Q2 2025 Royal Caribbean Group Earnings Call

Speaker: Globally inspired food, exclusive destinations, and exciting itineraries.

Speaker: We're nautical miles ahead of any other vacation.

Speaker: From bartenders who remember your favorite cocktails, to concierges who you'll swear can read minds, you'll always feel like a regular. Once you explore the world with us, you'll never want to vacation any other way.

At Celebrity Cruises, we elevate every detail beyond what you thought a vacation could be, with globally inspired food, exclusive destinations, and exciting itineraries or nautical miles ahead of any other vacation.

From bartenders who remember your favorite cocktails to those you’ll swear can read your mind, you’ll always feel like a regular.

Once you explore the world with us, you'll never want a vacation any other way.

Speaker: Good morning.

Regina: My name is Regina, and I will be your conference operator today.

Speaker: At this time, I would like to welcome everyone to the Royal Caribbean Group second quarter 2025 earnings call. All participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session.

Speaker: To ask a question during this session, you'll need to press star one on your telephone keypad.

Blake Vanier: I would now like to introduce Blake Vanier, vice president of investor relations. Mr. Vanier, the floor is yours.

Good morning. My name is Regina, and I will be your conference operator. Today, at this time, I would like to welcome everyone to the Royal Caribbean Group Q2 2025 Earnings Call. All participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star 1 on your telephone keypad. I would now like to introduce Blake Vanier, Vice President of Investor Relations. Mr. Vanier, the floor is yours.

Jason Liberty: Good morning, everyone. And thank you for joining us today for our second quarter 2025 earnings.

Jason Liberty: Joining me here in Miami are Jason Liberty, our Chief Executive Officer, Naftali Holtz, our Chief Financial Officer, and Michael Bayley, President and CEO of the Royal Caribbean Bank. Before we get started, I'd like to note that we will be making forward-looking statements during this call. These statements are based on management's current expectations and are subject to risks and uncertainty. A number of factors could cause actual results to differ materially from our current expectations.

Good morning everyone. And thank you for joining us today. For our second quarter 2025 earnings call.

Joining me here in Miami are Jason Liberty. Our chief executive officer, North Polly Holtz, our Chief Financial Officer, and Michael Bailey, president, and CEO of the Royal Caribbean brand.

Before we get started, I'd like to note that we will be making forward-looking statements during this call.

Speaker: Please refer to our earnings release issued this morning, as well as our filings with the SEC, for a description of the results. We do not undertake to update any forward-looking statements as circumstances change.

These statements are based on Management's, current expectations, and our subject to risks and uncertainties. A number of factors could cause actual results to differ materially from our current expectations, please refer to our earnings release issued this morning as well as our filings with the SEC for a description of these factors.

Speaker: Also, we will be discussing certain non-GAAP financial measures, which are adjusted as defined, and a reconciliation of all non-GAAP items can be found on our investor website and in our earnings report. Unless we state otherwise, all metrics are on a constant currency adjusted.

We do not undertake to update any forward-looking statements as circumstances change. Also, we will be discussing certain non-GAAP financial measures, which are adjusted as defined in a reconciliation. All non-GAAP items can be found on our investor website and in our earnings release.

Jason Liberty: Jason will begin the call by providing a strategic overview and update on the business.

Unless we State, otherwise all metrics are on a constant currency adjusted basis.

Naftali Holtz: Naftali will follow with a recap of our second quarter, the current booking environment, and our outlook for 2020. We will then open the call for your questions.

Jason Liberty: With that, I'm pleased to turn the call over to Thank you, Blake. And good morning, everyone. I am thrilled to share our strong second quarter results and updated outlook for the are world-class brands and the exceptional experiences they offer continue to resonate deeply with consumers driving both strong demand and excellent financial Our second quarter results exceeded expectations, mainly driven by stronger than expected close in demand, a shift in the timing of some expenses. The favorability below the line that was mainly driven by the outperformance of our two recruits' joint venture and lowering. We're also increasing our earnings guidance for the year and now expect adjusted earnings per share to grow 31% year-on-year.

Jason will begin the call by providing a strategic overview and update on the business. Methali will follow with a recap of our second quarter, the current booking environment, and our outlook for 2025, we will then open the call for your questions.

With that, I'm pleased to turn the call over to Jason.

Thank You, Blake and good morning, everyone. I am thrilled to share our strong second quarter results and updated outlook for the year.

Our world-class Brands and the exceptional experiences. They offer continued to resonate deeply with consumers driving both, strong demand, and excellent Financial results.

Our second quarter results, exceeded expectations, mainly driven by stronger than expected, close in demand a shift in the timing of some expenses and favorability below the line that was mainly driven by the outperformance of our 2E. Cruisers joined Venture and lower interest costs.

We are also increasing our earnings guidance for the year and now expected just at earnings per share to grow 31% year-over-year.

Jason Liberty: We are delivering exceptional value to our guests while continuously raising the bar with a powerful pipeline of industry and segment-leading new ships, a growing portfolio of meaningfully differentiated land-based private destinations. Adding new experiences to our ecosystem like river cruising and deploying unmatched digital and AI innovation to enhance the guest experience and maximize margin. These key differentiators and accelerators are resulting in another significant increase to this year's earnings estimates and accelerating our path to achieving our perfected financial targets by 2027 as we continue to win share on the rapidly growing $2 trillion global vacation. Like we have said before, our ambitions go well beyond perfection.

We are delivering exceptional value to our guests while continuously raising the bar with a powerful pipeline of industry and segment leading new ships, a growing portfolio of meaningfully differentiated land-based private destinations adding new experiences to our ecosystem, like River cruising and deploying unmatched digital and AI Innovation to enhance the guest experience and maximize margins.

These key differentiators and accelerators are resulting in another significant increase to this year's earnings estimates and accelerating our path to achieving our perfective, financial targets by 2027. As we continue to win, share on the rapidly growing 2 trillion dollar Global vacation Market.

Jason Liberty: as our strategic initiatives are designed to drive significant growth for years to come. In 2028 alone, we expect significant benefits from our current strategies, which, among many others, include the launches of OASIS-7 and EDGE-6, as well as full-year benefit of ICON-4 . full year operation of Perfect Day Mexico, Royal Beach Club La Lapa at full capacity. and the first complete operational year of Celebrity Revealed.

Like we have said before our Ambitions go, well, beyond perfecta as our strategic initiatives are designed to drive significant growth for years to come.

Jason Liberty: As we advance our journey to help our guests turn the vacation of a lifetime into a lifetime of vacations, we're already creating lasting memories for our growing guest base and significant long-term value for I want to thank the entire team here at the Royal Caribbean Group for their passion, dedication and commitment to continue to deliver the best vacation experiences responsibly every single day.

Operation. A perfect day in Mexico. Royal Beach Club laafa at full capacity and the first complete operational year of celebrity River.

As we advance our journey, to help our guests turn the vacation of a lifetime into a lifetime of vacations. We're already creating lasting memories for our growing guest base and significant long-term value for our shareholders.

I want to thank the entire team here at the Royal Caribbean group for their passion, dedication and commitment, who continue to deliver the best vacation experiences responsibly every single day.

Jason Liberty: Turning to our results and outlook. In the second quarter, our capacity increased 6% as we delivered over 2 million incredible vacations. 10% increase year-over-year at high guest satisfaction. Net yield grew 5.2%, 70 basis points higher than our guidance, but was driven by better than expected close-in demand across all key items. yield growth was split evenly between new hardware and the existing Low factor was 110%. Two percentage points higher than last year, driven by contributions from new ships and improvements on like-for-like basis across our itineraries, highlighting the continued strength in demand for our. We delivered adjusted earnings per share of $4.38 for the second quarter, which was 36% higher than last year and exceeded our guidance by 30%.

Turning to our results and Outlook.

In the second quarter, our capacity increased 6% as we delivered over 2 million incredible vacations, a 10% increase year-over-year, at high guest satisfaction scores.

Net yield grew 5.2%, 70 basis points higher than our guidance. It was driven by better-than-expected close-in demand across all key itineraries.

Yield growth was split evenly between new hardware and the existing Fleet most Factor was 110%.

2 percentage points higher than last year driven by contributions from new ships and improvements on like for like basis, across our itineraries, highlighting the continued strength in demand for our brands.

Jason Liberty: The outperformance was driven by better revenue, a shift in the timing of some expenses, and better below-the-line performance.

We delivered adjusted earnings per share of 4 dollars and 38 cents for the second quarter, which was 36% higher than last year and exceeded our guidance by 33 cents.

Naftali Holtz: Naftali will elaborate more on Q2 results in a few minutes.

The outperformance was driven by better Revenue, a shift in the timing of some expenses and better below the line performance.

Jason Liberty: Now I'll provide some insight into the demand environment. Bookings have accelerated since the last earnings call, particularly for close-ins. We continue to see engaged and excited consumers, with roughly 75% intending to spend the same or more on leisure travel over the next 12 months. At the same time, more than half of consumers tell us They are booking closer to their departure date than they used to, and for the people who intend to travel over the next 12 months, the majority have not yet. Our book position is in line with prior years at higher APDs for both 2025 and 2020.

Natalie will elaborate more on Q2 results in a few minutes.

Now I'll provide some insight into the demand environment booking to have accelerated since the last earnings call, particularly for clothes and families. We continue to see engaged and excited, consumers with roughly 75% intending to spend the same or more on Leisure Travel over the next 12 months.

At the same time, more than half of consumers, tell us.

they are booking closer to their departure date than they used to and for the people who intend to travel over the next 12 months, the majority have not yet booked

our book position is in line.

Jason Liberty: In addition, onboard spend and pre-cruise purchases continue to exceed prior These trends are supported by the exceptional strength in our digital channels in terms of both cruise bookings and pre-cruise bookings. Our spectacular new ships continue to generate strong quality demand. Earlier this month, we took delivery of Star of the Seas, and I can say that she is just as impressive as we had intended. We look forward to her star-studded launch in just a few weeks. Bookings for Star of the Seas and Celebrity Excel, which is coming in the fourth quarter, are strong in both pricing and loads.

With prior years at higher APDs for both 2025 and 2026. In addition, onboard spending and pre-cruise purchases continue to exceed prior years.

These Trends are supported by the exceptional strength. In our digital channels in terms of both Crews booking and pre-recorded purchases

our spectacular new ships continue to generate strong quality demand earlier this month. We took delivery of star of the Seas and I can say that she is just as impressive as we have intended.

We look forward to her star-studded launched in just a few weeks.

Jason Liberty: We also recently opened the Royal Beach Club Paradise Island for sale, and early demand has been incredibly strong, reinforcing our strategy of delivering exclusive, destination-led experiences that elevate the vacation value proposition within our ecosystem. We conduct independent research and leverage data points from millions of daily interactions with our customers. We continue to see very positive sentiment from our customers bolstered by strong labor markets, high wages, surplus savings and elevated wealth. Overall, consumers remain financially confident, with three out of four indicating that they feel financially Leisure and travel spend continues to grow and leisure travel continues to be the number one category when consumers plan to increase spending over the next 12 months.

