管理層發言
Greetings, and welcome to the Carnival Corporation Q2 26 Earnings Results. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. 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 26 Earnings Conference Call. I am joined today by our CEO, Joshua Ian 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 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 Joshua.
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 close-in demand and robust onboard spending, and marked our twelfth 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, 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, while we are incredibly resilient to major external shocks, we are not immune. Near-term disruption can affect the timing of results, especially if it persists for an extended period of time. Accordingly, our second quarter operational outperformance and accelerated cost efforts are offsetting the moderation we have 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 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 26, 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 the 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 enhancements, personalization, marketing effectiveness, and pulling onboard spending forward. These capabilities are helping us drive stronger pricing, higher onboard spend, and improved commercial execution across the portfolio. Second, we are 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 SPEAR class platform, with Sun Princess and Star Princess continuing to deliver fantastic guest satisfaction and commercial performance. They bring our total order book to ten ships, including five for Carnival Cruise Line and two for AIDA. While it is safe to assume that more will be ordered for delivery in the 2030s, we have no plans to deviate from our one-to-two-ship-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 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. 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 3.5 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 midsized 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 sand castle 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 exploring one of the Caribbean's most content-rich destinations. Isla Tropicale also pairs exceptionally well with our destinations in Cozumel and Puerto Maya, which serve as gateways 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 are 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, fleet, and 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 have made over the past several years and reflects the strength of the foundation we have 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 will turn the call over to David to walk you through the quarter and our guidance in more detail.
Thank you, Joshua. I will start today with a summary of our second quarter 26 results then I will 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 historically 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 and currency on our June guidance versus our previous guidance was less than $0.01 per share, with our fuel price for the 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 26 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 1 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 Joshua noted, 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 habit 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 cost without fuel: the partial-year operating expenses associated with Celebration Key and RelaxAway Half Moon Cay, 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 Middle East disruption resulted in a yield growth revision by approximately 1 percentage point relative to our prior guidance, our intensified focus on cost management generated an offsetting 1 percentage point improvement in cruise cost 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 was driven by improvements in depreciation expense, fuel consumption, fuel mix, net interest expense, and other income. Now I will 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 unification of our dual-listed company structure under a single company, Carnival Corporation, with Carnival plc as a UK 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 costs, 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. Today, 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 3.4x at year-end 2025 to 3.3x at the end of the first quarter to 3.1x at the end of the second quarter, which is over a half-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.
分析師問答
Operator, we are now ready to open the call for questions. Thank you. Ladies and gentlemen, we will now be conducting a question-and-answer session, and one follow-up. Thank you. One moment please while we poll for questions. Our first question comes from the line of Raymond Bowers with Wells Fargo. Please proceed.
Hey, guys. Thanks for the question. I apologize for my voice. I am fighting off some allergies. Just as we look at the shape of the yield growth for the balance of the year, it looks like Q4 implies a slightly lower number than Q3. Anything to call out there? Is that just being conservative or is there something about the shape of the year that would cause Q4 to be a little bit softer?
Hey, you sound fine, Raymond. So Q4, when you normalize for the Carnival loyalty program, which is all in Q4, is actually closer to 2%. So I do not think that is the normalized pattern in the end.
Okay. Perfect. I did not realize it was all Q4. And then 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 above a 3% 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?
I think it's well done that you right off the bat tried to get us to give guidance on 2027, but we are not going to do that yet. Sorry, I have to wait a little closer to 2027.
Well, I guess if not that then, just how much of that impact from loyalty impairs 2027 numbers as well?
Yeah. So for 2027 full year, it's about 0.4 of a point year-over-year because it is a full year of that.
Got it. Thanks so much, guys.
The next question comes from the line of Steven Wieczynski with Stifel. Please proceed.
Hey guys, good morning. So Josh, I guess I am a little bit confused here. If we think about your March full-year guidance, which was 2.3175% yield guidance you provided this morning, I am just trying to figure out what really has changed since March. At that point, you guys were 85% booked for the year. Were you expecting a smaller impact from the war? Or was there a major change in demand for certain itineraries, or did you witness a major uptick in cancellations? The simple question, Joshua: 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?
