Carnival Corporation Q2 2026 Earnings Call - Record Yields and Cost Discipline Offset Middle East Headwinds

Operator, Conference Call Operator: As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Beth Roberts, Senior Vice President of Investor Relations. Thank you, Beth. Please go ahead.

Beth Roberts, Senior Vice President of Investor Relations, Carnival Corporation: Thank you. Good morning, and welcome to our second quarter 2026 earnings conference call. I am joined today by our CEO, Josh Weinstein, our CFO, David Bernstein, and 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 U.S. GAAP is included in our earnings press release and our investor presentation. References to ticket prices, yields, and cruise costs without fuel are in constant currency unless we note otherwise.

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.

Josh Weinstein, Chief Executive Officer, Carnival Corporation: Thanks, Beth, and good morning, everyone. Once again, we delivered another quarter of outperformance, demonstrating the strong demand we have across our portfolio of world-class cruise lines, the value consumers place on our vacation experiences, and the progress we are making across the business. It was another record quarter with records across revenues, yields, EBITDA, net income, and customer deposits, which reached an all-time high of $9 billion. We outperformed our March guidance by $100 million, driven by continued commercial execution and a step-up in our cost efficiency efforts across the organization. Yields exceeded expectations on resilient closing demand and robust onboard spending and marked our 12th consecutive quarter of record yields. At the same time, we intensified our focus on cost management, delivering flat unit operating costs and outperforming our cost guidance by two and a half points.

Fuel efficiency improved by more than 5%, building on last year’s over 6% efficiency gain and further supporting our cost performance. What stands out most is that we achieved these results despite operating through a period of extreme geopolitical volatility, consumer sentiment at historically low levels, and unusually high fuel prices. As we have consistently said, though, while we are incredibly resilient to major external shocks, we are not immune, and near-term disruption can affect the timing of results, especially when it persists for an extended period of time. Accordingly, our second quarter operational outperformance and accelerated cost efforts are offsetting the moderation we’ve incorporated into our back half outlook given the impact of the prolonged conflict.

Specifically, this moderation was concentrated on our European deployments, particularly in the Med region, which were closest to the conflict, and it was further exacerbated by elevated airfares and reduced international flight capacity for North American guests. Yes, this did put a bit of a dent in our trajectory, but as you would expect, our revenue management teams pivoted and performed exceptionally well. We entered the quarter having strategically positioned ourselves with both an occupancy and pricing advantage, which was significant for European deployments, and which allowed us to deliberately utilize much of that occupancy advantage to prioritize price integrity. As a result, our booked position remains ahead of last year as we begin the third quarter at record prices in each of the remaining quarters of this year.

With 93% of the business on our books and less inventory remaining for sale than last year, we are well-positioned to close out 2026. We continue to expect record yields in the second half of the year, building on the strong mid-single-digit growth we achieved last year. Looking further out, we have continued to drive strong bookings for 2027 and beyond, reinforcing our extended booking curve. Since the start of the second quarter, booking volumes and pricing for these future sailings have continued to run ahead of last year’s levels. This strength has been broad-based and includes our European deployments next year, where bookings were up year-over-year in mid-teens percentages at higher prices, supporting our confidence in the longer-term demand environment. As conditions continue to normalize, we expect to benefit from the strong underlying demand, pricing, and operational improvements that remain embedded in our business.

In fact, booking trends in recent weeks suggest we are already beginning to see a reversal of these headwinds. The key takeaway here is that this moderation is already proving to be transitory and is not something that alters the underlying trajectory of the company. Importantly, these strong results are not being driven by a single factor. They are supported by structural improvements we continue to make across the business. These improvements are increasingly being driven by three areas: stronger commercial capabilities, disciplined fleet investments, and our differentiated destination portfolio, all while further reinforcing our industry-leading cost advantage. First, we continue to sharpen our commercial capabilities through revenue management enhancement, personalization, marketing effectiveness, and pulling onboard spending forward. These capabilities are helping us drive stronger pricing, higher onboard spend, and improve commercial execution across the portfolio.

Second, we’re continuing to improve the earnings power of both our existing and future fleet through disciplined capacity growth and high-return investments. Our capacity growth remains intentionally measured, and we remain highly disciplined in how we allocate capital, investing behind those brands and opportunities that demonstrate the strongest return potential. This quarter, we placed orders for three new Princess Cruises ships, scheduled for delivery in 2035, 2038, and 2039. These vessels build upon the success of our Sphere Class platform, with Sun Princess and Star Princess continuing to deliver fantastic guest satisfaction and commercial performance. They bring our total order book to 10 ships, including five for Carnival Cruise Line and two for AIDA. While it is safe to assume that more vessels will be ordered for delivery in the 2030s, we have no plans to deviate from our one to two ships per year cadence.

What we do plan to do is lean heavily into investing in return-generating modernization programs across our existing fleet. We are very encouraged by the continued performance of the AIDA Evolution program, with AIDAbella becoming the third of seven ships to complete the upgrade. We also recently announced Holland America Evolution, our next mid-life modernization program, which will further enhance the guest experience while creating additional revenue opportunities and operational efficiencies. Six Holland America Line ships will receive these upgrades, beginning with Oosterdam in the fall of 2027, and we also anticipate moderate capacity growth for Holland America as we leverage ways to add cabins to these ships. You can expect to hear more in the coming months about significant enhancement programs for more of our brands.