Bookings for star of the Seas and celebrity Excel, which is coming in the fourth quarter are strong in both, pricing and load Factor.

We also, recently opened the Royal Beach Club Paradise, Island for sale. And early demand has been incredibly strong reinforcing. Our strategy of delivering exclusive destination Le experiences and Elevate the vacation value proposition within our ecosystem.

We conduct independent research and leverage data points from millions of daily interactions with our customers. We continue to see very positive sentiment from our customers, bolstered by strong labor markets, high wages, surplus savings, and elevated wealth levels.

Overall consumers remain financially, confident with 3 out of 4 indicating that they feel financially secure.

Jason Liberty: That's Outpatient Dining, Live Entertainment, Shopping, and even Self-Care. We are also seeing strong intent across demographics, particularly among millennials and younger, who continue to represent half of our customers. do not only express a desire to travel more, but are increasingly choosing cruise vacations as their preferred way to celebrate meaningful life moments. Roughly seven in 10 consumers in these younger generations are also more likely to book closer to departure, reflecting a desire for spontaneity and flexibility. In addition, more than half of the millennials tell us they are more likely to consider cruising today compared to two years ago.

These are in travel spend continues to grow and Leisure Travel continues to be the number 1 category. When consumers plan to increase spending over the next 12 months,

That's outpacing dining, live entertainment, shopping, and even self-care.

We are also seeing strong intent across demographics, particularly among Millennials and younger, who continue to represent half of our customer base.

They not only express a desire to travel more, but our increasingly choosing Cruise vacations as their preferred way to celebrate meaningful life moments.

Roughly 7 and 10 consumers in these younger Generations, are also more likely to book, closer to departure, reflecting a desire for spontaneity and flexibility.

Jason Liberty: driven mainly by the attractive value proposition. Value continues to be a critical driver. Consumers consistently cite cruises as offering excellent value for money thanks to our all-inclusive pricing, high-quality products, and the unique opportunity to experience multiple destinations in a single day. And among those who were once skeptical of cruising, a growing share now say they are more likely to consider it than they were two years ago. Meanwhile, repeat cruisers continue to rate cruising as the best value for their vacation.

In addition, more than half of the Millennials tell us that they are more likely to consider cruising today compared to two years ago, driven mainly by the attractive value proposition of cruises.

Multiple destinations in a single trip.

And among those who were once, skeptical of cruising a growing share now, say they are more likely to consider it than they were 2 years ago.

Jason Liberty: With brands that consistently lead in guest satisfaction and vacation options that range from weekend getaways to bucket list adventures on ocean and on land, we continue to deliver on consumers evolving Moving to our outlook for 2025. The year is on track to be another record year with net yield expected to grow in the range of three and a half percent to 4% supported by new ships, like-to-like increases and the continued success of our private vessels. Our yield guidance does not factor in a further acceleration of closing demand within the quarter like we have recently seen.

Meanwhile, repeat cruisers continue to rate cruising as the best value for their vacation spent.

With brands that consistently lead and guest satisfaction and vacation options, that range from weekend getaways to bucket list Adventures on Ocean. And on land, we can continue to deliver on consumers, evolving, expectations.

Moving to our outlook for 2025. The year is on track to be another record year with net yield expected to grow in the range of 3 and a half percent to 4% supported by new ships like for like increases and the continued success of our private destinations.

Naftali Holtz: If current trends continue, it could lead to further yield growth above our guidance for the second half. Full year adjusted earnings per share is now expected to grow 31% and be in the range of $15.41 to $15.55. The improved guidance reflects our better-than-expected second quarter performance, lower-than-expected spend, and continued favorability below the line for the remainder of the year. In the third quarter, we expect to grow yields two to two and a half percent on top of almost 8% yield increase in the same quarter last Our expected yield growth for the quarter is driven almost entirely by like-for-like hardware, as Star of the Seas launches very late in the quarter after the peak summer season.

Our yield guidance is not factored in a further acceleration of clothes and demand within the quarter. Like we have recently seen your current trends continue. It could lead to further, yield growth above our guidance for the second half of the year.

Full-year adjusted earnings per share is now expected to grow 31% and be in the range of $15.41 to $15.55.

The improved guidance reflects our better than expected second quarter performance, lower than expected, spend, and continued favorability below the line for the remainder of the year.

In the third quarter, we expect to grow yields 2 to 2 and a half percent on top of almost 8% yield increase in the same quarter last year.

Our expected yield growth for the quarter is driven almost entirely by like, for like Hardware a star of the seed launches very late in the quarter.

Naftali Holtz: This timing, along with the operational ramp-up period, where we purposely limit load factor to ensure an exceptional experience. impacts its contributions and creates a headwind to yield for the quarter of approximately $150 billion.

After the peak summer season.

Jason Liberty: Our proven formula is working. Moderate capacity growth, moderate yield growth and strong cost to and is driving significant earnings growth, continued margin expansion, and robust cash flow. We remain on track to achieve our perfected targets, a 20% compound annual growth rate and adjusted earnings per share through 2027, and a return on invested capital in the high teens. But our ambitions, as we said before, go well beyond. We are well-positioned for our most ambitious chapter yet. It will reshape the vacation landscape and expand our leadership and leadership. It all begins with our world-class portfolio of brands, each leading and being the champion of their respective categories, both in trust and satisfaction, while meeting the evolving needs of our customers.

This timing along with the operational ramp up period, where we purposely limit load factor to ensure an exceptional experience impacts its contributions and creates a headwind to yield for the quarter of approximately 150 basis points.

Our proven formula is working. Moderate capacity, growth modernity of growth and strong cost of the plan and is driving significant earnings growth continued margin expansion and robust cash flow generation.

we remain on track to achieve, our perfected targets, a 20% compound annual growth rate and adjusted earnings per share through 2027 and a return on invested capital and the High Teens, but our Ambitions, as we said before go well beyond

We are well positioned for our most ambitious chapter yet. It will reshape the vacation landscape and expand our leadership and Leisure Travel.

Jason Liberty: We amplify that strength with the most innovative ships, exclusive private destinations, and a connected ecosystem that makes planning and enjoying your vacation seamless and rewarding. Over the next few years, we plan to introduce seven new ships, including Star of the Seas, Celebrity Accelerator this year, followed by Legend of the Seas in 2026. Icon 4, and our first Celebrity River in 2020. In 2028, we'll deliver Oasis 7 and Edge 6, the next ship in the Celebrity Edge. This study lineup will support our moderate capacity growth, enhance our global reach, and further differentiate our collection of vacations.

It all begins with our world-class portfolio of Brands, each leading and being the champion of their respective categories. Both in trust and satisfaction, while meeting the evolving needs of our guests.

We amplify that strength with the most Innovative ships, exclusive private destinations and a connected ecosystem that makes planning and enjoying a vacation seamless and rewarding.

Over the next few years, we plan to introduce 7 new ships including star of the Seas. Celebrity Excel later. This year followed by legend of the seas in 2026.

Icon 4, and our first celebrity River in 2027.

In 2028, we'll deliver a waste of 7 and Edge 6. The next ship in the celebrity Edge class.

Jason Liberty: On land, we're expanding our destination portfolio with World Beach Club Paradise Island opening in the Bahamas later this year, World Beach Club Cozumel at the end of 2026, and in late 2027, Perfect Day in Mexico. which is approximately the size of the Magic Kingdom in Orlando, will debut. Earlier this month, we officially closed on our acquisition of the Port of Costa Maya and are now well underway in bringing this exciting destination In 2027, we'll expand the reach of our Royal Beach Club collection to the South Pacific with Royal Beach Club La Lapa. These experiences are located across key strategic markets and are engineered to generate premium yields and returns for years to come.

This study lineup will support our moderate capacity growth, enhance our Global reach and further differentiate our collection of vacation brands.

On land or expanding our destination portfolio with World Beach Club Paradise Island opening in the Bahamas later this year.

Royal Beach Club ksml at the end of 2026 and in late 2027, perfect day of Mexico, which is approximately the size of the Magic Kingdom in Orlando.

Will debut.

Earlier this month, we officially closed on our acquisition of the port, or Costa, Maya and are now well underway in bringing this exciting destination to life.

In 20127, we'll expand the reach of our Royal Beach Club collection to the South Pacific with royal Beach Club. Lapa.

Jason Liberty: Central to our destination strategy is a commitment to the economic development of these communities, generating thousands of jobs, championing environmental restoration, improving wastewater treatment. Preserving local native plants and species. Robust Recycling Programs, as well as providing educational and training programs, and infrastructure investment in roads and community development. Our commercial flywheel is accelerating as we deepen relationships with our customers through digital innovation to remove friction, drive commercial opportunities, and lower Repeat bookings are meaningfully rising and cross brand loyalty is accelerating with nearly 40% of all bookings coming from our loyalty members who spend 25% more per Nearly 50% of onboard purchases are now coming through the mobile app compared to a third at the end of 2020.

These experiences are located across key, strategic markets and are engineered to generate premium yields and returns for years to come.

Central to our destination strategy is a commitment to the economic development of these communities generating, thousands of jobs, championing environmental restoration, improving wastewater treatment conserving, local native plants, and species and supporting robust recycling programs, as well, as providing educational and training programs and infrastructure investment in roads and community centers.

Drive commercial opportunities and lower acquisition costs.

Repeat bookings, are meaningfully rising and cross brand. Loyalty is accelerating with nearly 40% of all bookings. Coming from our loyalty members who spend 25% more per trip.

Jason Liberty: As a reminder, customers who purchase onboard experiences before their spend about two and a half times more than those who do not buy. We are investing in a modern digital travel platform, infusing AI into almost everything we do, and investing in enriched data to make it easier than ever for guests to book and design their dream vacations while allowing us to expand wallet. App downloads have now surpassed 30 million and long-term adoption is increasing. We continue to invest in more commercial and experience capabilities, increasing interactions, and enhancing commercial.

Nearly 50% of onboard purchases are now coming through the mobile app, compared to a third at the end of 2023. As a reminder customers, who purchase onboard experiences before their Cruise. Spend about 2 and a half times more than those who do not buy pre Cruise.

We are investing in a modern digital travel platform, integrating AI into almost everything we do, and investing in enriched data to make it easier than ever for guests to book and design their dream vacations, while allowing us to expand wallet share.

Jason Liberty: Looking ahead, we are incredibly energized by the momentum we are building. These ambitious initiatives reinforce our flywheel, strengthen our ecosystem, and unlock powerful new pathways for long term growth as we continue turning the vacation of a lifetime into a lifetime of I am incredibly proud of our teams at Royal Caribbean Group for their dedication and strong experience. The opportunity ahead is significant, and we're well positioned to lead the next era of leisure travel.

App downloads have now surpassed 30 million and long-term adoption is increasing. We continue to invest in more commercial and experienced capabilities, increasing interactions and enhancing commercial features.

