Q3 2026 Carnival Corp Ltd Earnings Call

September 29, 2026

Operator: Greetings, and welcome to the Carnival Corporation Q3 2026 earnings results. At this time, all participants are in listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Beth Roberts, Senior Vice President, Investor Relations. Thank you, Beth. Please go ahead.

Speaker #1: Greetings, and welcome to the Carnival Corporation Q3, 2026 earnings results. At this time, all participants joining listen-only mode. A brief question-and-answer session will follow the formal presentation.

Speaker #1: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

Speaker #1: It's not my pleasure to introduce your host, Beth Roberts, Senior Vice President and Investor Relations. Thank you, Beth. Please go ahead.

Speaker #2: Thank you. Good morning, and welcome to our third quarter 2026 earnings conference call. I'm joined today by our CEO, Josh Weinstein, our CFO, David Bernstein, and remotely, our Chair, Mickey Arison.

Beth Roberts: Thank you. Good morning, and welcome to our third quarter 2026 earnings conference call. I am joined today by our CEO, Josh Weinstein, our CFO, David Bernstein, and remotely, our Chair, Micky Arison. Before we begin, please note that some of our remarks on this call will be forward-looking. Therefore, I will refer you to today's press release and our filings with the SEC for additional information on factors and risks that could cause actual results to differ from our expectations. We will be referencing certain non-GAAP financial measures, including yields, cruise costs without fuel, EBITDA, net income, and related statistics for all, which are on a net basis or adjusted as defined, unless otherwise stated. A reconciliation to US GAAP is included in our earnings press release and our investor presentation. References to ticket prices, yields, and cruise costs without fuel are on constant currency unless we know otherwise.

Speaker #2: Before we begin, please note that some of our remarks on this call will be forward-looking. Therefore, I will refer you to today's press release and our filings with the SEC for additional information on factors and risks that could cause actual results to differ from our expectations.

Speaker #2: We'll be referencing certain non-GAAP financial measures, including yields, crews cost without fuel, EBITDA, net income, and related statistics for all, which are on a net basis or adjusted as defined, unless otherwise stated.

Speaker #2: A reconciliation to US GAAP is included in our earnings press release and our investor presentation. References to ticket prices, yields, and crew costs without fuel are on a constant currency basis unless noted otherwise.

Speaker #2: Please visit our corporate website, where our earnings press release and investor presentation can be found. With that, I'd like to turn the call over to Josh.

Beth Roberts: Please visit our corporate website, where our earnings press release and investor presentation can be found. With that, I would like to turn the call over to Josh.

Speaker #1: Thanks, Beth. And good morning, everyone. Once again, we closed out another excellent quarter. With revenues, yields, and reported net income, all reaching new highs, while customer deposits once again set a record.

Josh Weinstein: Thanks, Beth, and good morning, everyone. Once again, we closed out another excellent quarter, with revenues, yields, and reported net income all reaching new highs, while customer deposits once again set a record. Strong execution delivered approximately $2 billion to the bottom line, exceeding our guidance by $100 million, with both revenue and costs contributing to the outperformance. Excluding fuel, unit costs came in 1 point better than guidance for the quarter. To date, we have improved our full-year expectations by more than 1 point, even after absorbing continued pressure from higher than expected inflation. Fuel consumption also came in 3 points better than expected as our teams continued to find ways to use less, which is better for the environment, better for our bottom line, and ultimately the best way to manage fuel costs.

Speaker #1: Strong execution delivered approximately $2 billion to the bottom line, exceeding our guidance by $100 million with both revenue and costs contributing to the outperformance.

Speaker #1: Excluding fuel, unit costs came in a point better than guidance for the quarter, and to date, we have improved our full-year expectations by more than a point—even after absorbing continued pressure from higher-than-expected inflation.

Speaker #1: Fuel consumption also came in 3 points better than expected, as our teams continued to find ways to use less, which is better for the environment, better for our bottom line, and ultimately the best way to manage fuel costs.

Speaker #1: Taken together, we've generated more than $150 million of operational improvement since our June guidance, fully offsetting the impact of higher fuel prices that we now expect.

Josh Weinstein: Taken together, we have generated more than $150 million of operational improvement since our June guidance, fully offsetting the impact of higher fuel prices that we now expect. Yes, fuel can be a volatile input cost with a track record of prices going up and down. But amidst that noise, let's not lose sight of our underlying operational improvement. What matters most over the long term is our ability to continually improve the actual performance of the business, generating more demand, managing our booking curve for maximum revenue, operating more efficiently, and ultimately producing more earnings and higher returns. While it is still early, we are beginning to capture opportunities embedded in our PROPEL targets sooner than expected, leveraging our unmatched scale, sharpening commercial execution, investing where we generate outsized returns, and advancing technology to enhance revenue and control costs.

Speaker #1: Yes, fuel can be a volatile input cost, with a track record of prices going up and down. But amidst that noise, let's not lose sight of our underlying operational improvement.

Speaker #1: What matters most over the long term is our ability to continually improve the actual performance of the business—generating more demand, managing our booking curve for maximum revenue, operating more efficiently, and ultimately producing more earnings and higher returns.

Speaker #1: And while it's still early, we are beginning to capture opportunities embedded in our propel targets sooner than expected, leveraging our unmatched scale, sharpening commercial execution, investing where we generate outsized returns, and advancing technology to enhance revenue and control costs.

Speaker #1: This includes putting AI to work across our commercial systems to help our teams make better decisions and provide more personalized experiences for our guests.

Josh Weinstein: This includes putting AI to work across our commercial systems to help our teams make better decisions and provide more personalized experiences for our guests, automating more of how we operate shoreside, and identifying new efficiencies in how we manage our vessels. With 2026 largely on the books, our attention is turning to 2027 and beyond. For full-year 2027, we are already half-booked with both occupancy and pricing at record levels. Bookings taken over our Q3 solidified this position as we saw very healthy increases compared to last year's levels. While the booking disruption we experienced this spring extended into the Q1 of 2027, Q1 bookings have also rebounded meaningfully over the past three months, reinforcing our view that the impact is temporary. Demand remains broad-based, including very healthy demand for our peak summer European deployments.

Speaker #1: We are automating more of how we operate shoreside and identifying new efficiencies in how we manage our vessels. With 2026 largely on the books, our attention is turning to 2027 and beyond.

Speaker #1: For full-year 2027, we are already half-booked with both occupancy and pricing at record levels. Bookings taken over our third quarter solidified this position as we saw very healthy increases compared to last year's levels.

Speaker #1: And while the booking disruption we experienced this spring extended into the first quarter of 2027, Q1 bookings have also rebounded meaningfully over the past three months.

Speaker #1: Reinforcing our view that the impact is temporary. Demand remains broad-based, including very healthy demand for our peak summer European deployments. 2028 is also off to an excellent start, at higher occupancy and even higher prices year over year, and our booking curve is further out than it has ever been at this point in the year.

Josh Weinstein: 2028 is also off to an excellent start at higher occupancy and even higher prices year over year, and our booking curve is further out than it has ever been at this point in the year. Customer deposits tell a similar story. They reached a Q3 record of approximately $7.6 billion, up about 7%, despite flat capacity growth over the next 12 months. With demand continuing to grow well ahead of our intentionally measured capacity growth, we have an opportunity to keep managing the booking curve for price. That is exactly what our strategy is designed to do, drive more earnings and higher returns from our existing asset base with relentless focus and discipline. One of the most visible examples is our destination strategy. Celebration Key recently marked its first anniversary, having welcomed almost 2.5 million guests in its first year alone.

Speaker #1: Customer deposits tell a similar story. They reached a third-quarter record of approximately $7.6 billion, up about 7%, despite flat capacity growth over the next 12 months.

Speaker #1: With demand continuing to grow well ahead of our intentionally measured capacity growth, we have an opportunity to keep managing the booking curve for price.

Speaker #1: And that is exactly what our strategy is designed to do: drive more earnings and higher returns from our existing asset base, with relentless focus and discipline.

Speaker #1: One of the most visible examples is our destination strategy. Celebration Quay recently marked its first anniversary, having welcomed almost 2.5 million guests in its first year alone.

Speaker #1: The guest response has been exceptional. Celebration Quay is resonating with our loyal guests, giving them another compelling reason to sail with us again while also attracting new-to-cruise guests as well.

Josh Weinstein: The guest response has been exceptional. Celebration Key is resonating with our loyal guests, giving them another compelling reason to sail with us again while attracting new-to-cruise guests as well. We are only just beginning to realize its potential. With the second pier now open, Celebration Key is expected to welcome approximately 3.5 million guests next year, with 31 ships calling versus 26 this year. Its reach is also expanding beyond Carnival Cruise Line, with Princess joining next month, followed by select calls from AIDA and Costa late next year. Celebration Key is just one part of what is becoming an increasingly differentiated destination portfolio. Our recently expanded experiences at RelaxAway, Half Moon Cay, and Isla Tropicale, Roatán have already welcomed approximately 250,000 guests each with very positive guest response. We have made these amazing beach experiences even better and available to millions more guests.

Speaker #1: And we are only just beginning to realize its potential. With the second pier now open, Celebration Quay is expected to welcome approximately 3.5 million guests next year, with 31 ships calling versus 26 this year.

Speaker #1: Its reach is also expanding beyond Carnival Cruise Line, with Princess joining next month, followed by select calls from AIDA and Costa late next year.

Speaker #1: And Celebration Quay is just one part of what is becoming an increasingly differentiated destination portfolio. Our recently expanded experiences at Relax Away, Half Moon Quay, and Isla Tropical Roatán have already welcomed approximately 250,000 guests each, with very positive guest response.

Speaker #1: We have made these amazing beach experiences even better, and available to millions more guests. We can now pair the idyllic natural beauty of Relax Away, long one of our highest-rated beach experiences, with the high-energy experience of Celebration Quay, giving our guests two completely different beach experiences on the same itinerary and further differentiating what only we can offer.

Josh Weinstein: We can now pair the idyllic natural beauty of RelaxAway, long one of our highest-rated beach experiences, with the high-energy experience of Celebration Key, giving our guests two completely different beach experiences on the same itinerary and further differentiating what only we can offer. In fact, next year, 35% of Carnival Cruise Line's Caribbean capacity will feature itineraries visiting both of these incredible destinations on the same cruise. There is more to come as we continue to develop our destination footprint, differentiate the vacation experiences we offer, and make our existing fleet even more valuable. We are applying the same return-focused mindset across the rest of the business. We are finding new ways to deepen guest loyalty and increase lifetime value. In the year following Carnival Cruise Line's June 2025 announcement of its new loyalty program, co-branded credit card issuances increased 20% even before the new benefits took effect.

Speaker #1: In fact, next year, 35% of Carnival Cruise Line's Caribbean capacity will feature itineraries visiting both of these incredible destinations on the same cruise. And there is more to come, as we continue to develop our destination footprint, differentiate the vacation experiences we offer, and make our existing fleet even more valuable.