Third, we continue to maximize the value of our unmatched destination portfolio through investments that enhance the guest experience, strengthen itinerary differentiation, and further leverage this amazing footprint. In early May, we completed a pier extension at Celebration Key, increasing operational flexibility and enabling us to accommodate up to four ships and over 13,000 guests on any given day. Next year, Celebration Key is expected to welcome three and a half million visitors while still providing ample capacity for future landside expansion. This month, we also opened the new pier at RelaxAway Half Moon Cay, enabling two of our largest ships to dock simultaneously while maintaining tender operations for mid-sized vessels. This increases capacity at the destination to over 12,000 guests per day.

RelaxAway has opened to rave reviews, reflecting our deliberate intention to preserve the natural beauty and relaxed atmosphere that have made Half Moon Cay one of the most beloved destinations in the Caribbean. Importantly, these investments enable us to offer both Celebration Key Grand Bahama and RelaxAway Half Moon Cay on the same itinerary, creating two highly differentiated beach experiences within a single vacation. Celebration Key offers a high-energy experience, including expansive lagoons, the world’s largest sandcastle, complete with water slides, and the world’s largest swim-up bar. RelaxAway is centered on the natural beauty of its mile-long white sand beach and picturesque crystal blue waters. We believe this pairing is a meaningful competitive advantage. Beach vacations are among the most popular vacation choices for consumers, and few travel companies can offer this level of variety, convenience, and value within a single vacation experience.

We also continue to invest in Isla Tropicale in Roatán, recently completing an enhanced pool and cabana offering that adds to an already highly rated destination. These investments further strengthen our Western Caribbean itineraries by giving guests the flexibility to choose between an amazing beach day or explore one of the Caribbean’s most content-rich destinations. Isla Tropicale also pairs exceptionally well with our destination in Cozumel, Puerto Maya, which serves as a gateway to some of the most sought-after cultural and adventure experiences in Mexico. Together, these destinations create a differentiated Western Caribbean vacation that appeals to a broad range of guests and supports stronger demand across our deployment offering. These investments are particularly important because they build upon a position of strength in the Gulf Coast, where we have spent more than 25 years establishing the industry’s leading presence.

Today, we sail approximately 1 million guests annually from Galveston and operate six ships from the market, soon to be seven, with the arrival of Carnival Tropicale in 2028. Our scale, which also extends to Gulf home ports in New Orleans, Mobile, and Tampa, combined with our destination portfolio and long-standing year-round presence, provide a meaningful competitive advantage as demand continues to grow throughout the region. Taken together, our Paradise Collection destinations are expected to welcome over 9 million guest visits next year, with approximately 85% of our Caribbean itineraries calling on at least one exclusive destination and nearly half visiting two or more. Our unique destination strategy extends well beyond the Caribbean. Alaska remains one of our most important competitive advantages, spanned across five of our brands, 19 ships, and four embarkation ports.

Our scale and long-standing presence in the Alaska region have helped secure preferential access to both embarkation ports and ports of call, creating advantages that are increasingly difficult to replicate. Importantly, we’re the only cruise company with a fully integrated land and sea platform. Through our lodges, rail assets, and motor coach operations, we offer high-yielding land and sea experiences that further differentiate our Alaska offerings. We currently operate lodges at eight properties, including Denali, where an expansion of our most popular property is currently underway, reflecting both the strength of demand and our confidence in the long-term growth opportunity in the region. Together, our Caribbean and Alaska destination portfolios are exceptional assets that strengthen our competitive position and support long-term growth across the business. Collectively, our commercial, our fleet, and our destination initiatives are strengthening the business.

As they continue to mature, we expect them to drive stronger earnings, cash flow, and returns over time. As of today, we have the financial flexibility to simultaneously invest in our brands and destinations, continue reducing leverage, and accelerate shareholder returns. Consistent with that approach, we have already repurchased $450 million of stock under our opportunistic share buyback program. That flexibility is a direct result of the progress we’ve made over the past several years and reflects the strength of the foundation we’ve built. As we look ahead, we remain focused on executing our strategy, navigating external conditions as they emerge, and continuing to deliver sustainable long-term value for our shareholders. Of course, none of this progress would be possible without the dedication of our more than 160,000 team members, ship and shore.

I want to thank them for delivering these second quarter results and continuing to go above and beyond to deliver unforgettable happiness to our guests by providing them with 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 travel agent partners, our loyal guests, investors, destination partners, and all of our stakeholders for their continued support and for helping us build the momentum we are seeing across the business. With that, I’ll turn the call over to David to walk you through the quarter and our guidance in more detail.

David Bernstein, Chief Financial Officer, Carnival Corporation: Thank you, Josh. I’ll start today with a summary of our second quarter 2026 results. Then I’ll provide color on our full-year June guidance and finish up with some comments on the unification of our dual-listed company structure and an update on our share buyback program. We delivered record second quarter net income, exceeding our March guidance across revenue, costs, and earnings. These results reflect strong execution across our portfolio and the benefits of enhanced revenue optimization, cost management, and operational efficiency. Net income of $569 million was more than 20% higher than the prior year, despite a nearly 30% increase in our fuel price. Net income exceeded our March guidance by $100 million, or $0.07 per share. The outperformance versus March guidance was driven by three factors. The primary driver of our outperformance was exceptional cost discipline.