Looking ahead. We are incredibly energized by the momentum. We are building.

These ambitious initiatives reinforce our flywheel. Strengthen our ecosystem and unlock powerful new Pathways for long-term growth. As we continue turning the vacation of a lifetime into a lifetime of vacations.

I am incredibly proud of our teams at Royal Caribbean Group for their dedication and strong execution.

Naftali Holtz: And with that, I will turn the call over to Naftali. Thank you, Jason, and good morning, everyone. I will start by reviewing second quarter results. net yields grew 5.2% in constant currency compared to the second quarter of last year 70 basis points above the midpoint of our guide Yields grew across all key products and were evenly split between new and existing hardware. The Yield Hour performance was derived by stronger-than-expected close Onboard revenue was higher than last year across all key categories as we continue to see very engaged consumers. The second quarter, approximately half of our onboard spend was booked before the sailing, with three out of four guests making pre-cruise purchases to reserve onboard experience.

The opportunity ahead is significant and we're well positioned to lead the next era of leisure travel.

And with that, I will turn the call over to Natalie N.

Thank you, Jason, and good morning, everyone. I will start by reviewing second quarter results.

Net, yields grew 5.2% in constant currency compared to the second quarter of last year. 70 basis points above the midpoint of our guidance.

Yields grew across all key products and were evenly split between new and existing hardware.

The yield, our performance was driven by stronger than expected close-in demand.

Onboard revenue was higher than last year across all key categories as we continue to see a very engaged consumer.

Naftali Holtz: In the second quarter, we delivered 2.3 million incredible vacations. New to Cruise or new to Brandt accounted for approximately 60% of our guests, of which more than half were millennials or young Net cruise costs, excluding fuel, increased 2.1% in constant currency, 180 basis points lower than our initial guidance. driven by shifting of timing of spend that will roll into the second half of the year. The adjusted EBITDA margin was 41%, 300 basis points better than last year, and operating cash flow was $1.7 billion. Adjusted earnings per share were $4.38, 36% higher than last year and 8% higher than the midpoint of our guidance.

In the second quarter, approximately half of our onboard spend was booked before the sailing with 3 out of 4 guests. Making pre-cruise purchases to reserve onboard experiences.

In the second quarter, we delivered 2.3 million, incredible vacations.

New to cruise, or new to Brand, accounted, for, approximately 60% of our guests of which more than half were Millennials or younger.

Ned Cruise costs, excluding fuel increased 2.1% in constant currency 180 basis points lower than our initial guidance.

Driven by shifting of timing of spend, that will roll into the second half of the year.

Adjusted ibida margin was 41%, 300 basis points, better than last year and operating cash flow was 1.7 billion dollars.

Naftali Holtz: Earnings outperformance was driven by the strong close in demand, shifting timing of spend, and favorability below the line. $0.10 per share or favorable timing of spend.

Adjusted earnings per share were $4.38, 36% higher than last year and 8% higher than the midpoint of our guidance.

Earnings performance was driven by the strong close in demand, shifting timing of spend, and favorability below the line.

Naftali Holtz: is expected to roll into the second half of 2025. As Jason mentioned, demand for our portfolio of brands and industry-leading experiences continue to be very strong. Bookings have accelerated since the last earnings call, particularly for closing sailings, leading to the second quarter outperformance. Our book load factor is in line with prior years and higher APD. Capacity is expected to grow 6% for the full year and 3% in the third quarter. As expected, capacity in the third quarter is the lowest throughout the year and is impacted by the delivery timing of start of the seas in late August.

10 cents per share of favorable timing of spend.

Is expected to roll into the second half of 2025.

As Jason mentioned, the man for our portfolio Brands and industry-leading experiences continue to be very strong.

Bookings have accelerated since the last earnings call, particularly for closing sailings leading to the second quarter of performance.

Our book load factor is in line with prior years and higher apds.

Capacity is expected to grow 6% for the full year and 3% in the third quarter.

Naftali Holtz: Looking ahead, fourth quarter capacity growth is expected to be 10%, benefiting from a full quarter of starved disease, the launch of CelebDXL, and additional APCDs cured to lower dry dock days compared to 2020. represents 57% of our deployment this year and 42% of capacity in the third quarter. Our leading hardware and private destinations strengthen our competitive position in this market. With the introduction of Star of the Seas, Celebrity Excel, and the opening of Royal Beach Fluff Paradise Island by the end of the year. Europe will account for 15% of capacity for the year and 28% in the third quarter.

As expected, capacity in the third quarter is the lowest throughout the year and is impacted by the delivery timing of the start of the season in late August.

Looking ahead, fourth quarter capacity. Growth is expected to be 10% benefiting from a full quarter of star disease, the launch of select the Excel and additional apcs fewer to lower Dry. Dock days compared to 24.

the Caribbean represents 57% of our deployment this year and 42% of capacity in the third quarter,

Our leading hardware and private destinations strengthen our competitive position in this market with the introduction of Star of the Seas, Celebrity Excel, and the opening of Royal Beach Club Paradise Island by the end of the year.

Naftali Holtz: Alaska is expected to account for 6% of total capacity and 13% in the third quarter.

Will account for 15% of capacity for the year and 28% in the third quarter.

Naftali Holtz: Now, let me talk about our revised guidance for 2025. A proven formula for success, moderate capacity growth, moderate yield growth, and strong cost discipline is expected to drive significant earnings growth and higher cash flow generation. We are increasing our yield guidance for the year and now expect net yield growth of 3.5 to 4% driven by second quarter outperformance. As Jason mentioned, our yield guidance does not factor in further acceleration in close end demand like we have seen recently, which could lead to more upside if these trends continue. The cadence of yield growth throughout the year, as expected, is driven by the timing of new ship deliveries and lower dry dock days in the fourth quarter.

Alaska, is expected to account for 6% of total capacity and 13% in the third quarter.

Now, let me talk about our revised guidance for 2025.

Proven formula for Success moderate capacity, growth model yield growth and strong cost. Discipline is expected to drive significant earnings growth and higher cash flow generation this year.

We are increasing our yield guidance for the year and now expect net yield growth of 3.5% to 4%, driven by second quarter performance.

as Jason mentioned, our yield guidance does not factor in further acceleration in close in demand, like we have seen recently, which could lead to more upside if these strands continue

Naftali Holtz: impact on yield growth is approximately 150 basis points in the third quarter and approximately 90 basis points in the fourth quarter. Full year, net cruise costs, excluding fuel, are expected to be approximately 0.3%. 10 basis points lower than our prior guidance as we remained focused on efficiency, enhancing margins, and maximizing cash flow. While we manage our costs more on a yearly basis, the cadence of our cost growth varies throughout the year. This is driven by timing of dry docks, ship deliveries, and the ramp up of costs related to our acquisition of the Costa Maya port and other new private estates.

The cadence of yield growth throughout the year, as expected, is driven by the timing of new ship deliveries and lower dry dock days in the fourth quarter.

The impact on yield growth is approximately 150 basis points in the third quarter and approximately 90 basis points in the fourth quarter.

Full year net cruise costs, excluding fuel, are expected to be approximately 0.3%, 10 basis points lower than our prior guidance. As we remain focused on efficiency, enhancing margins, and maximizing cash flow.

While we manage our costs more on a yearly basis, the Cadence of our cost growth varies throughout the year.

Naftali Holtz: We anticipate a fuel expense of $1.14 billion for the year, and we are 66% hedged at below market rates. based on our current fuel prices. Currency exchange rates and interest rates, we expect adjusted earnings per share between $15.41 and $15.55. 43% increase compared to our prior guidance is driven by Q2 outperformance of $0.23, taking into account $0.10 of timing shift of spend and $0.20 benefit from lower spend and below the line favorability for the remainder of the year. We also expect 17% growth in adjusted EBITDA and 260 basis point growth in adjusted EBITDA margins.

This is driven by timing of dry, docks ship deliveries and the ramp up of costs related to our acquisition of the custom Maya Ford and other new private destinations.

We anticipate a fuel expense of $1.14 billion for the year, and we are 66% hedged at below market rates.

Based on our current fuel prices.

Currency exchange rates and interest rates. We expect adjusted earnings per share between 15.41 and 15.555.

The 43% increase compared to our prior guidance is driven by Q2 outperformance of 23 cents taking into account, 10 cents of timing shift of spend and 20 cents benefits from lower spend, and below the line favorability for the remainder of the year.

Naftali Holtz: This positions us to accelerate our capital generation, which allows us to continue investing in our strategic initiatives, maintaining investment grade balance sheet metrics, and expanding capital return to shareholders.

We also expect 17% growth in adjusted EBA, and 260 basis point growth in adjusted ibida margin.

Naftali Holtz: Now, let me comment on third quarter guidance. In the third quarter, we expect capacity will be up 3% year over year, and a net yield growth of 2% to 2.5%. Driven almost entirely by like-for-like hardware, the start of the season launches very late in the quarter. Net cruise costs excluding fuel are expected to be up six to six and a half percent. Approximately 230 basis points of cost growth is attributable to the timing of delivery of Star of the Seas and the cost timing shift from the second quarter.

This positions us to accelerate our cash flow generation which allows us to continue investing in our strategic initiatives maintaining investment. Grade balance sheet metrics and expanding Capital return to shareholders.

Now, let me comment on third quarter guidance.

In the third quarter, we expect capacity will be up, 3% year-over-year and a. Net yield growth of 2 to 2 and a half percent driven. Almost entirely by like for like Hardware the start of the Seas launches very late in the quarter.

Net cruise costs, excluding fuel, are expected to be up 6 to 6.5 percent.

Naftali Holtz: Taking all this into account, we expect adjusted earnings per share for the quarter to be $5.55 to $5.65.

Approximately 230 basis points of cost. Growth is attributable to the timing of the delivery of star of the Seas and the cost timing shift from the second quarter.

Naftali Holtz: Turning to our balance sheet, we ended the quarter with a strong $7.1 billion in liquidity. We are in a very strong financial position and will continue to further strengthen the balance. During the first half of the year, we received investment grade ratings by all three major credit agencies. reflecting the strength of our financial position, consistent performance, and disciplined capital allocation strategy. We are proud of the hard work that has brought us here and remain committed to maintaining the strong momentum. In addition, we amended and upsized our two unsecured revolving credit facilities during the quarter, bringing the combined revolving credit facilities commitments to $6.4 billion and extending the maturity of one facility to October 2030.

Taking all this into account, we expect adjusted earnings per share for the quarter to be between $5.55 and $5.65.

Turning to our balance sheet, we enter the quarter with a strong 7.1 billion dollars in the liquidity.

We are in a very strong financial position and will continue to further strengthen the balance sheet.

During the first half of the year, we received investment grade ratings by all 3. Major, Credit Agencies, reflecting the strength of our financial position, consistent performance and disciplined Capital allocation strategy.

We are proud of the hard work that has brought us here and remain committed to maintaining the strong momentum.

