tropic cow and along with celebration key and relax away half Moon Cay as the pinnacle of our seven Caribbean gems marketed as the Paradise collection.

Josh Weinstein: Its beaches are the number one destination for vacationing Americans. It is no accident that this is central to our destination strategy.

Josh Weinstein: Our seven Caribbean Jim's collectively provide miles upon miles of some of the most beautiful beaches in the world.

Josh Weinstein: By making targeted incremental investments and stepping up our marketing efforts across this portfolio.

Josh Weinstein: We believe we have a significant opportunity to further monetize these strategic assets by using them to drive consumer consideration and conversion taking share from land based alternatives.

Joshua Weinstein: At the same time, we continue to make investments in our existing fleet that will generate new demand and enhance price.

Josh Weinstein: At the same time, we continue to make investments in our existing fleet that will generate new demand and enhanced pricing.

Joshua Weinstein: AIDA DIVA recently re-entered service, the first ship to undergo the AIDA Evolution Upgrade. Since her revamp and reintroduction, AIDA DIVA has been knocking it out of the park with a huge take-up for its many added bar and specialty dining venues and rave reviews for its ship-wide enhancements. This success is a great sign for the remaining six vessels in the AIDA fleet that will undergo this upgrade over the next few years.

Josh Weinstein: I eat a diva recently reentered service the first ship to undergo the ETA evolution upgrade.

Josh Weinstein: Since her revamp and reintroduction.

Josh Weinstein: I eat a diva has been knocking it out of the park with a huge take up for its many added bar and specialty dining venues and rave reviews for its ship wide enhancements.

Josh Weinstein: This success is a great sign for the remaining six vessels in the Aida fleet that will undergo this upgrade over the next few years.

Joshua Weinstein: We also recently ordered two new builds for AIDA for delivery in fiscal 2030 and 2032, as we reinforce our strategy to rebalance the company towards our higher returning brand. These next generation ships, coupled with the AIDA evolution program, modernizing much of the existing fleet. will drive even more demand for our AIDA brand, which is already synonymous with cruising in Germany.

Josh Weinstein: Also recently ordered two new builds for Aida for delivery in fiscal 'twenty 30, and 2032 as we reinforce our strategy to rebalance the company towards our higher returning brands.

Josh Weinstein: These next generation ships, coupled with the Aida evolution program modernizing much of the existing fleet.

Josh Weinstein: We will drive even more demand for our Aida brand, which is already synonymous with cruising in Germany.

Joshua Weinstein: Additionally, Carnival Cruise Line recently announced exciting new features for its fourth and fifth incredibly successful XL class shifts for delivery in 2027 and 2020. Carnival Festival and Carnival Tropical will feature Sensation Point, a new outdoor zone on the top three decks, purposely designed to be the most family-friendly water park at sea, with six exhilarating slides, including two family raft slides, and, for the first time, the fun will continue into the evening, with extended park hours for guests to enjoy a vibrantly illuminated nighttime waterworks, including a DJ and a slew of other special evening activities. These shifts will be ideally suited for families, with 70% more interconnecting rooms than prior XL class And, just around the corner, we'll be welcoming our next new build, Star Prince.

Josh Weinstein: Additionally.

Josh Weinstein: Carnival cruise line recently announced exciting new features for its fourth and fifth incredibly successful X L class ships for delivery in 2027 and 2028.

Josh Weinstein: Carnival Festival and Carnival tropical will feature sensation point, a new outdoor zone on the top three decks purposely designed to be the most family friendly water Park at sea with six exhilarating slides, including two family RAF slides and for the first.

Josh Weinstein: Times, the phone will continue into the evening with extended park hours for guests to enjoy a vibrantly illuminated nighttime waterworks, including a D J and a slew of other special evening activities.

Josh Weinstein: These shifts will be ideally suited for families with 70% more interconnecting rooms than prior X L class ships.

Josh Weinstein: And just around the corner, we will be welcoming our next Newbuild Star Princess.

Joshua Weinstein: Sistership to the hugely successful Some Princess awarded Condé Nast Travelers 2024 Mega Ship of the Year. That means we'll be doubling down on Some Princess's innovative platform and tremendously successful guest operations spanning across F&B, entertainment, and its elevated ship within a ship, Suites Sanctuary Collection.

Josh Weinstein: Sister ship to the hugely successful some princess awarded Condi Nast Traveler's 'twenty 'twenty four mega ship of the year.

Josh Weinstein: That means we'll be doubling down on some princesses innovative platform and tremendously successful guest operations spanning across F&B entertainment and it's elevated ship within a ship suites sanctuary collection.

Joshua Weinstein: With our moderate new-build pipeline, including just three ships on order over the next four years, we have ample room to continue to pay down additional debt and return to investment-grade leverage metrics, while providing ourselves with a headroom to return value to shareholders.

Josh Weinstein: With our moderate Newbuild pipeline, including just three ships on order over the next four years, we have ample room to continue to pay down additional debt and returned to investment grade leverage metrics, while providing ourselves with the headroom to return value to shareholders.

Joshua Weinstein: And yet another opportunity that will help propel us forward is the exciting news Carnival Cruise Line announced just last week.

Josh Weinstein: And yet another opportunity that will help propel us forward is the exciting news Carnival cruise line announced just last week.

Joshua Weinstein: In June of next year, Carnival will be launching a brand new and improved loyalty program. This will be an industry-first, tying loyalty benefits and status to total spending on Carnival and spending on everyday purchases with Carnival's co-branded credit card, rather than being based on the lifelong accumulation of days. David will speak to the financial impact, so I'll just add that we see this as an important tool for improving customer engagement and increasing customer lifetime value and a long-term strategic differentiator for us. I would like to thank our team members, ship and shore once again for the enthusiasm and commitment they exhibit, which enabled us to deliver happiness to almost three and a half million guests this past quarter by providing them with extraordinary cruise vacations while honoring the integrity of every ocean we sail, place we visit and life we touch.

Josh Weinstein: In June of next year Carnival will be launching a brand new and improved loyalty program.

Josh Weinstein: This will be an industry first tying loyalty benefits and status. The total spending on carnival and spending on everyday purchases with carnivals co branded credit card rather than being based on the lifelong accumulation of days sales day.

Josh Weinstein: David will speak to the financial impact so I'll just add that we see this as an important tool for improving customer engagement and increasing customer lifetime value and our long term strategic differentiator for us.

Josh Weinstein: I would like to thank our team members ship and shore once again for the enthusiasm and commitment they exhibit which enabled us to deliver happiness to almost three and a half a million guests this past quarter by providing them with extraordinary cruise vacations, while honoring the integrity of every ocean we sale.

Josh Weinstein: Place we visit them.

Joshua Weinstein: It is their combined effort that has made a truly transformational change in this company inside of just two years. I would be remiss if I also didn't express my appreciation for all of the many supporters who contributed to this successful outcome. Thank you to our travel agent partners, destination partners, investors, and of course, our loyal guests. We could not have done this without all of you.

Josh Weinstein: If we touch it.

Josh Weinstein: It is their combined effort that has made a truly transformational change in this company inside of just two years.

Josh Weinstein: I would be remiss if I also didn't express my appreciation for all of the many supporters who contributed to this successful outcome.

Josh Weinstein: Thank you to our travel agent partners destination partners investors and of course, our loyal guests we could not have done this without all of you.

Joshua Weinstein: While I'm incredibly proud of the great progress our teams have made in such a short amount of time, these results are nowhere near our end point. The tailwinds and opportunities before us give us the potential for so much more.

Josh Weinstein: Well I'm incredibly proud of the great progress our teams have made in such a short amount of time.

Josh Weinstein: These results are nowhere near our endpoint, the tailwind and opportunities before us give us the potential for so much more with that I'll turn the call over to David.

David Bernstein: With that, I'll turn the call over to David. Thank you, Josh. I'll start today with a summary of our 2025 second quarter results. Next, I'll provide some color on our improved full year June guidance, as well as some key insights on our third quarter guidance. I will also explain the financial impact of Carnival Cruise Lines exciting new loyalty program Carnival Rewards for 2026 and beyond.

David Bernstein: Thank you Josh.

Speaker Change: Start today with a summary of our 2025 second quarter results.

Speaker Change: Next I'll provide some color on our improved full year June guidance as well as some key insights on our third quarter guidance.

Speaker Change: It will also explain the financial impact of Carnival cruise lines exciting new loyalty program Carnival rewards for 2026 and beyond.

David Bernstein: and then finish up with an update on our efforts to rebuild our financial fortress through refinancing and deleveraging. Turning to the summary of our second quarter results. Net income exceeded March guidance by $185 million as we outperformed once again, achieving our highest ever second quarter operating results. The outperformance was essentially driven by five things. First, favorability and revenue worth $84 million as yields came in up over 6.4% compared to the prior year and that was on top of last year's robust 12% increase. This was 200 basis points better than March guidance driven by close-in strength in ticket prices and continued strong on-board spending.

Speaker Change: And then finish up with an update on our efforts to rebuild our financial fortress through refinancing and deleveraging.

Speaker Change: Turning to the summary of our second quarter results.

Speaker Change: Net income exceeded March guidance by $185 million as we outperformed once again, achieving our highest ever second quarter operating results.

Speaker Change: The outperformance was essentially driven by side. Thanks.

Speaker Change: Favorability in revenue with $84 million.

Speaker Change: Came in up over 6.4% compared to the prior year and that was on top of last year's robust 12% increase this was 200 basis points better than March guidance, driven by close in strength in ticket prices.

Speaker Change: <unk> strong onboard spending.

David Bernstein: The yield increase was a result of improvements on both sides of these lines. The improvement in ticket prices was across all core programs. The improvement in onboard spending was broad-based, as all major categories of spending were meaningfully higher. Second, cruise costs without fuel per available lower birthday, or ALBD, were up three and a half percent compared to the prior year. This was also 200 basis points better than March guidance and was worth $56 million. The favorability in costs was driven by the timing of expenses between the quarters. Third, favorability and fuel consumption and fuel mix was worth $18 million as our efforts and investments to continuously improve the energy efficiency of our operations, leveraging technology and best practices, paid off once again.

Speaker Change: The increase was a result of improvements on both sides of the Atlantic.

Speaker Change: The improvement in ticket prices was across all core programs the improvement in onboard spending was broad based as all.

Speaker Change: All major categories of spending were meaningfully higher.

Speaker Change: Second cruise costs without fuel per available at Woodbury day, or a L. P. D. We're up three and a half per cent compared to the prior year.

Speaker Change: This was also 200 basis points better than March guidance.

Speaker Change: With $56 million the favorability in cost was driven by the timing of expenses between the quarters.

Speaker Change: Third favorability in fuel consumption and fuel mix was worth $18 million as our efforts and investments to continuously improve the energy efficiency of our operations leveraging technology and best practices paid off once again.

David Bernstein: Fourth, interest income and expense favorability of $8 million was driven by higher interest income and an opportunistic debt prepayment. And fifth, $15 million from the favorable net impact of currency and fuel price. Customer deposits at the end of the second quarter were at an all-time high, up over $250 million versus the prior year, despite the impact from our third quarter capacity decline of 2.4%.

Speaker Change: For interest income and expense favorability of $8 million was driven by higher interest income and an opportunistic debt prepayments.

Speaker Change: And $15 million from the favorable net impact of currency and fuel price.

Speaker Change: Customer deposits at the end of the second quarter were at an all time high up over $250 million versus the prior year. Despite the impact from our third quarter capacity decline of two 4%.

David Bernstein: Next, I will provide some color on our improved full year June guide. June Gein's net income of approximately $2.7 billion is a $200 million improvement over March Gein's. The improvement was essentially driven by five things. First, our second quarter favorability and yield flowed through to the full year, improving our full year yield guidance by 30 basis points to 5% higher than strong 2024 levels, which were up almost 11%. The total increase in full year revenue was over $100 million, which included not only the flow through of the second quarter favorability in revenue, but also additional voyages that were added by Carnival Cruise Lines, primarily in the fourth quarter as a result of the change in the dry dock schedule into 2026.

Speaker Change: Next I will provide some color on our improved full year June guidance.

Speaker Change: Net income of approximately $2 7 billion is a 200 million dollar improvement over March guidance.

Speaker Change: The improvement was essentially driven by <unk> first.

Speaker Change: Second quarter favorability in yield flow through to the full year, improving our full year yield guidance by 30 basis points to 5% higher and strong 2024 levels, which were up almost 11%.

Speaker Change: The total increase in full year revenue was over $100 million, which included not only the flow through in the second quarter favorability in revenue, but also additional voyages that were added by Carnival cruise lines, primarily in the fourth quarter as a result of the change in the dry dock schedule into 2020.

David Bernstein: These additional voyages improved June guidance net income. However, given the seasonality of our business and the late opening of the voyages added to the fourth quarter, these voyages tempered the full year positive yield impact by approximately one tenth of a point, which is included in the full year yield guidance of 5%. Second, cruise costs without fuel per ALBD are now expected to be up 3.6% compared to the prior year. This is two-tenths of a point better than March guidance. The improvement in this cost metric was driven by the increase in ALBDs as a result of the added voyage.

Speaker Change: Six.

Speaker Change: These additional voyages improved June guidance net income however, given the seasonality of our business and the reopening of the voyages added to the fourth quarter. These voyages tempered the full year positive yield impact by approximately 110th of a point, which is included in the full year yoga.

Speaker Change: Cadence of 5%.

Speaker Change: Second cruise costs without fuel per L. P. D are now expected to be up three 6% compared to the prior year. This is two tenths of a point better than March guidance. The improvement in this cost metric was driven by the increase in <unk> as a result of the added voyages.

David Bernstein: Even though we already have the industry-leading cost structure, our teams will always keep looking for ways to further optimize our costs while continuing to improve the onboard experience for our guests. Third, favorability and fuel consumption and fuel mix from the second quarter is expected to continue throughout the second half and grow to approximately $30 million for the full year compared to March guidance. Fourth, favorability and interest income and expense from the second quarter is also expected to continue throughout the second half and grow to approximately $30 million for the full year compared to March guidance driven by our refinancing efforts during the second quarter.

Speaker Change: Even though we already have the industry, leading cost structure. Our teams will always keep looking for ways to further optimize our cost while continuing to improve the onboarding experience for our guests.

Speaker Change: Third favorability in fuel consumption and fuel mix from the second quarter is expected to continue throughout the second half and grow to approximately $30 million for the full year compared to March guidance.

Speaker Change: Boy.

Speaker Change: Every ability and interest income and expense from the second quarter is also expected to continue throughout the second half and greater were approximately $30 million for the full year compared to March guidance, driven by our refinancing efforts during the second quarter and approximately $35 million from that.

David Bernstein: And fifth, approximately $35 million from the favorable net impact of currency and fuel. All of this results in $6.9 billion of EBITDA, a 13% improvement over 2024, virtually all of which is being driven by same store revenue growth as our capacity is only up 1% year over year.

Speaker Change: Favorable net impact of currency and fuel price all of this results in $6 9 billion of EBITDA a <unk>.

Speaker Change: 13% improvement over 'twenty 'twenty four virtually all of which is being driven by same store revenue growth as our capacity is only up 1% year over year.

David Bernstein: Next, I will provide some key insights on our third quarter guidance. As I previously indicated during the last two earnings calls, third quarter cruise costs are expected to be higher than the full year increase. Third quarter cruise costs without fuel per ALBD are expected to be up 7% compared to the prior year.

Speaker Change: Next I will provide some key insights on our third quarter guidance.

Speaker Change: I previously indicated during the last two earnings calls third quarter cruise costs are expected to be higher than the full year increase third quarter cruise costs without fuel per <unk> are expected to be up 7% compared to the prior year four factors are driving nearly half the year over year increase.

David Bernstein: Four factors are driving nearly half the year-over-year First, the introduction next month of our game-changing exclusive Caribbean destination Celebration Quay. While we anticipate that Celebration Quay will be a smash hit with our guests and provide an excellent return on our investment, operating expenses for the destination will impact our overall year-over-year cost comparison. Second, 2024 benefited from one-time items that we mentioned last year, also impacting our year-over-year cost comparison. Third, higher advertising expense, which we discussed on the December call, and fourth, lower third quarter capacity, which results in spreading our fixed costs over fewer ALBDs.

Speaker Change: First the introduction next month of our game changing exclusive Caribbean destination celebration key while we anticipate that celebration will be a smash hit with our guests and providing excellent return on our investment.

Speaker Change: Operating expenses for the destination will impact our overall year over year cost comparisons.

Speaker Change: 'twenty 'twenty four benefited from one time items that we mentioned last year also impacting our year over year cost comparisons.

Speaker Change: Third higher advertising expense, which was discussed on the December call and four.

Speaker Change: Lowest third quarter capacity, which results in spreading our fixed costs over fewer <unk> now let me explain the financial impact of Carnival cruise lines exciting new loyalty program Carnival rewards on 2026 and beyond.

David Bernstein: Now let me explain the financial impact of Carnival Cruise Line's exciting new loyalty program, Carnival Rewards, on 2026 and beyond. As Josh described, this new program will start in June 2026, impacting results for the second half of 2026. While the program will be cash flow positive from day one, it does impact our yields and our P&L during the first couple of years.

Josh Weinstein: As Josh described this new program will start in June 2026 impacting results for the second half of 2026, while the program will be cash flow positive from day, one it does impact our yields and our P&L during the first couple of years.

David Bernstein: Accounting treatment for recognizing revenue requires a deferral of a portion of the ticket price paid by the guests, equal to the value of future program benefits earned. Over time, the redemption of benefits by guests will build, and so will the revenue recognized for delivering these benefits to the guests. We expect that it will take approximately two years for the revenue recognized each quarter from the benefits redeemed by guests to exceed deferred revenue of the portion of the ticket price paid for the future benefits. Once this happens, after approximately two years, the program will be accretive to our yields.

Josh Weinstein: Accounting treatment for recognizing revenue requires a deferral of a portion of the ticket price paid by the guests equal to the value of future program benefits earned overtime. The redemption of benefits by guests will build so will the revenue recognized for delivering these benefits to the gas <unk>.

Josh Weinstein: That it will take approximately two years for the revenue recognized each quarter from the benefits redeemed by guests to exceed deferred revenue of the portion of the ticket price paid for the future benefits. Once this happens after approximately two years the program will be accretive tour yields as a.

David Bernstein: As a result, the year-over-year impact on yields is expected to be about a half a point in 2026, a bit less in 2027, neutral for 2028, and turn positive thereafter.

Speaker Change: The year over year impact on yields is expected to be about a half a point in 2026, a bit less in 2020 seven neutral for 2028 and turn positive thereafter. It should also be noted that we do not anticipate any meaningful impact on cost from the new loyalty.

David Bernstein: It should also be noted that we do not anticipate any meaningful impact on costs from the new loyalty program when compared to the current program. We look forward to building greater engagement with our guests because of the new, exciting Carnival Rewards program. Most airlines introduced similar types of loyalty programs many years ago, and we know how beneficial those programs turned out to be.

Speaker Change: The program when compared to the current program, we look forward to building greater engagement with our guests because of the new exciting Carnival rewards program. Most airlines introduce similar types of loyalty programs. Many years ago, and we know how beneficial those programs turned out to be now.

