Carnival Corporation Ltd. Common Shares

Greetings, and welcome to the Carnival Corporation Q2 2026 earning results. At this time, all participants are in a 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 of Investor Relations. Thank you, Beth. Please go ahead.

Thank you. Good morning, and welcome to our second quarter 2026 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, 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 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. And good morning, everyone. Once again, we delivered another quarter of our performance, 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're 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 close-in 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 2.5 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. So 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 book 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. And 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. And 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 and 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 some Princess and Star Princess continuing to deliver fantastic guest satisfaction and commercial performance. They bring our total order book to 10 ships, including 5 for Carnival Cruise Line and 2 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 AIDA Bella becoming the third of seven ships to complete the upgrade. We also recently announced Holland America Evolution, our next midlife 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 peer 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 3.5 million visitors, while still providing ample capacity for future landside expansions. 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 midsize vessels. This increases capacity at the destination to over 12,000 guests per day. Relaxaway has opened to rave reviews, reflecting our deliberate intentions 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 Cay Grand Bahama and Relax Away 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. Relax Away 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 Tropical in Roatan, 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 Tropical 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 Tropical in 2028. Our scale, which also extends to Gulf home ports in New Orleans, Mobile, and Tampa, combined with our destination portfolio and longstanding 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 longstanding 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. And 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 corridor and our guidance in more detail.