Speaker #1: We are applying the same return-focused mindset across the rest of the business. We're finding new ways to deepen guest loyalty and increase lifetime value.

Speaker #1: In the year following Carnival Cruise Line's June 2025 announcement of its new loyalty program, co-branded credit card issuances increased 20%, even before the new benefits took effect.

Speaker #1: And since the program went live on September 1, issuances have accelerated significantly, more than tripling from pre-announcement levels. And while the program has only been live for a few weeks, thousands of members have already redeemed tens of millions of points on everything from a drink on board to a suite on Carnival Celebration.

Josh Weinstein: Since the program went live 1 September, issuances have accelerated significantly, more than tripling from pre-announcement levels. While the program has only been live for a few weeks, thousands of members have already redeemed tens of millions of points on everything from a drink on board to a suite on Carnival Celebration. Exactly the kind of flexibility and choice the new program was designed to provide. We are also continuing to invest selectively in our fleet. Carnival Festivale enters service in the Caribbean in May, in time for the summer season, and begins contributing to our results in the H2 of the year. Our mid-life modernization programs continue to progress, with additional vessels planned for AIDA and Holland America next year. We will also complete a major upgrade of Cunard's flagship Queen Mary 2.

Speaker #1: Exactly the kind of flexibility and choice the new program was designed to provide. We’re also continuing to invest selectively in our fleet. Carnival Festival enters service in the Caribbean in May, in time for the summer season, and begins contributing to our results in the second half of the year.

Speaker #1: Our midlife modernization programs continue to progress. With additional vessels planned for Aida and Holland America next year. We will also complete a major upgrade, of Cunard's flagship Queen Mary 2, as the world's only ocean liner providing regular transatlantic service it is a one-of-a-kind asset and our investment is designed to ensure a continues to generate attractive returns for decades to come.

Josh Weinstein: As the world's only ocean liner providing regular transatlantic service, it is a one-of-a-kind asset, and our investment is designed to ensure it continues to generate attractive returns for decades to come. We continue to optimize deployment toward markets where we see the greatest opportunity. Next year, for example, we are leaning even further into our successful Northern European deployments, where guest interest continues to grow in coolcations, cooler weather destinations, and outdoor activities like hiking, exploring the fjords of Norway, and enjoying the northern lights. Importantly, we are doing this in the context of relatively flat overall capacity growth, meaning that we are actively shifting our deployment mix toward the opportunities we find most attractive. As a result, in 2027, Europe will, for the first time, tie with the Caribbean as our largest deployment region, each representing 34% of our mix.

Speaker #1: And we continue to optimize deployment toward markets where we see the greatest opportunity. Next year, for example, we are leaning even further into our successful Northern European deployments, where guest interest continues to grow in cool occasions.

Speaker #1: Cooler weather destinations and outdoor activities, like hiking, exploring the fjords of Norway, and enjoying the Northern Lights. Importantly, we are doing this in the context of relatively flat overall capacity growth, meaning that we are actively shifting our deployment mix toward the opportunities we find most attractive.

Speaker #1: As a result, in 2027, Europe will, for the first time, tie with the Caribbean as our largest deployment region, each representing 34% of our mix. Of course, the Caribbean remains an important part of our strategy and will benefit from the continued expansion of our Paradise Collection portfolio, even as we diversify our footprint more globally.

Josh Weinstein: Of course, the Caribbean remains an important part of our strategy and will benefit from the continued expansion of our Paradise Collection portfolio, even as we diversify our footprint more globally. Our diversified footprint is further strengthened by our industry-leading presence in Alaska, the ultimate coolcation. Our advantage there extends beyond cruising to our integrated land and sea experiences, supported by thousands of hotel and lodge rooms, 20 Glass-owned rail cars, and the largest fleet of motor coaches in all of Alaska. Together, these assets give our guests unparalleled access to experience the extraordinary natural beauty, culture, and wildlife of the great land in ways that are difficult to replicate. Taking a step back, these are all different initiatives across different brands and geographies, but the strategy behind them is consistent. Create differentiated demand, improve revenue generation, and drive attractive returns on the capital we deploy.

Speaker #1: And our diversified footprint is further strengthened by our industry-leading presence in Alaska, the ultimate cool occasion. Our advantage there extends beyond cruising to our integrated land and sea experiences, supported by thousands of hotel and lodge rooms, 20 glass-domed railcars, and the largest fleet of motor coaches in all of Alaska.

Speaker #1: Together, these assets give our guests unparalleled access to experience the extraordinary natural beauty, culture, and wildlife of the Great Land in ways that are difficult to replicate.

Speaker #1: Taking a step back, these are all different initiatives across different brands and geographies. But the strategy behind them is consistent, create differentiated demand, improve revenue generation, and drive attractive returns on the capital we deploy.

Speaker #1: And clearly, those efforts are showing up in our financial results. Despite the significant fuel price headwind this year, we expect to finish 2026 with even more brands generating mid-teens or higher returns on invested capital than last year.

Josh Weinstein: Clearly, those efforts are showing up in our financial results. Despite the significant fuel price headwind this year, we expect to finish 2026 with even more brands generating mid-teens or higher returns on invested capital than last year. That is meaningful progress, and we still see considerable runway ahead, with each of our brands on a path toward higher returns. The consistency of our performance is also translating into increasingly durable cash flow, giving us the ability to invest in the business, strengthen the balance sheet, and return capital to shareholders at the same time. Yes, we are doing all three. We continue to invest in the highest return opportunities across our brands and destinations. We continue to reduce debt and strengthen our financial position. Just six months into our share repurchase program, we have already bought back about $1.2 billion of stock alongside our ongoing dividend.

Speaker #1: That is meaningful progress, and we still see considerable runway ahead, with each of our brands on a path toward higher returns. The consistency of our performance is also translating into increasingly durable cash flow, giving us the ability to invest in the business, strengthen the balance sheet, and return capital to shareholders at the same time.

Speaker #1: And yes, we are doing all three. We continue to invest in the highest-return opportunities across our brands and destinations. We continue to reduce debt and strengthen our financial position.

Speaker #1: And just six months into our share repurchase program, we have already bought back about $1.2 billion of stock, alongside our ongoing dividend. That balance is important.

Josh Weinstein: That balance is important. Our objective is not simply to grow. It is to grow earnings and returns in a disciplined way while increasing the amount of cash we can return to shareholders over time. Importantly, we have the best team in all of travel and leisure making it happen. None of what we have accomplished or what lies ahead would be possible without the dedication of our more than 160,000 team members, both ship and shore. I want to thank them for everything they do every day to deliver unforgettable happiness to our guests by providing extraordinary cruise vacations while honoring the integrity of every place we visit, life we touch, and ocean we sail. I also want to thank our loyal guests, our investors, our travel agent partners, our destination and shipbuilding partners, and all of our stakeholders for their continued support.

Speaker #1: Our objective is not simply to grow; it is to grow earnings and returns in a disciplined way, while increasing the amount of cash we can return to shareholders over time.

Speaker #1: And importantly, we have the best team in all of travel and leisure making it happen. None of what we have accomplished, or what lies ahead, will be possible without the dedication of our more than 160,000 team members both ship and do, every day, to deliver unforgettable happiness to our guests, by providing extraordinary, cruise vacations, while honoring the integrity of every place we visit, life we touch, and ocean we sail.

Speaker #1: I also want to thank our loyal guests, our investors, our travel agent partners, our destination and shipbuilding partners, and all of our stakeholders for their continued support.

Speaker #1: We have tremendous momentum, an incredible team, and significant opportunities still ahead of us. With that, I'll turn the call over to David to walk you through the quarter and our guidance in more detail.

Josh Weinstein: We have tremendous momentum, an incredible team, and significant opportunities still ahead of us. With that, I'll turn the call over to David to walk you through the quarter and our guidance in more detail.

Speaker #2: Thank you, Josh. I'll begin with our third quarter results, then cover our updated full-year guidance and several considerations for 2027, before closing with capital allocation.

David Bernstein: Thank you, Josh. I'll begin with our Q3 results, then cover our updated full-year guidance and several considerations for 2027 before closing with capital allocation. We delivered record revenues and yields with Q3 net income exceeding our June guidance by over $100 million or $0.08 per share. The outperformance versus June guidance was driven by three factors. Revenue was the primary driver for our outperformance, contributing $0.05 per share. Yields increased nearly 2.5% year-over-year on top of almost 5% growth in last year's Q3. Strong close-in demand and robust onboard spending drove yields 1.2 percentage points above June guidance. Second, continued cost discipline drove additional upside. Cruise costs, excluding fuel per ALBD, increased only 1.8% year-over-year, 100 basis points better than June guidance, contributing $0.02 per share. Importantly, nearly all the Q3 cruise cost savings flowed through to our full year September guidance.

Speaker #2: We delivered record revenues and yields, with third quarter net income exceeding our June guidance by over $100 million, or $0.08 per share. The outperformance versus June guidance was driven by three factors: revenue was the primary driver for our outperformance, contributing $0.05 per share.

Speaker #2: Yields increased nearly 2.5% year over year, on top of almost 5% growth in last year's third quarter. Strong close-in demand and robust onboard spending drove yields 1.2 percentage points above June guidance.

Speaker #2: Second, continued cost discipline drove additional upside. Cruise costs excluding fuel, per ALBD, increased only 1.8% year over year, $100 basis points better than June guidance, contributing $0.02 per share.

Speaker #2: Importantly, nearly all the third quarter cruise cost savings flowed through to our full-year September guidance. Third, the remaining $0.01 per share of favorability came from further improvements in fuel consumption, where we delivered a nearly 4% year-over-year reduction, on top of the over 5% reduction in last year's third quarter, as well as the full-year 2025.

David Bernstein: Third, the remaining $0.01 per share of favorability came from further improvements in fuel consumption, where we delivered a nearly 4% year-over-year reduction on top of the over 5% reduction in last year's Q3, as well as the full year 2025. Now, turning to our full year September guidance. We expect operational improvement of more than $150 million in net income compared to June guidance, driven by improvements in yields, cruise costs excluding fuel per ALBD, and fuel consumption, overcoming $150 million impact from increased fuel prices. Our September guidance forecasts yield growth of approximately 2.3%, which is over half a point better than June guidance. We flowed through the $0.05 per share yield improvement from the Q3 and an additional $0.03 per share expected yield improvement for the Q4, for a total of $0.08 per share for the year.

Speaker #2: Now turning to our full-year September guidance. We expect operational improvement of more than 150 million dollars in net income compared to June guidance, driven by improvements in yields, cruise costs excluding fuel, per ALBD, and fuel consumption overcoming $150 million impact from increased fuel prices.

Speaker #2: Our September guidance forecasts yield growth of approximately 2.3%, which is over half a point better than June guidance. We flowed through the $0.05 per share yield improvement from the third quarter and an additional $0.03 per share expected yield improvement for the fourth quarter for a total of $0.08 per share for the year.

Speaker #2: For the fourth quarter, we now expect year-over-year growth of approximately 1.7% over three-fourths of a point above our implied June guidance. On a normalized basis, adjusting for the impact of the new loyalty program accounting for Carnival Cruise Line, our fourth quarter yields are expected to be up approximately 2.3%, consistent with the year-over-year growth we saw in the third quarter.

David Bernstein: For the Q4, we now expect year-over-year growth of approximately 1.7% over three-fourths of a point above our implied June guidance. On a normalized basis, adjusting for the impact of the new loyalty program accounting for Carnival Cruise Line, our Q4 yields are expected to be up approximately 2.3%, consistent with the year-over-year growth we saw in the Q3. Cruise costs excluding fuel per ALBD, are now expected to be up approximately 2.2% year-over-year, better than June guidance, which includes the $0.02 per share cost savings I previously mentioned for the Q3. On a normalized basis, adjusted cruise costs excluding fuel per ALBD, are up approximately 1.1% after reflecting the timing of certain expenses between the years, partial year operating expenses from two exclusive destinations, and the impact of certain elevated logistics costs as a result of the disruption from the Middle East conflict.

Speaker #2: Cruise costs excluding fuel, per ALBD, are now expected to be up approximately 2.2% year-over-year, better than June guidance, which includes the $0.02 per share cost savings I previously mentioned for the third quarter.

Speaker #2: On a normalized basis, adjusted cruise costs excluding fuel, per ALBD, are up approximately 1.1%, after reflecting the timing of certain expenses between the years, partial year operating expenses from two exclusive destinations, and the impact of certain elevated logistics costs as a result of the disruption from the Middle East conflict.

Speaker #2: Putting the full-year September guidance together, relative to June guidance: improved operating performance adds $0.12 per share—$0.08 from yields, $0.02 from cruise costs excluding fuel, and $0.02 from fuel consumption and other items.

David Bernstein: Putting the full year September guidance together relative to June guidance, improved operating performance adds $0.12 per share: $0.08 from yields, $0.02 from cruise costs excluding fuel, and $0.02 from fuel consumption and other items. Share repurchases added $0.01 per share of EPS accretion, while higher fuel prices were an $0.11 per share headwind. However, the 26% reduction in fuel consumption per ALBD since 2019 helps to mitigate the impact of the fuel price increases as we consume less fuel. The lower consumption represents savings of nearly $750 million at September guidance fuel prices. As a result, full-year EPS guidance is now $2.24, up $0.02 from our previous guidance. Now, a few things for you to consider for 2027. We are forecasting a capacity increase of half a percent in 2027 compared to 2026.

Speaker #2: Share repurchases added $0.01 per share of EPS were an $0.11 per share headwind. However, the 26% reduction in fuel consumption per ALBD since 2019 helps to mitigate the impact of the fuel price increases as we consume less fuel.

Speaker #2: The lower consumption represents savings of nearly $750 million, at September guidance fuel prices. As a result, full-year EPS guidance is now $2.24, up $0.02 from our previous guidance.

Speaker #2: Now, a few things for you to consider for 2027. We are forecasting a capacity increase of 0.5%, compared to 2026.

Speaker #2: As Josh indicated, we are in a strong position for 2027, with both occupancy and price at record levels. This is weighted to quarters two through four, since the effects of the booking disruptions earlier this year which impacted the second half of 2026, also carried heavily into bookings for the first quarter of 2027.

David Bernstein: As Josh indicated, we are in a strong position for 2027 with both occupancy and price at record levels. This is weighted to Q2 through Q4 since the effects of the booking disruptions earlier this year, which impacted the H2 of 2026, also carried heavily into bookings for the Q1 of 2027. While booking trends for the Q1 of 2027 have improved meaningfully over the past three months, we still expect the Q1 to reflect residual impacts from that disruption. Of course, the team is working hard to increase demand across the board, including Q1 sailings, and this gives us confidence in our ability to continue the momentum of our multi-year yield gains. On 1 September, we successfully launched Carnival Cruise Line's new loyalty program, Carnival Rewards.

Speaker #2: While booking trends for the first quarter of 2027 have improved meaningfully over the past three months, we still expect the first quarter to reflect residual impacts from that disruption.

Speaker #2: Of course, the team is working hard to increase demand across the board, including first-quarter sailings and this gives us confidence in our ability to continue the momentum of our multi-year yield gains.

Speaker #2: On September 1, we successfully launched Carnival Cruise Line's new loyalty program, Carnival Rewards. Our guests are already enjoying the enhanced benefits of the new program, with more flexibility in how they earn and redeem rewards, and more ways to get value from their relationship with Carnival.

David Bernstein: Our guests are already enjoying the enhanced benefits of the new program with more flexibility in how they earn and redeem rewards and more ways to get value from their relationship with Carnival. We are very confident in the benefits this program will bring to our guests and to the company over time. As I previously indicated, Carnival Rewards is expected to be cash flow positive from launch. Although the timing effect of revenue recognition creates a temporary yield headwind in Q4 2026 and fiscal year 2027. Under the accounting treatment, we defer a portion of revenue equal to the value of benefits earned. As redemptions build, revenue recognized upon redemption will eventually exceed new deferrals. Until 2028, when the impact turns positive, we do expect to have accounting-driven yield headwinds.

Speaker #2: We are very confident in the benefits this program will bring to our guests and to the company over time. As I previously indicated, Carnival Rewards is expected to be cash flow positive from launch.

Speaker #2: Although the timing effect of revenue recognition creates a temporary yield headwind in the fourth quarter of 2026 and fiscal year 2027, under the accounting treatment we defer a portion of revenue equal to the value of benefits earned.

Speaker #2: As redemptions build, revenue recognized upon redemption will eventually exceed new deferrals. Until 2028, when the impact turns positive, we do expect to have accounting-driven yield headwinds.

Speaker #2: We previously explained a $0.20 point impact for the full year 2026, all of which is from the $0.60 point impact in the fourth quarter of 2026.

David Bernstein: We previously explained a 0.2 of a point impact for the full year 2026, all of which is from the 0.6 of a point impact in Q4 2026. For full year 2027, there will be an additional 0.4 of a point impact. Now, I'll finish with some comments on capital allocation. To date, we have opportunistically repurchased nearly $1.2 billion of stock, representing 45 million shares. We are making meaningful progress towards our PROPEL target of distributing cash to our shareholders responsibly. Combining share repurchases with our expected fiscal year dividend payout, we will be returning nearly $2 billion to shareholders. Even with that level of capital return, we expect year-over-year improvements in our balance sheet and leverage metrics, and our total debt is now below $24 billion, a far cry from our $36 billion peak in 2023.

Speaker #2: And for full-year 2027, there will be an additional $0.4 point impact. Now, I'll finish with some comments on capital allocation. To date, we have opportunistically repurchased nearly $1.2 billion of stock representing 45 million shares.

Speaker #2: We are making meaningful progress towards our Propel target of distributing cash to our shareholders responsibly. Combining share repurchases with our expected fiscal year dividend payout, we will be returning nearly $2 billion to shareholders.

Speaker #2: Even with that level of capital return, we our balance sheet and leverage metrics, and our total debt is now below $24 billion, a far cry from our $36 billion peak in 2023.

Speaker #2: During the quarter, we also used cash on hand to redeem $500 million of 7% notes, which were among our highest-cost debt instruments. Furthermore, during the quarter, S&P upgraded the company's credit rating, making it the second rating agency to assign the company an investment-grade rating.

David Bernstein: During the quarter, we also used cash on hand to redeem $500 million of 7% notes, which were among our highest cost debt instruments. Furthermore, during the quarter, S&P upgraded the company's credit rating, making it the second rating agency to assign the company an investment-grade rating. Following this upgrade, which allowed the collateral to be released, the company does not have any remaining secure debt. Our expected EBITDA of more than $7 billion provides the capacity to invest in the business, improve leverage, and return capital to shareholders. Operator, we're now ready to open the call for questions.

Speaker #2: Following this upgrade, which allowed the collateral to be released, the company does not have any remaining secured debt. Our expected EBITDA of more than $7 billion provides the capacity to invest in the business, improve leverage, and return capital to shareholders.

Speaker #2: Operator, we're now ready to open the call for questions.

Speaker #1: Thank you. Now, I'm conducting a question-and-answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Operator: Thank you. Now conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. To allow for as many questions as possible, we ask you limit yourselves to one question and one follow-up. Thank you. One moment, please, while we poll for questions. Our first question today is coming from Robin Farley from UBS. Your line is now live.

Speaker #1: You may press star 2 if you'd like to move your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker #1: To allow for as many questions as possible, we ask that you limit yourselves to one question and one follow-up. Thank you. One moment, please, while we poll for questions.

Speaker #1: Our first question today is coming from Robin Farley from UBS. Your line is now live.

Operator: Our first question today is coming from Robin Farley from UBS. Your line is now live.

Robin Farley: Great. Thank you. Just wanted to ask about something a little bit away from the results today. Although my follow-up, I do have a question about the release. Just looking in the market, there is a transaction with an all-inclusive Caribbean resort chain that one would assume others in the industry maybe considered or looked at. I do not know if you have any thoughts you can share. Maybe it is not about that specific portfolio, but just your thoughts about synergies or would something like that make sense for Carnival or just any view on that. Thank you. I do have a follow-up on the release. Thanks.

Speaker #3: Great. Thank you. I just wanted to ask about something a little bit away from the results today, although my follow-up, I do have a question about the release.

Speaker #3: Just looking in the market, there's a transaction with an all-inclusive Caribbean resort chain that one would assume others in the industry maybe considered or looked at.

Speaker #3: I don't know if you have any thoughts you can share. Maybe it's not about that specific portfolio, but just your thoughts about synergies or would something like that make sense for Carnival or just any view on that.

Speaker #3: Thank you. And then I give a follow-up on the release. Thanks.

Speaker #4: Good morning, Robin. Wow, first question, not even about us. All right. So I'll just talk about us. I won't talk about somebody else's transaction.

Josh Weinstein: Good morning, Robin. Wow, first question, not even about us. All right. I will just talk about us. I will not talk about somebody else's transaction. I would say, I probably sound a little bit like a broken record here, but we are just laser-focused on improving our cruise business. We are very proudly a cruise company, and everything we do is to enhance the cruise experience for our guests. Our portfolio of eight brands, we feel we are in a great position given the momentum we have got and the things that we have got to come, to be able to improve the business on the assets that we have got. Clearly, I am not saying we do not have land-based assets in our portfolio. We do, but they are really ancillary to the cruise experience. Things like Celebration Key, RelaxAway, Half Moon Cay, and our unmatched position in Alaska.

Speaker #4: I'd say I probably sound a bit like a broken record here, but we are just laser-focused on improving our cruise business. We are very proudly a cruise company, and everything we do is to enhance the cruise experience for our guests.

Speaker #4: And so, we are a portfolio of brands. We feel we're in a great position, given the momentum we've got and the things that we've got to come.

Speaker #4: To be able to improve the business on the assets that we've got. Now, clearly, I'm not saying we don't have we don't have land-based assets in our portfolio.

Josh Weinstein: Clearly, I am not saying we do not have land-based assets in our portfolio. We do, but they are really ancillary to the cruise experience. Things like Celebration Key, RelaxAway, Half Moon Cay, and our unmatched position in Alaska. Those are all really bolt-ons to make the cruise product even better, and they are high returning. We are focused on the returns. We are focused on the cruise business. So there you go.

Speaker #4: We do, but they're really ancillary to the cruise experience. Things like Celebration Quay, Relax Away at Half Moon Quay, and our unmatched position in Alaska—those are all really bulldogs to make the cruise product even better.

Josh Weinstein: Those are all really bolt-ons to make the cruise product even better, and they are high returning. We are focused on the returns. We are focused on the cruise business. So there you go.

Speaker #4: And they're high returning. We're focused on the returns. We're focused on the cruise business, so. There you go.

Speaker #3: Okay. Great. Thank you. And then just for my follow-up, just the booking outlook and the release, I'm just curious if you can help clarify it talked about 2027 price and load being at record levels.

Robin Farley: Okay, great. Thank you. For my follow-up, just the booking outlook in the release. I am just curious if you can help clarify. It talked about 2027 price and load being at record levels. It did not say higher, and that may be fine, that may be part of the yield management strategy. But in talking about 2028, it does say higher occupancy and price. So I am just wondering if I am interpreting that right about 2027, that it is maybe at the same levels as-

Speaker #3: It didn't say higher, and that may be fine. That may be part of the yield management strategy. But then in talking about 2028, it does say higher.

Speaker #3: Occupancy and price—so I'm just wondering if I'm interpreting that right about 2027, that it's maybe at the same levels as.

Josh Weinstein: No, no. 2027 is higher. I am sorry. Yes, we are dancing on the pinhead. So sorry. 2027 occupancy and price is higher. Yes.

Speaker #4: No, no. 2027's higher. I'm sorry. Yeah. We're dancing on the pin. Pinhead. So sorry. 2027 occupancy and price is higher. Yes.

Speaker #3: Okay. Great. Thank you very much.

Robin Farley: Okay, great. Thank you very much.

Speaker #4: No problem, ma'am.

Josh Weinstein: No problem, Robin.

Speaker #1: Thank you. Our next question today is coming from James Hardman from Citi. Your line is now live.

Operator: Thank you. Our next question today is coming from James Hardiman from Citi. Your line is now live.

Speaker #5: Hey, good morning. Thanks for taking my questions and congrats on a really strong and maybe even surprisingly strong quarter here. I guess my first question, I mean, it sounds like the sure thing.

James Hardiman: Hey, good morning. Thanks for taking my questions and congrats on a really strong and maybe even surprisingly strong quarter here. I guess my first question.

David Bernstein: Thank you.

Josh Weinstein: Thank you.

David Bernstein: I mean, it sounds like the Sure thing. Sounds like the last 3 months of bookings were really good for you guys, which is particularly noteworthy given the fact that the macro and the geopolitical headlines haven't really gotten any better. I don't think airfare prices have gotten dramatically better. So maybe, help us connect those two dots. Do we think that some of this is specific to your business model, where a lot of your customers are maybe closer to departure ports, so airfare doesn't matter as much, or European customers care less? We've talked about that sort of distinction in the past. Europeans to European destinations and maybe Americans to European destinations.

Speaker #5: It sounds like the last three months of bookings were really good for you guys, which is particularly noteworthy given the fact that the macro and the geopolitical headlines haven't really gotten any better.

Speaker #5: And I don't think airfare prices have gotten dramatically better. So maybe help us connect those two dots? I mean, do we think that some of this is specific to your business model, where a lot of your customers are maybe closer to departure ports?

Speaker #5: And so airfare doesn't matter as much, or European customers care less? We've talked about that sort of distinction in the past—Europeans to European destinations, than maybe Americans to European destinations.

Speaker #5: Or do we think there's just fatigue with all of these headlines and people are saying I'm going to go on my vacation hell or high water and we're now beginning to see that.

James Hardiman: Do we think there's just fatigue with all of these headlines and people are saying, "I'm going to go on my vacation, hell or high water," and we're now beginning to see that? Thanks.

Speaker #5: Thanks.

Speaker #4: Yeah, no, I think all of those are pretty fair points, to be honest with you. I mean, taking a step back, June was an inflection point in the booking momentum, and it was positive year-over-year.

Josh Weinstein: Yeah. No, I think all of those are pretty fair points, to be honest with you. Taking a step back, June was an inflection point in the booking momentum, and it was positive year over year. Then we saw nice acceleration in both July and August. I think to some extent, there is a normalization of what the world is throwing at people. There is a growing change in the mentality of Americans, which is just catching up to Europeans, as we have talked about before, that vacations are sacrosanct. They will take them in good times and in bad. If you have a job, you get a break, and you need that vacation.

Speaker #4: And then we saw nice acceleration in both July and August. I think to some extent, there's a normalization of what the world is throwing at people.

Speaker #4: There is a growing change in the mentality of Americans, which is just catching up to Europeans—as we've talked about before—that vacations are sacrosanct.

Speaker #4: And they will take them in good times and in bad if you have a job, you get a break, and you need that vacation.

Speaker #4: And so we are an amazing value for people if the consumer confidence isn't great, if there is pressure from things like the price of gasoline, if there is other inflation, if there are concerns about fill in the blank, because that's all we hear about nowadays.

Josh Weinstein: We are an amazing value for people if the consumer confidence is not great, if there is pressure from things like price of gasoline, if there is other inflation, if there are concerns about fill in the blank, because that is all we hear about nowadays. We are a great value, we give a great experience, and we make it convenient for people. So we really do feel like our strategy is working. It can work in great times, and it can work in times that are not so great. That is what you are seeing now.

Speaker #4: And we're a great value. We provide a great experience, and we make it convenient for people. So we really do feel like our strategy is working.

Speaker #4: It's been working great at times, and it can work in times that aren't so great. And that's what you're seeing now.

Speaker #5: Got it. And then Josh, in your prepared remarks, you talked about the fact that Europe, for the first time, will tie the Caribbean for the largest deployment region.

James Hardiman: Got it. Then, Josh, in your prepared remarks, you talked about the fact that Europe for the first time will tie the Caribbean for the largest deployment region. Sounds like there is a bigger narrative there. I feel like I have been saying for a decade that eventually the pendulum might shift back towards Europe, and at least for you guys, that is happening. So maybe speak to what you are seeing on both sides of the Atlantic. Are you concerned about what is going on with respect to Caribbean capacity into 2027? Thanks.

Speaker #5: Sounds like there's a bigger narrative there. I feel like I've been saying for a decade that eventually the pendulum might shift back toward Europe, and at least for you guys, that's happening.

Speaker #5: So maybe speak to what you're seeing on both sides of the Atlantic. Are you concerned about what's going on with respect to Caribbean capacity and to 2027?

Speaker #5: Thanks.

Speaker #4: Well, so I'll answer. Europe question, and then a Caribbean question. The Europe question is this isn't new for us. This has been a growing piece of the business and the strategy, particularly in Northern Europe, as I mentioned in my prepared remarks, which is just amazing destinations for both North Americans and Europeans.

Josh Weinstein: Well, so I will answer a Europe question and then a Caribbean question. The Europe question is, this is not new for us. This has been a growing piece of the business and the strategy, particularly in Northern Europe, as I mentioned in my prepared remarks, which is just amazing destinations for both North Americans and Europeans. So our brands have a great foothold there. We actually have more European sailings outside of the Med than in the Med. We love that position. It is also longer seasonality. We can push into the shoulders more, because that is what guests are looking for, which fits well. With respect to the Caribbean, I have said this in different ways. I will say it again. Give me two options. Option number 1 is no growth in the Caribbean. Option number 2 is, if you look at 2027, something like 37% growth, over a 3-year period.

Speaker #4: And so our brands have a great foothold there. We actually have more European sailings outside of the Med than in the Med. And we love that position.

Speaker #4: It's also longer seasonality. We can push into the shoulders more because that's what guests are looking for, which fits well. With respect to the Caribbean, I've said this in different ways.

Josh Weinstein: With respect to the Caribbean, I have said this in different ways. I will say it again. Give me two options. Option number 1 is no growth in the Caribbean. Option number 2 is, if you look at 2027, something like 37% growth, over a 3-year period. I'm going to go with option A. Option A would make my life easier, make a lot of people's lives easier. But it's not taking away from the fact that the Caribbean is an amazing part of our portfolio, and we are absolutely committed to it forever. Hence the investments that we've made in our Paradise Collection. Carnival Cruise Line's been the leader in the Caribbean all year sailing forever, and we expect that to continue.

Speaker #4: I'll say to you, "Give me two options. Option number one is no growth in the Caribbean. Option number two is if you look at 2027, something like 37% growth over a three-year period.

Speaker #4: I'm going to go with option A. Option A would make my life easier, and make a lot of people's lives easier. But it's not taking away from the fact that the Caribbean is an amazing part of our portfolio.

Josh Weinstein: I'm going to go with option A. Option A would make my life easier, make a lot of people's lives easier. But it's not taking away from the fact that the Caribbean is an amazing part of our portfolio, and we are absolutely committed to it forever. Hence the investments that we've made in our Paradise Collection. Carnival Cruise Line's been the leader in the Caribbean all year sailing forever, and we expect that to continue. Does it face pressure when there's that kind of capacity coming at one time? Yeah, it does. And we've seen it before, and we get through it. We just got through Q3 of this year, yields up, I'd say fairly nicely. We're looking at the full year up almost 3% on a normalized basis, including our Caribbean portfolio against the backdrop of a pretty volatile world.

Speaker #4: And we are absolutely committed to it forever. And hence the investments that we've made in our Paradise collection. Carnival Cruise has been the leader in Caribbean, all-year sailing forever, and we expect that to continue.

Speaker #4: Does it face pressure when there's that kind of capacity coming at one time? Yeah, it does. And we've seen it before, and we get through it.

Josh Weinstein: Does it face pressure when there's that kind of capacity coming at one time? Yeah, it does. And we've seen it before, and we get through it. We just got through Q3 of this year, yields up, I'd say fairly nicely. We're looking at the full year up almost 3% on a normalized basis, including our Caribbean portfolio against the backdrop of a pretty volatile world. I'd say all of that's fitting together really nicely.

Speaker #4: We just got through the third quarter of this year, yields up, I'd say, fairly nicely. We're looking at the full year up almost 3% on a normalized basis.

Speaker #4: Including our Caribbean portfolio, against the backdrop of a pretty volatile world. So, I'd say all of that's fitting together really nicely.

Josh Weinstein: I'd say all of that's fitting together really nicely.

Speaker #5: Great color. Thanks, Josh.

James Hardiman: Great color. Thanks, Josh.

Speaker #4: Thanks, James.

Josh Weinstein: Thank you.

Speaker #1: Thanks. The next question is coming from Brent Montour from Barclays. Your line is now live.

Operator: Thank you. Next question is coming from Brandt Montour from Barclays. Your line is now live.

Speaker #6: Good morning, everybody. Thanks for taking my questions. So, back to 2027, I'm just curious—Josh, if you want to paint a picture of how the customer feels about booking that far out, and specifically related to this year, kind of six months into the year, looking at one year out versus one year ago, six months into tariffs, and booking out to '26.

Brandt Montour: Good morning, everybody. Thanks for taking my questions. Back to 2027. I was just curious, Josh, if you want to kind of paint a picture on how your booking customer feels about booking that far out and specifically relating this year, 6 months into Iran, looking at 1 year out versus 1 year ago, 6 months into tariffs, booking out to 2026. Have you seen any differences there, and then, which brands or which cohorts are you seeing that differential?

Speaker #6: Have you seen any differences there? And then, which brands or which cohorts are you seeing that differential?

Speaker #4: Yeah, I won't get into specific brands and customer bases of the brands, but what I would say is every crisis is different, and certainly this crisis was different from last year.

Josh Weinstein: Well, I won't get into specific brands and customer bases of the brands, but what I would say is every crisis is different and certainly this crisis was different from last year. We thought we'd have a great opportunity to lap the volatility from last year, but obviously what happened in the spring was a much longer burn for the consumer and for just the macroeconomic backdrop. We did have a lot of different patterns that were coming through in Q2, some of which spilled over into Q3. As we've been going through, it's been getting better certainly. But the impact it had on the long-haul flights, the exotic cruises, the things that we talked about that are going to have an impact in Q1, they're not insurmountable.

Speaker #4: We thought we'd have a great opportunity to lap the volatility from last year, but, obviously, what happened in the spring was a much longer burn.

Speaker #4: For the consumer and for just the macroeconomic backdrop. And so, we did have a lot of different patterns that were coming through in the second quarter.

Speaker #4: Some of which spilled over into the third quarter and as we've been going through, it's been getting better, certainly. But the impact it had on the long-haul flights, the exotic cruises, the things that we talked about that are going to have an impact in the first quarter, they're not insurmountable.

Speaker #4: But it certainly was more of a challenge than when we were thinking about last year at the same time and what it meant. At the same time, we really saw almost a doubling down on Europe for next year, particularly in the third quarter, which is the biggest part of the European deployment.

Josh Weinstein: But it certainly was more of a challenge than when we were thinking about last year at the same time and what it meant. At the same time, we really saw almost a double-down on Europe for next year, particularly in Q3, which is the biggest part of the European deployment. So there was certainly a large cohort of people in the spring into the early summer that said, "We're not going this year, but we are going next year," and so that bodes very well for 2027. So the flavors are always going to be different. It's our job to figure that out, and the teams pivot really well, adjust their booking strategies voyage by voyage, deployment by deployment, and like we said, we do believe that coming out of all of that, we'll still be able to experience solid yield next year.

Speaker #4: So there was certainly a large cohort of people in the spring into the early summer that said, "Right, we're not going this year, but we are going next year." And so that posed very well for 2027.

Speaker #4: So the flavors are always going to be different. It's our job to figure that out, and the team pivots really well, adjusts their booking strategies.

Speaker #4: Voyage by voyage, deployment by deployment, and like we said, we do believe that coming out of all of that will still be able to experience solid yields next year.

Speaker #6: That's great. Thanks for that. And this is a quick follow-up, maybe not so quick, but I think everybody on this call knows how to look through your release and see the core operating KPIs and how well you're doing.

Brandt Montour: That's great. Thanks for that. Just a quick follow-up, or maybe not so quick, but I think everybody on this call knows how to look through your release and see the core operating KPIs and how well you are doing. Obviously, EPS takes into account fuel, and that's much more volatile. I will just sort of ask the quarterly kind of question here, but it is 6 months into this conflict and fuel kind of doing what it is doing. Any change or update to the philosophy longer term or the conversation internally, thinking about potentially looking at hedging at some point in the future?

Speaker #6: Obviously, EPS takes into account fuel and that's much more volatile. So I'll just sort of ask the quarterly kind of question here, but it's six months into this.

Speaker #6: Conflict and fuel kind of doing what it's doing, any change or update to the philosophy longer term, or the conversation internally, thinking about potentially looking at hedging at some point in the future?

Speaker #4: Yeah. Thanks for getting that out of the way, Brent. So the only one fuels up, right? That's the only time people ask. It's a very fair question to ask.

Josh Weinstein: Yeah. Thanks for getting that out of the way, Brandt. Only when fuel is up, right? That's the only time people ask. It is a very fair question to ask because it does have the ability to reduce volatility in any given year. As we have looked at our business, we have looked at this financially as well. We do believe that that's a short-term band-aid that sometimes pays off, sometimes it does not. But the reduction in the volatility to us is not worth paying banks or counterparties to effectuate those types of trades. That's why we have been maniacally focused on our consumption rates.

Speaker #4: Because it does have the ability to reduce volatility in any given year. As we've looked at our business, and we've looked at this financially as well, we do believe that's a short-term band-aid that sometimes pays off, sometimes it doesn't.

Speaker #4: But the reduction in the volatility to us isn't worth paying banks or counterparties to effectuate those types of trades. And that's why we have been maniacally focused on our consumption rates.

Speaker #4: And you heard some statistics from David in his prepared remarks. But the fact that our consumption rate is down 26% since 2019, and 13% from just three years ago, that is where our focus is.

Josh Weinstein: You heard some statistics from David in his prepared remarks, but the fact that our consumption rate is down 26% since 2019, 13% than just 3 years ago, that is where our focus is and that's where we are going to actually save the money because fuel, for the medium term at least, is always going to be an input cost. The best way you can combat the input cost is to use less of it. Our teams have done an absolutely remarkable job of continuing to innovate, both on itineraries and the technology, to really make that happen. I could not be prouder of that work. It is also good for the planet, and it is tremendous for our bottom line.

Speaker #4: And that's where we're going to actually save the money, because fuel, for the medium term at least, is always going to be an input cost.

Speaker #4: And the best way you can combat the input cost is to use less of it. Our teams have done an absolutely remarkable job of continuing to innovate both on itineraries and technology to really make that happen.

Speaker #4: And I couldn't be prouder of that work. It is also good for the planet, and it's tremendous for our bottom line.

Speaker #1: Thanks, Josh. Congrats

Brandt Montour: Thanks, Josh. Congrats on the results.

Speaker #6: on the results.

Speaker #4: Appreciate it.

Josh Weinstein: Appreciate it.

Speaker #1: Thanks. Next question is coming from Matthew Boss from JP Morgan. Your line is now live.

Operator: Thank you. Next question is coming from Matthew Boss from JPMorgan. Your line is now live.

Speaker #7: Great, thanks. It's Amanda Douglas on for Matt. So, Josh, relative to the normalized yield growth of 2.7% expected for this year, could you speak to the puts and takes to consider as we look ahead to '27? Including if you see any constraints to bookings apart from the first quarter dynamics that you cited, and tailwinds to consider from your destination portfolio?

Amanda Douglas: Great. Thanks. It's Amanda Douglas on for Matt. Josh, relative to the normalized yield growth of 2.7% expected for this year, could you speak to puts and takes to consider as we look ahead to 2027, including if you see any constraints to bookings apart from the Q1 dynamics that you cited and tailwinds to consider from your destination portfolio and modernization initiatives?

Speaker #7: And modernization initiatives?

Speaker #4: Oh, thanks for the question, Amanda. We talked about the first quarter because it does just stick out for us a little bit because of the knock-on impact of the spring volatility.

Josh Weinstein: Well, thanks for the question, Amanda. We talked about the Q1 because it does just stick out for us a little bit because of the knock-on impact of the spring volatility. I don't actually think that there's too much to talk about. I mean, clearly, we love our deployment strategy. We think the combination of our European base, the Alaska portfolio that we've got, including the land side, to help. And obviously the Caribbean is going to remain important. All of those have got to do their part to help us on the yield growth. We'll certainly talk more in December about how we think about 2027 and some of the ins and outs. But overall, we feel very good about the trajectory.

Speaker #4: I don't actually think that there's too much to talk about. I mean, clearly we love our deployment strategy. We think the combination of our European base, the Alaska portfolio that we've got—including the landside to help—and then obviously the Caribbean is going to remain important.

Speaker #4: And all of those have got to do their part to help us on the yield growth. And so we'll certainly talk more in December about how we think about 2027 and some of the ins and outs.

Speaker #4: But overall, we feel very good about the trajectory.

Speaker #7: Thank you. And just as a follow-up, could you also speak to the strength of onboard spending trends that you're seeing in real time, or any signs of pause or change in consumer behavior relative to three months ago?

Amanda Douglas: Thank you. Just as a follow-up, could you also speak to the strength of onboard spending trends that you are seeing real time, or any signs of pause or change in the consumer's behavior relative to three months ago?

Speaker #4: Yeah. No, if anything, onboard is just accelerated. So we see continued strength from the consumer. And always with an asterisk, because of the way we do packages and bundles and things of that nature, you always should look at the total revenue.

Josh Weinstein: Yeah, no. If anything, onboard has just accelerated. So, we see continued strength from the consumer and always with an asterisk because of the way we do packages and bundles and things of that nature. You always should look at the total revenue because of how things might fall between ticket and onboard. But overall, just to reiterate, no, we have not seen a slowdown. The onboard trajectory has been really quite strong.

Speaker #4: Because of how things might fall between ticket and onboard. But overall, just to reiterate, no, we haven't seen the slowdown. The onboard trajectory has been really quite strong.

Speaker #7: Thank you.

Amanda Douglas: Thank you.

Speaker #4: Thank you.

Josh Weinstein: Thank you.

Speaker #1: Thank you. Next question is coming from Trey Bowers from Wells Fargo. Your line is now live.

Operator: Thank you. Next question is coming from Trey Bowers from Wells Fargo. Your line is now live.

Speaker #5: Hey, guys, thanks so much for the question. I'll start with kind of a macro question and pivot a little bit from yields for a second.

Trey Bowers: Hey, guys. Thanks so much for the question. I'll start with kind of a macro question and pivot a little bit from yields for a second. Now that you guys are investment grade, any thoughts as we think longer term? I know maximizing ROIC investments is the priority, but with the balance sheet in such good shape, is there any thought around just trying to expand kind of the capacity growth slightly? Thanks.

Speaker #5: Now that you guys are investment-grade, any thoughts as we think longer term? I know maximizing ROIC investments is the priority, but with the balance sheet in such good shape, is there any thought around just trying to expand the capacity growth slightly?

Speaker #5: Thanks.

