Carnival Corp and Carnival PLC Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Robin Farley - UBS AG - Analyst : Great. Thank you very much. I wanted to clarify -- obviously, very positive forward booking commentary. When we talk about historic price levels, does that mean sort of in line with or is that actually suggesting prices above? And I also thought it was interesting -- the comment in the release that something like now both Europe and North American sourcing brands are at that historic price. Is the implication there that maybe a quarter REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 29, 2025 / 2:00PM, CCL.N - Q3 2025 Carnival Corp and Carnival PLC Earnings Call ago that North American price on the books wasn't at that record level, like on a combined basis it was, but now North America better? So just wanted to get that clarification. Thanks.

Question: Robin Farley - UBS AG - Analyst : Thank you. And then just as a sort of follow-up, anything you can quantify with Celebration Key when you look at the impact on forward bookings where you could sort of say it's causing an X percent premium in ticket price for ships that are calling on that island versus other ships that aren't calling on it? Or any way to just sort of help us think about how that's driving your yields? Thank you.

Question: Robin Farley - UBS AG - Analyst : Great. Thanks very much.

Question: Brandt Montour - Barclays Services Corp - Analyst : Great. Thanks for taking my question. So I wanted to ask about the consumer -- your consumer, Josh. We see lower-end consumers sort of fatigued and hurting in several other travel verticals. It doesn't seem like you're seeing it. Maybe that's why you're not seeing it because of the value proposition like you talked about. But are you seeing any sort of behavioral shifts within your loyalty set or people maybe trading down between shore excursions or sort of any type of behavioral changes from your core consumer here? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 29, 2025 / 2:00PM, CCL.N - Q3 2025 Carnival Corp and Carnival PLC Earnings Call

Question: Brandt Montour - Barclays Services Corp - Analyst : Okay, great. That's helpful. And then just to follow up on the bookings commentary, you're half booked for '26. Sounds like from your tone that that's the place where you want to be. But just thinking about the ebbs and flows of that booking strategy over the last few months, bookings were choppy back in April and March and you kind of came back to that. When you look forward and think about how your strategy might change into '26, do you feel like you want to go in kind of similar to where you were last year? Or was there learning from last year where that might not be perfectly optimal?

Question: Brandt Montour - Barclays Services Corp - Analyst : Excellent. Thanks, everyone.

Question: Steven Wieczynski - Stifel, Nicolaus & Company Inc - Analyst : Hey, guys. Good morning. Congrats on the strong third quarter and outlook. So Josh, I want to ask a little bit more about how you're thinking about 2026 versus maybe three months ago. And fully understand you guys aren't in a position to provide guidance yet for next year. But based on your qualitative commentary, it seems like booking trends have actually accelerated, I would say, versus the fear that might be out there in the marketplace that demand is decelerating. So just wondering from a bigger picture perspective, maybe how you're feeling about next year versus back in June. And then also in your slide deck, you mentioned that 2027 bookings are off to, in your words, unprecedented start. And maybe if you could help us think a little more maybe what that wording means there. Thanks.

Question: Steven Wieczynski - Stifel, Nicolaus & Company Inc - Analyst : Okay, got you. Thanks for that. And then, Josh, here's another 2026 question. So David mentioned --

Question: Steven Wieczynski - Stifel, Nicolaus & Company Inc - Analyst : Exactly. David did mention there are headwinds out there as you start next year. I mean, 50-basis-point impact on yields for the reward program, 100 basis points for the drydocks, and 50 basis points, I think he said, for the buildout of the rest of the island. So basically, you guys have a 200-basis-point headwind as we start 2026. But I guess the question, Josh, is there anything you didn't mention that maybe kind of behind the scenes that you guys are working on to help kind of mitigate some of those headwinds?

Question: Steven Wieczynski - Stifel, Nicolaus & Company Inc - Analyst : Okay, great color. Thanks, Josh. Appreciate it.

Question: James Hardiman - Citi Infrastructure Investments LLC - Analyst : Hey. Good morning. