Carnival Corporation & plc Q2 FY2025 earnings call

• Addressed the Middle East conflict, noting no discernible impact on business yet but will monitor. - Business had phenomenal results with eight consecutive quarters of record revenues and yields, EBITDA and operating income at new second quarter highs, customer deposits at all-time high. - Exceeded 2026 fee change targets ahead of schedule, including EBITDA per ALBD growth and ROIC targets, and met carbon intensity reduction target. - Celebration Key, less than a month from opening, will offer exceptional experiences. Half Moon Cay expansion and Mahogany Bay upgrade in Honduras planned. - Fleet investments: Aida Diva reentered service with upgrades, new builds ordered; Carnival Cruise Line's Excel class ships and Star Princess announced. - New loyalty program, Carnival Rewards, to launch in June 2026, tying benefits to total spending.

Carnival Corporation & plc achieved record revenues and yields for the eighth consecutive quarter in the second quarter of 2025. Year over year, EBITDA was up 26%, operating income increased by 67%, and net income more than tripled. Customer deposits reached an all-time high. EBITDA margins were significantly higher year over year, with the past quarter's margins being the highest in nearly twenty years.

• Improved full-year June guidance for net income by $200 million, driven by yield flow-through, cruise cost improvements, fuel and interest income favorability. - Third-quarter cruise costs without fuel per ALBD expected to be up 7% due to factors like Celebration Key, one-time items, advertising, and lower capacity. - Carnival Rewards program to impact 2026 and beyond, with revenue recognition deferral initially, expected to be accretive to yields over time.

• Potential impact of the Middle East conflict on future business remains uncertain as it unfolds quickly. - Third-quarter cruise costs face headwinds from factors like Celebration Key's operating expenses, one-time items from 2024, higher advertising, and lower capacity.

Q: Josh, speak to improvements in product and experience translating to above plan pricing and onboard spend and incremental opportunity.

A: Improvements in onboard experience and product through small incremental steps, investments like Aida Evolution, still in early innings with Celebration Key.

Q: Color on pricing for Celebration Key itineraries and marketing plans.

A: Seeing a premium, marketing dollars shifted to lean into Celebration Key.

Q: Booking perspective in last three months and upside to revised guidance.

A: More volatility in April, May and June better, upside not same as December due to geopolitical events.

Q: Characterization of demand for Europe in Q3 and onboard spend potential.

A: Europe Q3 looking great, onboard spend strong and continued, guidance based on ticket and onboard.

Q: Consumer segment, lower income consumer struggle.

A: No differentiation in patterns between lower income and other segments, Carnival offers good value.

Q: 3Q cost guide details and loyalty program credit card.

A: Celebration Key, one-time items, advertising, lower capacity impact 3Q costs; loyalty program tied to credit card but specifics not given.

Q: Ship sale color and multiples.

A: Ships sold at overbooked value, no impact on cost as capacity in main markets.

Q: Loyalty program and onboard spend.

A: Program won't cannibalize onboard spend, onboard spending consistently increasing.

Q: Away and Isla Tropical expansion opportunity.

A: Relapse Away can significantly increase visitors, Isla Tropical can enhance experience.

Q: Loyalty program contemplation and impact.

A: Not contemplated two years ago, half point impact due to revenue deferral initially.