Speaker #4: Yeah. I mean, look, our capacity growth is pretty fixed for the next half-decade, so that's where we are. If there were opportunities that came around that are one-off, unique things, I'd always look at it.

Josh Weinstein: Yeah. I mean, look, our capacity growth is pretty fixed for the next half decade. That's where we are. If there were opportunities that came around that are one-off unique things, I'd always look at it. That's part of the job, but I think that's where we are. Is there more opportunity as we get further into the 2030s for more ships? Yeah. I still think it'll fit within our 1 to 2 ship a year construct. If we were ever going to deviate from that, certainly be something that we share with our stakeholders.

Speaker #4: That's part of the job. But I think that's where we are. Is there more opportunity as we get further into the 2030s for more ships?

Speaker #4: Yeah. I still think it'll fit within our one- to two-ship-a-year construct. And if we were ever going to deviate from that, it would certainly be something that we share with our stakeholders.

Speaker #5: Great. And then as a follow-up, just as you guys mentioned again, the Q1 cadence—is the exit rate we saw coming out of Q3 and Q4, on kind of a like-for-like yield basis, the right way to think about Q1? Or is it, just given the dynamics of the timing and the wave season, expected to be a bit of a downtick from where we exit the year?

Trey Bowers: Great. As a follow-up, just as you guys mentioned again, the Q1 cadence is the exit rate we saw coming out of Q3 and Q4 on kind of a like for like yield basis the right way to think about Q1, or is it just given the dynamics of the timing of the wave season, is that expected to be a bit of a downtick from where we exit the year? Thanks so much.

Speaker #5: Thanks so much.

Speaker #4: Yeah. Sorry. We're not going to we're starting to deviate into guidance for 2027, which we're not going to do. I just note that we feel good overall about 2027, particularly as you get away from Q1 into the latter part of the year.

Josh Weinstein: Yeah. Sorry, we are starting to deviate into guidance for 2027, which we are not going to do. I would just note that we feel good overall about 2027, particularly, as you get away from Q1 into the latter part of the year. I am not foreshadowing anything about Q1 other than it has got a little bit of a different profile. We will talk more about that in December.

Speaker #4: I'm not foreshadowing anything about Q1 other than it's got a little bit of a different profile. And so we'll talk more about that in December.

Speaker #5: Appreciate it. I had to try. Thanks, guys.

Trey Bowers: Appreciate it. I had to try. Thanks, guys.

Speaker #4: Good try. No, good try. Good try.

Josh Weinstein: Good try. No, good try.

Speaker #1: Thank you. Next question is coming from Xian Xiu from BNP Paribas. Your line is now live.

Operator: Thank you. Next question is coming from Ziad Abou Zaki from BNP Paribas. Your line is now live.

Operator: Thank you. Next question is coming from Xian Siew from BNP Paribas. Your line is now live.

Speaker #6: Hi, guys. Thanks for the question. Maybe following up a little bit on Caribbean. If we look at the capacity deployment mix, it seems like Caribbean capacity might be slightly down.

Ziad Abou Zaki: Hi, guys. Thanks for the question. Maybe following up a little bit on Caribbean. If we look at the capacity deployment mix, it seems like Caribbean capacity might be slightly down next year. At the same time, you have that growing private destination attendant guest mix. I guess maybe those two combined, I would think, bode well for pricing. Any thoughts on how we should think about that? What are some takes for Caribbean?

Xian Siew: Hi, guys. Thanks for the question. Maybe following up a little bit on Caribbean. If we look at the capacity deployment mix, it seems like Caribbean capacity might be slightly down next year. At the same time, you have that growing private destination attendant guest mix. I guess maybe those two combined, I would think, bode well for pricing. Any thoughts on how we should think about that? What are some takes for Caribbean?

Speaker #6: Next year, at the same time, you have kind of that growing private destination attendance, guest mix. So I guess maybe those two combined, I would think, bode well for pricing.

Speaker #6: But any thoughts on how we should think about that? Puts and takes for Caribbean?

Speaker #4: Yeah. I think you got to deconstruct it a little bit. I mean, some of the decrease in our capacity is Princess is moving out and sending a ship to Japan, which is going to be great for us.

Josh Weinstein: Yeah, I think, you got to deconstruct it a little bit. Some of the decrease in our capacity is Princess is moving out and sending a ship to Japan, which is going to be great for us. Princess is generally a premium brand, so when you pull a premium brand out, that has a different impact than others in the deployment region. There are little changes here and there. Generally speaking for the Caribbean, we are pretty consistent in the actual underlying core capacity. We are going to be able to flex both Celebration Key and RelaxAway, Half Moon Cay because both now have their full marine infrastructure built out, which means we can maximize the marine side of those assets, which is why the throughput is going to be up nicely year-over-year for those two destinations.

Speaker #4: But Princess is generally a premium brand. So when you pull a premium brand out that has a different impact than others in the deployment region, but so there's little changes here and there.

Speaker #4: But generally speaking, for the Caribbean, we're pretty consistent in the actual underlying core capacity. And we are going to be able to flex both Celebration Quay and Relaxaway, because both now have their full marine infrastructure built out. This means we can maximize the marine side of those assets, which is why the throughput is going to be up nicely year over year for those two destinations.

Speaker #6: Thanks. And then we talked a little bit about pricing for '27, how bookings have been ahead, but maybe on the cost side, you've done a really good job of controlling costs.

Ziad Abou Zaki: Thanks. We talked a little bit about pricing for 2027, how bookings have been ahead. Maybe on the cost side, you have done a really good job of controlling costs. Anything we should think about in terms of costs into next year? Anything different than maybe your algo or the success you have been having this year?

Xian Siew: Thanks. We talked a little bit about pricing for 2027, how bookings have been ahead. Maybe on the cost side, you have done a really good job of controlling costs. Anything we should think about in terms of costs into next year? Anything different than maybe your algo or the success you have been having this year?

Speaker #6: Anything we should think about in terms of cost into next year, anything different than maybe your algo or kind of the success you've been having this year?

Speaker #3: There's nothing in particular that's notable for 2027. As you can see in '26, we've been working hard to reduce costs and to find ways to save money through sourcing and other means.

David Bernstein: There is nothing in particular that is notable for 2027. As you can see, in 2026, we have been working hard to reduce costs and to find ways to save money through sourcing and other means. Our operating companies have been working hard to find efficiencies in their business as well. We will continue to step that up and to do more in 2027. There is nothing in particular too meaningful to drive the costs one way or the other.

Speaker #3: And our operating companies have been working hard to find efficiencies in their business as well. And we'll continue to step that up and to do more in 2027.

Speaker #3: But there's nothing in particular that's meaningful to drive the costs one way or the other.

Speaker #6: All right. Thanks. Good luck, guys.

Ziad Abou Zaki: All right. Thanks. Good luck, guys.

Xian Siew: All right. Thanks. Good luck, guys.

Speaker #4: Thank you.

Josh Weinstein: Thank you.

Speaker #1: Thank you. The next question today is coming from Patrick Scholes from Truist Securities. Your line is now live.

Operator: Thank you. Next question today is coming from Patrick Scholes from Truist Securities. Your line is now live.

Speaker #5: Hi. Good morning, everyone. Could you talk a little bit good morning. Could you give us a little bit more color on the 7% onboard and other revenue growth in the quarter?

Patrick Scholes: Hiya. Good morning, everyone.

Josh Weinstein: Good morning, Patrick.

Patrick Scholes: Hi, good morning. Could you give us a little bit more color on the 7% onboard and other revenue growth in the quarter? Specifically within that growth, how much did you see from last year's open Celebration Key, and how much was more from the actual onboard itself? Within your Q4 net yield guide, how much would you attribute from Celebration Key and how much from the core? Thank you. Ex Celebration Key. Thank you.

Speaker #5: Specifically, within that growth, how much did you see from last year's open Celebration Quay and how much was more from the actual onboard itself?

Speaker #5: And how would we within your four Q net yield guide, how much would you attribute from celebration quay and how much from the core?

Speaker #5: Thank you. Excela Celebration Quay. Thank you.

Speaker #3: So the third quarter onboard and revenue was really broad-based across all categories, and it was also across all brands on both sides of the Atlantic.

David Bernstein: The Q3 onboard and revenue was really broad-based across all categories, and it was also across all brands on both sides of the Atlantic. As Josh talked about before, we are not seeing any slowdown in the strength of the consumer. I think our bundled packages are helping to contribute to the onboard revenue. We are seeing more than 50% of our revenues pre-booked, so we are getting the benefit of the second wallet meaningfully on board. As a result, as Josh said before, onboards have been very strong. As far as the Q4 is concerned, we give guidance in total and yields. Josh mentioned to judge us on the total. Because of all the packages and things we offer, breaking down the two components is not as meaningful as it used to be.

Speaker #3: So as Josh talked about before, we are not seeing any slowdown in the strength of the consumer. I think our bundled packages are helping to contribute to the onboard revenue.

Speaker #3: We're seeing more than 50% of our revenues pre-booked. So we're getting the benefit of the second wallet meaningfully onboard. And so, as Josh said before, onboards have been very strong.

Speaker #3: And as far as the fourth quarter is concerned, I mean, we give guidance in total in yields. Josh mentioned to judge us on the total, because of all the packages and things we offer. Breaking down the two components isn't as meaningful as it used to be.

Speaker #3: And we gave you our yield guidance for the fourth quarter, and it's as strong as the third. So we're looking forward to it.

David Bernstein: We gave you our yield guidance for the Q4, and it is as strong as the Q3. We are looking forward to that.

Speaker #6: Okay. Thank you.

Patrick Scholes: Okay. Thank you.

Speaker #4: Thanks, Patrick.

Josh Weinstein: Thanks, Patrick.

Speaker #1: Thank you. Next question today is coming from Seawizinski from Steeple. Your line is now live.

Operator: Thank you. Next question today is coming from Steven Wieczynski from Stifel. Your line is now live.

Speaker #7: Hey, guys. Good morning.

Steven Wieczynski: Hey, guys. Good morning. Josh, so as we think about the PROPEL target, that would indicate you guys are targeting about let's say about $3.50 a share in earnings as we go out to 2029. 2026, we kind of know now is going to be, what, $2.20 a share in earnings. So that is implying about 20% earnings growth a year through 2029. You have mentioned in the past you guys do not forecast for the world to be perfect. But with oil prices, a war, Caribbean pricing potential headwinds and others, as we sit here today is that 20% earnings growth still pretty realistic in your view. Look, I assume so given you signed off on these targets, but just want to get your high-level thoughts around that.

Speaker #4: Hey, Josh.

Speaker #7: So as we think about the Propel targets, that would indicate you guys are targeting about let's say about 350 a share in earnings as we go up to 2029.

Speaker #7: 2026, we kind of know now, is going to be, what, $2.20 a share in earnings. So that's implying about 20% earnings growth a year through 2029.

Speaker #7: I mean, you mentioned in the past that you guys don't forecast for the world to be perfect. But with oil prices, a war, Caribbean pricing potential headwinds, and others, as we sit here today, is that 20% earnings growth still pretty realistic in your view?