Cruise costs without fuel per ALBD were essentially flat year-over-year, outperforming our March guidance by approximately 250 basis points and contributed $0.05 per share. This substantial improvement was achieved despite higher crew travel costs and freight resulting from the Middle East disruption. Some of the $0.05 per share cost improvement this quarter was timing of expenses between the quarters. Importantly, the improvement was not solely timing-related. During the quarter, we identified and implemented several initiatives that reduced our cost base and will continue to benefit earnings throughout the remainder of this year and beyond, resulting in a $0.06 per share cost improvement flowing through to our full-year June guidance. Second, revenue contributed $0.01 per share as yields were up 2.2% versus the prior year on top of a more than 6% increase in the second quarter last year.

Despite extreme geopolitical volatility and historic low levels of consumer sentiment throughout the quarter, resilient close-in demand and robust onboard spending drove yields modestly above our March expectations. And third, the remaining $0.01 per share of favorability came from improvements in depreciation expense and fuel consumption, where we delivered an over 5% year-over-year reduction. Now turning to our full-year June guidance. Our full-year guidance calls for earnings per share of $2.22, which is $0.01 above our previous guidance as we recognize the EPS accretion from our second quarter share repurchases. Overall, due to the extreme geopolitical volatility that lasted more than three months, our June guidance reflects a revision to yield that was offset by our intensified focus on cost management.

We view the revision to yield as transitory and not something that alters the underlying trajectory of the company while our cost management initiatives are embedded in the business and should continue to benefit us over time. In addition, given the recent volatility of fuel prices, I would like to point out that the net impact of fuel pricing currency on our June guidance versus our previous guidance was less than $0.01 per share with our fuel price for June guidance based on the current spot price of fuel. Now turning to yield growth. Our June guidance assumes normalized yield growth of approximately 2.25%.

As you recall, we normalized 2026 yield growth by approximately 50 basis points for two things: the previously disclosed impact of last summer’s close-in decision to redeploy away from the winter 2026 Arabian Gulf voyages, which in hindsight, turned out to be a great decision, and the fourth quarter impacts of loyalty program accounting. Our yield growth was revised by approximately one percentage point relative to our previous guidance and represents a $0.14 per share operational knock-on impact of the extreme geopolitical volatility generated by the Middle East conflict. As you heard from Josh, the conflict in the Middle East impacted our European deployments. The end result is a portion of the yield moderation is from slightly lower occupancy, and this revision includes both ticket and onboard revenue.

We believe this decision is consistent with our philosophy of making decisions that are in the best interest of the company in the long run and will facilitate our ability to benefit from inherent strong demand as the extreme geopolitical volatility subsides. Cruise costs without fuel per ALBD are now expected to be up approximately 1.3% on a normalized basis, which includes the $0.06 per share cost savings I previously mentioned. This is normalized for three factors that constitute slightly more than a point of cruise costs without fuel. The partial year operating expenses associated with Celebration Key and RelaxAway Half Moon Cay, and the timing of certain expenses between years, as we previously discussed, as well as the recent impact of higher crew travel costs and freight resulting from the Middle East disruption.

Importantly, while the conflict in the Middle East resulted in a yield growth revision by approximately one percentage point relative to our prior guidance, our intensified focus on cost management generated an offsetting one percentage point improvement in cruise costs without fuel. This demonstrates the many levers we have to manage the overall performance of our business. Other operational favorability of $0.08 per share were driven by improvements in depreciation expense, fuel consumption, fuel mix, net interest expense, and other income. Now I’ll finish up with some comments on the unification of our dual-listed company structure and an update on our share buyback program. In early May, we announced the completion of the unification of our dual-listed company structure under a single company, Carnival Corporation, with Carnival plc as a U.K. subsidiary of Carnival Corporation. The completion of the DLC unification represents an important milestone in our company’s evolution.

The transaction simplifies our corporate structure, enhances liquidity in our stock, creates a single global share price, and reduces administrative complexity, all of which strengthens our ability to create long-term shareholder value. I would like to take this opportunity to say thank you to our shareholders for their overwhelming support for this initiative. Turning to capital allocation. In late March, our board of directors approved an initial $2.5 billion share buyback program. The authorization of our buyback program reflects both the strength of our cash flow generation and our confidence in the long-term value of the business. To date, we have opportunistically repurchased over 17 million shares for over $450 million. Combining our annualized dividend distributions and just the share repurchases completed to date, we will be returning $1.3 billion to shareholders this year while continuing to invest in growth opportunities and further strengthening our balance sheet.

Our net debt to adjusted EBITDA ratio has consistently improved throughout the year from 3.4 times at year-end 2025 to 3.3 times at the end of the first quarter, to 3.1 times at the end of the second quarter, which is over a half a point improvement from just one year ago. All of this is made possible by the strength of our business, which is forecasted to generate over $7 billion of EBITDA this year, despite the recent events over the last four months. Operator, we’re now ready to open the call for questions.

Operator, Conference Call Operator: Thank you. Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you would 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 that you limit yourself to one question and one follow-up. Thank you. One moment, please, while we pull for questions. Our first question comes from the line of Trey Bowers with Wells Fargo. Please proceed.

Trey Bowers, Analyst, Wells Fargo: Hey, guys. Thanks for the question. I apologize for my voice. I’m fighting off some allergies. Just as we look at kind of the shape of the yield growth for the balance of the year, it looks like Q4 kind of implies a slightly lower number than Q3. Anything to call out there? Is that just kind of being conservative, or is there something about the shape of the year that would cause Q4 to be a little bit softer?