Yes. Let me start by going back to March. At the time, we were a few weeks into the conflict and what we did expect then was a significant pause as people tried to figure out what this new normal meant. We talked about concentric circles: the Med region was taking it most on the chin, it got better in Northern Europe, and 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 saw from that. Hindsight is great, but that was not the expectation. If we go back to last year, March was a recovery month for us. April of last year took a big hit with volatility, people normalized as they started figuring out what the impacts meant and moved on. This year, March was clearly impacted by the start of the war to differing degrees as I described. We did better year-over-year in April, but we should have done better because last year April had volatility from the tariff announcements. Europe did better in April than March, but it was still not positive year-over-year. So we were still not in a great place and that is not surprising because the news flow did not stop. This lasted through the last three months until we turned the page a bit in June. This was perpetual headlines and ever-changing questions about when and how it would end, so people could not normalize if they could not figure out how to plan. We experienced that. May was a bit of a step backwards year-over-year versus April because of the comps at least and the ongoing pace of the conflict. The good news is June seems to have turned a corner, and the signing of the MOU last week helped people start planning again. We do not plan for smooth sailing continuously as we go through the end of this year; that would be naive. We think there will be bumps as the geopolitical situation gradually normalizes. We are doing what we can to move forward.
Okay, that is great. Thanks, Joshua. And then I guess you kind of answered this a little bit, but maybe not. You mentioned you've recently started to see a reversal of these headwinds in 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 remain in place for the remainder of the year?
We definitely do not expect to go back to what the second quarter looked like, meaning we are not planning for a world where the conflict reignites and the straits are closed. If that happens, we will assess the impact. The fact that we delivered what we did in Q2 and expect record yields in the second half, while investing and deleveraging, shows the strength of the business. We are not planning for perfection, but we are planning for normalization and steady improvement.
Great. Thanks, Joshua. I appreciate it. Thanks, Steven.
The next question comes from the line of Robin Farley with UBS. Please proceed.
Great. Thanks. Just wanted to get a little more color around—you were 85% booked in March—and just thinking about the delta for the 100 basis points for the full year being on that last 15%. Could you give a little insight into that demand for the Med from North American travelers versus your European-sourced customers to get a little more color on that?
Both our Europe segment and our North America segment for our Europe deployment were ahead on occupancy overall. It was significantly more ahead year-over-year for our North American brands, which makes sense because it is a longer-haul decision. We were leaning into pulling that ahead, so their occupancy advantage actually unwound more than our European brands did. We are seeing a turn now, which is great, and we expect positive yields for our European deployments moving forward.
Okay. Thanks. And a follow-up: you mentioned the pier is done at Celebration Key to be able to have four ships. I do not think you have announced anything in terms of expanding what is available, your passenger capacity with the amenities there. Can you take four ships today and have all those travelers there? Or when does that happen that you get the benefit of the year being open?
We will get the benefit pretty much right away in that it gives us the flexibility to maximize that 13,000-guest footprint on land. We have already had three ships in a day, which was great. We typically take the three biggest ships because if we took the three biggest ships we would be closer to 18,000 than 13,000. What the pier extension gives us is flexibility to optimize deployments and mix and match ships to get as close to that 13,000 guest count as possible on a regular basis. That is why we expect, in 2027 on an annualized basis for Celebration Key, about 3.5 million visitors. We will certainly be talking more about potential landside expansion as we make our way through the year.
Great. Thank you.
Next question comes from the line of Ben Chaiken with Mizuho. Please proceed.
Hey, how's it going? Thanks for taking my questions. Joshua, I would love to touch on the modernization effort. It feels like you are leaning into this more. Are there any statistics you can share, whether expected yield uplift or ROI? It would be great to understand what data or thought process gives you confidence in this strategy. Thanks.
Sure. We look at modernization programs in three components. One is the necessary below-waterline work to keep equipment in good order. Second is guest-facing refurbishments, like public areas, cabins, and new food and beverage venues. Third is the ability to add new cabins. We look at the latter two when assessing ROI. Cabins are easy: they typically pay for themselves in a couple of years, so when we find those opportunities we take them. For guest refurbishments, we view them like a new-build hurdle but at much less cost, and we expect to achieve at least high-teens returns when making those refurbishment decisions.