Speaker #7: And I mean, look, I assume so given you signed off on these targets. But just want to get your kind of high-level thoughts around that.

Speaker #4: Yeah. No, it's a fair question. Obviously, from an I mean, let's start with the operational. And operationally, we are doing I would think this is a pretty good year against a backdrop that we were given.

Josh Weinstein: Yeah, no, fair question. Obviously, let's start with the operational. Operationally, I would think this was a pretty good year against the backdrop that we were given. So yields up almost 3% on a normalized basis in a year where there is the biggest geopolitical crisis we have seen in, I would argue, decades. That is a pretty good sign that the demand is robust and our brands are doing a really good job. Fuel prices, we do not know. You are right. We do not know what is going to happen in the future. They are going to go up, they are going to go down. I do know we can control consumption well and continue to drive that down, which is part of how we are going to improve the earnings profile. Our teams, we have got to shoot high, right?

Speaker #4: And so yields are up almost 3% on a normalized basis in a year where there is the biggest geopolitical crisis we've seen in, I would argue, decades.

Speaker #4: That's a pretty good sign that the demand is robust and our brands are doing a really good job. Fuel prices—we do not know. You're right.

Speaker #4: We don't know what's going to happen in the future. They're going to go up. They're going to go down. I do know we can control consumption well and continue to drive that down, which is part of how we're going to improve the earnings profile.

Speaker #4: And our teams, we got to shoot high, right? And we got to think about the different types of things that we can do, not only on demand generation side, but being innovative on the cost side, especially when our capacity is moderate growth, as you know.

Josh Weinstein: We have got to think about the different types of things that we can do, not only on the demand generation side, but being innovative on the cost side, especially when our capacity is moderate growth, as you know, to be smarter and more efficient in everything we do. I think our teams are absolutely capable of figuring those things out. Some of the trajectory that we have got is frankly us, I think, getting a little bit ahead on the collaborative nature of the things that we can do internally to really leverage our scale on a fuller basis, take advantage of the technologies that are out there now and are continuing to evolve. So I am not pretending that is not going to be hard work, but it is hard work that I think we are all excited to take on. We have got pretty good roadmaps to get there.

Speaker #4: To be smarter and more efficient in everything we do. And I think our teams are absolutely capable of figuring those things out. Some of the trajectory that we've got is, frankly, us, I think, getting a little bit ahead on the collaborative nature of the things that we can do internally to really leverage our scale on a fuller basis, take advantage of the technologies that are out there now and are continuing to evolve.

Speaker #4: So I'm not pretending that's not going to be hard work, but it's hard work that I think we're all excited to take on. And we've got pretty good roadmaps to get there.

Josh Weinstein: So I am not pretending that is not going to be hard work, but it is hard work that I think we are all excited to take on. We have got pretty good roadmaps to get there. Now, if fuel would cooperate, that would make it a hell of a lot easier. But clearly we cannot count on that.

Speaker #4: Now, fuel would cooperate—that would make it a hell of a lot easier. But clearly, we can't count on that.

Josh Weinstein: Now, if fuel would cooperate, that would make it a hell of a lot easier. But clearly we cannot count on that.

Speaker #7: Understood. Okay, Josh, here's a question I don't think you're going to answer, but I'm going to try it anyway. So, I—

Steven Wieczynski: Understood. Okay, Josh, here is a question I do not think you are going to answer, but I am going to try it anyway.

Josh Weinstein: Thank you for the preface, Scott. Thank you.

Speaker #4: Thank you for the preface. Thank you.

Speaker #7: I know. You can basically just say no comment after I ask this. Look, I know you don't want to give guidance at this point for next year, but if we go back and we think about kind of how you started your guidance ranges for, I think it was the last two years, you kind of started those in a what we call kind of a negative yield cost spread.

Steven Wieczynski: I know. You can basically just say no comment after I ask this. Look, I know you don't want to give guidance at this point for next year. But if we go back and we think about how you started your guidance ranges for, I think it was the last 2 years, you started those in a, what we'd call kind of a negative yield cost spread. David gave us a little bit of help in terms of cost for 2027. But, as we think about next year, should we be thinking about the way you start 2027 and that negative yield cost spread as you sit here today? Again, I don't think you're going to answer that, but I'm going to try it.

Speaker #7: David gave us a little bit of help in terms of cost for '27, but as we think about as we think about next year, should we be thinking about the way you kind of start '27 in that negative yield cost spread as you sit here today?

Speaker #7: Again, I don't think you're going to answer that, but I'm going to try it.

Josh Weinstein: I won't answer it. Nice try. I won't answer it. I would say I fully expect it to fit into the algorithm that we provided for our PROPEL targets. But let's see how we go.

Speaker #4: I won't answer it. See, nice try. I won't answer it. I would say I fully expect it to fit into the algorithm that we provided for our Propel targets.

Speaker #4: So let's see how we go.

Speaker #7: Okay. Appreciate it. Thank you.

Steven Wieczynski: Okay. Appreciate it. Thank you.

Speaker #4: Thanks for trying.

Josh Weinstein: Thanks for trying.

Speaker #1: Thank you. Our next question today is coming from Ben Shakin from Mizuho Security. Your line is now live from Mizuho. Your line is now live.

Operator: Thank you. Our next question today is coming from Ben Chaiken from Mizuho Securities. Your line is now live. From Mizuho, your line is now live.

Speaker #5: Hey, thanks for taking the question. I guess, Josh, I want to touch on the European deployment comments. You gave us some interesting commentary about the size of the market relative to the Caribbean.

Ben Chaiken: Hey, thanks for taking the questions. I guess, Josh, I want to touch on the European deployment comments. You gave us some interesting commentary about the size of the market relative to the Caribbean. I could be mistaken, but it also sounds like there is a shift in itinerary as well, leveraging cooler weather experiences versus beach, which I think is new. Maybe you could expand on what you are seeing and the opportunity and then a modeling follow-up. Thanks.

Speaker #5: And I could be mistaken, but it also sounds like there's a shift in itinerary as well leveraging cooler weather experiences versus beach, which I think is new.

Speaker #5: Maybe you could expand on what you're seeing and the opportunity and then kind of a modeling follow-up. Thanks.

Speaker #4: Sure, yeah. I'm talking about deployment here, and I don't think it's new. I think that Europe, particularly Northern Europe, is on the wish list of many North Americans.

Josh Weinstein: Sure. Yeah. Talking about deployment here, I do not think it is new. I think that Europe, particularly Northern Europe, is on the wish list of many North Americans. Frankly, with our European brands, it is the backyard for Germany, for the UK, even for Italy, which has a very strong presence from Northern Europe. Northern Europe is, it could be Baltic States, it could be Sweden, it could be the Fjords. It could be actually getting all the way to Iceland and back. There is just a lot of opportunity for things that are on people's lists. One of the things that we have noticed is that if people are looking for a beach vacation, we can satisfy them very well with what we do in the Caribbean.

Speaker #4: And frankly, with our European brands, it's the backyard for Germany, for the UK, and even for Italy, which has a very strong presence in Northern Europe.

Speaker #4: And Northern Europe—it could be the Baltic States, it could be Sweden, it could be the fjords, it could be actually getting all the way to Iceland and back.

Speaker #4: I mean, there's just a lot of opportunity for things that are on people's lists. And one of the things that we have noticed is that if people are looking for a beach vacation, we can satisfy them very well with what we do in the Caribbean.

Speaker #4: But there's a contingent that is looking particularly in the summer to explore Europe and they can do it with us. All around that European territory, we do believe that Northern Europe has been more beneficial for us over the past couple of years, probably.

Josh Weinstein: But there's a contingent that is looking particularly in the summer to explore Europe, and they can do it with us all around that European territory. We do believe that Northern Europe has been more beneficial for us over the past couple of years, probably, and we expect that to continue. It's not really a change. I guess probably we're emphasizing it a little bit more, particularly because there was a lot of questions about Europe because of the disruption in the spring. So it is something, though, that we feel very committed to for pretty much all of our brands. Even Carnival, when they're going over for refits and they have to get to Europe, that's a great itinerary for them while they're there.

Speaker #4: And we expect that to continue. And it's not really a change. I guess probably we're emphasizing it a little bit more, particularly because there was a lot of questions about Europe because of the disruption in the spring.

Speaker #4: So it is something, though, that we feel very committed to for pretty much all of our brands. Even Carnival, when they're going over for refits and they have to get to Europe—that's a great itinerary for them while they're there.

Speaker #5: Okay. And then maybe on another shot on goal regarding cost next year, if I'm not mistaken—or maybe I can frame it this way—if I'm not mistaken, I think '26 had a few different one-time costs in it.

Ben Chaiken: Okay. Then maybe another shot on goals regarding costs next year. Or maybe I can frame it this way. If I'm not mistaken, I think 2026 had a few different one-time costs in it. There was some logistics, moving crew around. I think you had some Celebration Key overflow from FY25. Is it fair to say that this year had something in the range of, I don't know, 130 to 150 basis points of one-timers in the number?

Speaker #5: There was some logistics, moving crew around. I think you had kind of some celebration key overflow from FY25. Is it fair to say that this year had something in the range of, I don't know, $130 to $150 basis points of one-timers in the number?

Speaker #4: Probably not a little over.

Josh Weinstein: Probably something.

David Bernstein: Probably something.

Ben Chaiken: It may not occur next year.

David Bernstein: a little over. Yeah, a little over 1 point.

Speaker #3: Yeah. A little over a point. But keep in mind that this year's celebration key operated the full year. Half moon key had a half year of operation.

Ben Chaiken: Thanks. Appreciate it.

David Bernstein: Keep in mind that this year Celebration Key operated the full year.

Ben Chaiken: Okay.

David Bernstein: Half Moon Cay had a half year of operation, and so we are also in a situation, but we are talking just a couple of tenths of a point. Next year, we will have five Evolution ships in dry dock compared to two this year. But overall, that may shift some of the costs around. But we are very confident in next year and our cost structure, given everything we are doing, to control costs, find sourcing savings, and find efficiencies in our business that will see controlled costs in 2027.

Speaker #3: And so we're also in a situation—but we're talking just a couple of tenths of a point. Next year, we will have five Evolution ships in dry dock, compared to two this year.

Speaker #3: But overall, that may shift some of the costs around, but we are very confident in next year and our cost structure, given everything we're doing.

Speaker #3: To control costs, find sourcing savings, and identify efficiencies in our business, we'll see controlled costs in 2027.

Speaker #5: Thank you.

Ben Chaiken: Thank you.

Speaker #1: Thank you. Our next question today is coming from Connor Cunningham from Milius Research. Your line is now live.

Operator: Thank you. Our next question today is coming from Conor Cunningham from Melius Research. Your line is now live.

Speaker #6: Hi, everyone. Thank you. I was hoping you could just level set a little bit about what a normalized CapEx profile looks like for the company for now.