David Bernstein, Chief Financial Officer, Carnival Corporation: Hey. You sound fine, Trey. Q4, when you normalize for the CCL loyalty program, which is all in Q4, we’re actually closer to 2%. I don’t think that’s the normalized pattern at the end of the day.

Trey Bowers, Analyst, Wells Fargo: Oh, okay, perfect. I didn’t realize it was all Q4. As we look out to 2027, you guys gave us kind of the impact of the war and the impact of the loyalty program. It seems like around a little bit of above a three number is the core of where yield is growing. Is that a good number to have in mind for next year, or are you guys going to pause on saying anything about 2027 this early?

David Bernstein, Chief Financial Officer, Carnival Corporation: Well, I think it’s well done that right off the bat, you tried to get us to give guidance on 2027, we’re not going to do that yet. I’m sorry. You’ll have to wait a little closer to 2027.

Trey Bowers, Analyst, Wells Fargo: Well, I guess if not that, just how much of that impact from loyalty kind of impairs 2027 numbers as well?

David Bernstein, Chief Financial Officer, Carnival Corporation: Yeah. For 2027, for the full year, it’s like four-tenths of a point.

Trey Bowers, Analyst, Wells Fargo: Year-over-year?

David Bernstein, Chief Financial Officer, Carnival Corporation: Year-over-year.

Trey Bowers, Analyst, Wells Fargo: Because it’s a full year of that.

David Bernstein, Chief Financial Officer, Carnival Corporation: Yeah, exactly.

Trey Bowers, Analyst, Wells Fargo: Got it. Thanks so much, guys.

David Bernstein, Chief Financial Officer, Carnival Corporation: Okay. Take care, Trey.

Operator, Conference Call Operator: The next question comes from the line of Steven Wieczynski with Stifel. Please proceed.

Steven Wieczynski, Analyst, Stifel: Yeah. Hey, guys. Good morning. Josh, I guess I’m a little bit confused here. If we think about your March full year yield guidance, which was 2.75%, versus the revised 1.75% yield guidance you provided this morning. I’m just trying to figure out what really has changed since March. At that point, you guys were 85% booked for the year. Just wondering, were you guys expecting a smaller impact from the war, or was there a major change in demand for certain itineraries or you guys witnessed-

David Bernstein, Chief Financial Officer, Carnival Corporation: Yeah

Steven Wieczynski, Analyst, Stifel: a major uptick in cancellations? I guess here’s a simple question, Josh. Is pretty much all of the 100 basis point cut to yields just directly tied to the Middle East, meaning the rest of your deployments have been pretty much status quo?

David Bernstein, Chief Financial Officer, Carnival Corporation: Yeah. Let me I guess I’ll start by going back to March. We had been, at the time, a few weeks into the conflict, what we did expect at that time was there was going to be a pretty significant pause as people try to figure out what this new normal means. What we talked about on the call is it did seem

Josh Weinstein, Chief Executive Officer, Carnival Corporation: Like there was kind of concentric circles as you go farther away from the conflict. The Med region was really the thing that kind of was taking it most on the chin. It got better when you got to Northern Europe, and then it got better as you moved farther away. We certainly did not expect the conflict to last throughout the whole of our second quarter, including the Strait of Hormuz and all the knock-on impacts that the world really saw from that. Hindsight’s great, that wasn’t the expectation. When we then think about and try to do this year-over-year, if we go last year, right? Last year, March was a recovery month for us. That was actually gaining steam because we had had an initial impact in February from the initial rumblings of tariffs, if you remember.

April of last year, just took a big hit with all the volatility, people normalized, as we talked about, because they started figuring out what does this mean or not mean to me, and they moved on. This year, March was clearly impacted by the start of the war to differing impacts like I talked about. We did better year-over-year in April, but we should have done better because last year, April was the volatility from the tariff announcements. Europe did do a good deal better in April than March, but it was not positive year-over-year. We were still not in a great place, and that’s not surprising because the news flow didn’t stop, right? I mean, the last three months, until we turn the page a little bit in June, we’ll talk about that too.

This was a perpetual headline of ever-changing questions about when and how this was going to end. People can’t normalize if they can’t figure out how are they going to plan their future. We really did experience that. May was a bit of a step backwards year-over-year versus April because of the comps, at the least, and then the ongoing pace of what was going on in the conflict. I think the good news is June certainly seems to have turned a corner. Last week was a nice cherry on top as we kind of got the MOU signed and people started thinking about, "Okay, I can start planning my life again." We do not plan for smooth sailing on a continuous basis as we get through the end of this year. I think that would be naive.

We think there’ll be bumps in the road, as the geopolitical situation does gradually normalize. We’re doing what we can and what we should, to move forward.

Steven Wieczynski, Analyst, Stifel: Okay. That’s great. Thanks, Josh. I guess you kind of answered this a little bit, but maybe not. You mentioned a couple of times that you’ve recently started to see a reversal of these headwinds in terms of booking progress.

As we think about your guidance for the rest of the year, is that assuming that reversal continues to play out, or does your guidance still assume that these headwinds that have been in place, kind of stay in place for the remainder of the year?