David Bernstein: Now, I'll finish up with an update of our refinancing and deleveraging efforts. During the quarter, we prepaid $350 million of our $1.4 billion notes due 2026 and refinanced the remainder with senior unsecured notes due 2031. These transactions will reduce net interest expense by over $20 million through early 2026. We also upsized our euro-denominated floating rate loan from 200 million to 300 million euros, extending its maturity and amending its margin at a favorable rate, resulting in an all-in interest rate of less than 4%. These transactions continued our efforts, rebuilding an investment-grade value. We have been working aggressively to reduce interest expense, simplify our capital structure, and manage our future debt maturities, refinancing nearly $7 billion of debt already this year at favorable rates.

Speaker Change: Any shop with an update of our refinancing and deleveraging efforts during the quarter, we prepaid $350 million about 1.4 billion notes due 2026 and refinance the remainder with senior unsecured notes due 2031. These transactions will reduce net interest.

Speaker Change: <unk> expense by over $20 million through early 2026, we also upsized, our euro denominated floating rate loan from 200 million to 300 million euros.

Speaker Change: And then its maturity and amending its margin at favorable rate, resulting an all in interest rate of less than 4%. These.

Speaker Change: These transactions continued our efforts rebuilding an investment grade balance sheet.

Speaker Change: We have been working aggressively to reduce interest expense simplify our capital structure and manage our future debt maturities refinancing nearly $7 billion of debt already this year had favorable rates. We are pleased that our efforts have been recognized with the recent credit rating upgrades in.

David Bernstein: We are pleased that our efforts have been recognized with the recent credit rating upgrades. In fact, we now have only one notch to go to reach our investment grade rating with both S&P and FIT. Over the last three months, we saw a marked improvement in our net debt to EBITDA ratio, going from 4.1 times at the end of the first quarter to 3.7 times as of the end of the second quarter. During the second half of 2025, we anticipate continuing to pay down debt. However, it will not impact net debt, as we'll be utilizing cash already on the book.

Speaker Change: Uh huh.

Speaker Change: We now have only one notch to go to reach our investment grade rating with both S&P and Fitch.

Speaker Change: Over the last three months, we saw a marked improvement in our net debt to EBITDA ratio going from four one times at the end of the first quarter to three seven times as of the end of the second quarter during.

Speaker Change: During the second half of 2025, we anticipate continuing to pay down debt. However will not impact net debt as we will be utilizing cash already on the books well.

David Bernstein: While we are guiding to improved EBITDA in the second half of 2025, given the delivery of Star Princess later this year, with its associated export credit, we expect our net debt to EBITDA ratio to remain flat at year end with second quarter. Earlier this month, we extended and upsized our revolver capacity by 50% to $4.5 billion on more favorable terms, meaningfully enhancing our liquidity. With this in hand and coupled with our well-managed near-term maturity towers through 2026, we expect to opportunistically accelerate our debt reduction efforts during the remainder of 2025 and 2026, executing the rest of our current refinancing plan.

Speaker Change: Well, we are guiding to improved EBITDA in the second half of 2025, given the delivery of star Princess slated this year with its associated export credit we expect our net debt to EBITDA ratio to remain flat at yearend with second quarter.

Speaker Change: Earlier this month, we extended and Upsized, our revolver capacity by 50% to $4 $5 billion on more favorable terms.

Speaker Change: <unk> enhancing our liquidity.

Speaker Change: With this in hand, and coupled with our well manage near term maturity towers through 'twenty 'twenty six we expect to Opportunistically accelerate our debt reduction efforts during the remainder of 2025 and 2026 executing the rest of our current refinancing plan.

David Bernstein: Looking forward, we expect our leverage metrics to continue to improve as our EBITDA continues to grow, and our debt levels continue to shrink, increasing our confidence in achieving investment grade leverage metrics in the not too distant future as we move further down the road, rebuilding our financial fortress while continuing the process of transferring value from debt holders back to shareholders.

Speaker Change: Looking forward, we expect our leverage metrics to continue to improve as our EBITDA continues to grow and our debt levels continued to shrink increasing our confidence in achieving investment grade leverage metrics in the not too distant future as we move further down the road rebuilding.

Speaker Change: Our financial fortress, while continuing the process of transferring value from that holds us back to shareholders.

Operator: Now operator, let's open the call for questions. Thank you.

Speaker Change: Now operator, let's open the call for questions.

Operator: We'll now be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad and a confirmation tone will indicate your line is in question queue. Let me press star two if you'd like to withdraw your question from the queue.

Speaker Change: Thank you we will now be conducting a question and answer session if.

Speaker Change: If you'd like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Antonio indicate your line in the question queue.

Speaker Change: You May press star two if you'd like to withdraw your question from the queue.

Operator: For participants that are using speaker equipment, it may be necessary to pick up the handset before placing the star key.

Speaker Change: Publicity seeker equipment, it may be necessary to pick up the handset before pressing the star keys.

Operator: To allow for as many questions as possible, we ask that you limit yourselves to one question and one follow-up. Thank you. One moment please while we poll for questions. Thank you.

Speaker Change: To allow for as many questions as possible, we ask that you limit yourself to one question and one follow up.

Speaker Change: Thank you one more piece, where we poll for questions.

Matthew Boss: Our first question is from the line of Matthew Boss with J.P. Morgan. Great thanks and congrats on the phenomenal quarter. Thanks, Matt.

Speaker Change: Thank you. Our first question is from the line of Matthew Boss with Jpmorgan. Please proceed with your question.

Matthew Boss: Great, Thanks, and congrats on a phenomenal quarter.

Joshua Weinstein: So maybe, so Josh, maybe could you speak to improvements in product and experience so far that you think is translating to today's above plan pricing and onboard spend and and maybe how best to think about the incremental opportunity that may be tied to the laundry list of additional drivers you cited, you talked about continued fleet improvements, you talked about the launch of private islands exiting this year and also loyalty. So maybe just the incremental opportunity or maybe where we stand in terms of innings relative to what you've already done. Sure. You know, we've been talking about this for a few years now at this point.

Josh Weinstein: Thanks, Matt So maybe.

Josh Weinstein: Josh maybe could you speak to improvements in product and experience. So far that you think is translating to today is above plan pricing and onboard spend in and maybe how best to think about the incremental opportunity that may be tied to the laundry list of additional drivers. You cited you talked about continued fleet improvements Utah.

Josh Weinstein: About the launch of private islands exiting this year and also loyalty. So maybe just the incremental opportunity or maybe where we stand.

Josh Weinstein: In terms of earnings relative to what you've already done.

Josh Weinstein: Sure.

Matthew Boss: We've been talking about this for a few years now at this point you know really when we look at what the teams have done it across the commercial space.

Joshua Weinstein: You know, really when we look at what the teams have done across the commercial space, they've been making, you know, step-by-step improvements in pretty much all areas for the business. And when it comes to onboard experience and product, that's the one I've always talked about the least in this context because they're always on their game, right? Nothing is going to be, from my perspective, about recreation. Really, it's going to be about innovation, step-by-step, responding to the guests that they are targeting. And it's small incremental things that make us, you know, have this improved profile onboard every single quarter.

Matthew Boss: They've been making step by step improvement.

Matthew Boss: Pretty much all areas of the business and when it comes to onboard experience.

Matthew Boss: And product that's the one I've always talked about the Leafs in this context, because they're always on their game right nothing is going to be from my perspective.

Matthew Boss: Recreation really it's gonna be about innovation step by step responding to the guests.

Matthew Boss: We are targeting a small.

Matthew Boss: Incremental things that make us have this improved profile on board every single quarter.

Joshua Weinstein: You know, and they're not necessarily exciting in the eyes of lots of folks, but the way that Holland America, for example, understands its guests really lean into the concept of fresh seafood as an integral part of their cruise experience and being able to source locally fresh and be able to champion that and make that part of the experience. Little things like that go a long way, and all of our brands do that all the time. Now, on top of that, we obviously do take opportunities to make some investments in the assets themselves. We've talked about AIDA Evolution, and as you heard me talk about in my notes, it's exceeded our expectations when it comes to the returns that it's generating.

Matthew Boss: And they're not necessarily exciting.

Matthew Boss: Lots of folks, but the way the Holland America for example understand its guests really lean into the concept of fresh seafood as an integral part of their cruise experience and being able to source locally fresh and be able to champion that makes that part of the experience little things like that but we're a long way in all of our brand.

Matthew Boss: And do that all the time and go on top of that we obviously do take opportunities.

Matthew Boss: To make some some investments in the assets themselves, we've talked about Aida evolution and as you heard me talk about it in my notes it's.

Matthew Boss: We exceeded our expectations when it comes to the returns that it's generating so this is this is this is business as usual as far as I'm concerned and that will continue well into the future.

Joshua Weinstein: So this is business as usual as far as I'm concerned, and that will continue well into the future. As far as, you know, looking forward, I, you know, I'd say we're still in the early innings, right? Celebration Key doesn't exist yet. We have another month before that happens. And there's lots more in the pipeline, some of which we've already talked about other things we've not, which doesn't mean it's huge incremental investments the size of Celebration Key, but things that we can do to make our, our experiences and products on the land side even better. We look forward to talking about those over time.

Matthew Boss: As far as.

Matthew Boss: Looking forward.

Matthew Boss: I'd say, we're still in the early innings right celebration. He doesn't exist yet we have another month before that happens.

Matthew Boss: And there's lots more in the pipeline some of which we've already talked about other things, we've not which doesn't mean, it's huge incremental investments to the size of a celebration key but things that we can do to make our our experiences and products on the land side, even better and we look forward to talking about the overtime.

Joshua Weinstein: Great.

Joshua Weinstein: And then maybe, Josh, on the bottom line, how best to think about the margin opportunity, which I think you cited as so much more from here, with the last two quarters now exceeding 2019. And I think you've made it clear that you don't see 2019 as a CLR. Right? No, I mean, highest in 20 years, right? So we feel good about that trajectory. From from our perspective, it's maintaining our low cost industry leadership status while continuing to focus on driving incremental revenue. I mean, it is as simple as that incremental revenue is flowing to the bottom line.

Matthew Boss: Great and then maybe Josh on the bottom line, how best to think about the margin opportunity, which I think you've cited is so much more from here with the last few quarters now exceeding 2019, and I think you've made it clear that you don't see 2019 as a ceiling.

Speaker Change: Right No I mean 20 years right.

Matthew Boss: So we feel good about that trajectory from from our perspective, it's maintaining our low cost industry leadership status, while continuing to focus on driving incremental revenue.

Matthew Boss: It is as simple as that and the incremental revenue is flowing to the bottom line and that's exactly where the teams have been focused and we can do both we can chew gum and walk and we can manage our costs and increase revenue, which is what we've been seeing.

Joshua Weinstein: And that's exactly where the teams have been focused.

Joshua Weinstein: And we can do both, we can chew gum and walk, and we can manage our costs and increase revenue, which is what you've been Great color. That's the block.

Matthew Boss: Great color best of luck.

Matt: Thanks, Matt.

Ben Chaiken: Our next questions are from the line of Ben Chaiken with Mizzou Host Securities. Hey, good morning. Thanks for taking my question.

Matthew Boss: Our next questions are from the line of Ben Chaiken with Mizuho Securities.

Matthew Boss: With your question.

Ben Chaiken: Hey, good morning, Thanks for taking my questions.

Ben Chaiken: Maybe you could provide some color on pricing for Celebration Key itineraries. Is this asset getting a premium today? Or is it too early? And then related, what plans do you have to market the destination? Like, do you anticipate putting marketing dollars behind the project or will this stay more word of mouth for the time being? And then one follow up. Thanks.

Ben Chaiken: Maybe you could provide some color on pricing for celebration key itinerary. This asset getting a premium today or is it too early and then related what plans do you have to market. The destination like do you anticipate putting marketing dollars behind the project or this day more word of mouth for the time being and then one follow up thanks.

Joshua Weinstein: Good morning, Ben. So, we are seeing a premium. It's in line with what our expectations were. So, everything's proceeding exactly as we had anticipated it to be. With respect to marketing dollars, you know, we have been putting marketing dollars and shifting marketing dollars to really lean into Celebration Key. And I think that's why it's one of the most sought after destinations, even though it doesn't take people yet. I mean, we need one more month before that happens. So, there's more to come on that.

Ben Chaiken: Alright.

Ben Chaiken: So we are seeing a premium it's in line with what our expectations were so everything's proceeding exactly as we had anticipated it to be.

Speaker Change: With respect to marketing dollars you know we have been we have been putting marketing dollars and shifting marketing dollars to really lean into celebration Kian I think that's why it's one of the most sought after destination, even though it doesn't it doesn't.

Speaker Change: It doesn't take take people yet.

Speaker Change: One a month before that happens so there's more to come on that and Theres more that we will be doing in shifting the marketing.

Joshua Weinstein: And there's more that we'll be doing in shifting the marketing spend so that we can leverage the same type of enthusiasm for the other things that we've got in the works, like the expansion for Relax Away, which is going to be another wind at our backs, so to speak, as we get into 2026 and beyond. Got it. I guess I guess the essence of the marketing question was just I would imagine it's difficult to market it too much prior to there being bodies there, but but totally appreciate kind of where you're coming from.

Speaker Change: And so that we can leverage the same type of enthusiasm for the other things that we've got in the works like the expansion for relax away.

Speaker Change: It could be another wind at our backs so to speak as we get into 2026 and beyond.

Speaker Change: Got it I guess I got the essence of the marketing question would just I would imagine it's difficult to market it too much prior to their being bodies, there, but totally appreciate kind of where they're coming from and then on the on the loyalty program announcement is this potentially a gateway to more of a book direct Bush or is it more about.

Joshua Weinstein: And then on the on the loyalty program announcement, is this potentially a gateway to more of a book direct push, or is it more about people just keeping customers in the network? Curious how you think about the benefits. Obviously, David walked us through some of the yield impacts of the next couple years. Thanks. Sure, sure. No, definitely not a push to go more direct. Bookings with our travel agents will get the same benefit for the guest and for the trade that they always would. So we think that this is a great avenue for increased business and loyalty and engagement, not only directly with us, but through our valuable trade partners.

Speaker Change: People, just keeping customers in the network curious how you think about the benefits obviously, David walked us through some of the yield impacts over the next couple of years. Thanks.

Speaker Change: Sure sure no definitely not.

Speaker Change: Pushed didn't go more direct bookings without travel agents will get the same benefit for them for the gas to them for the trains that they always work so.

Speaker Change: We think that this is a great avenue for increased business and loyalty and engagement.

Speaker Change: Not only directly with us.

Speaker Change: Our valuable trade partners as well.

Ben Chaiken: Got it.

Ben Chaiken: Thank you.

Speaker Change: Got it thank you.

Speaker Change: Thanks.

Steve Wieczynski: Next questions are from the line of Steve Wieczynski with Stiefel. Please proceed with your question. Yeah, hey, guys. Good morning. And congrats, Josh, on the second quarter in Outlook here. So Josh, since, you know, we heard from you guys back in March, obviously, there's a lot, you know, that's been going on out in the world. But but maybe wondering if, you know, you can kind of walk us through kind of how those last three months look from a from a booking perspective, just, I think what we're trying to figure out here, were there, you know, were there stronger months versus softer months?

Speaker Change: Next question is from the line of Steve <unk> with Stifel. Please proceed with your question.

Speaker Change: Yeah, Hey, guys good morning.

Speaker Change: Congrats Josh on the second quarter and outlook here.

Speaker Change: So Josh since we heard from you guys back in March obviously, there's a lot that's been going on out in the world.

Speaker Change: But maybe wondering if you can kind of walk us through kind of how those last three months look from a from a booking perspective, just I think what we're trying to figure out here, where there were the stronger months versus softer months or you don't have bookings have been pretty much status quo status quo across geographies and sourcing and maybe also wondering how bookings have looked more.

Steve Wieczynski: Or, you know, have bookings been pretty much status quo status quo across, you know, geographies and sourcing, and maybe all also wondering how bookings have looked, you know, more recently, you know, with all the noise out in the marketplace around Iran, Israel, and all that stuff you noted in your prepared Sure, morning, Steve. So yeah, no, we definitely saw more volatility in the month of April, as probably should not be expected. So that took a dip versus where we were in the trajectory in March, but May, nicely better than April and the first couple of weeks of June, nicely better than May.

Speaker Change: Recently.

Speaker Change: Without the noise out in the marketplace around Iran, Israel and all that stuff you noted in your prepared remarks.

Mark: Sure Mark.

Speaker Change: So yes, we definitely saw.

Mark: More volatility in the month of April.

Mark: That's probably should not be expected so that took a dip versus where we were in the trajectory in March but.

Mark: May nicely better than April and the first couple of weeks of June actually better than that so well.

Steve Wieczynski: So you know, we'll, you know, we'll keep responding to a very tricky environment. Okay, gotcha. And then, Josh, as we think about the back half of the year, I mean, I think in your presentation, it said you're 93% booked for 2025. And if we think about, you know, you guys have actually, you know, you've exceeded your first and second quarter guidance. And, you know, that was pretty much driven by stronger close-in pricing and onboard trends. So, you know, Josh, I guess I'm guessing as we think about the last two quarters, should we be thinking that, you know, there probably won't be as much potential upside to, you know, to your revised guidance, given, you know, not as much close-in pricing is left.

Mark: Well keep responding.

Mark: Brokerage is a very tricky environment.

Mark: Okay got you and then just as we think about the back half of the year I mean, I think in your presentation that said your 93% booked for 2025.

Mark: And if we think about you guys are actually you've exceeded your first and second quarter guidance.

Speaker Change: You know that was pretty much driven by stronger close in pricing and onboard trends, so Josh because I'm guessing as we think about the last two quarters should we be thinking that there probably won't be as much potential upside to your revised guidance given.

Steve Wieczynski: And then the real driver of yield out performance for the last six months is, you know, essentially just the onboard spend. Is that kind of the right way to think about the next two quarters?

Mark: Not as much close in pricing is left and then the real driver of yield out performance for the last six months is essentially just the onboard spend does that does that kind of the right way to think about the next two quarters.

Steve Wieczynski: Well, I mean, I think I'll answer maybe at a little bit of a higher level, which is I think it's fair to say, you know, the upside that we thought we'd have in December, for the back half of the year is not at the same place. And hopefully, people would expect that because the world over the last five, six months, has taken some turns that nobody expected. And as we talked about before, you know, in the grand scheme of things, a lot of times what happens is there's just, there's just a reflection for a lot of consumers about what does this mean for me, internalizing it, figuring it out, and then moving forward with their plans.

Speaker Change: Well I mean.

Speaker Change: I'll answer it maybe at a little bit of a higher level, which is I think it's fair to say.

Mark: The upside that we thought we'd have in December for the back half of the year is not is not at the same place.

Mark: Hopefully people would expect that because the world over the last five six months six months.

Mark: Has.

Mark: <unk> taken some terms in terms of nobody expected and as we've talked about before in the Grand scheme of things a lot of times. What happens is there's just there's just a reflection for a lot of consumers about what does this mean for my.

Mark: Internalizing it figuring it out and then moving forward with their plans and that's all well and good and that's part of the process. When these types of things occur, but your issue is theres just been a lot in the first half.

Joshua Weinstein: And that's, that's all well and good. And that's part of the process when these types of things occur. The issue is, you know, there's just been a lot in the first half, a lot of those points in time. And I think the team's been doing an amazing job of delivering not only the actuals that you see in the first couple of quarters, but just continuing to figure out how to navigate the yield curve, and how we manage our revenue in the environment. So definitely not saying there's not upside, we're always going to, you know, strive to meet and exceed guidance.