Naftali Holtz: With a strong balance sheet, we're committed to investing in our growth strategies, delivering a competitive dividend yield, and opportunistically buying back. We have very limited maturities left for this year, all related to ship amortization payments that we plan to repay with cash flow. We also expect leverage to be at mid-two turns by the end of 2020.

In addition we amended an upsized our 2 une revolving credit facilities during the quarter, bringing the combined revolving credit facilities. Commitments to 6.4 billion dollars and extending the maturity of 1 facility to October 2030.

With a strong balance sheet, we are committed to investing in our growth. Strategies delivering a competitive dividend yield and opportunistically buying back shares.

We have very limited maturities left for this year. All related to ship amortization payments that we plan to repay with cash flow.

Naftali Holtz: In closing, we remain committed and focused on our mission to deliver the best vacation experiences responsibly as we work to deliver another year of strong performance.

Of 2025.

Speaker: With that, I will ask the operator to open the call for Q&A. At this time, if you would like to ask a question, press star followed by the number one on your telephone keypad. We ask that you limit yourself to one question and one follow-up, then re-enter the queue for any additional questions you may have.

In closing, we remain committed and focused on our mission to deliver the basic and experiences responsibly as we work to deliver another year of strong performance.

With that, I will ask the operator to open the call for a Q&A session.

at this time, if you would like to ask a question,

Matthew Boss: Our first question will come from the line of Matthew Boss with J.P. Morgan. Please go ahead. Thanks and congrats on another great quarter. So Jason, could you elaborate on the continued acceleration in demand that you cited for your brands and experiences?

We ask that you limit yourself to 1 question and 1 follow-up, then re-enter the queue for any additional questions. Our first question will come from the line of Matthew Boss with JP Morgan. Please go ahead.

Thanks, and congrats on another great quarter.

Thank you.

Jason Liberty: Have you seen any change in July booking trends and maybe could you speak to the playbook for offense that it seems like you're laying out with investments and initiatives to stay ahead of where demand is going in that $2 trillion growing global vacation market? Sure, well, thanks, Matt, and I hope you're doing well. I think just to first start off, one of the things that we have seen of late is just this kind of overall acceleration in close-in demand, which is a little bit different. We've seen close-in demand acceleration, but we have seen that kind of further shift in behavior, which I had commented is not something we typically contemplate in our forward-looking guidance.

So Jason could you elaborate on the continued acceleration in demand that you cited for your Brands and experiences? Have you seen any change in July booking Trends and and maybe could you speak to the playbook for offense? That it seems like you're laying out with Investments and initiatives to stay ahead of where demand is going in that 2 trillion dollar growing Global vacation Market.

Sure. Well, thanks Madam. I hope you're doing well. Um, I I think just to first start off, um, 1 of the, the things that we have seen of late is just this kind of overall acceleration and close in demand, which is a little bit different. We've seen close in demand acceleration, um, but we have seen that kind of further shift, in Behavior, which I, I calm commented is not something we typically contemplate.

Jason Liberty: And that's, it's not just on the ticket side, but it's also what we're seeing on onboard spend. So we, holistically, as we get to see millions of spending activities per day, we see a very healthy customer. And when we dig into that customer, they have strong, they have great jobs, they have strong balance sheets, and they're confident in spending and making sure that they're receiving the vacation experience that they're looking for. So, again, I think all turns are green on the customer at this point in time. And they're traveling all over the world. We're seeing that not just in North America, but we're also seeing that in European travel activities.

Um, in our, in our forward-looking guidance. Um, and that's it's not just on the ticket side. It's also what we're seeing on on board spend. So we have holistically as we get to see millions of of, of spending activities per day. Uh, we're we see a very healthy customer, um, when we dig into that customer, they have strong. They have great jobs. They have strong balance, sheets. Um, and they're confident in spending and making sure that they're, they're receiving the, uh, the vacation experience that they're looking for.

Jason Liberty: I think as we think about going on the offense I think first just grounding that ultimately what we're trying to do and what we always do is we orbit ourselves around our guests around our customer you know we focused on this I know it's a it's a tagline of going from a vacation a a vacation of a lifetime to a lifetime of vacations but it's very important for us as we think about how do we increase our repetition with our customers and you're already starting to see signs of that offense. coming forward here with an increase in the number of loyalty members that are sailing with us that has now inched up to 40%.

Um, so again I think all turns are are green um on the customer um at at this point in time and they're traveling all over the world. We're seeing that not just in North America. But we're also seeing that in European uh, travel activity.

Um, I think as we think about going on the offense, I think first is grounding that ultimately what we're trying to do. Um, and what we always do is we orbit ourselves around our guests around our customer. Um, you know, we focused on this. I know, it's a, it's a tagline of going from a vacation, a a, a, a vacation of a lifetime, to a lifetime of vacation, but it's very important for us as we think about how do we increase our repetition with our customers and you're already starting to see signs of that offense.

Jason Liberty: So we're trying to increase repetition, which ultimately will lead to an increase in lifetime value of the customer, lowers our acquisition costs, and positions us to close the gap further to land-based vacation. So we are chasing closing that gap of the industry is probably around 80, 85 billion on the $2 trillion leisure market that is out there. We're doing that in several ways. Obviously, when you look at it on structural items like ships, we're excelling in the core. So we're designing and building the most innovative ships, and not just the industry, but also in our respective segments.

Um um Coming forward here with an increase in the number of loyalty members um that are sailing with us that has now inched up to to 40%. So we're trying to increase repetition, which ultimately leads to an increase in lifetime value of the customer lowers, our acquisition cost and positions us to close the gap further to land-based vacation. So we are chasing, um, closing that Gap to to, you know, to to uh, of of, of of to the industry is probably around. 80 85 billion on the 2 billion dollar. Um, Leisure Market, um, that is out there. Uh, we're doing that in several ways. Obviously when you look at it on a on on structural items like ships, like we're excelling in the core so we're investing in growing our Fleet. Um you know we have I think a very clear reputation of

Jason Liberty: We're continuing to grow our brands. We're modernizing our fleet. So those ships are highly competitive and are in line with what the customer of today is looking for. We are meaningfully investing in destination experiences. You know, we have three announced Royal Beach Clubs. We have one announced Perfect Day in Mexico that we're building, in addition to the one that we have in the Bahamas. Again, you know, meeting our customers, what they're looking to do, and we're able to do that, not just by benefiting from the volume, but also enhancing the guest experience as those destinations tend to be the highest rate destinations that are out there.

Designing and building the most Innovative ships and not just the industry. But also in our respective segments, um, we're continuing to grow Our Brands. We're modernizing our Fleet. So those ships are, um, highly competitive and are in line, with what the customer of today is looking for. Um, we are meaningfully investing. Um, in destination experiences, you know, we have 3 announced of Royal Beach Clubs, we have 1 announce perfect day. Um, in Mexico that we're building in addition to the 1 that we have in the Bahamas,

Jason Liberty: We're also expanding the experiences that we're delivering, right, and you can see that in the addition of River in 2027, and also even in the hotel that we're building in the southern part of Chile, which creates differentiation in anyone who's looking to visit Antarctica. And then lastly, all around this is heavily investing in our commercial apparatus, right? So it's what is interacting with our guests each and every day, and we're utilizing disruptive technology like AI and other tools to be able to manage 15 million price points a day and to be able to listen to what our customers are looking for and curate what our customers are looking for that are relevant to them, that enhances the experience for them, takes friction out of the experience, and also allows us to be more efficient and gain more margin.

Um again you know meeting our customers, what they're looking to do um and we're able to do that not just by benefiting from the the volume but also enhancing the guest experience. As those destinations tend to be the highest rated destinations um that are out there.

Um, we're also expanding the experiences that we're delivering, right? And, and you can see that, um, in our in the addition of river in 2027, and also, even even in the hotel that we're building in the southern part of Chile, which creates differentiation and anyone who looks who's looking to visit Antarctica,

Jason Liberty: And then the other thing I would just add is, you know, we obviously last year we rolled out our integration across our brands on loyalty. We are focused on loyalty that matters, loyalty that really impacts guest behavior. So it has to be something that they appreciate and it keeps them inside of our ecosystem.

To manage 15 million price points a day and and to be able to listen to what our customers are looking for. And curate, what our customers are looking for, um, that are relevant, um, to them, um, that enhances the experience for them, takes friction out of the experience and also allows us to be more efficient and and gain more more margin

Jason Liberty: So I just kind of laid out like if you were to look at like where we're investing in terms of especially what we've announced, that's what we're doing in order to make structural differentiation, deepen our moats, continue to lead. And again, ultimately, you know, our focus is not what's happening on the cruise competitor side. Our focus is on how do we close that gap to land-based vacation because every one percentage point is worth a tremendous amount of money to the company and to our shareholders. That's great color.

Um, and then the other thing I would just add is, you know, we obviously, last year, we rolled out, um, our um, our our integration across our brands on loyalty. Um, we are focused on loyalty that matters loyalty that that really, um, impacts guest behavior. Um, so it has to be something that they appreciate, and, um, it keeps them inside of our ecosystem. So I, I just kind of laid out. Like, if you were to look at like, where we're investing in terms of especially what we've announced, um, you know, that's what we're doing. In order to make structural differentiation deep in our modes, um, continue to lead. Um, and again, ultimately, you know, our focus is not what's happening on the cruise competitors side. Our focus is on. How do we close that Gap? Um, to land-based Vacation? Um, because every 1 percentage point is worth a tremendous amount of money, um, to the company, um, and to our shareholders.

Naftali Holtz: Maybe as a follow up, Naftali, near term, what have you embedded for close in demand in the back half relative to the outperformance that you saw in the first half? And then with more than 30% earnings growth now forecasted for this year, that's well above your analyst's daycaker. Just any puts and takes to consider as it relates to the phasing of investments multi-year beyond this year? Yeah, hi, Matt. So as we said in the prepared remarks, we gave guidance based on what we've seen in terms of booking. But as we said, we have seen acceleration.

That's great caller, um, maybe as a follow-up enough, tally near term, what have you embedded for close in demand in the back, half relative to the outperformance that you saw in the first half? And then with more than 30%, earnings growth now forecasted for this year, that's well, above your analyst, acre. Just any puts in.

Takes to consider as it relates to the phasing of an investment multi-year beyond this year.

Naftali Holtz: And so to the extent that there is further acceleration of closing demand, obviously, that creates an upside for the second half of the year. Also, remember, we're fairly booked for the year. So we're kind of closing out a very successful year and now obviously focusing into next year towards in a couple of positions us very well to achieve our Perfecta targets. And so the formula is working. And that's really what we're focused on moderate capacity growth, moderate yield growth, strong cost control, that obviously drives earnings, drives cash flow, and allows us to execute on our plans.