Josh Weinstein, Chief Executive Officer, Carnival Corporation: Yeah. We definitely do not expect to go backwards to what the second quarter looked like, meaning we do not expect, and we’re not planning on a world where the conflict is going to reignite and the straits are going to be closed, and that’s what we’re going to be experiencing for the next several months. If that happens, we’ll have to see what that means for our business and what we do. I think the fact that we were able to deliver what we did in Q2, and come out the other side with what we expect to be record yields in the second half, and giving the dividend play and investing in ourselves and de-levering, I think it shows the strength of the business. We’re now planning for perfection, though.

Steven Wieczynski, Analyst, Stifel: Okay, great. Thanks, Josh. Really appreciate it.

Josh Weinstein, Chief Executive Officer, Carnival Corporation: Thanks, Steven.

Operator, Conference Call Operator: The next question comes from the line of Robin Farley with UBS. Please proceed.

Robin Farley, Analyst, UBS: Great. Thanks. Just wanted to get a little more color around, you were 85% booked in March, just kind of thinking about the delta for the 100 basis points for the full year to be on that last 15%. Could you maybe give us a little bit of insight into that demand for the Med from North American travelers versus your European-sourced customers, just to get a little more color around that?

Josh Weinstein, Chief Executive Officer, Carnival Corporation: Robin, I’m sorry. Can you do me a favor? I apologize. Can you ask the question again? Sorry about that.

Robin Farley, Analyst, UBS: Oh, sure. Basically, asking for the difference in demand from European-sourced passengers for your European-sourced brands versus North American travelers. You were 85% booked for the year in March, the 100 basis point change is really just occurring on that last 15% that hadn’t been sold as of March. Just trying to think about how that is versus those two different customer segments of yours. Thanks.

Josh Weinstein, Chief Executive Officer, Carnival Corporation: What I’d tell you is, both our Europe segment and our North America segment for our Europe deployment were ahead in occupancy overall, which was great to see. It was significantly more ahead year-over-year for our North American brands, which makes sense because it’s a longer haul type of decision they’re making, and we were really leaning into pulling that ahead. Their occupancy advantage actually unwound more than our European brands did. We’re seeing a turn, which is great, as I mentioned. It does seem like people are now turning the page, including for Europe. We are ending in a place where we absolutely expect positive yields for our European deployments as we move forward.

Robin Farley, Analyst, UBS: Okay, thanks. Just as a follow-up, actually, on a different topic. Chris, you mentioned that the pier is done at Celebration Key to be able to have four ships, but I don’t think you’ve announced anything in terms of expanding what you have available, your passenger capacity with the amenities there. Can you take four ships today and have all of those travelers there, or when does that happen that you get the benefit of the pier being open? Thanks.

Josh Weinstein, Chief Executive Officer, Carnival Corporation: Yep. We’ll get the benefit pretty much right away in that it gives us the flexibility to maximize that 13,000 guest footprint that we have on land. We won’t have three ships. Actually, no, I take that back. We’ve already had three ships in a day, which was great. Obviously, we can’t take the three biggest ships, because if we took the three biggest ships in a day, we’d be closer to 18,000 than we would 13,000. What it does give us, though, is the flexibility to optimize the deployments and the itineraries to mix and match the ships to make sure that we’re getting as close to that 13,000 guest count as we can on a regular basis.

That’s why we’re expecting, when you look at 2027, on an annualized basis for Celebration Key, I think about 3.5 million people, which is a pretty good step in the right direction. We will certainly be talking more about potential landside expansion as we make our way through the year.

Robin Farley, Analyst, UBS: Okay, great. Thank you.

Josh Weinstein, Chief Executive Officer, Carnival Corporation: Thanks.

Operator, Conference Call Operator: The next question comes from the line of Ben Chaiken with Mizuho. Please proceed.

Ben Chaiken, Analyst, Mizuho: Hey, how’s it going? Thanks for taking my questions. I’d love to, Josh.

Josh Weinstein, Chief Executive Officer, Carnival Corporation: Yeah

Ben Chaiken, Analyst, Mizuho: I’d love to get your thoughts on the modernization effort. It feels like you’re maybe leaning into this a little bit further. Are there any statistics you can share, whether that’s expected yield uplift or ROI? I guess it’d just be great to understand what data or thought process gives you the confidence in this strategy. Thanks.

Josh Weinstein, Chief Executive Officer, Carnival Corporation: The way we’ve looked at it, there’s three components to these modernization programs. One is the boring stuff, which happens on any refit, which is below the waterline, the things you have to do to make sure that the equipment’s in good order, et cetera. Next is what we consider the fun refurbishment side, which is guest-facing public areas, cabin work, new venues for F&B experiences, and all of that segment 2. Segment 3 is the ability to include new cabins. We look at the latter two when we think about our ROIs and the investments we make. The cabins are easy. They pay for themselves in a couple of years. When we find those opportunities, we exploit them. We couldn’t do it on AIDA because they were so densely packed to begin with since their creation.

Certainly for Holland America and other brands as we announce, those will be part of the equation. When we look at the guest refurbishment side, we really think about it like a new build type of hurdle with much less cost involved. We expect to achieve at least high teens when we’re going into those type of refurbishment decisions.

Ben Chaiken, Analyst, Mizuho: Okay. Got it. That’s helpful. Maybe just touch on Celebration Key. You kind of alluded to it a moment ago in the previous question, any update on Celebration Key from a demand perspective, also more importantly, how you’re thinking about future phases of land development to the extent that’s on your mind, which kind of sounds like it might be. Thanks.