Mark: A lot of those points in time and I think the team has been doing an amazing job of delivering not only the actuals that you see in the first couple of quarters, but just continuing to figure out how to navigate the yield curve and how we manage our revenue in this environment, so definitely not saying theres not outside we're always going to strive to meet.

Steve Wieczynski: But yeah, no, definitely not the same, same view of the upside as we had in December. Okay, thanks, Josh. Appreciate it.

Mark: <unk> guidance, but yeah, no definitely not the same.

Mark: Okay.

Mark: The upside is we had in December.

Mark: Okay. Thanks, guys appreciate it.

Mark: Sure.

Robin Farley: The next questions are from the line of Robin Farley with UBS. Please proceed with your questions. Great. Yeah, sort of similarly thinking about the second half of the year, can you characterize a little bit how demand for Europe is in Q3? And then just thinking about, I totally understand your comments about, you know, what's going on in the world, impacting bookings. And also, it seems like you, you know, maybe have less left to sell anyway for the second half. But in terms of, you know, onboard revenues, that's a little bit closer in. It seems like that came in well, despite, you know, kind of volatility and geopolitical events that people were still spending when they got on board.

Speaker Change: The next question is from the line of Robin Farley with UBS.

Mark: With your question.

Mark: Great.

Mark: Suddenly thinking about the second half of the year can you characterize a little bit how demand for Europe is in Q3, and then just thinking about until I understand your comments about what's going on in the world impacting bookings and also it seems like you maybe have less left to sell anyway for.

Mark: For the second half but.

Mark: In terms of onboard revenues, that's a little bit closer and it seems like that came in well despite kind of volatility and geopolitical events that people were still spending when they got on board. So does it seem reasonable that the onboard piece that there's maybe some upside potential in the second half from that end.

Robin Farley: So does it seem reasonable that the onboard piece that there's maybe some upside potential in the second half from that? And perfectly understand, you may not want to bake it into your guidance today. But it, it sounds like the onboard spend did kind of continue through the period of volatility. Is that, is that, you know, just trying to characterize that? Thanks.

Mark: Perfect I understand you may not want to bake it into your guidance today, but.

Speaker Change: It sounds like the onboard spend did kind of continues through the period of volatility is that is that just trying to characterize thanks.

Robin Farley: Good morning, Robin, how are you? So we clearly said one question is a follow up, but since it's you, so Europe Q3 is looking great. So nothing, nothing but good things to talk about there. With respect to onboard, you know, I say, you know, we outperformed as David, I think said in his notes, or maybe I did, I can't even remember, David, we outperformed on both the passenger revenue and the onboard. And the onboard was was really quite strong throughout the month of throughout the quarter. And so far, what we've seen in the first couple of weeks of June is that's continued.

Robyn: Good morning, Robyn how are you.

Speaker Change: So.

Speaker Change: We said one question a follow up since you.

Speaker Change: So Europe Q3 is looking great. So nothing nothing but good things to talk about there.

Speaker Change: With respect to.

Speaker Change: Onboard I'll say, we outperformed as David I think said in his notes there might be I think I can't even remember David.

Speaker Change: We outperformed on both the passenger revenue on the onboard.

Speaker Change: The onboard was was really quite strong throughout the month of October.

Speaker Change: The quarter and so far what we've seen in the first couple of weeks of June and that's continued.

Robin Farley: You know, what the yield guidance that we gave is, is, is based on, you know, what we want to be able to achieve on both the ticket and the onboard side. So it's, it's in there. As I said, we always want to outperform, but, but that's the guidance that we've, we've Okay, great.

Speaker Change: You know what.

Speaker Change: The yield guidance that we gave is based on you know what we want to be able to achieve on both the ticket and the onboard side. So it's in there.

Speaker Change: As I said, we always wanted to outperform but but that's the guidance that we've given.

Robin Farley: Thank you. And I guess that I already have my follow-up.

Speaker Change: Okay, great. Thank you and I guess that I had my phone.

David Bernstein: So maybe just one thought, David. Thank you, Robin. But just if I could just mention one thing.

Speaker Change: Maybe just one David.

Robyn: Thank you Robyn.

Robyn: But just if I could just mentioned went away.

David Bernstein: Oh, wait. Are you serious? Okay. All right. Go ahead. No, no, no. Not a question.

Robyn: Alright, alright.

Robyn: No no no no no not a question just a suggestion that when David just talking about the impact of the rewards program next year that just to maybe next year in the first year of the program. It might be helpful. For all of US if you kind of break out what the yield would have been.

David Bernstein: Just a suggestion that when David, just talking about the impact of the rewards program next year, just that maybe next year in the first year of the program, it might be helpful for all of us if you kind of break out what the yield would have been under the old accounting, you know, just so we can see whether it's, you know, if it's 50 basis points, it's more, if it's less, just that might be helpful in the first year. So just that thought, no follow-up question. Thanks. Yeah, happy to do that when the time comes in the back.

Robyn: In the old accounting just so we can see whether it's you know it is.

Robyn: It's 50 basis points, that's more if its less just that might be helpful. In the first year. So just wanted to just not sought no follow up question. Thanks.

Robyn: Yeah happy to do that when the time comes in the back half of 'twenty.

David Bernstein: Thank you.

Brandt Montour: The next questions are from the line of Brandt Montour with Barclays. Please receive your question.

Robyn: Thank you.

Speaker Change: Next questions are from the line of Brent <unk> with Barclays. Please proceed with your question.

Brandt Montour: Good morning, everybody. Congrats on the quarter. First question is on the consumer, Josh. The lower-income consumer, we're seeing some struggle in that segment across other travel verticals, but we've seen that for the last two years, and you guys have done really well throughout that. I just want to get your thoughts on geopolitical events aside.

Brent: Good morning, everybody congrats on the quarter.

Speaker Change: The first question is on the the consumer Josh.

Speaker Change: Lower income consumer we're seeing we're seeing some struggle in that segment across other travel verticals, but we've seen that for the last two years and you guys have done really well throughout that I just wanted to get your thoughts on.

Joshua Weinstein: If that consumer feels different today, right now, this year, first half, whatever you want to talk about, versus last year or the year before, if you think you can keep knocking the ball off the cover with that consumer, if they're accumulating a struggle, that's going to start showing up. Sure, so we haven't seen anything that's really showing us a differentiation in patterns between the lower end consumer and those that are looking for the premium or even the luxury. So nothing in particular to speak of. I go back to what I've said a lot, which a lot of people say is, we are an incredibly stupid value when it comes to the alternatives.

Speaker Change: Political events aside is that consumer feels different today right. Now this year first half whatever you want to kind of talk about versus last year or the year before.

Speaker Change: You think you can kind of keep sort of knocking the ball off to cover with that consumer if that's if there's sort of accumulating a struggle.

Speaker Change: To start showing up.

Speaker Change: Sure so yeah.

Speaker Change: We haven't seen anything that's really showing us a differentiation and patterns between the.

Robyn: Lower end consumer.

Robyn: Those that are looking for the premium or even the luxury so nothing nothing in particular to speak of.

Robyn: I'll go back to what I've, what I've settled a lot, which a lot of people say is we are incredibly stupid value when it comes to the alternatives and when people are looking to take vacation because they do.

Joshua Weinstein: And when people are looking to take vacation because they do, we hold up really, really well. And the lower down you come in income, the more important that becomes because they have to make their dollars really earn on their vacation. And that's what we try to do for everybody. Okay, thanks for that.

Robyn: We hold up really really well and the lower down you come in and income into more important that becomes because.

Robyn: Because they have to make their dollars really earn burn on their vacation and that's what we tried to do for everybody.

Robyn: Okay. Thanks for that and then just a second or another go at the second half year, just looking at the implied guidance and the cadence. It does it does look like the fourth quarter implied guide is higher than the third quarter.

Brandt Montour: And then just a second, or another go at the second half here, just looking at the implied guidance and the cadence, it does, you know, it does look like the fourth quarter implied guide is higher than the third quarter. You know, we know that that and we know in the third quarter is obviously below the last couple quarters run rate growth.

Robyn: We know that that and we know in the third quarter is obviously below.

Robyn: Last couple of quarters run rate growth and so if europe's not.

Joshua Weinstein: And so if Europe's not softer, or there's anything to say there, then is it fair to say that the fourth quarter just has a sequential lift implied from the ramping up of the island? Or is there sort of anything else in there that we could maybe highlight? Yeah, you know, the certainly celebration key is, is, is helpful in our portfolio. So we're happy about that, you know, but taking a step back from percentages, when you look at actual dollars, the increases that we're forecasting, because Q3 is seasonally higher as a base, they're each eight bucks higher year over year.

Robyn: Softer or there's anything to say there then is it fair to say that the fourth quarter just has a sequential lift implied from the ramping up of the island or is there sort of anything else in there that we could maybe highlight.

Robyn: Yes.

Robyn: Sure certainly celebration kids is is helpful.

Robyn: Helpful. In our portfolio. So we're happy about that but taking a step back from percentages. When you look at actual dollars. The increases that we're forecasting because Q3 is seasonally higher as a base the reshape of higher year over year.

Brandt Montour: So Okay, great. Thanks for that, guys.

Speaker Change: Okay, great. Thanks for that guys congrats again on the quarter.

Brandt Montour: Congrats again on the quarter.

Robyn: Thanks.

James Hardiman: The next question is from the line of James Hardiman with Citi. Hey, good morning. Thanks for taking my call. And, you know, obviously, congrats on another strong quarter here. So Josh, you talked about a little bit of weakness in April, followed by a pickup from April to May, and then from May to June. I wanted to sort of connect that to the booking commentary for 2026. I think coming out of Q1, we were ahead in terms of bookings, and we're in line now. Should the narrative ultimately be that... We saw a little bit of a lull in booking demand, but that you held strong on pricing throughout, just given the fact that you've got a lot of time, obviously, to fill out that order book.

Robyn: The next question is from the line of James Hardiman with Citi.

Robyn: With your question.

James Hardiman: Hey, good morning, Thanks for taking my call.

Robyn: You know obviously congrats on another strong quarter here so.

Speaker Change: Josh you talked about a little bit of weakness in April followed by a pickup in from April to May and then from May to June.

Robyn: I wanted to sort of connect that to the booking commentary for.

Robyn: For 2026, I think I think.

Robyn: Coming out of Q1, we were ahead in terms of bookings.

Robyn: And we're in line now should the narrative ultimately be that that.

Robyn: You saw a little bit of a lull in <unk>.

Robyn: Booking demand, but that you held strong on pricing throughout.

Robyn: Just given the fact that you've got a lot of time, obviously, you got to fill out that order book.

James Hardiman: Or maybe I'm connecting dots that shouldn't be connected.

Robyn: Or maybe I'm connecting back, but it shouldn't be connected.

Joshua Weinstein: No, I think generally, excuse me, I agree. You know, we don't have to panic and we don't have to do silly things. So, you know, volatility comes and it goes. And like I said, our teams are managing, managing the curve and trying to do the right things and staying ahead of ahead of the game. Got it. That's helpful.

John: Yeah, No I think that's good morning, John.

Robyn: Generally.

Robyn: Excuse me I agree.

Robyn: We don't have to panic, and we don't have to do silly things so.

Robyn: Ultimately it comes and it goes in.

Robyn: Our teams are managing.

Robyn: Managing the curve and trying to do the right things and stay on a head to head up again.

Robyn: Got it that's helpful and then.

Joshua Weinstein: And then, I mean, you talked about up top how it's way too early to really anticipate. sort of the Middle East conflict and how it might impact your business, but just based on where things are happening, right? This is. New York Federal Reserve. Yeah, crystal balls are nice. But, you know, we really only have a couple of ships at the very end of this year and for the winter, a few months into 2026, that would potentially have their itineraries impacting and that's because they go and base themselves out of Dubai. And we're obviously, we have mitigation plans and we're looking at this and we'll make the right decision at the right time.

Speaker Change: I mean, you talked about how it's way too early to really anticipate sort of sort of the middle east conflict and how it might impact your business, but just based on.

Speaker Change: Where things are happening right. This isn't.

Speaker Change: New at least in terms of having to take.

Speaker Change: That part of the World off the board right going back to the Israel Gaza conflict do you anticipate where we sit today, having meaningfully changed any itinerary.

Speaker Change: Crystal balls are nice but.

Speaker Change: We really only have a couple of ships at the very end of this year and for the <unk>.

Speaker Change: Winter a few months into 2026 that would that would potentially have there are scenarios impacting and that's because they they'd go on based on sales out of Dubai.

Speaker Change: Obviously, we have mitigation plans and we're looking at this and we'll make the right decision at the right time.

Joshua Weinstein: But, you know, we already avoid the Red Sea, as you know. So, you know, and when it comes to things like world cruises and exotic cruises, we really have no exposure in this area through the end of 2026. So, you know, we'll say that's going to be paramount and it always is. So we'll make the right decision as we understand what the lay of the land will be. Got it. That's helpful. Thanks, Josh.

Speaker Change: But we already avoid the Red Sea as you know so when it comes to things like World cruises and exotic cruises.

Speaker Change: We have no exposure in this area through the end of 2026 so.

Speaker Change: So you're gonna be Paramount and it always is.

Speaker Change: So we'll make the right decision as we understand what the labor line it looks like.

Jeff: Got it that's helpful. Thanks, Jeff.

Speaker Change: Excellent.

Conor Cunningham: The next questions are in the line of Conor Cunningham with Melly's Research. Pleasure to see you. Hi, everyone. Thank you. Just on the 3Q cost guide, there's a couple things in there that I wanted to just understand a little better. I think you talked a little bit, I think you talked about 200 basis points of timing related stuff that shifted from 2Q to 3Q. And then you mentioned Celebration Key. Could you just give a number on Celebration Key, what that headwind is? And I'm just trying to, it's more for 26, as that kind of normalizes throughout the, as it matures and whatnot.

Speaker Change: The next questions are from the line of Conor Cunningham with Melius Research. Please proceed with your questions.

Conor Cunningham: Hi, everyone. Thank you just on.

Speaker Change: The <unk> cost guidance, there's a couple of things in there that I wanted to just understand a little better I think you talked a little bit, but I think you're talking about 200 basis points of timing related stop that shifted from <unk> to <unk> and then you mentioned celebration Keith could you just.

Speaker Change: Given number on celebration key what that headwind is just I'm just trying to it's more for 'twenty six is that kind of normalizes throughout the AR as it matures and whatnot. Thank you.

Conor Cunningham: Thank you. Sure, so the four factors that I included was about half of the increase and the total increase is 7%. Celebration key I had mentioned was about a half a point impact for the full year. So it's about a full point for the back half of the year in each of the third and the fourth quarter. I didn't say it was 200 basis points for the one-time benefits from last year. just that we had mentioned it, but it's about a point in the third quarter for that particular item. So a point for Celebration Key, a point for the one-time benefit, and the advertising and the lower capacity was probably worth between the two a little.

Speaker Change: Sure.

Speaker Change: Factors that I included about half of the increase.

Speaker Change: Total increases 7% celebration key I had mentioned it was about a half a point of impact for the full year. So it's a battle.

Speaker Change: <unk> points for the back half of the hearing and shrimp that third and the fourth quarter I didn't say it was 200 basis points for the one time benefit from last year.

Speaker Change: Just you had mentioned it.

Speaker Change: But it's about a point in the third quarter for that particular, right. So point for celebration key points for the one time benefit.

Speaker Change: And the advertising M D.

Speaker Change: The lower capacity was probably worth between the two a little over a point.

Conor Cunningham: Okay, helpful. And then just on loyalty, I don't know how much you want to talk about this, but you mentioned the airlines and how they've benefited from that. When those companies talk about it, they talk a lot about the marketing component related to the credit card agreements that they have as well that are tied to it. I think you extended your credit card relationship with Barclays in 2022. When does that expire? And just do you have any details around how that's going to happen? Yes, we have. Okay. Thank you. I'm sorry, you want to know how it ties to the credit card?

Speaker Change: Okay helpful and then just on loyalty.

Speaker Change: I don't know how much you want to talk about this but you mentioned the airlines and how they've benefited from that when most companies talk about it they talk a lot about the marketing component related to the credit card agreements that they have as well that are tied to it.

Speaker Change: I think you extended your credit card relationship with Barclays in 2022 when does that expire and just do you have any details around alright, I actually had two.

Speaker Change: Uh huh.

Speaker Change: I'm, sorry, you said.

Speaker Change: Sorry, you want to know how it ties to the credit card is that is that the question. Yeah. Yeah. Yeah. So basically you mentioned the airlines I mean, just trying to make the parallel because.

Conor Cunningham: Is that is that the question? Yeah, yeah. Yeah. So basically, you mentioned the airlines, I'm just trying to make the parallel because they talk, I mean, the numbers that are huge. And so just like how many people actually have the card, what percentage of, you know, marketing revenue of your overall revenue you get from the marketing component from the credit card, just any details there, I think would be really helpful. Thank Okay, got it. So I'd rather not give specifics just from a competitive standpoint, but I would say that the existing program that we have for loyalty is disassociated with our co-branded credit card from Carnival and several of our other brands have the same thing.

Speaker Change: They talk I mean, the numbers there are huge and so just like how many people actually have the card what percentage of marketing revenue D of your overall revenue you get from the marketing component from the credit card just any details there I think would be really helpful. Thank you.

Speaker Change: Okay got it so I'd, rather not give specifics just from a competitive standpoint, but I would say that the.

Speaker Change: The existing program that we have.

Speaker Change: The loyalty of this associated with our co branded credit card from Carnival and several of our other brands have the same thing and that's a very successful program in and of itself the benefit of the new program. One of the benefits is there was there was.

Conor Cunningham: And that's a very successful program in and of itself. The benefit of the new program, one of the benefits is there's a distinct tie between the two, which does not mean you need a credit card, a Carnival credit card to be able to enjoy being part of the loyalty program. But having the card will supercharge your ability to generate points, generate status. And we'll be talking more about that by the time we get to the end of the year, just from a consumer standpoint about exactly how all of it will work. But the card is a great, great part of this.

Speaker Change: Tie between the two which does not mean you need a credit card a carnival credit card to be able to enjoy being part of the loyalty program, but having the card will supercharge your ability to generate points generate status.

Speaker Change: And we'll be talking more about that by the time. It gets at the end of the year just from a consumer standpoint about exactly how all of it will work, but we the card as it is a great great part of this and so the card will be part of this for the foreseeable future.

Conor Cunningham: And so the card will be part of this for the foreseeable future.

Conor Cunningham: Okay, appreciate it.

David Katz: Thank you.

Speaker Change: Okay.

Speaker Change: Appreciate it thank you.

Speaker Change: Sure.

David Katz: The next questions are from the line of David Katz with Jeffreys, please receive their questions. Hi, good morning, everybody. Thanks for taking my question. I wanted to just dig a little deeper on the ship sale, if you don't mind. I see, I think you've given us the gain, but not sort of what the amount or any color around a multiple on what that would be. And, you know, any thoughts around that strategically? And, you know, do you look at these as sort of a recycling exercise, you know, that could potentially grow over time? So we had sold the pasta for tuna.

Speaker Change: The next question is from the line of David Katz with Jefferies. Please proceed with your questions.

David Katz: Hi, Good morning, everybody. Thanks for taking my question I wanted to just dig a little deeper on the ship shale.

David Katz: You don't mind.