Got it. That is helpful. And then maybe touch on Celebration Key—any update on demand? And are you thinking about future phases of land development to the extent that is on your mind? It sounds like it might be.
It is still a lot of work to get there and we do not want to get ahead of anything, so nothing to announce yet, but we will when appropriate. On demand, Reception has been strong and it is pretty endemic to Caribbean capacity for Carnival. Feedback has been very strong and we solved many startup challenges. We expect to keep improving the experience and now we can pair Celebration Key with RelaxAway at Half Moon Cay, which is a big positive. There are many tailwinds as we look into the future.
The next question comes from the line of Xian Siew with BNP Paribas. Please proceed.
Hi, thanks for the question. Maybe going back to the net yield guidance and the 100 basis-point reduction: you mentioned lower occupancy as part of that. Are you leaving some cabins unsold rather than discounting, or are these cancellations? Can you give a little more color? And then if I look ahead, could occupancy snap back into next year? Thanks.
Occupancy is definitely part of it, particularly in Q3. We looked at trends, our book position, and what the right trade-off was. We reduced our occupancy expectations a couple of points for Europe because we think that is the right long-term decision. We recognized it might impact onboard spending since there are fewer guests, but we are managing the business for the long term and believe this is the healthiest approach. As for snapping back next year, yes, absolutely: we see no reason we should not be able to achieve our targets as things normalize. We view this as a temporal phenomenon and a pause in momentum that we expect to ramp back up as conditions improve. Regarding the Western Caribbean and Isla Tropicale, we will continue to invest there. In 2028, we will have the newest Carnival Cruise Line ship positioned out of Galveston and continue to invest in Isla Tropicale and Puerto Maya to maximize our presence in the Western Caribbean.
Great, thanks. Good luck.
The next question comes from the line of Matthew Boss with JPMorgan. Please proceed.
Great, thanks. So 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. Any notable trends in the Caribbean? If I put it together, it sounds like no change at all in your confidence for moderate yield growth multi-year as outlined in the PROPEL plan.
No change in my confidence for that. It is early for 2027, but we wanted to highlight the temporal nature of this: our European bookings for 2027 over the same period saw almost doubling versus last year, which is a great sign. Overall, we are at historic highs for price and occupancy for 2027 and will work hard to improve our position over time.
Great. And David, with your net cruise cost ex fuel guidance of 2% to 3% for this year, it is coming in roughly 100 basis points more favorable relative to your initial forecast. Do you see the cost savings this year as structural? Any potential reinvestments we should think about or anything multi-year that would change the low-single-digit cost CAGR embedded in the PROPEL plan?
The overwhelming majority of what we are doing is intended to be long term. We found lots of hundreds of little things that can change over time which will improve our cost base. For example, brands have been optimizing the number of forklifts used on embarkation day; moving from 14 to 13 forklifts across multiple ships and itineraries saves hundreds of thousands of dollars per year. We have many ideas like that. We have also been working with suppliers and vendors to look for reduced rates as they implement AI and gain efficiency. There are hundreds of items across the business which we view as permanent cost savings going forward.
Great color. Best of luck, thank you.
The next question comes from the line of James Hardiman with Citi. Please proceed.
Hi. This is Sean Wagner on for James. Similar to the first question about yield impacts in 2027 and understanding that it is too early to give 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 elevated costs related to the Middle East back, but can you walk us through the timing of costs and partial operating expenses for the two exclusive destinations and how they net out next year?
There are a lot of puts and takes for 2027, and at this point it is a little premature to give full color because many decisions have yet to be made for 2027. As we said in our long-term PROPEL model and guidance, we have great cost discipline built into the business and expect to utilize that discipline to control costs over time.
Okay, fair enough. Then how does the overall 2027 booking curve compare to 2026 at this point? And is the substantial increase in European bookings for 2027 primarily first-half weighted?
Overall our position for 2027 is at historical highs for price and occupancy and we are setting ourselves up well. There is still a lot of work to do and I do not have the first-half/second-half split for Europe available now, but we can follow up. Overall we feel like we are as well positioned as possible and will continue to progress bookings.
