Carnival Corporation Ltd. Common Shares

Greetings, and welcome to the Carnival Corporation and PLC Q3 2025 Earnings Results Conference Call-in Webcast. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star 1 on your telephone keypad, and we ask that you please ask one question and one follow-up to return to the queue. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Beth Roberts. Please go ahead, Beth.

Thank you. Good morning and welcome to our third quarter 2025 earnings conference call. I'm joined today by our CEO, Josh Weinstein, our CFO, David Bernstein, and our chair, Mickey 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, ROIC, 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, which are available on our corporate website. References to ticket prices, yields, and cruise costs without fuel are in constant currency, unless we know otherwise. please visit our corporate website where our earnings press release and investor presentation can be found. With that, I'd like to turn the call over to Josh.

Thanks, Beth. This was a truly outstanding quarter with our business continuing to fire on all cylinders, outperforming and taking us to new heights. Once again, we delivered record revenues, yields, operating income, EBITDA, and customer deposits. This quarter, we also achieved all-time high net income of $2 billion, surpassing our pre-pause benchmark by nearly 10%. This is a significant milestone with strong operational execution, more than compensating for a nearly 600% increase in net interest expense compared to 2019. On a unit basis, both operating income and EBITDA reached the highest levels in the better part of 20 years. These record results were delivered on 2.5% lower capacity as compared to the third quarter last year, yet another proof point on our successful delivery of same-ship yield improvement and its marked impact on the bottom line. In fact, yields increased 4.6%, all of which was achieved on a same-ship basis. Yields were also over a point better than guidance, again, due to the strength in both close in demand and onboard spending. Unit costs beat guidance by one and a half points on continued cost discipline. The outperformance on revenue and costs alongside our refinancing efforts enabled us to take up our full year guidance for the third time this year. These fantastic results and our team's consistently strong execution delivered ROIC of 13% for the trailing 12 months. This is the first time since 2007, nearly 20 years ago, that returns have reached the teams, another clear testament to the fundamental improvements in our operational performance. Our leverage is now down another notch to 3.6 times net debt to EBITDA, closing in on investment grade leverage metrics. This positions us even closer to using our strong and growing free cash flow to not only continue to responsibly de-lever, but also to return capital to shareholders. In fact, just today, we called the remaining converts using $500 million of cash that David will touch upon. To fuel this over the longer term, we believe we have much more opportunity to increase same-ship yields and further close the unbelievable value gap to land-based alternatives, pushing margins and returns even higher over time. In fact, booking trends have continued to improve since our last update, nicely outpacing capacity growth at higher prices and setting a record for bookings made on sailings two years out. And with nearly half of 2026 already on the books at higher prices, We feel pretty good about next year. We just welcomed Star Princess into the fleet, sister to the highly successful Sun Princess, previously awarded Condé Nast's 2024 Mega Ship of the Year. This new ship class will now represent over 15% of the Princess fleet, a nice tailwind for the brand next year. Of course, we also have the full benefit of Celebration Key and the continued rollout of our destination development strategy as we progress through next year. Celebration Key is as phenomenal as we expected and open to rave reviews. I could not be prouder of both the Carnival Cruise Line and our destination development teams for not only getting this fantastic development done on time and on budget, but also delivering an amazing guest experience right from the start. Since our late July opening, nearly half a million Carnival Cruise Line guests have already passed through the sun-shaped arch in Paradise Plaza, soaking in the largest freshwater lagoon in the Caribbean, heading up to the top of the world's largest sandcastle, zipping down our racing water slides, or enjoying a cool cocktail at the world's largest swim-up bar. While early guest feedback from Celebration Key has been fantastic, we are paying close attention to our guest's suggestions and will continue to fine tune operations and strive for continuous improvement to make the experience for our guests even better. As you may have seen, the media coverage for our new destination has been overwhelmingly positive. Even before opening, we were amongst the most searched cruise destinations and we have clearly built on that success. Our marketing teams have been working around the clock to make Celebration Key a household