David Katz: I see I think you've given us the gain but not sort of what the amount or any color around a multiple on what that would be and any thoughts around that strategically.

David Katz: Do you look at the use is sort of a recycling exercise that could potentially grow overtime.

David Katz: And so we had sold the customer selection.

David Katz: And we announced that in the second quarter and then the first quarter shift that was sold. We talked about both. You know, previously, in the case of the Costa Fortuna, and we have so many shifts over time, and this is really just in the normal course of revitalization of our fleet. forward over time. His ships do get older. We will sell them to other parties. We do not feel that those parties come back to compete again. They are generally in different markets. These are opportunistic, it was opportunistic. People came to us looking for ships and gave us prices that we thought is the best long-term interest of the company, and so we made the decision.

David Katz: And when you announced that in the second quarter and in the first quarter.

David Katz: I'm sure that one so we.

David Katz: We talked about both.

David Katz: You know previous free.

David Katz: In the case of a cost approaching that.

David Katz: We have so many ships over time and this is really just in the normal course, a revitalization of our fleet as we move forward.

David Katz: Overtime.

David Katz: Chips, you'll get older we will sell them to other parties.

David Katz: We do not feel that those parties come back to compete against us because they are.

David Katz: Generally and in different marketplaces.

David Katz: Great.

David Katz: Understood.

David Katz: These are opportunities are opportunistic.

David Katz: So I think it was opportunistic people came to us looking for shifts and gave us prices that we thought it was the best long term interest of the company.

Joshua Weinstein: It doesn't impact Costa's capacity when it comes to its main markets of Europe because it's going to be taking the one ship that it had that was doing a lot of charter business in Asia and Korea and Taiwan and Japan, and we're going to be moving that back to Europe, which is slightly bigger, so it's actually going to be increasing its capacity in Europe, which is a great sign for Costa. Understood.

David Katz: And so we've made the decision that doesn't impact cost of capacity when it comes to its main markets of Europe, because it's going to be taking the one chip that it had that was doing a lot of charter business in Asia, and Korea, and Taiwan and.

David Katz: And we're gonna be moving that back to Europe, which is slightly bigger so it's actually going to be increasing its capacity in Europe, which is a great time for costa as well.

David Katz: Sorry for cutting in. But I wanted to see if we might be able to get some color on the multiples or valuations or, you know, any perspective at all on what those ships sold for. Well, it was it was nicely overbooked value. And we'll just leave it at that. Okey-doke.

Speaker Change: And just sorry for cutting in but I wanted to see if we might be able to get some color on the multiples.

Speaker Change: Our or valuations or any perspective at all on what those ships sold for X.

Speaker Change: Well it was it was nicely over book value.

Speaker Change: I'll just leave it at that.

David Katz: Thanks, nice quarter. Thanks, David.

Speaker Change: Okay.

Speaker Change: Thanks nice quarter.

Speaker Change: Thanks, Dave.

Sharon Zackfia: Our next question is from the line of Sharon Zackfia with William Blair. Hi, good morning, thanks for taking the question. I wanted to ask more about the loyalty program. So I understand the deferral of revenue, but I'm also curious, it seems as if this would also kind of goose onboard spending quite a bit if passengers are getting rewarded for total spend. So how do we think about kind of a partial offset there in terms of onboard spend potentially accelerating and will passengers actually have kind of real-time tracking of their spending onboard towards points? And how are you gonna use data to kind of facilitate all of that onboard?

Sharon Zackfia: Our next question is from the line of Sharon Zackfia with William Blair. Please proceed with your question Hi.

Speaker Change: Hi, good morning, and thanks for taking the question.

Speaker Change: Wanted to ask more about the loyalty program. So I understand the deferral of revenue, but I'm also curious it seems as if this would also kind of goes onboard spending quite a bit of passengers are getting rewarded for total spend.

Speaker Change: How do we think about kind of a partial offset there in terms of onboard spend potentially accelerating and will passengers actually have kind of real time tracking of their spending on board towards planes and how are you going to use data to kind of facilitate all of that on board.

Sharon Zackfia: Yeah, so that's a great question. So as far as will it cannibalize onboard spending, no, the answer is no, we do not believe that that will. Oh no, I thought maybe it would boost onboard spending. Yeah, so you know, we think the engagement and the ability to earn points through spend is a great thing. So you know, it's kind of like Celebration Key.

Speaker Change: Yeah, so great.

Speaker Change: Great question.

Speaker Change: So as far as will it cannibalize onboard spending now the answer is no. We do not believe that the Oh, no I thought I thought maybe it would boost onboard spending.

Speaker Change: Yeah, So we think the engagement and the ability to earn points.

Speaker Change: <unk> is a great thing so.

Joshua Weinstein: This doesn't start for a year. So we'll talk a lot more once the program is in place. And we can talk about you know, what what it is that we're seeing. But the whole the whole goal is like, at the end of the day, Carnival Cruise Line is an incredibly successful brand that's got a great base of loyal guests, and so much so that it's just hard. It's hard to be able to to provide operationally all the things that we'd like to provide, because there's just too many folks with the loyalty tiers on our ships.

Speaker Change: It's kind of like calibration kit.

Speaker Change: It doesn't start for a year. So we'll talk a lot more once the program is in place and we can talk about what it is that we're seeing but the whole the whole Gulf is like at the end of the day Carnival cruise line isn't incredibly successful brand that's got a great base of loyal guests and so much so that it's just hard it's hard to.

Speaker Change: To be able to provide operationally all the things that we'd like to provide because there's just too many folks with the royalty tiers.

Joshua Weinstein: And that's, that's a that's a good problem to have. But it is a problem. We want to make sure that we're delivering great experiences for our loyal guests.

Speaker Change: On our ships.

Speaker Change: That's a good problem to have but it is a problem we want to make sure that we're delivering great experiences.

Sharon Zackfia: So this is a way to be able to address that, stay engaged with our guests, and hopefully they'll see the benefits as the program gets rolled out and really leaning Can I ask a follow-up, Josh? I think about a year ago you talked about about 35% of on-board being pre-booked. Can you give us an update on where that stands today? Yeah, it's more or less the same. It's a little bit higher. But it's more or less there.

Speaker Change: For our loyal guests. So so this is a way to be able to address that stay engaged with our guests and hopefully they'll see the benefits as.

Speaker Change: As the program gets rolled out and really lean into it.

Speaker Change: Can I ask a follow up Josh I think about a year ago, you talked about about 35%.

Speaker Change: On board being pre booked can you give us an update on where that stands today.

Speaker Change: Yeah, it's more or less the same a little bit higher, but it's more or less there.

Joshua Weinstein: We don't, you know, and I've said this before, we don't have a, we don't have a particular target in mind. What we're looking to do is provide our guests with lots of different ways and alternatives to be able to spend on their vacation with us. And we're doing that through bundles, we're doing that through packages, we're doing that through targeted offers. And of course, spending on board in real time while you're there. So as long as we keep seeing progress, it's obviously all flowing into the onboard spending numbers that we talk about and report on, which are consistently going up quarter over quarter.

Speaker Change: And I've said this before we don't have we don't have a particular target in mind, but we're looking to do is to provide our guests with lots of different ways and alternatives to be able to.

Speaker Change: Spend on their vacation with us.

Speaker Change: We're doing that through bundles, we're doing that through packages, we're doing that through targeted offers.

Speaker Change: Of course spending on board in real time, while Youre there so.

Speaker Change: Long as we keep seeing progress, it's obviously all flowing into the onboard spending numbers that we talk about and report on which are consistently growing up quarter over quarter, and we expect that to continue.

Sharon Zackfia: And we expect that to continue. Okay, great.

Jian Xu: Thank The next questions are from the line of Jian Xu with BNP Paribas. Please proceed with your questions. Hi, thanks for the question.

Speaker Change: Okay, great. Thank you.

Speaker Change: Okay.

Speaker Change: The next questions are from the line of Xi'an <unk> with BNP Paribas. Please proceed with your question.

Speaker Change: Alright. Thanks for the question I wanted to ask a little bit more about relapse when Tropicana I.

Unknown Executive: I want to ask a little bit more about Relax Away and Isla Tropicana. I think Half Moon had about 900,000 visitors in Mahogany Bay, about 500,000 previously. Can you talk about maybe the opportunity you see for those islands and how big they could get?

Speaker Change: I think halfmoon and about 900000 visitors in mahogany Bay about 500000 previously can you talk about maybe the opportunity you see.

Speaker Change: For those islands, and how big that could get.

Speaker Change: With the expansion sure well with respect to share with respect to relapse away.

Speaker Change: The output can be significantly higher.

Speaker Change: 900000 can certainly double.

Unknown Executive: Unknown Executive, Charles Scholes, Sharon Zackfia, Benjamin Chaiken, Conor Cunningham, Joshua Weinstein, Benjamin Chaiken, Conor Cunningham, Joshua Weinstein, Benjamin Chaiken, Joshua Weinstein, Benjamin Chaiken, Conor Cunningham, Joshua Weinstein, Benjamin Chaiken, Great. Thanks so much and good luck. Thank you.

Speaker Change: More because in today's world, there's one shift of tenders and that's pretty much the extent of the operations and we're going to be able to berth two shifts and still have the ability to tender and the <unk>.

Speaker Change: <unk> location, because we're building up the infrastructure on the island, we feel good that we can still accommodate all of those folks and have them enjoying an amazing experience as you've heard me talk about it.

Speaker Change: In my notes at the beginning of this call with respect to easily Tropic, how we're going to be able to enhance the experience.

Speaker Change: There were not talking about doing anything on the marine side to be able to accommodate more shifts, but we cannot accommodate two shifts at a time. So we feel real good that we'll have the ability to maximize.

Speaker Change: That brought destination as well over time I don't have a number for you on Easter chocolate cow, but we'll I'm sure we'll be able to talk more about that as we get those developments, where we probably would want them to be.

Speaker Change: Great. Thanks, so much and good luck.

Operator: We have time for one more, Harper.

Speaker Change: Thank you.

Speaker Change: We have time for one more I think that that will be coming from the line of Chris Lewis with Susquehanna. Please proceed with your question.

Operator: Thank you.

Christopher Stathoulopoulos: That will be coming from the line of Chris Stathoulopoulos with Susquehanna. Good morning, everyone. Thanks for getting me in here. I'll keep it to one Josh, you know, we've spoken in the past on the the loyalty program, obviously, it is a big piece of the story with respect to airlines, but want to understand why the change now, you know, is this contemplated back at your Investor Day, I think it was two years ago and feedback so far. And then part B, David, the half point impact for next year, any color that you can give with respect to what's assumed with acquisitions and So with respect to the loyalty program, no, it wasn't something that we, you know, two years ago were kind of, you know, focused on.

Chris Lewis: Good morning, everyone. Thanks for getting me in here I'll keep it to one Josh we've spoken in the past on the loyalty program obviously.

Speaker Change: It is.

Speaker Change: A big piece of the story with respect to airlines, but want to understand why the change now was this contemplated back at your.

Speaker Change: Investor Day, I think it was two years ago and feedback so far and then part B David the half point impact for next year any color that you can give with respect to what's assumed with acquisitions and existing users.

Speaker Change: So with respect to the loyalty program no. It wasn't something that we you know two years ago were kind of focused on always I wasn't focused on it.

Joshua Weinstein: I wasn't focused on it.

David Bernstein: So I guess that's the answer to the question. Yeah, and the half a point really just comes from the fact that once the program starts, we do have to initially defer a portion of the ticket price that's associated with the benefits that people will earn from the program. So, you know, as I said, we don't expect incremental costs associated with the new program. program. And it's just a deferral. Because, you know, initially, when this first starts, you're not going to see the redemption of any benefits immediately. And therefore, you're not getting revenue from the redemption.

Speaker Change: So I guess, that's the answer to the question.

Speaker Change: Yes.

Speaker Change: Half a point really just comes from the fact that once the program starts we do have two English really differ.

Speaker Change: Is it ticket price that's associated with the benefits that people will earn.

Speaker Change: One of the program.

Speaker Change: So.

Speaker Change: We don't expect incremental costs associated with the new program versus the existing program.

Speaker Change: And it's just a deferral because initially when this first started I'm not going to see the reduction.

Speaker Change: Any benefits immediately and therefore youre not getting revenue from the redemption. So it will take some time for it to normalize itself as I indicated.

David Bernstein: So it'll take some time for it to normalize itself. Okay, thank you.

Speaker Change: Okay. Thank you.

Joshua Weinstein: Okay, so I'll just say thank you, everybody, for joining us for another earnings call. And from my team, I'd say, take a bow. Congratulations on exceeding sea change targets 18 months in advance. That is an amazing job. Well done.

Speaker Change: Okay. So I'll just say thanks.

Speaker Change: <unk> everybody for joining us for another earnings call for my team I say take about congratulations on exceeding sea change targets 18 months in advance how does an amazing job well done.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: [music].

Speaker Change: [music].

Greetings, welcome to the Carnival Corporation PLC's second quarter 2025 earnings call. At this time, all participants are in listen-only mode. A brief question and answer session will follow the forum presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Just a reminder, this conference is being recorded.

Speaker Change: Greetings and welcome to the Carnival Corporation, and Plc's second quarter 2025 earnings call.

Speaker Change: At this time, all participants are in listen only mode.

Speaker Change: A brief question and answer session will follow the formal presentation.

Speaker Change: If anyone should require operator assistance during the conference. Please press star zero from your telephone keypad.

Speaker Change: This conference is being recorded.

It is now my pleasure to introduce your host, Beth Roberts, Senior Vice President, Investor Relations. Thank you, Beth. You may now begin. Thank you.

Speaker Change: It is now my pleasure to introduce your host Beth Roberts Senior Vice President Investor Relations. Thank you Betsy you may now begin.

Good morning and welcome to our second quarter 2025 earnings conference call. I'm joined today by our CEO, Josh Weinstein, our CFO, David Bernstein, and our Chair, McIarist. Before we begin, please note that some of our remarks on this call will be forward-looking. Therefore, I will refer you to the forward-looking statement in today's press release. All references to ticket prices, yields, and cruise costs without fuel will be in constant currency unless otherwise stated. References to yields will be on a net basis. References to cruise costs without fuel, EBITDA, net income, ROIC, and related statistics, for all, will be on an adjusted basis unless otherwise stated.

Speaker Change: Thank you good morning, and welcome to our second quarter 2025 earnings Conference call I'm joined today by our CEO, Josh Weinstein, our CFO, David Bernstein, and our chairman Micky Arison.

Speaker Change: Before we begin please note that some of our remarks on this call will be forward looking therefore, I will refer you to the forward looking statement in today's press release, all references to ticket prices yields and cruise costs without fuel will be in constant currency unless otherwise stated references to yields will be on a net basis references to cruise costs.

Speaker Change: Without fuel EBITDA net income Rois C and related statistics for all will be on an adjusted basis unless otherwise stated all of these references are non-GAAP financial measure as defined in our earnings press release, a reconciliation to the most directly comparable U S. GAAP financial measures and other associated disclosures are also continue.

All these references are non-GAAP financial measures defined in our earnings press release. A reconciliation to the most directly comparable U.S. GAAP financial measures and other associated disclosures are also contained in our earnings press release and in our investor presentation. Please visit our corporate website where our earnings press release and investor presentation can be found.

Speaker Change: And in our earnings press release and in our Investor presentation.

Speaker Change: Please visit our corporate website, where our earnings press release and Investor presentation can be found.

With that, I'd like to turn the call over to Josh. Thanks, Beth.

Speaker Change: With that I'd like to turn the call over to Josh.

Before we begin, I'd like to take a moment to address the conflict in the Middle East. The Escalation of the Past Two Weeks culminating over the last few days has been Swift. While we certainly hope for a quick and peaceful resolution, and it has not yet had any discernible impact on our business, This is all unfolding too quickly in real time to try to project how it could impact our future. Like many others, we will actively monitor the situation over the coming days and weeks to evaluate its potential effects on our business and provide updates as needed.

Josh Weinstein: Thanks, Beth before we begin I'd like to take a moment to address the conflict in the middle East.

Josh Weinstein: The escalation of the past two weeks, culminating over the last few days.

Speaker Change: Has been Swift.

Speaker Change: Well, we certainly hope for a quick and peaceful resolution and it has not yet had any discernible impact on our business. This is all unfolding too quickly in real time to try to project.

Speaker Change: It could impact our future business like many others, we will actively monitor the situation over the coming days and weeks to evaluate its potential effects on our business and provide updates as needed.

In the interim, our thoughts and prayers are for the safety of all innocent civilians and for the brave men and women of the U.S. Armed Forces who work tirelessly to protect the United States of America.

Speaker Change: In the interim.

Speaker Change: Our thoughts and prayers are for the safety of all innocent civilians.

Speaker Change: For the Brave men and women of the U S. Armed forces, who worked tirelessly to protect the United States of America.

Turning to our business. another quarter on the books, and another set of phenomenal results. This marks eight quarters in a row we've achieved record revenues on record yield. We also hit new second quarter highs for EBITDA and operating income, both in total and on a per ALBD basis, while customer deposits also reach an all-time high. Year over year, EBITDA was up 26%, operating income increased by 67%. and net income more than tripled as we continue to benefit from our focus on commercial execution. Net income came in $185 million better than guidance as we outperformed across the board.

Speaker Change: Turning to our business.

Speaker Change: Another quarter on the books and another set of phenomenal results.

Speaker Change: This marks eight quarters in a row, we have achieved record revenues on record yields.

Speaker Change: We also hit new second quarter highs for EBITDA and operating income both in total and on a per <unk> basis, while customer deposits also reached an all time high.

Speaker Change: Year over year EBITDA was up 26%.

Speaker Change: Operating income increased by 67%.

Speaker Change: Net income more than tripled as we continue to benefit from our focus on commercial execution.

Speaker Change: Net income came in at $185 million better than guidance as we outperformed across the board.

Yields grew by almost six and a half percent, beating our guidance by 200 basis. Both ticket and on board equally outperformed on very strong closing demand, reaffirming the strength of our consumer. Unit costs also came in 200 basis points better than expected on timing between the quarters. This was yet another quarter with EBITDA margins up significantly year over year. You know, investors often ask me, Can margins get above 2019 levels? Well, as I've always answered, I never thought of 2019 as a ceiling. And we've now proven that out. Last quarter EBITDA margins were 140 basis points above 2019 and this quarter they were 200 basis points higher.

Speaker Change: Yields grew by almost 6.5% beating.

Speaker Change: Beating our guidance by 200 basis points.

Speaker Change: Both ticket and onboard equally outperformed them very strong close in demand reaffirming the strength of our consumer.

Speaker Change: Unit costs also came in 200 basis points better than expected on timing between the quarters.

Speaker Change: This was yet another quarter with EBITDA margins up significantly year over year.

Speaker Change: Investors often ask me can margins get above 2019 levels well as I've always answered I never thought of 2019 as a ceiling and we've now proven that out laugh.

Speaker Change: Last quarter EBITDA margins were 140 basis points above 2019, and this quarter. They were 200 basis points higher in fact, this past quarter's margins were the highest we've achieved in nearly 20 years.

In fact, this past quarter's margins were the highest we've achieved in nearly 20 years.