Josh Weinstein, Chief Executive Officer, Carnival Corporation: Yep. I’ll take the latter quickly. It is still a lot of work to do to get there, we don’t want to get ahead of anything. Nothing to talk about yet, certainly as soon as we feel comfortable doing that, we will. With respect to demand, it’s really on almost all Caribbean capacity for Carnival. It is pretty endemic and ingrained in what their offering is. The feedback has been really quite strong. We solved a lot of the challenges that we had from startup, which isn’t surprising given it was a startup. We expect to just keep making the experience better and better for our guests. Now we have the ability to also pair that with Relaxaway at Half Moon Cay, which we are absolutely really ecstatic about. A lot of tailwinds as we look into the future.

Ben Chaiken, Analyst, Mizuho: Thanks.

Josh Weinstein, Chief Executive Officer, Carnival Corporation: Thanks, Ben.

Operator, Conference Call Operator: The next question comes from the line of Shawn Xu with BNP Paribas. Please proceed.

Shawn Xu, Analyst, BNP Paribas: Hi, guys. Thanks for the question. Maybe going back to the net yield guidance and the 100 basis points reduction. I think you mentioned lower occupancy as part of that. Is it that you’re maybe leaving some cabins unsold rather than discounting, or is it cancellations? Can you give us maybe a little bit more color? If I look ahead then, could occupancy snap back into next year? Thanks.

Josh Weinstein, Chief Executive Officer, Carnival Corporation: Sure. Yeah, occupancy is definitely part of it. We looked at, particularly with Q3, where we were looking at what the trends were and what our book position is and what’s the right trade-off to make. We took our occupancy expectations down a couple of points for Europe because we think that’s the right thing to do for the long term. We recognize that that might have an impact on the onboard spending, obviously, profile since there’s less souls on board, but we’re managing the business for the long term. We think that that’s the right trade-off and overall the healthiest thing for the business. As far as snapping back when we look into next year, yeah, absolutely. There’s nothing to say that we shouldn’t be able to achieve what we want.

I’ve tried to stress in my notes, and I know David did as well, we really do view this as a temporal phenomenon. It was just a little bit of a pause in the good momentum that we’ve had, so that it’s a little bit less momentum right now, and we expect to ramp it back up as things do normalize.

Shawn Xu, Analyst, BNP Paribas: Great. Thanks. You talked a little bit about the Western Caribbean and Isla Tropicale. I’m just wondering if you give us a little bit more color on what you think the opportunity is for that region as you kind of lean into it a bit more. Thanks.

Josh Weinstein, Chief Executive Officer, Carnival Corporation: Yeah. We have been for decades. We will continue to do that. We’re really excited in 2028. We’ll have the then newest ship for the Carnival Cruise Line brand positioned out of Galveston. We will continue to invest in things like Isla Tropicale, Puerto Maya, which is a beautiful gateway Paradise Collection destination for us. We’ll continue to do what we’ve been doing and try to maximize our presence in the Western Caribbean as well.

Shawn Xu, Analyst, BNP Paribas: Great. Thanks. Good luck.

Josh Weinstein, Chief Executive Officer, Carnival Corporation: Thank you.

Operator, Conference Call Operator: The next question comes from the line of Matthew Boss with JPMorgan. Please proceed.

Matthew Boss, Analyst, JPMorgan: Great. Thanks. Josh, with your booking curve the furthest out on record, as you cited, could you elaborate on demand for 2027 sailings for Europe, as you noted, people turning the page there, and any notable trends in the Caribbean? Maybe just if I put it all together, it sounds like, and I just wanted to confirm, no change at all in your confidence for moderate yield growth multi-year as you outlined as part of the PROPEL plan.

Josh Weinstein, Chief Executive Officer, Carnival Corporation: Yep. No change in my confidence for that. It’s early days for 2027. We wanted to give you a little bit of color to kind of highlight the temporal nature of this, the fact that our European bookings over the same time that we saw a really big pause for a lot of folks for 2026. We saw almost a doubling down for 2027, which we thought was a great sign. Overall, we are at historic highs for price and occupancy for 2027, and we’ll work hard to improve our position over time.

Matthew Boss, Analyst, JPMorgan: Great. David, with your net cruise cost ex-fuel guidance of 2%-3% for this year, it’s coming in roughly 100 basis points more favorable relative to your initial forecast. Do you see the cost savings this year as structural? Just wanted to confirm potential reinvestments that we should think about, or just anything multi-year that would change the low single-digit cost CAGR that was embedded in the PROPEL plan.

David Bernstein, Chief Financial Officer, Carnival Corporation: The overwhelming majority of what we’re doing is for the long term. We’ve found hundreds of little things that we can change over time, which will improve our cost base. There’s things like the brands have been optimizing the number of forklifts that they use on embarkation day. When you go from 14 to 13 forklifts and you can make a change on multiple ships over multiple itineraries, it saves $hundreds of thousands in a year. There’s lots of ideas and things like that. We’re also been working with many of our suppliers and vendors to look for reduced rates. As everybody implements AI and gains efficiency in their business, we do expect fee reductions as a result of that. Hundreds of items across the business, which we view as permanent cost savings in the future.

Matthew Boss, Analyst, JPMorgan: It’s a great color. Best of luck.

David Bernstein, Chief Financial Officer, Carnival Corporation: Thank you.

Operator, Conference Call Operator: The next question comes from the line of James Hardiman with Citi. Please proceed.