Yeah, hi Matt. Um, so as we said in the prepared remarks, we we gave, uh, guidance based on what we've seen in terms of booking, but as we, we said, we have seen acceleration. And so, to the extent that there is further acceleration of the male of closing demand. Obviously, that creates an upside for for the second half of the Year. Also, remember, we're fairly booked for the year. Um, so we kind of closing out the a very successful year. And now obviously focusing into into next year towards in a couple of months, in terms of what embedded in the is a in, in our plans. So, as you know, we've, we've announced perfecta and this is a 20%, um, annual compound and growth of earnings through the 2027 and everything. The Jason just mentioned in terms of Investments, and shifts destinations technology, uh modernization modernization of our ships is really what's driving that mode and uh, differentiated performance. Now this year is obviously higher than that 20%, uh, Kiger and so this

Naftali Holtz: One of the things that is important, and we said that also, when we announced Perfecta, you know, when we put out these targets, we did not embed any share buybacks into into those plans. And so as we get the balance sheet to the range, and it is, it is already in within the range, obviously, we will be focused on capital return as a supplement to that growth. And that is in the form of share buybacks, which we will opportunistically do, and of course, dividend. And we're very focused on competitive dividend. Now, competitive dividend brings value to the shareholders, but obviously does not factor in into earnings per share itself.

Positions us very well to achieve our perfecta, uh, targets. Um, and so the formula is working. And that's really what we're focused on moderate capacity, growth, moderate yield growth, strong cost control that obviously drives earnings drives, uh, cash flow. Um, and allows us to execute on our plans, 1 of the things that is, uh, important. And we said that also, when we announced perfecta,

Naftali Holtz: But as you kind of look at it together, that's, that's another area of that.

Naftali Holtz: And at the end of it, as Jason mentioned in his prepared remarks, you know, Perfecta is just for us another milestone, but definitely not our ambition. And we laid out just in 2028, tremendous tailwinds that we have from all the new ships and destinations that are coming online. So we're very much focused on building the most and long term shareholder value. great color, best of luck.

You know, when we put out these targets, um, we did not embed any share BuyBacks into into those plans. And so, as we get the balance sheet to, um, the range and it is, it is already within the range. Obviously, we will be focused on Capital return as a, as a supplement to that growth. And that is the in the form of share BuyBacks, uh, which we will opportunistically do, and of course dividend. Um, and we're very focused on competitive dividend now, competitive dividends brings value to the shareholders, but obviously does not factor in into earnings per share, um, itself. But as you kind of look at it together, that's that's another area of that and at the end of it. Um, as Jason mentioned, it's prepared remarks. You know, perfecta is just, um, for us another Milestone, but definitely not our ambition. And we laid out just in 2028, tremendous, uh, Tailwind that we have from all the, the new ships and destinations that are coming online. So we're very much focused on building the most

and long-term shareholder value.

Great color, best of luck.

Steven Wieczynski: Our next question comes from the line of Steven Wieczynski with Stiepel. Please go ahead. Yeah, hey guys, good morning. So Jason, I want to go back to the second half of the year guidance, which, you know, obviously, you talked a lot about it doesn't incorporate any benefit from close in booking momentum, or, you know, kind of, you know, what you've seen in terms of onboard spend. So let me try to ask this question a little bit differently than Matt just kind of asked. But let's say Jason, hypothetically, if close in demand stays, you know, as strong as what you've seen recently, and it sounds like, you know, given the feedback that you guys have gotten from your customer base, that's not going to change.

Our next question comes from the line of Stephen.

Yeah, hey guys. Good morning. Um, so Jason, I want to go back to the second half of the year guidance, which, you know, obviously, you could talk a lot about. It doesn't incorporate any benefit from closed and booking momentum, or, you know, kind of, you know, what you've seen in terms of onboard spend. So let me try to.

Steven Wieczynski: And onboard kind of stays the same way. You know, as well, is there a way to think about what that would mean? You know, two yields in the back of the year? And I guess, you know, I'm probably just a little bit surprised that the, you know, you think about the third quarter, you know, being able to grow, let's call it 4% on a like for like basis, when you include the start of the season impact off of a plus 8% last year, you know, to us, that's, that's kind of impressive. But I guess what I'm trying to figure out here is, you know, what what could that mean for yields?

Steven Wieczynski: If everything kind of stays status quo? Hopefully, that kind of makes sense. Yeah, yeah.

Jason Liberty: Well, thanks for the question, Steven. And of course, it's, you know, even if you look at the third quarter, I'm doing this from memory, but I think 2023 was close to 17%. And last year, it was close to 8% on a yield improvement standpoint. And we do have, we tried to articulate, if you had a full quarter of star, like what that would, what that would have looked like for us, as all the all the Q3 is being driven by like for like. The answer is that if we see similar patterns, the answer is that the back half of the year will be better.

For the year. And I guess, you know, I'm probably just a little bit surprised at the, you know, when you think about the third quarter, um, you know, being able to grow, let's call it 4% on a like, for like basis, when you include the, you know, start of the Season impact off of a plus 8% last year, you know, to us, that's, that's kind of impressive. But I guess what? I'm trying to figure out here is, you know what, what could that mean for yields? Um, if everything kind of stays status quo, hopefully that kind of makes sense. Yeah, yeah. Well, thanks for the questions, Stephen. And of course it's, you know, even if you look at the third quarter, I I assume it's from memory but I think 2023 was close to 17% and um, last year was close to 8% um, on on on yield Improvement standpoint. And and and we do have, you know, we we we tried to articulate if you had a full quarter of star, like, what that would, what that would have looked like for us. Um, as all the, all the Q3 is being driven by, um, like for like

um,

Jason Liberty: As Nath just commented, we are very well sold into the year, and so there's always the opportunity, as we think about even in the third quarter, a couple points of low factor that we still have left to build, there's opportunity there, and that opportunity would be larger in the fourth quarter. But we typically, when we think about our forecast, we do try to do a 50-50 forecast. Also when we put a forecast together, we typically want to look more than just a couple of months of demand points to kind of set that going forward. So we do see the similar demand patterns.

Um, demand Generation. Um, so I mean, I'm I'm in the, the answer is that, you know, we see similar patterns, um, you know, the answer is, is that, you know, the back half of the year will be better. Um, as as not just commented, I mean, we are very well sold into the year. Um, and so, you know, there's there's always the opportunity as we think about even in the third quarter or, you know, a couple points of load factor that we still have left to build, there's opportunity there. And and then, that opportunity would be larger, um, in the, in the fourth quarter. Um, but we typically, when we think about our forecasts, we do try to do.

Jason Liberty: The answer is it's better stuff to actually quantify, if I could have quantified it, then we probably would have put that into our guidance for the year.

Jason Liberty: But I think the main takeaway... is that the consumer is strong. There's strong demand for our brands. I think we have a very strong handle on costs and on our capital, on where we're investing. I think it's very clear where that is, and it's there to not just support the business, but to continue to differentiate the business. And 30 plus percent earnings growth year over year is pretty spectacular, I think. And it's just another, I think, testament to how we keep finding opportunities to do better. And we're never satisfied, as our investors are never satisfied, I'm sure.

5054, um, also when we, when we put a forecast together, you know, we we we typically want to look more than just a couple of months of um of uh of demand points to to kind of set that going forward. So we do see the similar demand patterns, you know the you know the answer is it's it's better. Um, sub to actually quantify if I could quantify it, then we probably would have put that into our our uh, our guidance for the year. But I think the main takeaway

Is that the consumer is strong. There's strong demand for our brands.

Jason Liberty: So we're always looking to do more.

Jason Liberty: And I think all these investments that will play itself out here over the coming years, especially on the destination side, really has an opportunity to have a really significant step change in earnings power. Okay, that's great, Jason.

Um, we're I think we have a very strong handle on costs and, and, on our Capitol on where we're investing, I think it's very, um, um, clear um, where that is. And it's and it's there to not just support the business to put to continue to differentiate the business. Um, and you know, 30 plus percent earnings growth year over year is pretty. Um, it's pretty spectacular. Um, I think, um, and uh, and it's just it's just another adding Testament to how we keep finding opportunities. Um, you know, to do better. Um, and we're never satisfied. Um, as our investors are never satisfied, I'm sure. So we're always looking to do more. Um and uh and I think all these Investments that will play itself out here, over the coming years, especially on the destination side. Really has, you know, an opportunity to have. I'm really significant step change in uh, earnings power.

Steven Wieczynski: And then second question, going back to Perfecta. Obviously, you've talked about how that's on track at this point. But you know, those targets obviously end in 2027. So, you know, you mentioned all these positive things that are going to be coming online in 2028 that are going to help you guys out, whether that's Perfect Day Mexico, Oasis Class Icon, River Cruising, other private islands, I mean, the list kind of goes on.

okay, that's great color Jason then second question, going back to, uh,

Jason Liberty: So, you know, guess my question actually is, you know, sitting here today, should we think that 2028 could see, you know, earnings growth at least, you know, in line with your Perfecta targets? I'd probably even say maybe if not, if not, you know, higher than that? Well, I think it's, I appreciate you pointing it out. Obviously, a lot of these investments take time to design and build and bring them online. And of course, when we bring these things online, we're very thoughtful in the ramp up, because, you know, we only have one chance, as my mom said, you only have one chance to make a good impression on somebody.

To perfecta. Um, obviously, you talked about how that's on track at this point, but you know, those targets obviously end in 2027. So you know, you mentioned all these positive things that are going to be coming online in 28, they're going to help you guys out whether that's perfect de Mexico, elasis class icon River, cruising other private islands in the list, kind of goes on. So, you know, guess my, my question actually is, you know, is you guys are sitting here today? Should should we think that 2028 could see? Um, you know, earnings growth at least, uh, you know, in line, with your perfected targets. That's that's probably even say maybe you've not, it's not, you know, higher than that.

Jason Liberty: And so we're really thoughtful about that. And so I think, to your point, when you look into 2028, and you see, you know, basically, I mean, we've all seen the power of Perfect Day in the Bahamas, right until you see Perfect Day Mexico come to life. And the World Beach Clubs come to life. And now we have River. And of course, you know, we ramp up from two ships in 27 to four ships in 2028. And of course, it's probably too early to talk about exactly what that all means, but it should result in a significant step up in earnings power as we think about that.

Uh, well, I think it's uh, I appreciate you pointing it out, obviously, a lot of these Investments um, take time, um, to design, um, and and, and build and and bring them online. And of course, when we bring these things online, we're very thoughtful in the ramp up. Um, because you know, we, you know, we only have 1 1 chance as they as as my as my mom said you only have 1 chance to make a good impression um, um, on on on somebody. And so we're really thoughtful about that and so I think to your point when you look into 2028 and you see, you know, basically I mean we've all seen the power of Perfect Day in the Bahamas. Wait until we see a perfect day in Mexico. Um come to life. Um, and the Royal Beach Clubs come to life. And now we have a river and of course, you know we ramp up from 2 ships. In 27 to 4 ships in 2028,

Um, of course, it's probably too early to talk about exactly.

Jason Liberty: And none of that, of course, takes into account when we think about capital allocation, Naft mentioned us, obviously not significantly. I mean, we first, of course, are investing in growing our business, but we take very seriously shareholder returns through a competitive dividend and buyback shares. And any share buyback consideration is not something that is contemplated, which will just be another, I think, significant tailwind to earnings per share.