This consistently strong performance significantly accelerated progress towards our 2026 sea change target. In December, we telegraphed being able to hit our 50% EBITDA per ALBD growth target at the end of 2025. In March, we said that we expected our 12% return on invested capital target to also materialize at the end of 2020. And now, we can advise that through the hard work of our amazing global team, we met and exceeded both of these targets a full 18 months ahead of schedule. We were able to deliver trailing 12 month EBITDA per birthday, 52% above our 2023 baseline, and our ROIC surpassed 12.5%, more than doubling in less than two years.

Speaker Change: This consistently strong performance significantly accelerated progress towards our 2026 C change targets.

Speaker Change: In December.

Speaker Change: Telegraph to being able to hit our 50% EBITDA for a L. B D growth target at the end of 'twenty five.

Speaker Change: In March we said that we expected our 12% return on invested capital target to also materialized at the end of 2025.

Speaker Change: And now we can advise that through the hard work of our amazing global team, we met and exceeded both of these targets a full 18 months ahead of schedule.

Speaker Change: We were able to deliver trailing 12 month EBITDA per birthday, 52% above our 20 twenty-three baseline.

Speaker Change: Our rois see surpassed 12, and a 5% more than doubling in less than two years.

This was no small feat, given these are both the highest levels this company has seen in nearly 20 years. Not to be forgotten is our third 2026 commitment to reduce our carbon intensity by 20% as compared to 2019. I'm very pleased to report we have also just met this target as well. This is not only great for the environment. It's also great for our bottom line. Again, thanks to each of our phenomenal team members, we topped these milestones in half the time originally expected. And even better news, we have so much more potential to take our margins, returns and results even higher.

Speaker Change: Now this was no small feat given these are both the highest levels. This company has seen in nearly 20 years now.

Speaker Change: Not to be forgotten is our third 2026 commitment to reduce our carbon intensity by 20% as compared to 2019.

Speaker Change: I am very pleased to report we have also just met this target as well. This is not only great for the environment. It's also great for our bottom line.

Speaker Change: Again, thanks to each of our phenomenal team members, we top these milestones and half the time originally expected.

Speaker Change: And even better news, we have so much more potential to take our margins returns and results even higher.

So, with our 2026 targets in the rearview mirror, we anticipate setting new targets in early Q2 next year, and I look forward to raising the bar even higher. In the short term, this outperformance has also enabled us to take up our full year guidance again. This includes raising our yield guidance to 5% based on our strong second quarter results while affirming yield expectations for the remainder of the year. Cumulatively, that will take our yields up 16% across 2024 and 2025. In a world of heightened volatility, the amazing cruise experiences our portfolio of cruise brands deliver at a truly exceptional value simply stand out.

Speaker Change: So with our 2026 targets in the rear view mirror, we anticipate setting new targets in early Q2 next year and I look forward to raising the bar even higher.

Speaker Change: In the short term. This outperformance has also enabled us to take up our full year guidance again.

Speaker Change: This includes raising our yield guidance to 5% based on our strong second quarter results, while affirming yield expectations for the remainder of the year.

Speaker Change: Cumulatively.

Speaker Change: That will take our yields up 16% across 'twenty 'twenty, four and 'twenty 'twenty five.

Speaker Change: In a world of heightened volatility the amazing cruise experiences our portfolio of cruise brands deliver a truly exceptional value.

It's enabled us to deliver two consecutive quarters that were significantly better than expected and maintain strong 4% yield growth in the back half of the year, consistent with our original guidance in December, which I would remind you was given well before much of 2025's macroeconomic and geopolitical turbulence had surfaced. Now, Would the second half of the year have been even stronger, but for all of this noise? Absolutely. No excuses, though. We need to deal in the realities of the world we live in. And while it's proving to be a fairly unpredictable place of late, we are well positioned and clearly will do our best to meet or exceed guidance, taking another significant step forward for the.

Speaker Change: Please stand out it's enabled us to deliver two consecutive quarters that were significantly better than expected.

Speaker Change: And maintained strong 4% yield growth in the back half of the year consistent with our original guidance in December which I would remind you was given well before much of 'twenty 'twenty fives macroeconomic and geopolitical turbulence had surfaced now.

Speaker Change: No.

Speaker Change: With the second half of the year have been even stronger but for all of this noise absolutely no excuses, though.

Speaker Change: We need to deal and the realities of the World We live in.

Speaker Change: And while it's proving to be a fairly unpredictable place of late.

Speaker Change: We are well positioned and clearly we'll do our best to meet or exceed guidance, taking another significant step forward for the company.

We also continue to set ourselves up well for 2020. Our book position is in line with last year's record levels and at historically high prices. Our elongated advanced booking window and limited capacity growth give us flexibility to patiently take price, and our sharpened yield management tools are helping us optimize our performance in the current environment. Our strong results, book position, and outlook are a testament to the success of our ongoing strategy to deliver same-ship, high-margin revenue growth. We remain focused on achieving yield improvement by driving demand that outpaces our supply, and we have a lot more in store to keep our strong momentum going.

Speaker Change: We also continue to set ourselves up well for 2026.

Speaker Change: Our book position is in line with last year's record levels and at historically high prices.

Speaker Change: Our elongated advanced booking window and limited capacity growth gave us flexibility to patiently take price and our sharpened yield management tools are helping us optimize our performance and in the current environment.

Speaker Change: Our strong results book position and outlook are a testament to the success of our ongoing strategy to deliver same ship high margin revenue growth.

Speaker Change: We remain focused on achieving yield improvement by driving demand that outpaces, our supply and we have a lot more in store to keep our strong momentum going.

We are counting down the days to the opening of Celebration Key, which is now less than a month away. with the largest lagoons in the Caribbean at over 275,000 surface square feet, multiple times that of any other private cruise destination in existence or in construction. Over one and a half miles of white sand beach and the world's largest swim-up bar and largest sand castle, we are gearing up to deliver even more fantastic experiences for Carnival guests than ever before. We are on schedule to welcome our first ship, Carnival Vista, on July 19th and intentionally ramp up from there into the fourth quarter so that we can make sure the guest experience is as extraordinary as possible from the start.

Speaker Change: We are counting down the days to the opening of celebration kit, which is now less than a month away.

Speaker Change: With the largest lagoons and the Caribbean at over 275000 surface square feet multiple times that of any other private cruise destination in existence or in construction.

Speaker Change: Over one and a half miles of white sand beach, and the world's largest swim up bar and largest sand castle, we are gearing up to deliver even more fantastic experiences for carnival guests than ever before.

Speaker Change: We are on schedule to welcome our first ship Carnival Vista on July 19th and intentionally ramp up from there into the fourth quarter. So that we can make sure. The guest experience is as extraordinary as possible from the start.

You know, it's gratifying to see that already Celebration Key is consistently ranked among the most searched cruise destinations on Google, and it hasn't even opened yet. We fully expect the buzz around it to only build once our five portals built for fun begin welcoming guests to our expertly curated ultimate beach day. Once complete, we'll be augmenting our marketing materials with live footage and imagery from this amazing destination. And of course, word of mouth from over 2 million guests annually will amplify our share of voice.

Speaker Change: It's gratifying to see that already celebration key is consistently ranked among the most searched cruise destinations on Google and it Hasnt even opened yet we fully expect the buzz around it to only build once our five portals built for fun begin welcoming guests who are expertly curated.

Speaker Change: Ultimate Beach day.

Speaker Change: Once complete will be augmenting our marketing materials with live foot addition imagery from this amazing destination and of course word of mouth from over 2 million guests annually will amplify our share of voice.

We're also on track for the mid-2026 opening of a significant expansion at Relax Away, Half Moon Key, our pristine Caribbean oasis. This spectacular tropical paradise, already ranked among the best private islands in the Caribbean, invites our guests to enjoy an idyllic beach day full of white sand, turquoise waters, refreshing ocean breezes, delicious food, tropical drinks, and opportunities galore to do exactly as its new name invites you to do, relax. We've shaped many itineraries that combine these perfectly paired destinations in order to provide our guests with both the ultimate and the idyllic beach days, all on one vacation.

Speaker Change: We're also on track for the mid 2026 opening of a significant expansion at relax away half Moon Cay are pristine Caribbean Oasis.

Speaker Change: This spectacular tropical Paradise already ranked among the best private islands in the Caribbean.

Speaker Change: Invites our guests to enjoy and idyllic Beach day full of white sand turquoise waters refreshing ocean breezes delicious food tropical drinks and opportunities galore to do exactly as its new name invites you to do.

Speaker Change: Relax.

Speaker Change: We've shaped many itineraries that combined these perfectly paired destinations in order to provide our guests with both the ultimate.

Speaker Change: And the idea like Beach days, all one vacation.

During the quarter, we also announced another meaningful expansion and enhancement to our beautiful destination, Mahogany Bay in Roatan, Honduras. already rated one of the highest destinations in the Caribbean. Upgrades will include a large pool with a swim-up bar, a beautiful new private beach club, and doubling the beachline to almost half a mile. This destination will be renamed Isla Tropical and, along with Celebration Quay and Relax Away Half Moon Quay, as the pinnacle of our seven Caribbean gems, marketed as the Paradise Collection. You know, beaches are the number one destination for vacationing Americans. It is no accident that this is central to our destination strategy.

Speaker Change: During the quarter, we also announced another meaningful expansion and enhancement to our beautiful destination mahogany Bay in Roatan Honduras.

Speaker Change: Already rated one of the highest destinations in the Caribbean upgrades will include a large pool with the swim up bar, a beautiful new private Beach club and doubling the beach line to almost half a mile.

Speaker Change: This destination will be renamed East to let Tropicana and along with celebration key and relax away half Moon Cay as the pinnacle of our seven Caribbean gems marketed as the Paradise collection.

Speaker Change: You know its beaches are the number one destination for vacationing Americans. It is no accident that this is central to our destination strategy.

Our seven Caribbean gems collectively provide miles upon miles of some of the most beautiful beaches in the world. by making targeted incremental investments and stepping up our marketing efforts across this portfolio. We believe we have a significant opportunity to further monetize these strategic assets by using them to drive consumer consideration and conversion, taking share from land-based alternatives.

Speaker Change: Our seven Caribbean gems collectively provide miles upon miles of some of the most beautiful beaches in the world.

Speaker Change: By making targeted incremental investments and stepping up our marketing efforts across this portfolio.

Speaker Change: We believe we have a significant opportunity to further monetize these strategic assets by using them to drive consumer consideration and conversion taking share from land based alternatives.

At the same time, we continue to make investments in our existing fleet that will generate new demand and enhance price. AIDA-DIVA recently re-entered service, the first ship to undergo the AIDA Evolution Upgrade Since her revamp and reintroduction, AIDA DIVA has been knocking it out of the park with a huge take-up for its many added bar and specialty dining venues and rave reviews for its ship-wide enhancements. This success is a great sign for the remaining six vessels in the AIDA fleet that will undergo this upgrade over the next few years. We also recently ordered two new builds for AIDA for delivery in fiscal 2030 and 2032, as we reinforce our strategy to rebalance the company towards our higher returning brand.

Speaker Change: At the same time, we continue to make investments in our existing fleet that will generate new demand and enhanced pricing.

Speaker Change: I eat a diva recently reentered service the first ship to undergo the ETA evolution upgrade.

Speaker Change: Since her revamp and reintroduction.

Speaker Change: I eat a diva has been knocking it out of the park with a huge take up for its many added bar and specialty dining venues and rave reviews for its ship wide enhancements.

Speaker Change: This success is a great sign for the remaining six vessels in the Aida fleet that will undergo this upgrade over the next few years.

Speaker Change: We also recently ordered two new builds for Aida for delivery in fiscal 'twenty 30, and 2032 as we reinforce our strategy to rebalance the company towards our higher returning brands.

These next generation ships, coupled with the AIDA evolution program, modernizing much of the existing fleet. will drive even more demand for our AIDA brand, which is already synonymous with cruising in Germany.

Speaker Change: These next generation ships, coupled with the Aida evolution program modernizing much of the existing fleet.

Speaker Change: We will drive even more demand for our Aida brand, which is already synonymous with cruising in Germany.

Additionally, Carnival Cruise Line recently announced exciting new features for its fourth and fifth incredibly successful XL class shifts for delivery in 2027 and 2028. Carnival Festival and Carnival Tropical will feature Sensation Point, a new outdoor zone on the top three decks, purposely designed to be the most family-friendly water park at sea, with six exhilarating slides, including two family raft slides, and, for the first time, the fun will continue into the evening, with extended park hours for guests to enjoy a vibrantly illuminated nighttime waterworks, including a DJ and a slew of other special evening activities. These shifts will be ideally suited for families with 70% more interconnecting rooms than prior XL class And just around the corner, we'll be welcoming our next new build, Star Prince.

Speaker Change: Additionally.

Speaker Change: Carnival cruise line recently announced exciting new features for its fourth and fifth incredibly successful X L class ships for delivery in 'twenty, and 'twenty, seven and 2020 eight.

Speaker Change: Carnival Festival and Carnival tropical will feature sensation point, a new outdoor zone on the top three decks purposely designed to be the most family friendly Waterpark at sea with six exhilarating slides, including two family RAF slides and for the first.

Speaker Change: Times, the phone will continue into the evening with extended park hours for guests to enjoy a vibrantly illuminated nighttime waterworks, including a D J and a slew of other special evening activities.

Speaker Change: These shifts will be ideally suited for families with 70% more interconnecting rooms than prior X L class ships.

Speaker Change: And just around the corner, we will be welcoming our next Newbuild Star Princess.

Sister Ship to the Hugely Successful Sun Princess awarded Condé Nast Travelers 2024 Mega Ship of the Year. That means we'll be doubling down on Some Princess's innovative platform and tremendously successful guest operations spanning across F&B, entertainment and its elevated ship within a ship, Suites Sanctuary Collection.

Speaker Change: Sister ship to the hugely successful some princess awarded Condi Nast Traveler's 'twenty 'twenty four mega ship of the year.

Speaker Change: That means we'll be doubling down on some princesses innovative platform and tremendously successful guest operations spanning across F&B entertainment and it's elevated ship within a ship suites sanctuary collection with.

With our moderate new build pipeline, including just three ships on order over the next four years, we have ample room to continue to pay down additional debt and return to investment grade leverage metrics while providing ourselves with a headroom to return value to shareholders.

Speaker Change: Our moderate Newbuild pipeline, including just three ships on order over the next four years, we have ample room to continue to pay down additional debt and return to investment grade leverage metrics, while providing ourselves with the headroom to return value to shareholders.

And yet another opportunity that will help propel us forward is the exciting news Carnival Cruise Line announced just last week. In June of next year, Carnival will be launching a brand new and improved loyalty program. This will be an industry first, tying loyalty benefits and status to total spending on Carnival and spending on everyday purchases with Carnival's co-branded credit card, rather than being based on the lifelong accumulation of days. David will speak to the financial impact, so I'll just add that we see this as an important tool for improving customer engagement and increasing customer lifetime value and a long-term strategic differentiator for us.

Speaker Change: And yet another opportunity that will help propel us forward is the exciting news Carnival cruise line announced just last week.

Speaker Change: In June of next year Carnival will be launching a brand new and improved loyalty program.

Speaker Change: This will be an industry first tying loyalty benefits and status to total spending on carnival and spending on everyday purchases with carnivals co branded credit card rather than being based on a lifelong accumulation of days sales day.

Speaker Change: David will speak to the financial impact so I'll just add that we see this as an important tool for improving customer engagement and increasing customer lifetime value and our long term strategic differentiator for us.

I would like to thank our team members, ship and shore, once again, for the enthusiasm and commitment they exhibit, which enabled us to deliver happiness to almost three and a half million guests this past quarter by providing them with extraordinary cruise vacations while honoring the integrity of every ocean we sail, place we visit and life we touch. It is their combined effort that has made a truly transformational change in this company inside of just two years. I would be remiss if I also didn't express my appreciation for all of the many supporters who contributed to this successful outcome.

Speaker Change: I would like to thank our team members ship and shore once again for the enthusiasm and commitment they exhibit which enabled us to deliver happiness to almost three and a half a million guests this past quarter by providing them with extraordinary cruise vacations, while honoring the integrity of every ocean we sale.

Speaker Change: Place, we visit and life, we touch it is their combined effort that has made a truly transformational change in this company inside of just two years.

Speaker Change: I would be remiss if I also didn't express my appreciation for all of the many supporters who contributed to this successful outcome.

Thank you to our travel agent partners, destination partners, investors, and of course, our loyal guests. We could not have done this without all of you.

Speaker Change: To our travel agent partners destination partners investors and of course, our loyal guests we could not have done this without all of you.

While I'm incredibly proud of the great progress our teams have made in such a short amount of time, these results are nowhere near our end point. The tailwinds and opportunities before us give us the potential for so much more.

Speaker Change: Well I'm incredibly proud of the great progress our teams have made in such a short amount of time.

Speaker Change: These results are nowhere near our endpoint, the tailwind and opportunities before us give us the potential for so much more with that I'll turn the call over to David.

With that, I'll turn the call over to David. Thank you, Josh.

I'll start today with a summary of our 2025 second quarter results. Next, I'll provide some color on our improved full year June guidance, as well as some key insights on our third quarter guidance. I will also explain the financial impact of Carnival Cruise Lines exciting new loyalty program Carnival Rewards for 2026 and beyond. and then finish up with an update on our efforts to rebuild a financial fortress through refinancing and deleveraging. Turning to the summary of our second quarter results. Net income exceeded March guidance by $185 million as we outperformed once again, achieving our highest ever second quarter operating result.

Speaker Change: Josh.

Speaker Change: Start today with a summary of our 2025 second quarter results.

Speaker Change: Next I'll provide some color on our improved full year June guidance as well as some key insights on our third quarter guidance.

Speaker Change: He will also explain the financial impact of Carnival cruise lines exciting new loyalty program Carnival rewards for 2026 and beyond.

Speaker Change: And then finish up with an update on our efforts to rebuild our financial fortress through refinancing and deleveraging.

Speaker Change: Turning to the summary of our second quarter results.

Speaker Change: Net income exceeded March guidance by $185 million as we outperformed once again, achieving our highest ever second quarter operating results.

The outperformance was essentially driven by five things. First, favorability and revenue worth $84 million as yields came in up over 6.4% compared to the prior year, and that was on top of last year's robust 12% increase. This was 200 basis points better than March guidance, driven by close-in strength in ticket prices and continued strong onboard spending. The yield increase was a result of improvements on both sides of the Atlantic. The improvement in ticket prices was across all core programs. The improvement in onboard spending was broad based as all major categories of spending were meaningfully higher.

Speaker Change: The outperformance was essentially driven by five things.

Speaker Change: Favorability in revenue with $84 million.

Speaker Change: It came in up over six 4% compared to the prior year and that was on top of last year's robust 12% increase this was 200 basis points better than March guidance, driven by closing strength in ticket prices and continued strong onboard spending.

Speaker Change: The increase was a result of improvements on both sides of the Atlantic.

Speaker Change: The improvement in ticket prices was across all core programs the improvement in onboard spending was broad based as all.

Speaker Change: All major categories of spending were meaningfully higher.

Second, cruise costs without fuel per available lower birthday or ALBD were up three and a half percent compared to the prior year. This was also 200 basis points better than March guidance and was worth $56 million. The favorability in costs was driven by the timing of expenses between the quarters. Third, favorability and fuel consumption and fuel mix was worth $18 million as our efforts and investments to continuously improve the energy efficiency of our operations, leveraging technology and best practices, paid off once again. Fourth, interest income and expense favorability of $8 million was driven by higher interest income and an opportunistic debt prepayment.