Sean Wagner, Analyst, Citi: Hey. This is Sean Wagner on for James. Similar to the first question about yield impacts in 2027 and understanding that it’s too early to give us 2027 guidance, with all the moving parts and one-time pieces called out in the 2026 cost guidance, how should we think about these cost items into next year? I assume you get all of the 30 basis points of elevated costs related to the Middle East back, but can you sort of walk us through how the timing of costs and partial operating expenses for the two exclusive destinations net out next year?

David Bernstein, Chief Financial Officer, Carnival Corporation: Yeah. There’s a lot of puts and takes for 2027. At this point in time, I think it’s a little premature because many decisions have yet to be made for 2027. Like the yield guidance that Josh referred to, you’ll have to wait a little bit closer to the end of the year to get better color on that. As we said in our long-term PROPEL model and guidance, we’ve got great cost discipline built in the business, and we do expect to utilize that discipline to control costs over time.

Sean Wagner, Analyst, Citi: Okay. Fair enough. I guess you spoke on bookings and pricing on 2027 sailings being up since March. How does the overall 2027 booking curve compare to 2026 at this point? I guess to the point of the substantial increase in European bookings for 2027, is that increase primarily first half weighted?

Josh Weinstein, Chief Executive Officer, Carnival Corporation: Overall, our book position for 2027 is at historical highs for price and occupancy. We’re setting ourselves up well. Still a lot of work to do. I don’t have the split, to be honest with you, for Europe between first half and second half. We can try to get back to you on that. Overall, we feel like we’re setting ourselves up as best as can be, and we’ll see how we can progress into it.

Sean Wagner, Analyst, Citi: Okay. Thanks a lot.

Josh Weinstein, Chief Executive Officer, Carnival Corporation: Thank you.

Operator, Conference Call Operator: The next question comes from the line of Lizzie Dove with Goldman Sachs. Please proceed.

Lizzie Dove, Analyst, Goldman Sachs: Hi, good morning. Thanks for taking the question. As it relates to this year, it sounds like for the guidance cut on yield, most of that, maybe all of it, is Europe. Could you maybe elaborate a little more on Caribbean trends? How would you characterize the kind of backdrop and competitive environment there, and how did the conflict or higher airfares from the conflict impact that region versus Europe?

Josh Weinstein, Chief Executive Officer, Carnival Corporation: Sure. Hi, Lizzie. I think it’s fair to say holistically, nothing was immune because there were certainly people at any price point for any deployment that this changed their decision-making process. Clearly, as we talked about, for us at least, it was really centered primarily in Europe and then lesser impact as it got farther away. The actual booking trajectory of the Caribbean didn’t take much of a movement as we went into the war, during the war, and now have come out. We just seem to be chugging along. I think it’s fair to say we’re chugging along where the capacity increase outside of us is 27% over two years. As I’ve said before, give me two options. One is no growth and the other’s 27, I’ll take the no growth. That’s already been baked into our planning and how we’ve been positioning ourselves.

Lizzie Dove, Analyst, Goldman Sachs: Got it. Thank you. I guess just going back to Europe, one thing I’m trying to square is, we had one of your peers say Europe trends had turned in late April. It sounds like yours are kind of starting to turn now. Is there anything that you would flag from, I don’t know, maybe more of a brand perspective? I know we’ve discussed local Europe versus U.S., but anything, whether it be P&O, AIDA versus Costa, that you’d flag in terms of how Europe has trended?

Josh Weinstein, Chief Executive Officer, Carnival Corporation: Yeah. Well, I certainly wouldn’t speak for any of our competitors, I can just speak for ourselves. I’m not sure if you heard what I had said earlier on the call, May, even for Europe, was definitely a good amount better than April. Pardon me. April was a good amount better than May. It still didn’t mean it was going great. You could say for us, yeah, it was recovering in April, versus where we were in March, which was really a kind of a cardiac arrest for a little while. It still wasn’t great. In April, we did have much easier comps year-over-year. In May, it was just that continuation of the news flow and fuel prices and will Europe have fuel to fly my plane back home, right? I mean, all those things, they didn’t really die down.

It did definitely have an impact, at least for us, in May, particularly with folks who were looking to fly. That’s the best I can tell you about ourselves.

Lizzie Dove, Analyst, Goldman Sachs: Thanks, Josh.

Josh Weinstein, Chief Executive Officer, Carnival Corporation: Thank you, Lizzie.

Operator, Conference Call Operator: The next question comes from the line of Conor Cunningham with Melius Research. Please proceed.

Conor Cunningham, Analyst, Melius Research: Hi, everyone. Thank you. Just on Celebration Key, I know you talked about the ramp and the goal for next year, I think you start to sell itineraries to other brands that start to touch there. I think Princess itineraries start to open up in November or something like that. If you could just talk about how different brands are going to be impacted, or yeah, if you could just talk about the opportunity at the different brands for Celebration Key in general. Thank you.

Josh Weinstein, Chief Executive Officer, Carnival Corporation: Yeah, sure. Definitely opportunities. I think AIDA is technically the first brand that’s going to touch down outside of Carnival Cruise Line, so they get the mantle. That’s fairly irregular as opposed to what Princess is going to be doing, which is more scheduled throughout the winter. Right now, I’d say it’s great, but it’s the tail of the dog because, for the most part, Carnival Cruise Line is taking up most of it. We certainly have been building out itineraries for as many brands, as many ships to be able to benefit from Celebration Key as possible. We have the same approach for not only Celebration Key, but for Relaxaway at Half Moon Cay, and just try to maximize the impact that we can make for the company. The limiting factor certainly on Celebration Key is that land side.