What that all means. But it it um it is um it should result in a significant Step Up um in earnings power um as we think about that. And and none of that of course takes into account.

And any shared body back consideration is not something that is is is contemplated which will just be another. Um I think significant Tailwind to earnings per share growth

Speaker: Okay, thanks Jason, appreciate it.

Okay, thanks Jason. Appreciate it.

Conor Cunningham: Our next question comes from the line of Conor Cunningham with Neleus Research. Please go ahead. Okay, appreciate it.

Our next question comes from the line of Conor Cunningham with Milius Research. Please go ahead.

Hi everyone. Thank you. Just um I'm loyalty you've been talking about a lot more and obviously 1 of your competitors is speaking about a little bit as well um when when I looked 1 1 1 1 more talk about the bio closing the Gap to to land base, you know, competitors and whatnot. A big gap I think is on the co-branded credit card, you know, program and and then maybe the the Loyalty program optimization in general. So, could, if you could just talk about the opportunity set there and and how you envisioned that, I don't think your credit card, is tied to your loyalty program at at currently. So, just if you could just talk about that a little bit, I think that could be helpful. Thank you. Sure. Sure. Well, we do have a co-branded credit card it is, it is tied. Um, um, today to our loyalty program, but not in the way that, um, fits our ambition. Um, and so, you know, we're, you know, very closely working with our our co-branded, um, credit card provider. Um, and I think you're going to see, um, something very meaningful coming out of that. Um, very, very soon, um, at the end of the day, you know, we, you know, we have this great opportunity that we sit on a

A lot of quality, um, data. We have a lot of interactions with our guests. Our guests are telling us what are important, um, to them. Um, you know, we don't have a business consumer here, right? So we don't have that frequency of a business consumer in the, in the world of, uh, your earn and your burn. You earn on the business side you earn on the consumer side and and our guests are very focused on recognition. Um, and also being incentivized for the for the spend in the Loyalty that they provide. Um, and so, you know, we are, I mean, if you've spent time in our app, um, and if you spent time seeing how we're interacting with our guests, especially in the Loyalty program side, um, we are, um, you know, very tuned into and, and, and have a lot of plans on what are things in, which our guests on Our Brands. Um, um, feel is of value to them that, that would result in them behaving, um, even more loyal to us. Um, we've already seen a shift of a couple of months, um, just in the, in, in the, in the, um, in their behavior with us, which is why, you know,

There was a 40%.

Of of our guests in the third quarter that were loyalty members. Um, so loyalty I think is very important. Um I think people want to be recognized um they want to and not just recognize further spend today but recognized for all that they have done um in the past. And then we need to make sure we're creating an environment across Our Brands to make sure that in their lifetime of vacation that we have the right vacation experience.

That is relevant to them. Um, and that you know, that they're, they're benefiting from come you continue to stay inside of our ecosystem. At the end of the day, I look at loyalty, as I look at loyalty with our employees and everyone else is. It's a 2-way street, um, and and um, you know, our, our guests should feel that they always want to stay inside of our ecosystem. Um, and if somebody goes outside of our ecosystem um to another Cruise competitor or to somebody else on on on on land then we we should look at that as a as a fail. Um and I think our teams have done such an exceptional job at um engaging and putting things in front of our guests that they value and incentivizing them which is now resulting in, even more and more repetitions with our guests.

Naftali Holtz: And then maybe I could ask just for a clarification on the, on the drag from from the timing of Star of the Season. So is there anything embedded in fourth quarter from from Celebrity XL, Star? Does anything linger from Star of the Season there? Or from a load factor perspective? The only reason why I ask is that you strip out a lot of the noise. I think that's kind of happening. Like core pricing is actually exiting very, very strong. So I'm just trying to understand where core is for some of these timing issues that are that are kind of out there.

Naftali Holtz: Thank you. Yeah, you're right, Conor. So, you know, most of the impact of Star is really in the third quarter. In the fourth quarter, we have two things that I pointed out. One is Celebrity XL starts in mid-November. So that's obviously just mid quarter. So you have that and you have to get her ready. And so that and obviously ramp her up. So similar, similar to what happened with Star in the third quarter. But also recall that last year, we had a pretty heavy dry dock year. And so we usually take our dry dock, dry docks in the lower yielding period.

Okay appreciate it. And then maybe I could ask just for a clarification on the uh, on the drag from from the timing of the star of the season. So is there anything embedded in the fourth quarter from from celebrity XL? Star that does anything linger from Star this season there from a, from a load Factor perspective. The only reason why I ask is that you you strip out a lot of the noise. I think that's kind of happening. Like core pricing is actually exiting very, very strong. So I'm just trying to understand, uh, where our core is for some of these timing issues that are that are kind of out there. Thank you. Yeah, you're right Connor. So, um, you know, most of the impact of of star is really in the third quarter. In the fourth quarter, we have 2 things that I pointed out 1 is celebrity

Naftali Holtz: And so last year in the fourth quarter, we had more dry docks than this year. So that's actually a drag on yield as well.

Naftali Holtz: And so together, we quantify that as roughly 90 basis points between what between timing of new ships as well as dry dock days. Okay, thank you.

Days.

Speaker: Appreciate it.

Okay, thank you. Appreciate it.

Robin Farley: Our next question comes from the line of Robin Farley with UBS. Please go ahead. Great, thank you. Just looking at the full year guide, I mean, you know, Q2, great results, your commentary is very positive. Why, you know, at the top end of the yield range, you know, what's your change in thinking there that the top end of the yield range came down a little for the year? Thanks. Yeah, I would just say, Robin, when we gave guidance last, we expanded the range. You know, there was a lot of noise in the system geopolitically that resulted in us just widening that range to give kind of investors a sense of what that could be.

Our next question comes from the line of Robin Farley with UBS. Please go ahead.

Great. Thank you. Um, just looking at the full year guide, uh, I mean, you know, Q2 great results, your commentaries for a positive. Um, why, you know, at the top end of the yield range, um, or you know, what's your change in in thinking there that the top end of the yield range came down a little through the year? Thanks.

Yeah, I’m, I would just say, Robin, you know, when we gave guidance last week, we expanded the range. You know, there was a lot of.

Robin Farley: Obviously, there were others in travel that pulled their guidance. We expanded our range just to give kind of where potential outcomes could be. So really, what you see in our range is a reflection of our historical practices. At this point in the year, we're typically plus or minus. seven, you know, points there. And that's what we provided 70 yes, 70 points. So if we think about kind of that, obviously, in April, it's a very active sort of geopolitical, you know, headlines and all going on. I guess I'm just trying to think how we should interpret the, that you're, how you're feeling at the sort of most optimistic end versus a quarter ago, because it seems like, you know, some of the hotel companies have called out things improving in July, you know, relative to where they were in that sort of April, May period.

Noise in the system. Geopolitically that, um, we resulted in us, just widening that range, um, to give kind of an investors, in a sense of

Of what that could be. Obviously there were others in in travel. These are not pulled their guidance, we expanded our, our range, just to give um, you know, kind of where potential outcomes could be. So really uh what you see in our in our range is a reflection of our historical practices. Um

At this point in the year, we're typically plus or minus.

Um, you know, 70 um, you know, points there and that's um, um, that's what we provide: 70. Yeah, 70 points, 70 basis points.

Jason Liberty: Just trying to think how we should view your commentary, your yield, you know, change at the top end. Yeah, well, one, I think that one of the differences between, I mean, cruise and hotel and even airlines is just what percent booked we are within a period. So I don't think it's, in terms of the opportunity, it's probably not necessarily the same on hotel and airlines because of how sold we are in the quarter and how sold we are for the end of the year. But as I said, with that range, that range is a reflection of, you know, 50-50 on our forecast.

So if we think about kind of that obviously in April, it's a very active sort of geopolitical, um, you know, headlines all going on. Um, we I guess I, I'm just trying to think how we should interpret the, um, that you're how you're feeling at the sort of most optimistic and versus a quarter grow. Because it seems like, you know, some of the hotel companies have called out things, improving in July, you know, relative to where they were in that sort of April, May period. So, just trying to think how we should view your commentary. Your, your yield, you know, change at the top end. Yeah, well, I what I I think that um, 1 of the differences between, I mean, cruise and hotel and even Airlines is is just what percent booked we are, um, within a period. So I don't think it's in terms of the opportunity is probably not necessarily the same on hotel and, and, and Airlines because of household. We are on the quarter and household, we are for the end of the year. Um, but as I said with that range, that range is a reflection. Um,

Jason Liberty: And, you know, there could be, if you want to take the optimistic side, if we continue to see strengthening and close in demand, you know, that would be likely the optimistic side of why it could be towards the top end or Yeah, I think, I don't recall exactly, but I think most of the, some of the hotel companies also may have reduced their guidance in the first quarter. We kind of, regardless, we kept it the same. We actually increased it, if you recall, and we really widened this to account for the geopolitical outcomes that, you know, the noise that was there and the outcomes it could have.

Of, of, of, you know, 50/50 on our forecasts and, and you know, there could be—if you want to take the optimistic side—if we continue to see strengthening and closeness in demand, you know, that would be likely the optimistic, um, um, you know, side of why it could be out towards the top end or better.

Jason Liberty: And really, now we're just going back to normal, right? This is typically what we do through the year.

Speaker: For more information, visit www.FEMA.gov Thank you.

Yeah, I think um I I don't recall exactly but I think most of the some of the hotel companies Also may have reduced their guidance um um in the first quarter a week on a regardless, we kept it the same. We actually increased it if you recall and we really widened this to a fact to to account for the geopolitical outcomes that you know, the the noise that was there and the outcomes that could have and really now we're just um, going back to normal, right? This is typically what we do, uh, through the year

Jason Liberty: And just one quick follow up. Would you say that your onboard spend, because I know some of the way it's reported can be impacted by sort of how you allocate accounting things, just broadly speaking, is gross and onboard spend still higher than gross and ticket price? Or how should we think about that relationship? Thanks. I would I would say that we're seeing very similar trends on ticket as well as on on on board. Obviously, both of them are are competing against very, very significant comps. But what we're seeing in terms of where the consumer is spending while they're on the ship looks, looks, looks very similar, except that it's stronger.

Thank you. Just one quick follow-up. Would you say that you're on board with spend? Because I know some of the way it's reported can be impacted by how you allocate accounting things. Just broadly speaking, it's growing on board. Spend is still higher than growth in ticket price, or possibly think about that relationship. Thanks.

Jason Liberty: We're also benefiting that, you know, every day we get more and more pre crew sales activity. And we're still in the very early innings of, you know, being effective and curating that and getting our guests to book, you know, to plan their vacation experiences earlier and earlier. And that, as I mentioned in my comments, you know, you typically see a significant increase in overall spend because, you know, they basically have paid that bill and they've moved on to new activities and new memories they want to create on their vacation. Great, thank you.