Speaker Change: Cruise costs without fuel per available at Woodbury day, or a L. P. D. We're up three and a half per cent compared to the prior year.

Speaker Change: This was also 200 basis points better than March guidance.

Speaker Change: We're at $56 million the.

Speaker Change: The favorability in cost was driven by the timing of expenses between the quarters.

Speaker Change: Third favorability in fuel consumption and fuel mix was worth $18 million as our efforts and investments to continuously improve the energy efficiency of our <unk>.

Speaker Change: Operations, leveraging technology and best practices paid off once again.

Speaker Change: For interest income and expense favorability of $8 million was driven by higher interest income and an opportunistic debt prepayments.

And fifth, $15 million from the favorable net impact of currency and fuel profit. Customer deposits at the end of the second quarter were at an all-time high, up over $250 million versus the prior year, despite the impact from our third quarter capacity decline of 2.4%.

Speaker Change: $15 million from the favorable net impact of currency and fuel price cut.

Speaker Change: Customer deposits at the end of the second quarter were at an all time high up over $250 million versus the prior year. Despite the impact from our third quarter capacity decline of two 4%.

Next, I will provide some color on our improved full year June guidance. June Gein's net income of approximately $2.7 billion is a $200 million improvement over March Gein's. The improvement was essentially driven by five things. First, our second quarter favorability and yield flowed through to the full year, improving our full year yield guidance by 30 basis points to 5% higher than strong 2024 levels, which were up almost 11%. The total increase in full year revenue was over $100 million, which included not only the flow through the second quarter favorability in revenue, but also additional voyages that were added by Carnival Cruise Lines, primarily in the fourth quarter as a result of the change in the dry dock schedule into 2026.

Speaker Change: Next I will provide some color on our improved full year June guidance.

Speaker Change: Cumulative net income of approximately $2 7 billion is a 200 million dollar improvement over March guidance.

Speaker Change: The improvement was essentially driven by <unk>.

Speaker Change: First our second quarter favorability in yield flowed through to the full year, improving our full year yield guidance by 30 basis points to 5% higher and strong 2024 levels, which were up almost 11%.

Speaker Change: The total increase in full year revenue was over $100 million, which included not only the flow through in the second quarter favorability in revenue, but also additional voyages that were added by Carnival cruise lines, primarily in the fourth quarter as a result of the change in the dry dock schedule into 2020.

These additional voyages improve June guidance net income. However, given the seasonality of our business and the late opening of the voyages added to the fourth quarter, these voyages temper the full year positive yield impact by approximately 1 10th of a point, which is included in the full year yield guidance of 5%. Second, cruise costs without fuel per ALBD are now expected to be up 3.6% compared to the prior year. This is two-tenths of a point better than March guidance. The improvement in this cost metric was driven by the increase in ALBDs as a result of the added voyage Even though we already have the industry leading cost structure, our teams will always keep looking for ways to further optimize our costs while continuing to improve the onboard experience for our guests.

Speaker Change: Six.

Speaker Change: These additional voyages improved June guidance net income however, given the seasonality of our business and the reopening of the voyages added to the fourth quarter. These voyages tempered our full year positive yield impact by approximately 110th of a point, which is included in the full year yield.

Speaker Change: Guidance of 5%.

Speaker Change: Second cruise costs without fuel per <unk>.

Speaker Change: L. P. D are now expected to be up three 6% compared to the prior year.

Speaker Change: This is two tenths of a point better than March guidance. The improvement in this cost metric was driven by the increase in <unk> as a result of the added voyages.

Speaker Change: Even though we already have the industry, leading cost structure. Our teams will always keep looking for ways to further optimize our cost while continuing to improve the onboard experience for our guests.

Third, favorability and fuel consumption and fuel mix from the second quarter is expected to continue throughout the second half and grow to approximately $30 million for the full year compared to March guidance. Fourth, favorability and interest income and expense from the second quarter is also expected to continue throughout the second half and grow to approximately $30 million for the full year compared to March guidance driven by our refinancing efforts during the second quarter. And fifth, approximately $35 million from the favorable net impact of currency and fuel. All of this results in $6.9 billion of EBITDA, a 13% improvement over 2024, virtually all of which is being driven by same store revenue growth as our capacity is only up 1% year over year.

Speaker Change: Third favorability in fuel consumption and fuel mix from the second quarter is expected to continue throughout the second half and grow to approximately $30 million for the full year compared to March guidance.

Speaker Change: Favorability in interest income and expense from the second quarter is also expected to continue throughout the second half and grow to approximately $30 million for the full year compared to March guidance, driven by our refinancing efforts during the second quarter.

Speaker Change: Approximately $35 million from the favorable net impact of currency and fuel price. All of this results in $6 9 billion of EBITDA, a 13% improvement over 2020 for virtually all of which is being driven by same store revenue growth as our.

Speaker Change: City is only up 1% year over year.

Next, I will provide some key insights on our third quarter guidance. As I previously indicated during the last two earnings calls, third quarter cruise costs are expected to be higher than the full year increase. Third quarter cruise costs without fuel per ALBD are expected to be up 7% compared to the prior year. Four factors are driving nearly half the year-over-year increase. First, the introduction next month of our game-changing exclusive Caribbean destination Celebration Quay. While we anticipate that Celebration Quay will be a smash hit with our guests and provide an excellent return on our investment, operating expenses for the destination will impact our overall year-over-year cost comparison.

Speaker Change: Next I will provide some key insights on our third quarter guidance as I previously indicated during the last two earnings calls third quarter cruise costs are expected to be higher than the full year increase third quarter cruise costs without fuel per <unk> are expected to be up 7% compared to.

Speaker Change: The prior year four factors are driving nearly half the year over year increase first the introduction next month of our game changing exclusive Caribbean destination celebration key while we anticipate that celebration will be a smash hit with our guests and providing excellent return on our own.

Speaker Change: <unk> operating expenses for the destination will impact our overall year over year cost comparisons second 2024 benefited from one time items that we mentioned last year also impacting our year over year cost comparisons.

Second, 2024 benefited from one-time items that we mentioned last year, also impacting our year-over-year cost comparison. Third, higher advertising expense, which we discussed on the December call, and fourth, lower third quarter capacity, which results in spreading our fixed costs over fewer ALBDs.

Speaker Change: Third higher advertising expense, which was discussed on the December call and for <unk>.

Speaker Change: Lower third quarter capacity, which results in spreading fixed costs over fewer <unk> now let me explain the financial impact of Carnival cruise lines exciting new loyalty program Carnival rewards on 2026 and beyond.

Now let me explain the financial impact of Carnival Cruise Line's exciting new loyalty program, Carnival Rewards, on 2026 and beyond. As Josh described, this new program will start in June 2026, impacting results for the second half of 2026. While the program will be cash flow positive from day one, it does impact our yields and our P&L during the first couple of years. Accounting treatment for recognizing revenue requires a deferral of a portion of the ticket price paid by the guest, equal to the value of future program benefits earned. Over time, the redemption of benefits by guests will build, and so will the revenue recognized for delivering these benefits to the guests.

Speaker Change: As Josh described this new program will start in June 2026 impacting results for the second half of 2026, while the program will be cash flow positive from day, one it does impact our yields and our P&L during the first couple of years.

Speaker Change: Accounting treatment for recognizing revenue requires a deferral of a portion of the ticket price paid by the guests equal to the value of future program benefits earned overtime. The redemption of benefits by guests will build so will the revenue recognized for delivering these benefits to the gas we.

We expect that it will take approximately two years for the revenue recognized each quarter from the benefits redeemed by guests to exceed deferred revenue of the portion of the ticket price paid for the future benefits. Once this happens, after approximately two years, the program will be accretive to our yields. As a result, the year-over-year impact on yields is expected to be about a half a point in 2026, a bit less in 2027, neutral for 2028, and turn positive thereafter. It should also be noted that we do not anticipate any meaningful impact on costs from the new loyalty program when compared to the current program.

Speaker Change: I expect that it will take approximately two years for the revenue recognized each quarter from the benefits redeemed by guests to exceed deferred revenue of the portion of the ticket price paid for the future benefits. Once this happens after approximately two years the program will be accretive to our yields as a rig.

Speaker Change: The year over year impact on yields is expected to be about a half a point in 2026.

Speaker Change: Less than 2027 neutral for 2028.

Speaker Change: Turn positive thereafter.

Speaker Change: It should also be noted that we do not anticipate any meaningful impact on cost from the new loyalty program.

We look forward to building greater engagement with our guests because of the new exciting Carnival Rewards program. Most airlines introduced similar types of loyalty programs many years ago, and we know how beneficial those programs turned out to be.

Speaker Change: <unk> to the current program.

Speaker Change: We look forward to building greater engagement with our guests because of the new exciting Carnival rewards program. Most airlines introduce similar types of loyalty programs. Many years ago, and we know how bandwidth issue those programs turned out to be now I'll finish up with an update of our refinancing deal.

Now I'll finish up with an update of our refinancing and deleveraging effort. During the quarter, we prepaid $350 million of our $1.4 billion notes due 2026 and refinanced the remainder with senior unsecured notes due 2031. These transactions will reduce net interest expense by over $20 million through early 2026. We also upsized our euro-denominated floating rate loan from 200 million to 300 million euros, extending its maturity and amending its margin at a favorable rate, resulting in an all-in interest rate of less than 4%. These transactions continued our efforts, rebuilding an investment-grade balance. We have been working aggressively to reduce interest expense, simplify our capital structure, and manage our future debt maturities, refinancing nearly $7 billion of debt already this year at favorable rates.

Speaker Change: Averaging efforts during the quarter, we prepaid $350 million about $1 4 billion notes due 2026 and refinance the remainder with senior unsecured notes due 2031. These transactions will reduce net interest expense by over $20 million through early.

Speaker Change: 2026, we also upsized, our euro denominated floating rate loan from 200 million to 300 million euros, extending its maturity and amending its margin at favorable rate, resulting in an all in interest rate of less than 4%.

Speaker Change: These transactions continued our efforts rebuilding an investment grade balance sheet.

Speaker Change: We have been working aggressively to reduce interest expense simplify our capital structure and manage our future debt maturities refinancing nearly $7 billion of debt already this year at favorable rates. We are pleased that our efforts have been recognized with the recent credit rating upgrades in.

We are pleased that our efforts have been recognized with the recent credit rating upgrades. In fact, we now have only one notch to go to reach our investment grade rating with both S&P and FIT. Over the last three months, we saw a marked improvement in our net debt to EBITDA ratio, going from 4.1 times at the end of the first quarter to 3.7 times as of the end of the second quarter. During the second half of 2025, we anticipate continuing to pay down debt. However, it will not impact net debt, as we'll be utilizing cash already on the books.

Speaker Change: Thanks.

Speaker Change: We now have only one notch to go to reach our investment grade rating with both S&P and Fitch.

Speaker Change: Over the last three months, we saw a marked improvement in our net debt to EBITDA ratio going from four one times at the end of the first quarter to three seven times as of the end of the second quarter. During the second half of 2025, we anticipate continuing to pay down debt.

Speaker Change: However, it will not impact net debt as we will be utilizing cash already on the books.

While we are guiding to improve the EBITDA in the second half of 2025, given the delivery of Star Princess later this year with its associated export credit, we expect our net debt to EBITDA ratio to remain flat at year end with second quarter. Earlier this month, we extended and upsized our revolver capacity by 50% to $4.5 billion on more favorable terms, meaningfully enhancing our liquidity. With this in hand and coupled with our well-managed near-term maturity towers through 2026, we expect to opportunistically accelerate our debt reduction efforts during the remainder of 2025 and 2026, executing the rest of our current refinancing plan.

Speaker Change: We are guiding to improved EBITDA in the second half of 2025, given the delivery of Star Princess later this year with its associated export credit.

Speaker Change: We expect our net debt to EBITDA ratio to remain flat at yearend with second quarter.

Speaker Change: Earlier this month, we extended and Upsized, our revolver capacity by 50% to $4 $5 billion or more favorable terms meaningfully enhancing our liquidity.

Speaker Change: With this in hand, and coupled with our well manage near term maturity towers through 2026, we expect to Opportunistically accelerate our debt reduction efforts during the remainder of 2025 and 2026 executing the rest of our current refinancing plan.

Looking forward, we expect our leverage metrics to continue to improve as our EBITDA continues to grow, and our debt levels continue to shrink, increasing our confidence in achieving investment grade leverage metrics in the not too distant future as we move further down the road, rebuilding our financial fortress while continuing the process of transferring value from debt holders back to shareholders.

Speaker Change: Looking forward, we expect our leverage metrics to continue to improve as our EBITDA continues to grow and our debt levels continue to shrink increasing our confidence in achieving investment grade leverage metrics in the not too distant future as we move further down the road rebuilding.

Speaker Change: Financial fortress, while continuing the process of transferring value from debt holders back to shareholders.

Now operator, let's open the call for questions. Thank you.

Speaker Change: Now operator, let's open the call for questions.

We'll now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad and a confirmation tone will indicate your line is in question queue. Let me press star 2 if you'd like to withdraw your question from the queue. For participants that are using speaker equipment, it may be necessary to pick up the handset before placing the star key. To allow for as many questions as possible, we ask that you limit yourselves to one question and one follow-up.

Speaker Change: Thank you well now be conducting a question and answer session if.

Speaker Change: If you'd like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Antonio indicate your line is in the question queue.

Speaker Change: You May press star two if you'd like to withdraw your question from the queue.

Speaker Change: This is city seeker equipment, it may be necessary to pick up the handset before pressing the star keys.

Speaker Change: To allow for as many questions as possible, we ask that you limit yourselves to one question and one follow up.

Thank you. One moment please while we poll for questions.

Speaker Change: Thank you Juan please pull for questions.

Thank you. Our first question is from line of Matthew Boss with J.P. Morgan. Great thanks and congrats on the phenomenal quarter. Thanks Matt. So maybe, so Josh, maybe could you speak to improvements in product and experience so far that you think is translating to today's above plan pricing and onboard spend and maybe how best to think about the incremental opportunity that may be tied to the laundry list of additional drivers you cited. You talked about continued fleet improvements, you talked about the launch of private islands exiting this year and also loyalty. So maybe just the incremental opportunity or maybe where we stand in terms of innings relative to what you've already done.

Speaker Change: Thank you. Our first question is from the line of Matthew Boss with Jpmorgan. Please proceed with your question.

Speaker Change: Great, Thanks, and congrats on a phenomenal quarter.

Speaker Change: Thanks, Matt So maybe.

Speaker Change: Josh maybe could you speak to improvements in product and experience. So far that you think is translating to today is above plan pricing and onboard spend in and maybe how best to think about the incremental opportunity that may be tied to the laundry list of additional drivers. You cited you talked about continued fleet improvements you talk.

Speaker Change: About the launch of private islands exiting this year and also loyalty. So maybe just the incremental opportunity or maybe where we stand in.

Speaker Change: In terms of earnings relative to what you've already done.

Sure. You know, we've been talking about this for a few years now at this point. You know, really when we look at what the teams have done across the commercial space, they've been making, you know, step-by-step improvements in pretty much all areas of the business. And when it comes to onboard experience and product, that's the one I've always talked about the least in this context because they're always on their game, right? Nothing is going to be, from my perspective, about recreation. Really, it's going to be about innovation, step-by-step, responding to the guests that they are targeting.

Speaker Change: Sure.

Speaker Change: We've been talking about this for a few years now at this point really when we look at what things have gone across the commercial space.

Speaker Change: Basically is making.

Jeff: Jeff improvements.

Speaker Change: Pretty much all areas for the business and when it comes to onboard experience.

Speaker Change: And product that's the one I've always talked about the Leafs in this context, because they're always on their game right nothing is going to be from my perspective.

Speaker Change: Recreation really it's gonna be about innovation step by step responding to the guests.

And it's small, incremental things that make us, you know, have this improved profile onboard every single quarter. You know, and they're not necessarily exciting in the eyes of lots of folks, but the way that Holland America, for example, understands its guests really lean into the concept of fresh seafood as an integral part of their cruise experience and being able to source locally fresh and be able to champion that and make that part of the experience. Little things like that go a long way, and all of our brands do that all the time. Now, on top of that, we obviously do take opportunities to make some investments in the asset themselves.

Speaker Change: We are targeting.

Speaker Change: And it's small incremental things that make us have.

Speaker Change: This improved profile onboard every single quarter.

Speaker Change: And they're not necessarily exciting.

Speaker Change: Lots of folks, but the way the Holland America for example understand its guests really lean into the concept of fresh seafood as an integral part of their cruise experience and being able to source locally fresh and be able to champion that and make that part of the experience little things like that go a long way at all.

Speaker Change: Of our brands do that all the time now on top of that we obviously do take opportunities.

We've talked about AIDA Evolution, and as you heard me talk about in my notes, it's exceeded our expectations when it comes to the returns that it's generating. So this is business as usual as far as I'm concerned, and that will continue well into the future.

Speaker Change: To make some investments in the assets themselves, we've talked about Aida evolution and as you heard me talk about it in my notes.

Speaker Change: Exceeded our expectations when it comes to the returns that it's generating so this is this is this is business as usual as far as I'm concerned and that will continue well into the future.

As far as, you know, looking forward, you know, I'd say we're still in the early innings, right? Celebration Key doesn't exist yet. We have another month before that happens. And there's lots more in the pipeline, some of which we've already talked about, other things we've not, which doesn't mean it's huge incremental investments the size of Celebration Key, but things that we can do to make our experiences and products on the look forward to talking about over time. Great.

Speaker Change: As far as.

Speaker Change: Looking forward.

Speaker Change: I'd say, we're still in the early innings right celebration he doesn't exist yet.

Speaker Change: We have another month before that happens.

Speaker Change: And there's lots more in the pipeline some of which we've already talked about other things we've not.

Speaker Change: Doesn't mean, it's huge incremental investments to the size of celebration key but things that we can do to make our our experiences and products on the land side, even better and we look forward to talking about the overtime.

And then maybe, Josh, on the bottom line, how best to think about the margin opportunity, which I think you cited as so much more from here, with the last two quarters now exceeding 2019. And I think you've made it clear that you don't see 2019 as a as a ceiling. Right? No, I mean, highest in 20 years, right? So we feel good about that trajectory. From from our perspective, it's maintaining our low cost industry leadership status while continuing to focus on driving incremental revenue. I mean, it is as simple as that. And the incremental revenue is flowing to the bottom line.

Speaker Change: Great and then maybe Josh on the bottom line, how best to think about the margin opportunity, which I think you cited is so much more from here with the last few quarters now exceeding 2019, and I think you've made it clear that you don't see 2019 as a ceiling.

Speaker Change: Right no.

Speaker Change: 20 years right. So we feel good about that trajectory.

Speaker Change: From our perspective, it's maintaining our low cost industry leadership status, while continuing to focus on driving incremental revenue.

And that's exactly where the teams have been focused. And we can do both, we can chew gum and walk, and we can manage our costs and increase revenue, which is what you've been Great color. Best of luck.

Speaker Change: As simple as that and the incremental revenue is flowing to the bottom line and that's exactly where the teams have been focused and we can do better than we can chew gum and walk and we can manage our costs and increase revenue, which is what we've been seeing.

Speaker Change: Great color best of luck.