Hopefully, as we make our way through the latter half of this decade, we’ll be able to make some inroads on giving ourselves even more opportunity.

Conor Cunningham, Analyst, Melius Research: Okay. That’s helpful. Then I’m sorry to bring it back to 2027. There’s a lot of moving parts. I think we all understand that that second half comps are now a little bit easier than they were before. You made the parallel to the trade and tariff situation in 2025. That seemed to linger on, I think, within your yield headwinds for a little bit longer than what I think we all kind of had anticipated. When you booked stuff. I presumably think that’s a first-half commentary during this whole timeframe.

Josh Weinstein, Chief Executive Officer, Carnival Corporation: Yes.

Conor Cunningham, Analyst, Melius Research: Did your yields change meaningfully in any direction? Just trying to understand the transitory part of the whole thing. Thank you.

Josh Weinstein, Chief Executive Officer, Carnival Corporation: I had you until you asked the last part of the question, to be honest with you.

Conor Cunningham, Analyst, Melius Research: Yeah. It’s like you’re talking about how it’s transitory. I understand that the worst is over and your bookings are starting to improve. Presumably, you’ve booked some 2027 bookings in the first half during this timeframe. Should we expect a headwind to first half of 2027 next year, just given things were booked now? If that makes sense.

Josh Weinstein, Chief Executive Officer, Carnival Corporation: I got you. You’re certainly right about last year. The flavor of that crisis had a lingering impact. As far as this goes, I think it’s safe to say we’re still early days to figure out exactly how much, if and which way this is all coming together for 2027. I think it’s a little bit premature. Clearly, there’s some folks who are not booking. Who just went through the quarter and didn’t book. There is an impact there. I think the good news is overall for 2027, our bookings were up year-over-year, which is a good sign.

Conor Cunningham, Analyst, Melius Research: Okay. Fair enough. Thank you.

Josh Weinstein, Chief Executive Officer, Carnival Corporation: Thanks.

Operator, Conference Call Operator: The next question comes from the line of Andrew Didora with Bank of America. Please proceed.

Andrew Didora, Analyst, Bank of America: Hey, good morning, everyone. I guess just one last question on the occupancy point in the back half of the year. Just embedded in your 3Q net yield guidance, should we be factoring in flat year-over-year occupancy, down occupancy, or up occupancy?

David Bernstein, Chief Financial Officer, Carnival Corporation: Yeah. It’s probably relatively flat year-over-year. Our original thought would be that we would perhaps get a bit more than we did in the prior year. Given the circumstances, I’d say it’s going to be close to flat.

Andrew Didora, Analyst, Bank of America: Okay, that’s helpful. Thank you. Josh, you continue to double down on the limited fleet growth and new hardware. I guess, what are maybe the top two or three opportunities that Carnival has that can help keep your longer-term net yield growth sort of in that moderate range, or I’ll call it above inflationary range over the next several years as you have a little bit more modest fleet growth? Thank you.

Josh Weinstein, Chief Executive Officer, Carnival Corporation: Yeah, thanks. Honestly, I think a lot of it’s just blocking and tackling and doing well across the space in our commercial execution. With respect to things that we can introduce to help everybody, we’ve got a lot of the foundation in place already with the destination footprint that we’ve already got that we can now leverage fully as we look forward. I think that’s going to help. I think our brands are truly world-class. They’ve been doing a lot to show significant improvement in their yields, most of which had no new builds. We just got to keep doing what we’ve been doing and deliver. We’ve got time for one more, operator.

Operator, Conference Call Operator: The final question will come from the line of Anthony Abbenante with Jefferies. Please proceed.

Anthony Abbenante, Analyst, Jefferies: Hey, good morning. This is Anthony on for David Katz. Thanks for taking our question. Just one quick one on the capital returns. I know you’ve done the dividend and the buyback. Just curious if you expect the dividend to kind of remain constant or grow over time. For repurchases, is the level that you’ve been doing over the first half representative of what you kind of expect for the second half, or how should we think about that? Thank you.

Josh Weinstein, Chief Executive Officer, Carnival Corporation: Sure. Well, I’m only one of many board members, and this is a board decision about the dividend. I do think it’d be fair to say that a moderate increase as we look forward is rational and reasonable, but ultimately, we had to do that with the board in full. I think we’ll do that in a very measured, responsible way. With respect to the buybacks, I’ve said we got the initial authorization for $2.5 billion. We certainly don’t expect to spend $2.5 billion this year. At an annualized rate, $450 million a quarter would probably be too much to expect, at least on our current thinking. We have been opportunistic and will continue to be opportunistic. We still have plenty of headroom as we look forward with the cash that we’re generating and the metrics that we’re trying to achieve.

I expect more to come, but I wouldn’t be wedded to annualizing this quarter’s amount.

Anthony Abbenante, Analyst, Jefferies: Thank you.

Josh Weinstein, Chief Executive Officer, Carnival Corporation: Okay. Well, thank you very much, everybody. I hope you all have very pleasant summers. I hope you’re sailing with us, and we’ll see you or talk to you in September. Take care.

Operator, Conference Call Operator: Thank you. This concludes today’s conference. You may disconnect your lines at this time, and we thank you for your participation.