I I would I would say that we're seeing very similar Trends on ticket as well as on on on board. Um obviously both of them are are competing against very, very significant comps. Um but what we're seeing in terms of where the consumer is spending, while they're on the ship. Um um looks looks uh looks you know, very similar except that it's stronger. Um we're also benefiting that you know, every day we get more and more uh, pre crew sales activities. Um and we're still in a very early Innings of, you know, being effective in curating that and and getting our guests to to book more, you know, to plan their vacation experience.

Experiences earlier and earlier. And that as I, as I mentioned in my comments, you know, you then typically see a significant um, increase in and overall spend because, you know, they basically have, you know, paid that bill. And and they moved on to new, new activities and new memories. They want to create on the ship.

Great. Thank you.

Brandt Montour: Our next question comes from the line of Brandt Montour with Barclays. Please go ahead. Good morning, everybody, and thanks for taking my question. So the first question is on the Royal Beach Club. Maybe you could just talk a little bit about, you know, the operational expectation for that destination out of the gate. You know, you guys gave prices out to the market a little bit ago, you know, wondering maybe, you know, if the feedback from the travel agent community as well as the pre-bookings you're seeing, if that sort of points to full utilization potential out of gate, you know, if prices are dynamic, or if that's even the goal, how should we think about the ramp-up to the destination?

Our next question comes from the line of Brand Menteur with Barkley's. Please go ahead.

Seeing if that sort of points, the full utilization potential out of gate, I know price are Dynamic um or if that's even the goal, how should we think about the ramp up to the destination?

Jason Liberty: Thank you, Brandt. I'm so happy you asked that question. We opened for sale a few weeks ago. Sales are very strong. Interest is very high. Our first sailing will be in December the 21st, which will be great timing for the holiday period. Construction is all on target. It's looking great. And when we send drones over and share that with the team on a regular basis, it's really looking impressive, especially the world's largest swimmer bar. It's going to be a winning product, a great destination, and we're very excited about what we're seeing in terms of activity.

Thank you, Brandon. I'm so happy. You asked that question. Um, we we, we open for sale in a few weeks ago, sales are very strong interest is very high. Um, our first sailing will be in, uh, December the 21st, which will be great timing for the, the holiday period construction is all on target. It's looking great. And we send drones over and share that with, with the team on a regular basis, it it's really looking impressive.

Especially the world's largest swim-up bar.

Jason Liberty: Prices start from around $139. It is dynamic because we've got a lot of capacity coming into Nassau, and some days will be different from others in terms of overall Royal Caribbean capacity in the port. So we've got dynamic pricing, we've got different packages available, and we've been extremely pleased with the sales to date. I do have to share one interesting story, which is in the first hour when we opened for sale, we sold our Ultimate Family Cabana for one day at $10,000, which was quite remarkable. And subsequently, we've sold a lot of days in the Ultimate Family Cabana at $10,000.

Um so it's going to be a a a winning product, a great destination, and we're very excited about what we're seeing in terms of activity prices.

Start from around 139. It is dynamic because we've got a lot of capacity coming into Nassau, and some days will be different from others. In terms of the overall Royal Caribbean capacity in the port.

Um, so we've got dynamic pricing. We've got different packages available, and we've been extremely pleased with the sales to date. I do have to share one interesting story, which is in the first hour when we opened for sale.

Jason Liberty: So we really do think we've got the product right, and we think it's going to deliver very high levels of guest satisfaction. So we're excited for the Beach Club in Paradise Island, and we're equally excited for the Beach Club in Mexico, Lalepa, and of course, the really big thing, which is, of course, Perfect Day Mexico in Fulvia 28.

Jason Liberty: Yeah, and Brent, I just want to add, in terms of on the ramp-up side, we have a very thoughtful formula for this, where it's not about a question of demand, it's a question of operational excellence. and so you know it will be in terms of the actual number of people we take will be meaningfully less as we start and then build up in the into the into the first quarter and then into the second quarter. We want to make sure the experience is flawless. um in in what we're doing so it's well we could probably make more money um um you know the trust that we establish with our customers is is a is a high priority and so it will it will be a slow ramp up like they they typically are in any new experience or or destination or ship that we bring online.

We sold our ultimate, family, Cabana for 1 day at 10 thousand dollars, which was which was quite remarkable and subsequently, we've sold a lot of days in the ultimate family Cabana at ten thousand dollars. So we we really do think we've got the product, right? And we think it's going to deliver very high levels of uh, guest satisfaction. So we're excited for the beach club in Paradise Island and we're equally excited for, uh, the beach club in Mexico, Aleppo. And of course, the really big thing, which is, of course perfect de Mexico in in, uh, full full year 28,

Yeah, and Brad, I just want to add in terms of on the ramp up side. Um, you know, we we have a very, I think thoughtful formula for this where, um, you know, we it's it's not about a question of demand. It's a question of operational excellence. Um, and, and so, you know, you know, it will be um, in terms of the actual number of people we take will be meaningfully less as we start, um, and then build up in the into, the into the first quarter, um, and then into the second quarter, right? We want to make sure that the experience is flawless.

Speaker: Thanks for that, that's super helpful both.

Um, in in what we're doing, so it's all we could probably make more money. Um, um, you know, the trust that we established with our customers is is is a, the high priority and so it will it will be a slow ramp up like the, the, the typically are in any new experience or, or or destination or ship that we've been online.

Brandt Montour: A second question, you know, Jason, I feel like you covered the closing demand strength from a number of different angles this morning. I'm struggling between two different narratives on that. You know, is that, you know, one, is that maybe at the expense of longer term bookings and potentially compressing, you know, book lead times and would that be sort of a function of either mixed younger consumer or, you know, residual effects from the tariffs and the macro impacts of the last few months? Or is it just, again, more incremental demand that you're seeing from that younger consumer and at the same time you're seeing 26 bookings sort of plod along as planned?

Jason Liberty: I don't know if those two things are, if there's a third, you know, but if you can help me sort of understand what you guys are trying to get at with that commentary. Yeah. Well, you know, Brandon, as I've said this in the past, you know, we never get our yield management perfect. Even with all the technology, we always, there's always money we leave on the table. And I think one of the things you just, you know, I think the reality of what we have left to sell is little. And I think because we are, you know, half of our guests are millennials or younger, there is a reality that they do book closer in.

Um I think that that's super helpful. Both um a second question, you know Jason I feel like you covered the um closing demand strength or a number of different angles. This morning. Uh I'm struggling between 2 different narratives on that you know is is that, you know, 1 is that maybe at the expense of longer term, bookings, and potentially compressing, um, you know, both the lead times and would that be sort of a a function of either mixed younger consumer or you know, residual effects from the tariffs and the macro impacts or the last few months or is it just again more more incremental demand that you're seeing from that younger consumer and and while and at the same time you're seeing 26 bookings, sort of plow along with planned. Uh, I don't know if those 2 things are, or if there's a third, uh, you know, but if you could help me, sort of understand what what you guys are trying to get at what that commentary.

Yeah. Well you know Brandon as I as I've said this in the past, you know, we we never get

Michael Bayley: We have more of the shorter product going to great places like Perfect Day and Soon Royal Beach Club, which will have them lean a little bit more closer in. But in my remarks, you know, just commentary around, you know, 2026, right, we're in line with same time last year at higher rates. I think we should give you an indication that, you know, demand is actually quite healthy and is keeping pace and guests willing to pay more is certainly there. So I think it's really two different things. I think it is a little bit of a younger consumer.

Our yield management perfect. Even with all the technology. Um, we always, um, there's always money. We leave on the table and I think um, 1 of the things you just you know I think the reality of what we have left to sell is is little um and I think because we are, you know, half of our guests are, millennials are younger, you know, there is a reality that they do book closer in, we have more of the shorter product going to great places like perfect day and soon boil Beach Club which we'll we'll we'll have them lean a little bit more um um closer in. But you you and and my remarks, you know,

Commentary around, you know, 2026 right, we're in line with the same time last year at higher rates.

Michael Bayley: And the second piece of it is that confidence and making sure that people are getting the vacation experiences that they want, that people are willing to plan thoughtfully out into the future. I think also, it's Michael again, I think also another consideration is the increase in the short, short capacity that we've seen, particularly that goes to Perfect Day. And for, you know, for the Royal Brand, which we have a lot of short cruise capacity, you know, we've got Utopia now sailing out of Port Canaveral in the three and four day market, and now Wonder of the Seas.

Michael Bayley: So the second Oasis class ship will be starting soon out of Miami doing the same thing. That takes those two ships alone in terms of just volume is around, you know, 30,000 guests a week, just on those two ships that are going to Perfect Day. So I think that also is beginning to skew the, you know, how people perceive their booking window, because it's kind of a, it's a great weekend, we call it the big weekend, and people just, you know, decide later on to jump on board and have a great time. And we see a lot of repeat on those products as well.

Great. I think also uh, this Michael again, I think also another consideration is the increase in the short, um, short capacity that we've seen particularly that goes to perfect day and for, you know, for the Royal brand, which we have a lot of short, um, Cruise capacity. You know, we've got Utopia now sailing out of Port, Canaveral in the 3 and 4 day market and now wonder of the Seas for the second Oasis class. Ship will be starting soon out of Miami doing the same thing that that takes

Speaker: It's a great weekend. When we open up the Beach Club, which complements Perfect Day, that big weekend is getting even bigger. So we think that that's part of the kind of the evolution of the business. Thanks, everybody.

Those those 2 ships alone in terms of just volume is around, you know, 30, 30, 30, 30,000 guests a week, just on those 2 ships that are going to perfect day. So I think that also is beginning to skew the the, you know, how people perceive their booking window because it's it's kind of a, it's a great weekend. We call it the big weekend and people just, you know, decide later on to jump on board and have a great time and we see a lot of repeat on those products as well. It's a, it's a great weekend when we open up the beach club which complements perfect day, that big weekend is getting even bigger. So we think that that's part of the kind of the evolution of the business.

Okay, thanks everybody.

Ben Chaiken: Our next question comes from the line of Ben Chaiken with Mizuho. Please go ahead. Hey, good morning. Thanks for taking my question. One on Nassau quickly, you know, you've previously given us some preliminary kind of targets or expectations for volume, but how did you think about the attach rate using, you know, Royal Nassau visitors in the denominator, if you will? Meaning, is this 25% adoption, 50% adoption? And I ask this in the context of, you know, COCO seeing three and a half million guests or more, presumably a lot of them going to Nassau. So understanding there's a ramp, kind of as you get going.

Thank you. Our next question, Council Levine of been shaken with muo, please. Go ahead.

Speaker: Is there any way to frame the attach rate based on the volume numbers you've given us the last few quarters? pricing is going to play a very important role in that product. But we think we've got the numbers perfectly right. Understood.