Conor Cunningham: Hi, everyone. Thank you. I was hoping you could just level set a little bit about what a normalized CapEx profile looks like for the company for now. New builds are pretty limited. So just on the non-new build side, what that could potentially look like. I realize that a lot of it's high return on investment, but just any building blocks there would be super helpful. Thank you.

Speaker #6: I mean, again, new builds are pretty limited. So, just on the non-new build side, what that could potentially look like? I realize that a lot of it is high return on investment, but just any building blocks there would be super helpful.

Speaker #6: Thank you.

Speaker #4: Yeah. Well, like the P&L, we're—

David Bernstein: Yeah. Like the P&L, we're not giving guidance for CapEx for 2027 yet, but we have said this before. Our non-new build CapEx for 2026 is $2.4 billion. We do expect to see a little bit of a step-up in that number as we go forward because of the, I mentioned the five Evolution ships next year, versus two this year. So we are expecting to see a step-up in the amount. But we'll give more guidance in December on that as well.

Speaker #3: not giving guidance for capex for 2027 yet. But we have said this before. Our non-new build capex for 2026 is 2.4 billion. And we do expect to see a little bit of a step up in that number as we go forward because of I mentioned the five evolution ships next year.

Speaker #3: Versus two this year. So we are expecting to see a step up in the amount, but we'll give more guidance in December on that as well.

Speaker #6: But that is a structural hire. We should expect that to be a structural hire thing through the end of the decade, as you have less new builds.

Conor Cunningham: That is a structural, we should expect that to be a structural higher thing through the end of the decade as you have less new builds, correct?

Speaker #6: Correct?

Speaker #3: It's obviously very early to give multi-year guidance, but we do expect to see somewhat higher than the $2.4 billion a year for the next few years.

David Bernstein: It is obviously very early to give multiple year guidance, but we do expect to see somewhat higher than the $2.4 billion a year for the next few years.

Speaker #6: Okay. Super helpful. And then understand the commentary around the shift in European and whatnot. But I would think that European cruises are just a natural higher ADR versus other areas in some aspects.

Conor Cunningham: Okay, super helpful. Then, maybe a silly question, but I am just trying to understand the commentary around the shift in European and whatnot. I would think that European cruises are just a natural higher ADR versus other areas in some aspects. Is there just a mixed benefit in the commentary that you are talking about from a booked position into 2027 and 2028? Or are you talking about it on a like for like basis if the itinerary deployments were the same overall? Realize that is a little nuanced, but yeah. Thanks.

Speaker #6: So is there just a mixed benefit in the commentary that you're talking about from a booked position into '27 and '28? Or are you talking about it on a like-for-like basis if the itinerary deployments were the same overall?

Speaker #6: I realize that's a little nuanced, but yeah. Thanks.

Speaker #4: It's a difficult question to answer, because you've got different ships. I mean, at different times of the year, we get very different yields in different places.

David Bernstein: It is a difficult question to answer because you have got different times of the year we get very different yields in different places. But overall, what we are always trying to do is optimize our revenue as well as our profit or our operating income. We have shifted ships around in order to do that.

Speaker #4: But overall, what we're always trying to do is optimize our revenue as well as our profit, or operating income. And so we have shifted ships around in order to do that.

Speaker #6: Yeah. And I'd say that the two guiding principles we have when we're making our deployment decisions are: one, where ultimately do these guests want to go?

Josh Weinstein: Yeah. I'd say that the two guiding principles we have when we're making our deployment decisions is, one, where ultimately do these guests want to go? What's the most accretive for the business? I'd say, trust us, we're doing it for the right reasons, for both guest satisfaction and the bottom line for the company.

Speaker #6: And what's the most accretive for the business? And so we trust I'd say trust us. We're doing it for the right reasons. For both guest satisfaction and the bottom line for the company.

Speaker #5: I would hope so. Well, thank you. Thanks again.

Conor Cunningham: I would hope so, but thank you. Thanks again.

Speaker #6: You're welcome.

Josh Weinstein: You're welcome.

Speaker #1: Thank you. The next question today is coming from Lizzie Doug from Goldman Sachs. Your line is now live.

Operator: Thank you. Next question today is coming from Lizzie Dove from Goldman Sachs. Your line is now live.

Speaker #7: Hey, thanks for taking the question, and congrats on the great results. I wanted to ask about your private destination strategy. I think in the presentation, it looks like your Celebration Key visits will be up about 30% next year.

Lizzie Dove: Hey, thanks for taking the question, and congrats on great results. I wanted to ask about your private destination strategy. I think in the presentation, it looks like your Celebration Key visits will be up about 30% next year. RelaxAway and Isla Tropicale almost 50%. I know you've already made a lot of great investments there, already a great offering and amenities. Is there a desire over the longer term to do more and expand further with any of those destinations?

Speaker #7: Relax away in island tropical or most 50. And so I know you've already made a lot of great investments there. Already a great offering and amenities.

Speaker #7: But is there a desire over the longer term to kind of do more and expand further with any of those destinations?

Speaker #6: I think there might be some little things we can do here and there. For Eastern Tropical, might be some more improvements we can make over time for relax away.

Josh Weinstein: I think there might be some little things we can do here and there for Isla Tropicale. There might be some more improvements we can make over time for RelaxAway. But we feel very comfortable about those positions. Celebration Key, we are certainly maxed out on the current build that we've got on the land side, and we have the ability to build more, and we've talked about that in a pretty theoretical way with you all before. I do hope and expect that we'll be able to talk about what's phase 2 for Celebration Key to be able to provide even more to even more guests over time. But it's premature to talk about that.

Speaker #6: But we feel very comfortable about those positions. Celebration Key, we are certainly maxed out on the current build that we've got on the land side.

Speaker #6: And we have the ability to build more. And we've talked about that in a pretty theoretical way with you all before. I do hope and expect that we'll be able to talk about what's phase two for celebration key to be able to provide even more to even more guests over time.

Speaker #6: But it's premature to talk about that.

Speaker #7: Got it. Okay. And then, I guess kind of, maybe a final shot on goal at this, but I was going back to look at your Propel guidance from what you talked about on the Q1 call.

Lizzie Dove: Got it. Okay. I guess maybe final shot on goal at this, but I was going back to look at your PROPEL guidance back on what you talked about on the Q1 call. Something I'd found interesting then was obviously you said your growth would outpace cost growth, but you've made a comment that as you drive operational efficiencies and realize scale benefits and whatnot, that there'll be decelerating cost growth throughout the period. I know that's through 2029, but could you maybe just talk about that and when you gave that guidance at the time for decelerating cost growth, if there's a turning point for that or just how to think about some of those savings? Appreciating you've already outperformed on costs, but yeah.

Speaker #7: And something I'd found interesting then was obviously you'd said yield growth would outpace cost growth, but you've made a comment that as you drive operational efficiencies and realize scale benefits and whatnot, that there'll be decelerating cost growth throughout the period.

Speaker #7: Now, I know that's through 2029, but could you maybe just talk about that and when you kind of gave that guidance at the time for decelerating cost growth, if there's kind of a turning point for that or just how to think about some of those savings?

Speaker #7: I appreciate that you've already kind of outperformed on cost, but yeah.

Speaker #6: Yeah, I mean, that was what I was going to start with. Well, we're already pulling some of that forward, right? And I think the team is doing a really good job of not sticking to the algorithm for the sake of the algorithm.

Josh Weinstein: Well, I was going to start with, we're already pulling some of that forward. I think the team is doing a really good job of not sticking to the algorithm for the sake of the algorithm, but really trying to do what we can, and so pulling some of that forward. We'll talk more about specific cost guidance when we get into 2027. But from a trajectory standpoint and what we think we can achieve for PROPEL, that still holds. But we'll talk about specifics in any particular year when we give guidance, and we're not there yet.

Speaker #6: But we're really trying to do what we can, and so we're pulling some of that forward. We'll talk more about specific cost guidance when we get into 2027.

Speaker #6: But from a trajectory standpoint and what we think we can achieve for Propel, that still holds, but we'll talk about specifics in any particular year when we give guidance and we're not there yet.

Speaker #7: Okay. Thank you.

Lizzie Dove: Okay. Thank you.

Speaker #6: Thanks, Lizzie. Operator, I think we have time for one more call.

Josh Weinstein: Thanks, Lizzie. Operator, I think we have time for one more call.

Speaker #1: Certainly, our final question today is coming from Jose Gorguieva from Infinity Research. Your line is now live.

Operator: Certainly. Our final question today is coming from Assia Georgieva from Infinity Research. Your line is now live.

Speaker #8: Good morning. Thank you for taking my call, and congratulations on a great quarter. I understand that there might still be some issues with Q1 because of the summer events and because winter quarters can be sloppier, as we like to call them.

Assia Georgieva: Good morning. Thank you for taking my call and congratulations on a great quarter. I understand that there might be still some issues with Q1 because of the summer events and because winter quarters can be sloppier, as you like to call them. But it does seem that 2027 might be an above, how should I put it, historical track of about 2% yield improvement. Is that fair to say? I know in the press release you were saying it will be a record year, but even a 10 basis point yield improvement will technically be a record yield. So I just wondered, relative to the 2% historical benchmark, is that what you're thinking at this point, or could we be higher because of that Europe shift in demand? Thank you so much.

Speaker #8: But it does seem that '27 might be an above—how should I put it—a historical track of about 2% yield improvement. Is that fair to say?

Speaker #8: I know in the press release you were saying it will be a record year, but even a 10 basis point yield improvement will technically be a record yield.

Speaker #8: So I just wondered relative to the 2% historical benchmark, is that what you were thinking at this point, or could we be higher because of that Europe shift in demand?

Speaker #8: Thank you so much.

Josh Weinstein: Thank you for the question. I appreciate you giving it one last shot for the team on trying to get us to give more guidance. We're not going to. We will talk more about 2027 in three months when we get on the call.

Speaker #6: Thank you for the question. I appreciate you giving it one last shot for the team on trying to get us to give more guidance.

Speaker #6: But we're not going to, and so we'll talk more about 2027 in three months when we get on the call.

Speaker #8: Thank you, Josh. I appreciate that. I have to try.

Assia Georgieva: Thank you, Josh. I appreciate that. I had to try.

Speaker #6: Yeah. Yeah. Well done. Well done. Well, thank you, everybody, for participating and we will talk to you again in three months. And before we get off, I'd just like to shout out again to the team for doing a remarkable job against a very complicated backdrop.

Josh Weinstein: Well done. Well, thank you everybody for participating, and we will talk to you again in three months. Before we get off, I would just like to shout out again to the team for doing a remarkable job against a very complicated backdrop. So thank you very much for a job well done. Take care.

Speaker #6: So thank you very much for a job. Well done. Take care.

Speaker #1: Thank you. That does conclude today's teleconference. You may just connect your lines at this time and have a wonderful day. We thank you for your participation today.

Operator: Thank you. That does conclude today's teleconference. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.