Okay. Thanks a lot. Thank you.
The next question comes from the line of Lizzie Dove with Goldman Sachs. Please proceed.
Hi, good morning. Thanks for taking the question. Regarding the guidance cut on yield, most of that may be Europe. Could you elaborate a little more on Caribbean trends? How would you characterize the competitive backdrop there? And how did the conflict or higher airfares from the conflict impact that region versus Europe?
Holistically, nothing was completely immune; there were certainly people at any price point whose decisions changed. For us, the impact was primarily in Europe and less so as you move farther away. The booking trajectory for the Caribbean did not take much movement during the conflict and has come out chugging along. It is fair to say we are chugging along into a market where capacity outside of our actions increased 27% over two years, which we have baked into our planning and positioning. Regarding trends in Europe versus competitors, I can only speak for ourselves: April recovered versus March for us, but it still was not great overall. May continued to be impacted by news flow and fuel price concerns, and those factors affected customers deciding whether they could fly home. That was the key impact for us in May.
Thank you.
The next question comes from the line of Conor Cunningham with Melius Research. Please proceed.
Hi, everyone. Thanks. Just on Celebration Key: I know you talked about the ramp and the goal for next year. I think you start to sell itineraries so other brands touch there. If you could talk about how different brands will be impacted, or the opportunity for the different brands at Celebration Key in general. Thank you.
Opportunities exist across brands. AIDA will technically be the first brand to touch down outside of Carnival Cruise Line, but Princess will have more scheduled calls throughout the winter. Carnival Cruise Line is taking up most capacity for now, but we are building itineraries for as many brands and ships as possible to benefit from Celebration Key and RelaxAway. We aim to maximize the impact for the company. The limiting factor on Celebration Key is landside capacity; we hope to make inroads in the latter half of the decade to expand those opportunities.
That is helpful. And back to 2027—there's a lot of moving parts. We understand second-half comps are easier than before. You referenced the trade and tariff situation in 2025 lingering. When you booked during the first half, did yields change meaningfully for 2027? Should we expect a headwind to the first half of 2027 given some bookings were made during the conflict?
You are correct about last year having a lingering impact. For this situation, it's early to know precisely how much will carry into 2027. Some people are not booking now, which has an impact. The good news is that overall for 2027, our bookings were up year-over-year, which is a positive sign.
Okay, thanks. Thank you.
The next question comes from the line of Andrew Didora with Bank of America. Please proceed.
Hey, good morning everyone. One last question on occupancy in the back half of the year: embedded in your Q3 net yield guidance, should we be factoring in flat year-over-year occupancy, down, or up?
It will be relatively flat year-over-year. Our original thought might have been to get a bit more than the prior year, but given circumstances, it will be close to flat.
That is helpful. And Joshua, you continue to double down on limited fleet growth and new hardware. What are the top two or three opportunities Carnival has that can help keep longer-term net yield growth in that moderate or above-inflation range over the next several years as you have more modest fleet growth?
A lot of it is blocking and tackling and strong commercial execution. We have the destination footprint we can now fully leverage, and our brands are world class and have shown significant yield improvement with no new builds in many cases. We need to keep executing, invest in modernization and destinations when return-generating, and continue to improve commercial capabilities to capture demand and spend. That combination will help sustain moderate yield growth with measured fleet additions.
The final question comes from the line of David Katz with Jefferies. Please proceed.
Hey, good morning. This is Anthony on for David Katz. One quick question on capital returns: you've done the dividend and buyback. Do you expect the dividend to remain constant or grow over time? For repurchases, is the level you've been doing in the first half representative of what you expect in the second half, or how should we think about that?
I am one of many board members and dividend decisions are a board decision. It would be fair to say a moderate increase as we look forward is rational and reasonable, but the board will decide in a measured, responsible way. Regarding buybacks, the board authorized $2.5 billion. We certainly do not expect to spend $2.5 billion this year. Annualizing the first-half rate would be too aggressive. We have been opportunistic and will continue to be so. We have plenty of headroom with the cash we are generating and the metrics we aim to achieve. I expect more buybacks over time, but I would not be wedded to annualizing this quarter's amount.
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