Hey, good morning, thanks for taking my questions, um, 1 on Nassau quickly. You know, you previously given us some preliminary, kind of targets or expectations for volume, but how do you think about the attach rate using? Um, you know, Royal Nassau visitors in the denominator if you will meaning is this 25% adoption 50% adoption? And I asked this in the context of, you know, Coco seeing 3 and a half million guests or more um, presenting a lot of them going to Nassau. So understanding there's a ramp kind of as you get going. Does any way to frame the attach rate um based on the the volume numbers? He's gonna given us the last few quarters. Yeah, I think I think uh I think our current thinking is when you look at the volume, we're going to bring in 26 International which is you know give or take around 3 million guests.

And the overall capacity of the beach club will be be around, give or take a million. Then you're looking at 33% of of our guests, we think will be, you know, more than happy. And I mean, I think what we may experience is more demand and Supply it with, with the beach club in there. So, we, we're going to have to. And obviously, that's why Dynamic pricing is going to play a very important role in that product, but we we think we've got the, the numbers perfectly, right?

Speaker: Very helpful.

Jason Liberty: And then, Jason, you made a pretty interesting comment earlier in the call. You mentioned that Costa Maya is going to be the same size as Magic Kingdom in Orlando, if I caught that right. I presumably meant that in terms of acreage. I mean, to the extent you have anything to share on amenities, you can kind of like blow it to us, understanding this is still several years away. I don't know if that was like a little bit of a metaphor or whatnot. Well, I think it is in terms of like the actual footprint of Perfect Day in Mexico.

Jason Liberty: And I think it's to have people understand ultimately the scale of what's going to be there. Of course, we're going to deliver that with much, much fewer guests than the guests that visit the Magic Kingdom, right? Because we're super focused on that everybody has this Perfect Day. And I would very much point everybody to just go onto YouTube and watch the videos that we put out from our event in last May on what Perfect Day Mexico is going to look like. And it delivers a perfect day, I think, for pretty much everybody, whether you're looking to go down the world's largest lazy river, whether you're looking for kind of that Vegas beach party, just some fun in the sun, relaxation, family and incredible pools and so forth.

I'm so very helpful and then Jason um you made a, a kind of I made a pretty interesting comment earlier in the call. Uh mentioning it comes to Maya is going to be the same size as Magic Kingdom in Orlando. If I caught that right, I presumably you meant that in terms of acreage. Um, I mean to the extent, you have anything to share on amenities, you can kind of like float to us understanding. This is still several years away. I don't know if that was like a little bit of a metaphor or whatnot. Well, I think it it is in terms of like the actual Footprints um of perfect de Mexico. Um and I think it's to have people understand the, the ultimately, the scale,

Of what's going to be there. Um, of course, you know we're going to deliver that with much, much fewer guests.

Jason Liberty: There's so much that's going to be done. And it's curated like we do very well on our ships into different neighborhoods. So people can kind of experience with who they would like to experience that with. And that's what we do, right? I mean, Michael and his team are heavily focused on designing that Perfect Day. We clearly delivered that in the Bahamas. And we're going to do that in Mexico for even more people. Lastly, I would just say, I mean, it also opens up this incredible catchment area or deeper into markets like Texas and the West Coast, and even the Midwest that will be able to lessen where they spend their share of wallets on potential air travel and other travel to shift it to make it more affordable for them and potentially more share for us.

Than the guests that visit the Magic Kingdom, right? Because it's we're super focused on that. Everybody has this perfect day and I would, um, I would very much Point everybody to, to just go on to YouTube and and watch, um, the the videos that we put out, um from um, our event in last May on what perfect day uh Mexico is going to look like. And uh it it delivers a perfect day. Um I think for pretty much everybody whether you're looking to go down the world's largest, Lazy River, whether you're looking for kind of that Vegas beach party, just some fun in the sun relaxation, um family and and credible pools and and and so forth. Um you know, there's so much that's going to that's going to be done and it's curated like we do very well in our ships into different.

Neighborhoods so people can kind of experience with with who they would like to to experience that with and and that's what we do, right? I mean you know, Michael and his team um are heavily focused on designing that perfect day. Um, we clearly delivered that in the Bahamas and we're going to do that in Mexico for even more people.

Um, lastly I just say, I mean, it also opens up this incredible catchment area for, um, you know, deeper into markets, um, like Texas and the West Coast. Um, and even the Midwest that...

Well, you know, we'll be able to lessen where they spend their share of wallets, um, on potential air travel and and other travel um to uh, to to, to ship to, to make it more affordable for them and potentially more wallets share for us.

Speaker: And more importantly, it has the world's largest sombrero. definitely important.

Importantly, it has the world's largest sombrero.

Naftali Holtz: Did 3Q have Costa Maya cost in the NCC number? Yes, it does. And so we just closed on it. And obviously, we'll operate it for quite some time until we start development. So yes, and that's part of the headwind. We didn't really call it out in the release. We're not preparing a mark, but there is extra cost for that. And obviously, as well as we ramp up the beach club to open up in December, there are some costs there with obviously no APCDs.

Number. Yes, it does. And so we just closed on it. Um, obviously, we'll operate it for quite some time until we start development. So, yes, and that's part of the headwind. We didn't really call it out in the release or were not prepared to mark, but there is extra cost for that. Um, and obviously for Paradise, as well as we ramp up.

The beach club is set to open up in December. There are some costs involved, with obviously no AP CDs.

Vince Ciepiel: Our final question will come from the line of Vince Ciepiel with Cleveland Research Company. Please go ahead. Thanks. I wanted to unpack river a little bit more. I know it's still a ways away, but I think at some point in the second half of this year, a little bit more clarity and what the itineraries and offering might look like.

Our final question will come from the line of ncbo with Cleveland research Company. Please go ahead.

Jason Liberty: And as you're 90 days further into exploring what that could look like for you, any big picture thoughts on just conviction level of getting to 35, 40 ships, river capacity to do so, and being able to curate a great experience, shoreside for guests when considering birthing rights, etc. Yeah. Well, thanks for the question, Vince.

Thanks. Uh, I wanted to unpack River a little bit more. I know it's still a ways away, but I think at some point in the second half of this year we have a little bit more clarity on what the itineraries and offerings might look like. As you're 90 days further into exploring what that could look like for you, any big picture thoughts on just conviction level of getting to 35-40 ships? Um, River's capacity to do so and um, being able to curate a great experience shoreside for guests when considering birthing rights, etc.

Jason Liberty: I wish I wish Laura was here, because, you know, she could probably talk a little bit about it more in detail. And she would also tell you that I bother her every single day on how do we get as many ships up as soon as possible. And that's not just a reflection on us now getting comfortable with it operationally, having a very strong idea of all the different destinations, not just in Europe, but around the world where, where we can go out and deliver this incredible river experience. We're pretty well baked with the ship design, which we, which we are very confident will be a, a meaningful differentiator to what is currently available out there.

Jason Liberty: And there's, and there's a lot of like, you know, spacers, you know, this is a leading a very underpenetrated marketplace. And so there's room for everybody to grow and grow successfully. But we're going to elevate this. So I would say that we feel very, very good about the destination experience that Celebrity is going to offer here, not just on the ship itself, but also on land. And I think it's just, I'm probably more focused on how do we get it done faster. And, and, but our teams are being very thoughtful about that. It's going to be a, I mean, a great vacation experience for our guests.

Yeah. Well thanks for the question Vince. Um uh I I wish I wish Laura was here because um, you know, since you can probably talk a little bit about a more in detail. Um, and she would also tell you that I bother her every single day um on how do we get as many ships up as soon as possible and that's not just a reflection on us now, getting comfortable with it operationally um, having a very strong idea of all the different destinations, not just in Europe but around the world where where we can go out and deliver this incredible River experience. Um, we're pretty well baked with the ship design, um, which we, we, which we are very confident will be a, a, um, a meaningful differentiator to what is currently available out there. Um, and as and, and there's a lot of like, you know, spacers, you know, this is a, i reading a very underpenetrated, um, a Marketplace. And so there's room for everybody to grow and grow successfully, but we're going to elevate this. Um, so I would say that we feel very um, very good about the destination experience that's celebrities going to offer here.

You're not just on the ship itself, but also on land.

Jason Liberty: And I think the last point I just want to make about the, what brings such confidence is. When we announce this, and we kind of get our customers coming forward with wanting to be on it as soon as possible, and us starting to kind of build up lists of customers who want to go on, it's going to take us a long time to satisfy that level of demand. And so we want to make sure that we can deliver these experiences to our guests, and we have to challenge ourselves, not just because we can make some more money on it, but we need to meet that demand for our guests who are looking to have that river experience from our celebrity brand.

Um, and I think it's just uh um I'm I'm probably more focused on how do we get it done faster. Um and and uh but you know our teams are being very thoughtful about that it's going to be a I mean a a great vacation experience um for our guests. And I think the last point I just want to make about the what brings such confidence is.

when we announced this and and we kind of get our our uh um, our customers coming forward with

Um, wanting to be on it as soon as possible. And US starting to kind of build up lists of customers who want to go on. Um, it's going to it would take us a long time to satisfy that level of demand. Um, and so, you know, we want to make sure that we can deliver these experiences to our guests and we have to challenge ourselves, not just, because we can make some more money on it, but, um, we need, we need to meet that demand for our guests who are looking to have that River experience from our uh our celebrity brand.

Speaker: Great. Thanks.

Naftali Holtz: One other just kind of housekeeping question. Thinking about CapEx, $5 billion for the year, I think one-sixth of its non-new build with some Costa Maya in there as well. When you think about the Perfecta plan, is that $5 billion like a good annual number to use for 26 and 27 and a similar mix of non-new build and new build as we're thinking about the path ahead? So even after CapEx, we have excess cash flow that obviously will be focused on making sure that the balance sheet is intact and then supplementing all that growth with capital shareholder returns.

Great thanks. Um, 1 1, 16 and 27 and a similar mix of non-, new build and new build as we're uh, thinking about the path ahead. Yeah. So we we we're not providing guidance obviously for the next couple of years, but on the ship building side. It really depends on the ship deliveries. And so this year, we have 2, fairly large ships, right? Both starting to seize and and celebrity Excel. You can go, um, and see kind of what 26, uh, and 27 are or they're only 1 ship right there. Um,

Kind of our long-term targets, but I think the most important thing is the company now is is is very large. We're generating a lot of cash flow. So even after capex, we have access cash flow that obviously will be focused on getting making sure that the balance sheet is in is intact and then supplementing that all that growth with capital shareholder returns.

Naftali Holtz: Thanks, Bob.

Thanks m.

Naftali Holtz: And I will now turn the conference back over to Naftali Holtz, CFO, for closing remarks. Thank you. We thank you all for your participation and interest in the company.

And I will now turn the conference back over to Natalie Holtz CFO for closing remarks.

Blake Vanier: Blake will be available for any follow-ups. We wish you all a great day.

Thank you. We thank you all for your participation and interest in the company. Blake will be available for any follow-ups. We wish you all a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect. Experience the best family vacation in the world, Icon of the Seas. It's the first of a whole new class of ships where everyone in your crew will have the time of their life, multiple times a day.

we'll never forget the