name. The grand opening alone generated almost one and a half billion media impressions. And we've been activating a ton of live footage from the destination on social media and the like ever since. Celebration Key is sure to increase consideration amongst new to crews, while at the same time giving our repeat guests yet another reason to come back soon. In fact, we expect word of mouth will continue to build with 2.8 million guests visiting Celebration Key next year on 20 Carnival ships leaving from 12 different home ports. This adds up to high utilization rates with a ship in port virtually every day of the year and at least two ships 85% of the time. To that end, Our peer extension is in progress and by next fall will accommodate up to four ships at a time, allowing us to maximize the utilization of our existing land capacity. And because I know I will get asked right off the bat, I'll just say in the early innings, the returns of our celebration key investment are indeed meeting expectations, all of which were built into our forecast and which we have exceeded. Switching gears to another of our Caribbean gems, mid next year, we will also open the pier expansion at Relax Away Half Moon Cay, our pristine Caribbean oasis. This spectacular tropical paradise, already ranked amongst the best private islands in the Caribbean, invites our guests to relax and enjoy our white sand crescent beach and crystal clear turquoise waters. Once both piers are operating, One out of every five Carnival Cruise Line Caribbean itineraries will go to these perfectly paired destinations, providing guests with both the ultimate and the idyllic beach days, all in one vacation. And overall, the vast majority of our Caribbean guests will enjoy one of our seven purpose-built Caribbean gems, with half of those guests visiting more than once. As beaches are the number one destination for vacationing Americans, our miles upon miles of some of the most beautiful beaches in the world are the perfect fix. By making targeted incremental investments and stepping up our marketing efforts to support this broad destination portfolio, we believe we have further opportunity to monetize these strategic assets by using them to drive consumer consideration and conversion, taking share from land-based alternatives. Altogether, our exclusive Caribbean destinations will capture over 8 million guest visits next year, almost equal to the rest of the cruise industry combined. And let's not forget, our strategic portfolio of brands and assets stretch far beyond the Caribbean. We have by far the most assets in and capacity dedicated to Alaska. which has been incredibly strong this year, as well as the biggest reach into Europe, which has likewise been performing incredibly well for us. Our portfolio of brands and land-based assets are clearly the largest and most diverse in the industry and getting even better every day. While getting to 13% ROIC so quickly is a significant achievement, it's certainly not a ceiling. We have been disciplined in deploying capital towards our highest returning brands with seven ships on order for Carnival and AIDA combined. But keep in mind, we have many other brands that are quickly progressing up the internal leaderboard. This year, the overwhelming majority of capacity will be at brands delivering double digit returns. Yes, this is already well above our cost of capital, but our brands have much more room to significantly improve. In fact, several of our brands are not yet back to either 2019 levels or the record highs they've reached in the past two decades. So we know the latent potential they have. And even the two stars currently atop that internal leaderboard, AIDA and Carnival Cruise Line, have roadmaps to progress. AIDA will continue to benefit from its hugely successful evolutions program. which coupled with new ship orders will modernize its current fleet. Next month, Aida Luna will enter dry dock, the second of seven ships to receive this proven upgrade. Carnival will also be launching a fantastic new marketing campaign just ahead of wave season, an enhanced loyalty program mid next year, and of course stands to disproportionately benefit from the step up we're making in our Caribbean destinations given their large year-round Caribbean presence. So, while it is incredibly rewarding to see the great progress our teams have made in such a short amount of time, I am equally excited about the opportunities ahead as we create shareholder value through continued progress on profitability and returns. At the same time, further balance sheet improvement should continue the transfer of enterprise value from bondholders back to shareholders. I would like to again thank our team members, ship and shore, for the dedication and execution which enabled us to deliver happiness to nearly 4 million guests this past quarter by providing them with extraordinary cruise vacations while honoring the integrity of every ocean we sail, place we visit, and life we touch. And special thanks to our travel agent partners, destination partners, investors, And of course, our loyal guests for their continuing support. With that, I'll turn the call over to David.