Our next questions are from the line of Ben Chaiken with Mizuho Securities. Hey, good morning. Thanks for taking my question. Maybe you could provide some color on pricing for Celebration Key itineraries. Is this asset getting a premium today? Or is it too early? And then related? What plans do you have to market the destination? Like do you anticipate putting marketing dollars behind the project or this day more word of mouth at the time being? And then one follow up. Thanks. All right, sir. Morning, Ben. So we are seeing a premium. It's in line with what our expectations were.

Matt: Thanks, Matt.

Speaker Change: Our next questions are from the line of Ben Chaiken with Mizuho Securities. Please proceed with your question.

Ben Chaiken: Hey, good morning, Thanks for taking my question.

Speaker Change: Maybe you could provide some color on pricing for celebrating key itineraries as this asset getting a premium today or is it too early and then related what plans do you have to market the destination.

Speaker Change: Do you anticipate putting marketing dollars behind the project or will this stay more word of mouth for the time being and then one follow up thanks.

Speaker Change: Alright.

Speaker Change: Good morning.

Speaker Change: So we are seeing a premium it's in line with what our expectations were so everything's proceeding exactly as we had anticipated it to.

So everything's proceeding exactly as we had anticipated it to be. With respect to marketing dollars, you know, we have been putting marketing dollars and shifting marketing dollars to really lean into Celebration Key. And I think that's why it's one of the most sought after destinations, even though it doesn't take people yet. And we need one more month before that happens. So there's more to come on that. And there's more that we'll be doing in shifting the marketing spend so that we can leverage the same type of enthusiasm for the other things that we've got in the works, like the expansion for Relax Away, which is going to be another wind at our backs, so to speak, as we get into 2026 and beyond.

Speaker Change: With respect to marketing dollars you know we have been we have been putting marketing dollars and shifting marketing dollars to really lean into celebration Kian I think thats why its one of the most sought after destination, even though it doesn't it doesn't.

Speaker Change: It doesn't take take people yes.

Speaker Change: Walmart a month before that happens so there's more to come on that and Theres more that we'll be doing in shifting the marketing spend so that we can leverage the same type of enthusiasm for the other things that we've got in the works like the expansion for relapsed away.

Speaker Change: Is it going to be another wind at our backs so to speak as we get into 2026 and beyond.

Got it. I guess I guess the essence of the marketing question was just I would imagine it's difficult to market it too much prior to there being bodies there, but but totally appreciate kind of where you're coming from. And then on the on the loyalty program announcement, is this potentially a gateway to more of a book direct push, or is it more about people just keeping customers in the network? Curious how you think about the benefits. Obviously, David walked us through some of the yield impacts of the next couple years. Thanks. Sure, sure. No, definitely not a push to go more direct.

Speaker Change: Got it I guess I got the essence of the marketing question was just I would imagine it's difficult to market it too much prior to their being bodies, there, but totally appreciate kind of where they're coming from.

Speaker Change: And then on the on the loyalty program announcement is this potentially a gateway to more of a book direct Bush or is it more about people just keeping customers in the network curious how you think about the benefits obviously, David walked us through some of the yield impacts over the next couple of years. Thanks.

Speaker Change: Sure sure no definitely not.

Bookings with our travel agents will get the same benefit for the guest and for the trade that they always would. So we think that this is a great avenue for increased business and loyalty and engagement, not only directly with us, but through our valuable trade partners. Got it. Thank you.

Speaker Change: Pushed didn't go more direct.

Speaker Change: With our travel agents will get the same benefit.

Speaker Change: For the gas to them for the trains that they always want so we think that this is a great Avenue for increased business and loyalty and engagement.

Speaker Change: Not only directly with us.

Speaker Change: Valuable trade partners as well.

Speaker Change: Got it thank you.

Next questions are from the line of Steve Wieczynski with Stiefel. Please proceed with your question. Sure, morning, Steve. So yeah, no, we definitely saw more volatility in the month of April, as probably should not be expected. So that took a dip versus where we were in the trajectory in March, but May, nicely better than April, and the first couple of weeks of June, nicely better than May. So you know, we'll, you know, we'll keep responding to a very tricky environment. Okay, gotcha. And then, Josh, as we think about the back half of the year, I mean, I think in your presentation, it said you're 93% booked for 2025.

Speaker Change: Thanks.

Speaker Change: Next question is from the line of Steve <unk> with Stifel. Please proceed with your question.

Speaker Change: Yeah, Hey, guys good morning.

Speaker Change: Congrats Josh on the second quarter and outlook here.

Speaker Change: So Josh since we heard from you guys back in March obviously, there's a lot that's been going on out in the world.

Speaker Change: But maybe wondering if you can kind of walk us through kind of how those last three months look from a from a booking perspective.

Speaker Change: What we're trying to figure out here, where there were the stronger months versus softer months bookings have been pretty much status quo status quo across geographies and sourcing and maybe also wondering how bookings have looked more recently.

Speaker Change: Without the noise out in the marketplace around Iran, Israel and all that stuff you noted in your prepared remarks.

Speaker Change: Sure Mark So, yes, we definitely saw.

Speaker Change: More volatility in the month of April that's.

Speaker Change: That's probably should not be expected.

Speaker Change: So that took a dip versus where we were and the trajectory in March but.

Speaker Change: Hey nicely better than April and the first couple of weeks of June actually better than May so well.

Speaker Change: Well keep responding.

Speaker Change: Brokerage is a very tricky environment.

Speaker Change: Okay got you and then just as we think about the back half of the year.

Speaker Change: In your presentation that said youre, 93% booked for 2025.

And if we think about, you know, you guys have actually, you know, you've exceeded your first and second quarter guidance. And, you know, that was pretty much driven by stronger close-in pricing and onboard trends. So, you know, Josh, I guess I'm guessing as we think about the last two quarters, should we be thinking that, you know, there probably won't be as much potential upside to, you know, to your revised guidance given, you know, not as much close-in pricing is left. And then the real driver of yield out performance for the last six months is, you know, essentially just the onboard spend.

Speaker Change: If we think about you guys are actually you've exceeded your first and second quarter guidance.

Josh Weinstein: That was pretty much driven by stronger close in pricing and onboard trends. So Josh I guess I'm guessing as we think about the last two quarters should we be thinking that there probably won't be as much potential upside to your revised guidance given.

Speaker Change: Not as much close in pricing is left and then the real driver of yield out performance for the last six months is.

Is that kind of the right way to think about the next two quarters? Well, I mean, I think I'll answer maybe at a little bit of a higher level, which is I think it's fair to say, you know, the upside that we thought we'd have in December for the back half of the year is not is not at the same place. And hopefully people would expect that because the world over the last five, six months, six months, has taken some terms and terms that nobody expected. And as we talked about before, you know, in the grand scheme of things, a lot of times what happens is there's just, there's just a reflection for a lot of consumers about what does this mean for me, internalizing it, figuring it out, and then moving forward with their plans.

Speaker Change: Essentially just the onboard spend does that is that kind of the right way to think about the next two quarters.

Speaker Change: Well I mean, I'll take I'll answer maybe at a little bit of a higher level, which is I think it's fair to say.

Speaker Change: The upside that we thought we'd have in December for the back half of the year.

Speaker Change: It is not at the same place.

Speaker Change: Hopefully people would expect that because the world over the last five six months six months.

Speaker Change: Has taken.

Speaker Change: <unk> taken some terms in terms of nobody expected and as we've talked about before in the Grand scheme of things.

Speaker Change: What happens is there's just there's just a reflection for a lot of consumers about what does this mean for me.

And that's, that's all well and good. And that's part of the process when these types of things occur. The issue is, you know, there's just been a lot in the first half, a lot of those points in time, and I think the team's been doing an amazing job of delivering not only the actuals that you see in the first couple of quarters, but just continuing to figure out how to navigate the yield curve, and how we manage our revenue in this environment. So definitely not saying there's not upside, we're always going to, you know, strive to meet and exceed guidance.

Speaker Change: Internalizing it figuring it out and then moving forward with their plans and that's all well and good and Thats part of the process. When these types of things occur, but your issue is theres just been a lot in the first half.

Speaker Change: A lot of those points in time and I think the team has been doing an amazing job of delivering not only the actuals that you see in the first couple of quarters, but just continuing to figure out how to navigate the yield curve and how we manage our revenue in this environment, so definitely not saying theres not outside we're always going to strive to meet.

But yeah, no, definitely not the same, same view of the upside as we had in December. Okay, thanks, Josh. Appreciate it.

Speaker Change: <unk> guidance, but yeah, no definitely not the same.

Speaker Change: Okay.

Speaker Change: The upside is we had in December.

Speaker Change: Okay. Thanks, guys appreciate it.

The next questions are from the line of Robin Farley with UBS. Please proceed with your questions. Great. Yeah, sort of similarly thinking about the second half of the year, can you characterize a little bit how demand for Europe is in Q3? And then just thinking about, I totally understand your comments about, you know, what's going on in the world, impacting bookings. And also it seems like you, you know, maybe have less left to sell anyway for the second half. But in terms of, you know, onboard revenues, that's a little bit closer in. It seems like that came in well, despite, you know, kind of volatility and geopolitical events that people were still spending when they got on board.

Speaker Change: Okay.

Speaker Change: The next question is from the line of Robin Farley with UBS. Please proceed with your question.

Speaker Change: Great.

Speaker Change: Really thinking about the second half of the year can you characterize a little bit how demand for Europe is in Q3, and then just thinking about.

Speaker Change: Totally understand your comments about what's going on in the world impacting bookings and also it seems like you maybe have less left to sell anyway for for the second half but.

Speaker Change: In terms of onboard revenues, that's a little bit closer and it seems like that came in well despite kind of volatility and geopolitical events that people were still spending when they got on board. So does it seem reasonable that the onboard piece that there's maybe some upside potential in the second half from that.

So does it seem reasonable that the onboard piece, that there's maybe some upside potential in the second half from that? And I perfectly understand you may not want to bake it into your guidance today, but it sounds like the onboard spend did kind of continue through the period of volatility. Is that, you know, just trying to characterize that. Thanks. Good morning, Robin, how are you? So we clearly said one question is a follow up, but since it's you, so Europe Q3 is looking great. So nothing, nothing but good things to talk about there. With respect to onboard, you know, I say, you know, we outperformed as David, I think said in his notes, or maybe I did, I can't even remember, David, we outperformed on both the passenger revenue and the onboard.

Speaker Change: And perfectly understand you may not want to bake it into your guidance today, but.

Speaker Change: It sounds like the onboard spend did kind of continues through the period of volatility is that is that just trying to characterize that.

Speaker Change: Good morning, Robyn how are you.

Speaker Change: So.

Speaker Change: We just had one question a follow up since you.

Speaker Change: So Europe Q3 is looking great. So nothing nothing but good things to talk about there.

Speaker Change: With respect to.

Speaker Change: Onboard I'll say, we outperformed as David I think certainly as notes there might be I can't even remember David.

And the onboard was was really quite strong throughout the month of throughout the quarter. And so far, what we've seen in the first couple of weeks of June is that's continued. You know, what the yield guidance that we gave is, is, is based on, you know, what we want to be able to achieve on both the ticket and the onboard side. So it's, it's in there. As I said, we always want to outperform, but, but that's the guidance that we've, we've Okay, great, thank you, and I guess that already had my follow-up, so maybe just one, David.

Speaker Change: We outperformed on both the passenger revenue on the onboard.

Speaker Change: The onboard was was really quite strong throughout the month of June.

Speaker Change: The quarter and so far what we've seen in the first couple of weeks of June and that's continued.

Speaker Change: <unk>.

Speaker Change: The yield guidance that we gave is based on what we want to be able to achieve on both the ticket and the onboard side. So it's in there.

Speaker Change: As I said, we always wanted to outperform but but that's the guidance that we've given.

Speaker Change: Okay, great. Thank you and I guess that I had my phone.

Thank you, Robyn. But just if I could just mention one. Oh, wait, are you serious? Okay, all right, all right, go ahead. No, no, no, no, not a question, just a suggestion that when David, just talking about the impact of the rewards program next year, just that maybe next year in the first year of the program it might be helpful for all of us if you kind of break out what the yield would have been under the old accounting, you know, just so we can see whether it's, you know, if it's 50 basis points, it's more, if it's less, just that might be helpful in the first year, so just that thought, no follow-up question, thanks.

Speaker Change: So maybe just one David.

David Katz: Thank you Robyn.

Speaker Change: But just if I could just mentioned went away.

Speaker Change: Alright, alright.

Speaker Change: No no no no not a question just a suggestion that when David just talking about the impact of the rewards program next year, just maybe next year in the first year of the program it might be helpful. For all of US if you kind of break out what the yield would have been.

Speaker Change: Under the old accounting, just so we can see whether it's.

Speaker Change: Is it 50 basis points, that's more if its less just that might be helpful. In the first year. So just wanted to just not sought no follow up question. Thanks.

Yeah, happy to do that when the time comes in the back. Thank you.

Speaker Change: Yeah happy to do that when the time comes in the back half of 2006.

The next questions are from the line of Brandt Montour with Barclays. Please proceed with your questions. Good morning, everybody. Congrats on the quarter. First question is on the consumer, Josh. The lower-income consumer, we're seeing some struggle in that segment across other travel verticals, but we've seen that for the last two years, and you guys have done really well throughout that. I just want to get your thoughts on geopolitical events aside. If that consumer feels different today, right now, this year, first half, whatever you want to talk about, versus last year or the year before, if you think you can keep knocking the ball off the cover with that consumer, if they're accumulating a struggle, that's going to start showing up.

Speaker Change: Thank you.

Speaker Change: Our next questions are from the line of Brent <unk> with Barclays. Please proceed with your question.

Speaker Change: Good morning, everybody congrats on the quarter.

Speaker Change: First question is on the the consumer Josh.

Speaker Change: Lower income consumer we're seeing.

Speaker Change: Seeing some struggle in that segment across other travel verticals, but we've seen that for the last two years and you guys have done really well throughout that I just I wanted to get your thoughts on geopolitical events. Aside is that consumer feels different today right. Now this year first half whatever you want to kind of talk about versus last year or the year before.

Speaker Change: Sure.

Speaker Change: Do you think you can kind of keep sort of knocking the ball to cover with that consumer if thats. If there is sort of accumulating a struggle.

Sure, so we haven't seen anything that's really showing us a differentiation and patterns between the lower end consumer and those that are looking for the premium or even the luxury. So nothing in particular to speak of. I go back to what I've said a lot, which a lot of people say is, we are an incredibly stupid value when it comes to the alternatives. And when people are looking to take vacation, because they do, we hold up really, really well. And the lower down you come in income, the more important that becomes, because they have to make their dollars really earn on their vacation.

Speaker Change: I'm going to start showing up.

Speaker Change: Sure so.

Speaker Change: Haven't seen anything that's really showing us a differentiation and patterns between the.

Speaker Change: Lower end consumer and those that are looking for the premium or even the luxury so.

Speaker Change: Nothing in particular to speak of.

Speaker Change: I'll go back to what I, what I've settled a lot, which a lot of people say is we are incredibly stupid value when it comes to the alternatives and when people are looking to take vacation because they do.

Speaker Change: We hold up really really well and the lower down you come in income and the more important that the comps.

And that's what we try to do for everybody. Okay, thanks for that. And then just a second, or another go at the second half here, just looking at the implied guide and the cadence, it does, you know, it does look like the fourth quarter implied guide is higher than the third quarter. You know, we know that, and the third quarter is obviously below the last couple quarters run rate growth. And so if Europe's not softer, or there's anything to say there, then is it fair to say that the fourth quarter just has a sequential lift implied from the ramping up of the island?

Speaker Change: Because they have to make their dollars really earn earn on their vacation and that's what we tried to do for everybody.

Speaker Change: Okay. Thanks for that and then just a second or another go at the second half or just looking at the implied guidance.

Speaker Change: It does yes. It does look like the fourth quarter implied guide is higher than the third quarter.

Speaker Change: We know that that in the third quarter is obviously below that.

Speaker Change: The last couple of quarters run rate growth.

Speaker Change: So if europe's not.

Speaker Change: Softer or there's anything to say there then is it fair to say that the fourth quarter just has a sequential lift implied from the ramping up of the island or is there sort of anything else in there that we could maybe highlight.

Or is there sort of anything else in there that we could maybe highlight? Yeah, you know, the certainly celebration key is, is, is helpful in our portfolio. So we're happy about that, you know, but taking a step back from percentages, when you look at actual dollars, the increases that we're forecasting, because Q3 is seasonally higher as a base, they're each eight bucks higher year over year. So Okay, great. Thanks for that, guys. Congrats again on the quarter.

Speaker Change: Yes.

Speaker Change: Certainly celebration key has helped.

Speaker Change: In our portfolio. So we're happy about that but taking a step back from percentages. When you look at absolute dollars. The increases that we're forecasting because Q3 is seasonally higher as a base the reshape of higher year over year.

Speaker Change: No.

Speaker Change: Okay, great. Thanks for that guys congrats again on the quarter.

The next question is from the line of James Hardiman with Citi. Hey, good morning. Thanks for taking my call. And, you know, obviously, congrats on another strong quarter here. So Josh, you talked about a little bit of weakness in April, followed by a pickup from April to May, and then from May to June. I wanted to sort of connect that to the booking commentary for 2026. I think coming out of Q1, we were ahead in terms of bookings, and we're in line now. Should the narrative ultimately be that... We saw a little bit of a lull in booking demand, but that you held strong on pricing throughout, just given the fact that you've got a lot of time, obviously, to fill out that order book.

Speaker Change: Thanks.

Speaker Change: The next question is from the line of James Hardiman with Citi.

Speaker Change: With your question.

James Hardiman: Hey, good morning, Thanks for taking my call.

Speaker Change: Obviously, congrats on another strong quarter here so.

James Hardiman: <unk>.

Speaker Change: Josh you talked about a little bit of weakness in April followed by a pickup in from April to May and then from May to June.

Speaker Change: I wanted to sort of connect that to the booking commentary.

Speaker Change: For 2026, I think I think.

Speaker Change: Coming out of Q1, we were ahead in terms of bookings.

Speaker Change: And were in line now.

Speaker Change: So the narrative ultimately be that that.

Speaker Change: You saw a little bit of a lull in.

Speaker Change: Booking demand, but you held strong on pricing throughout.

Or maybe I'm connecting dots that shouldn't be connected. Yeah, no, I think generally, excuse me, I agree. You know, we don't have to panic and we don't have to do silly things. So, you know, volatility comes and it goes. And like I said, our teams are managing the curve and trying to do the right things and staying ahead of the game. Got it. That's helpful. And then I mean, you talked about up top how it's way too early to really anticipate sort of the Middle East conflict and how it might impact your business, but just based on where things are happening, right?

Speaker Change: Just given the fact that you've got a lot of time, obviously to fill out that order book.

Speaker Change: Or maybe I'm connecting back, but it shouldnt be connected.

Speaker Change: Yeah, No I think good morning, John generally excuse me I agree.

Speaker Change: We don't have to panic, and we don't have to do silly things so.

Speaker Change: Volatility comes and it goes and our guests are our teams are managing.

Speaker Change: Managing the curve and trying to do the right things and stay on a head to head up again.

Speaker Change: Got it that's helpful and then.

Speaker Change: I mean, you talked about how it's way too early to really anticipate sort of sort of the middle east conflict and how it might impact your business, but.

This is. Yeah, crystal balls are nice. But, you know, we really only have a couple of ships at the very end of this year and for the for the winter, a few months into 2026, that would that would potentially have their itineraries impacting and that's because they go and base themselves out of Dubai. And we're obviously we have mitigation plans, and we're looking at this and we'll make the right decision at the right time. But you know, we already avoid the Red Sea, as you know, so you know, and when it comes to things like world cruises and exotic cruises, we really have no exposure in this area through the end of 2026.

Speaker Change: Based on.

Speaker Change: Where things are happening right. This isn't.

Speaker Change: New at least in terms of having to take.

Speaker Change: That part of the World off the board right going back to the Israel Gaza conflict do you anticipate.

Speaker Change: Where we sit today having.

Speaker Change: Meaningfully changed any itinerary.

Speaker Change: Crystal balls are nice but.

Speaker Change: We really only have a couple of ships at.

Speaker Change: The very end of this year and for the winter a few months into 2026 that would that would potentially have there are scenarios impacting and that's because they've got one based on sales out of Dubai.

Speaker Change: And we're obviously, we have mitigation plans and we're looking at this and we will make the right decision at the right time.

Speaker Change: But we already avoid the Red Sea as you know so.

Speaker Change: When it comes to things like World cruises, and exotic cruises and we really have no exposure in this area through the end of 2026 so.

So, you know, we'll say that's going to be paramount, and it always is. So we'll make the right decision as we understand what the lay of the land Got it. That's helpful. Thanks, Jeff.

Speaker Change: Sure.

Speaker Change: Be paramount and it already there so we'll make the right decision as we understand what the labor line it looks like.

Speaker Change: Got it that's helpful. Thanks, Jeff.

The next questions are in the line of Conor Cunningham with Melly's Research. Pleasure to see you. Hi, everyone. Thank you. Just on the 3Q cost guide, there's a couple things in there that I wanted to just understand a little better. I think you talked a little bit, I think you talked about 200 basis points of timing related stuff that shifted from 2Q to 3Q. And then you mentioned Celebration Key. Could you just, you know, give a number on Celebration Key, what that headwind is? I'm just trying to, it's more for 26, as that kind of normalizes throughout the, as it matures and whatnot.

Speaker Change: Thanks, guys.

Speaker Change: The next questions are from the line of Conor Cunningham with Melisa Research. Please proceed with your questions.

Conor Cunningham: Hi, everyone. Thank you just on the <unk> cost guidance, there's a couple of things in there that I wanted to just understand a little better I think you've talked a little bit I think you're talking about 200 basis points of timing related stuff that shifted from <unk> to <unk> and then you mentioned celebration Keith could you just.

Conor Cunningham: Give a number on celebration key what that headwind is I'm just trying to it's more for 'twenty six is that kind of normalizes throughout.

Thank you. Sure, so the four factors that I included was about half of the increase, and the total increase is 7%. Celebration key, I had mentioned, was about a half a point impact for the full year, so it's about a full point for the back half of the year in each of the third and the fourth quarter. I didn't say it was 200 basis points for the one-time benefits from last year. just that we had mentioned it, but it's about a point in the third quarter for that particular item. So a point for Celebration Key, a point for the one-time benefit, and the advertising and the lower capacity was probably worth, between the two, a little over a point.

Speaker Change: As it matures and whatnot. Thank you.

Speaker Change: Sure.

Speaker Change: For factors that I included it was about half of the increase in the total increase is 7% celebration key I had mentioned.

Speaker Change: A point of impact for the full year. So it's about a couple points for the back half of the year on a truck.

Speaker Change: Third in the fourth quarter.

Speaker Change: I didn't say it was 200 basis points for the one time benefit from last year.

Speaker Change: Just you had mentioned it.

Speaker Change: It's about a point in the third quarter for that particular, right South point for celebration key points for the one time benefit.

Speaker Change: And the advertising M D.

Speaker Change: The lower capacity was probably worth between the two a little over a point.

Okay, helpful.

And then just on loyalty, I don't know how much you want to talk about this, but you mentioned the airlines and how they've benefited from that. When those companies talk about it, they talk a lot about the marketing component related to the credit card agreements that they have as well that are tied to it. I think you extended your credit card relationship with Barclays in 2022. When does that expire? And just, do you have any details around how many people actually have the card today? I'm sorry, you said you want to know how it ties to the credit card?

Speaker Change: Okay helpful and then just on loyalty.

Speaker Change: I don't know how much you want to talk about this but you mentioned the airlines and how they've benefited from that when most companies talk about it.

Speaker Change: Talk a lot about the marketing component related to the credit card agreements that they have as well that are tied to it.

Speaker Change: I think you extended your credit card relationship with Barclays in 2022, when does that expire and just do you have.

Speaker Change: Any details around.

Speaker Change: Having gone through that.

Speaker Change: I'm, sorry, you said.

Is that? Is that the question? Yeah, yeah. Yeah. So basically, you mentioned the airlines, I'm just trying to make the parallel because they talked, I mean, the numbers, they're huge. And so just like how many people actually have the card, what percentage of, you know, marketing revenue of your overall revenue you get from the marketing component from the credit card, just any details there, I think would be really helpful. Thank Okay. I appreciate it.

Speaker Change: I'm sorry.

Speaker Change: I don't know how it ties to the credit card is that is that the question, yes, yes, yes.

Speaker Change: You mentioned the airlines I'm, just trying to make the parallel because they.

Speaker Change: I mean, the numbers there are huge and so just like how many people actually have the card what percentage of marketing revenue.

Speaker Change: Of your overall revenue you get from the marketing component from the credit card just any details there I think would be really helpful. Thank you.

Speaker Change: Okay got it so I'd, rather not give specifics just from a competitive standpoint, but I would say that.

Speaker Change: The existing program that we have.

Speaker Change: For loyalty is associated with our co branded credit card from Carnival and several of our other brands have the same thing and that's a very successful program in and of itself. The benefit of the new program. One of the benefits is there is there is a distinct tie between the two which does not mean you need a credit card Carnival credit card.

Speaker Change: To be able to enjoy being part of the loyalty program, but having to card will supercharge your ability to generate points generate status and.

Speaker Change: And we'll be talking more about that by the time. It gets at the end of the year just from a consumer standpoint about exactly how all of it will work, but we.

Speaker Change: Hard as it is.

Speaker Change: Great Great part of this and so the card will be part of us for the foreseeable future.

Thank you. The next questions are from the line of David Katz with Jeffreys. Pleasure to see you through questions. Hi, good morning, everybody. Thanks for taking my question. I wanted to just dig a little deeper on the ship sale, if you don't mind. I see, I think you've given us the gain, but not sort of what the amount or any color around a multiple on what that would be. And, you know, any thoughts around that strategically? And, you know, do you look at these as sort of a recycling exercise, you know, that could potentially grow over time?

Speaker Change: Okay I appreciate it thank you.

Speaker Change: Sure.

Speaker Change: The next question is from the line of David Katz with Jefferies. Please proceed with your questions.

David Katz: Hi, Good morning, everybody. Thanks for taking my question I wanted to just dig a little deeper on the ship shale.

David Katz: If you don't mind.

Speaker Change: I see I think you've given us the gain but not sort of what the amount or any color around a multiple.

Speaker Change: And what that would be and any thoughts around that strategically.

Speaker Change: Do you look at the use is sort of a recycling exercise.

So we had sold the Costa Fortuna. And we announced that in the second quarter and in the first quarter that was sold. We talked about both previously. In the case of the Costa Fortuna, we have sold many ships over time, and this is really just in the normal course of revitalization of our fleet. forward over time. His ships do get older, we will sell them to other parties. We do not feel that those parties come back to compete again. They are generally in different markets. These are opportunistic, it was opportunistic. People came to us looking for ships and gave us prices that we thought is the best long-term interest of the company and so we made the decision.

Speaker Change: That could potentially grow over time.

Speaker Change: So we had sold the <unk>.

Speaker Change: <unk> solid tumor.

Speaker Change: Kevin when you announced that in the second quarter and then the first quarter.

Speaker Change: Ship that one so.

Speaker Change: We talked about both.

Speaker Change: <unk> previously.

Speaker Change: In the case of the cost of approaching that.

Speaker Change: We have so many ships over time.

Speaker Change: This is really just in the normal course revitalization of our fleet as we move forward.

Speaker Change: <unk> chips.

Speaker Change: Chips, you'll get older we will sell them to other parties.

Speaker Change: We do not feel that those parties come back to compete against us because they are generally in different marketplaces.

Speaker Change: Great.

Speaker Change: Understood.

Speaker Change: These are opportunities for <unk>.

Speaker Change: Yes.

Speaker Change: It was opportunistic people came to us looking for shifts and gave us prices that we thought it was the best long term interest of the company.

It doesn't impact Costa's capacity when it comes to its main markets of Europe because it's going to be taking the one ship that it had that was doing a lot of charter business in Asia and Korea and Taiwan and Japan and we're going to be moving that back to Europe, which is slightly bigger, so it's actually going to be increasing its capacity in Europe, which is a great sign for Costa.

Speaker Change: And so we've made the decision that doesn't impact cost of capacity when it comes to its main markets of Europe, because it's going to be taking the one shifts that had had that was doing a lot of charter business in Asia, and Korea, and Taiwan and Japan.

Speaker Change: We're going to be moving that back to Europe, which is slightly bigger so it's actually going to be increasing its capacity in Europe, which is a great time for costa as well.

Understood. Sorry for cutting in. But I wanted to see if we might be able to get some color on the multiples or valuations or, you know, any perspective at all on what those ships sold for. Well, it was it was nicely overbooked value. And we'll just leave it at that. Okey-doke. Thanks, nice quarter.

Speaker Change: And just sorry for cutting in but I wanted to see if we might be able to get some color on the multiples.

Speaker Change: Or valuations or any perspective at all on what those ships sold for X.

Speaker Change: Well it was it was nicely over book value and we'll just leave it at that.

Thanks, David. Our next question is from the line of Sharon Zackfia with William Blair. Hi, good morning, thanks for taking the question. I wanted to ask more about the loyalty program. So I understand the deferral of revenue, but I'm also curious, it seems as if this would also kind of goose onboard spending quite a bit if passengers are getting rewarded for total spend. So how do we think about kind of a partial offset there in terms of onboard spend potentially accelerating and will passengers actually have kind of real-time tracking of their spending onboard towards points?

Speaker Change: Okay. Thanks.

Speaker Change: Thanks nice quarter.

Speaker Change: Thanks, Dave.

Speaker Change: Our next question is from the line of Sharon Zackfia with William Blair. Please proceed with your question.

Sharon Zackfia: Hi, good morning, and thanks for taking the question I wanted to ask more about the loyalty program. So I understand the deferral of revenue, but I'm also curious it seems as if this would also kind of goes onboard spending quite a bit if if passengers are getting rewarded for total spend so how do we think about kind of parcel.

Speaker Change: All set there.

Speaker Change: Terms of the onboard spend potentially accelerating and will passengers actually have kind of real time tracking of their spending on board towards planes and how are you going to use data to kind of facilitate all of that on board.

And how are you going to use data to kind of facilitate all of that onboard? Yeah, so that's a great question. So as far as will it cannibalize onboard spending, no, the answer is no, we do not believe that that will. Oh no, I thought maybe it would boost onboard spending. Yeah. So, you know, we think the engagement and the ability to earn points through spend is a great thing. So, you know, it's kind of like Celebration Key. This doesn't start for a year, so we'll talk a lot more once the program is in place and we can talk about, you know, what it is that we're seeing.

Speaker Change: Yeah. So.

Speaker Change: Great question.

Speaker Change: So as far as will it cannibalize onboard spending now the answer is no. We do not believe that the Ono I thought I thought maybe it would boost onboard spending.

Speaker Change: Yeah, So we think the engagement and the ability to earn points.

Speaker Change: <unk> is a great thing so.

Speaker Change: It's kind of like celebration. This doesn't start for a year. So we'll talk a lot more once the program is in place and we can talk about what it is that we're seeing but the whole the whole Gulf is like at the end of the day.

But the whole goal is, look, at the end of the day, Carnival Cruise Line is an incredibly successful brand that's got a great base of loyal guests, and so much so that it's just hard. It's hard to be able to provide operationally all the things that we'd like to provide because there's just too many folks with loyalty tiers on our ships. And that's a good problem to have, but it is a problem. We want to make sure that we're delivering great experiences for our loyal guests. So this is a way to be able to address that, stay engaged with our guests, and hopefully they'll see the benefits as the program gets rolled out and really meaningful.

Speaker Change: Carnival cruise line is an incredibly successful brand that's got a great base of loyal guests and so much. So that it's just hard it's hard to be able to provide operationally all the things that we'd like to provide because there's just too many folks with the royalty tiers.

Speaker Change: On our ships.

Speaker Change: That's a good problem to have but it is a problem we want to make sure that we're delivering great experiences.

Speaker Change: For our loyal guests. So so this is a way to be able to address that stay engaged with our guests and hopefully they will see the benefits.

Can I ask a follow-up, Josh? I think about a year ago you talked about about 35% of on-board being pre-booked. Can you give us an update on where that stands today? Yeah, it's more or less the same, a little bit higher. But it's more or less there. We don't you know, and I've said this before, we don't have a, we don't have a particular target in mind. What we're looking to do is provide our guests with lots of different ways and alternatives to be able to spend on their vacation with us. And we're doing that through bundles, we're doing that through packages, we're doing that through targeted offers.

Speaker Change: As the program gets rolled out and really lean into them.

Speaker Change: Can I ask a follow up Josh I think about a year ago, you talked about about 35%.

Speaker Change: On board being pre booked can you give us an update on where that stands today.

Speaker Change: Yes, it's more or less the same a little bit higher, but it's more or less.

Speaker Change: And I've said this before we don't have we don't have a particular target in mind, but we're looking to do is to provide our guests with lots of different ways and alternatives to be able to.

Speaker Change: Spend on their vacation with us.

And of course, spending on board in real time while you're there. So as long as we keep seeing progress, it's obviously all flowing into the onboard spending numbers that we talked about and report on, which are consistently going up quarter over quarter. And we expect that to continue. Okay, great.

Speaker Change: Doing that through bundles, we're doing that through packages, we're doing that through targeted offers.

Speaker Change: Of course spending on board in real time, while Youre there so.

Speaker Change: As long as we keep seeing progress. It's obviously all flowing into the onboard spending numbers that we talked about and report on which are consistently growing up quarter over quarter.

Thank The next questions are from the line of Jian Xu with BNP Paribas, please proceed with Hi, thanks for the question. I want to ask a little bit more about Relax Away and Isla Tropicana. I think Half Moon had about 900,000 visitors in Mahogany Bay, about 500,000 previously. Can you talk about maybe the opportunity you see for those islands and how big they could get? Unknown Executive, Charles Scholes, Sharon Zackfia, Benjamin Chaiken, David Bernstein, Conor Cunningham, Christopher Stathoulopoulos, Xian Sam, David Bernstein, Benjamin Chaiken, Conor Cunningham, Christopher Stathoulopoulos, Xian Sam, David Bernstein, Conor Cunningham, Great. Thanks so much and good luck.

Speaker Change: We expect that to continue.

Speaker Change: Okay, great. Thank you.

Speaker Change: Okay.

Speaker Change: The next questions are from the line of Xi'an <unk> with BNP Paribas. Please proceed with your question.

Speaker Change: Alright. Thanks for the question I wanted to ask a little bit more about relapse when Tropicana.

Speaker Change: Thank halfmoon and about 900000 visitors in mahogany Bay about 500000 previously can you talk about maybe the opportunity you see for.

Speaker Change: For those islands, and how big that could get.

Speaker Change: With the expansion sure well with respect to share with respect to relapse away.

Speaker Change: The output can be significantly higher.

Speaker Change: 900000.

Speaker Change: Certainly double.

Speaker Change: More because in today's world, there's one shift of tenders and Thats pretty much the extent of the operations and we're going to be able to berth two shifts and still have the ability to tender and the existing location because we're building out the infrastructure on the island, we feel good that we can still accommodate all of those folks and have them enjoying amazing.

Speaker Change: Experience as you've heard me talk about it.

Speaker Change: Notes at the beginning of this call with respect to easily Tropic, how we're going to be able to enhance the experience.

Speaker Change: There were not talking about doing anything on the marine side to be able to accommodate more shifts, but we can accommodate two shifts at a time. So we feel real good that we'll have the ability to maximize.

Speaker Change: That brought destination as well over time I don't have the number for you on Easter chocolate cow.

Speaker Change: I'm sure, we'll be able to talk more about that as we get those developments, where we where we want them to be.

Thank you.

We have time for one more, Robert. Thank you. That will be coming from the line of Chris Stathoulopoulos with Susquehanna. Good morning, everyone. Thanks for getting me in here. I'll keep it to one Josh, you know, we've spoken in the past on the the loyalty program, obviously, it is a big piece of the story with respect to airlines, but want to understand why the change now, you know, is this contemplated back at your Investor Day, I think it was two years ago, and feedback so far. And then part B, David, the half point impact for next year, any color that you can give with respect to what's assumed with acquisitions and existence?

Speaker Change: Great. Thanks, so much and good luck.

Speaker Change: Thank you.

Speaker Change: We have time for one more I think that that will be coming from the line of Chris <unk> with Susquehanna. Please proceed with your question.

Speaker Change: Good morning, everyone. Thanks for getting me in here I'll keep it to one Josh we've spoken in the past on the loyalty program obviously.

Speaker Change: It is.

Speaker Change: A big piece of the story with respect to airlines, but want to understand why the change now was this contemplated back at your.

Speaker Change: Investor Day, I think it was two years ago and feedback so far and then part B David the half point impact for next year any color that you can give with respect to what's assumed with acquisitions and existing users.

So with respect to the loyalty program, no, it wasn't something that that we, you know, two years ago, we're kind of, you know, focused on it, I wasn't focused on it. So I guess that's the answer to the question. Yeah, and the half a point really just comes from the fact that once the program starts, we do have to initially defer a portion of the ticket price that's associated with the benefits that people will earn from the program. So, you know, as I said, we don't expect incremental costs associated with the new program. program. And it's just a deferral.

Speaker Change: So with respect to the loyalty program no. It wasn't something that we two years ago were kind of focused on hurwitz I wasn't focused on it.

Speaker Change: So I guess that answers the question.

Speaker Change: Yes, they have.

Speaker Change: A point really just comes from the fact that once the program starts we gave them perhaps to initially differ.

Speaker Change: <unk> is the ticket price that's associated with the benefits that people will earn.

Speaker Change: Under the program.

Speaker Change: So I.

Speaker Change: We don't expect incremental costs associated with the new program versus the existing program.

Because, you know, initially, when this first starts, you're not going to see the redemption of any benefits immediately. And therefore, you're not getting revenue from the redemption. So it'll take some time for it to normalize itself. Okay, thank you. Okay, so I'll just say thank you, everybody, for joining us for another earnings call. And from my team, I'd say, take a bow. Congratulations on exceeding sea change targets 18 months in advance. That is an amazing job. Well done. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: It's just a deferral because initially when this first starts youre not going to see the redemption of any benefits immediately and therefore youre not getting revenue from the redemption. So it will take some time for it to normalize itself as I indicated.

Speaker Change: Okay. Thank you.

Speaker Change: Okay. So I'll just say.

Speaker Change: Thank you everybody for joining us for another earnings call for my team might say take about congratulations on exceeding sea change targets 18 months in advance how does an amazing job well done.

Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.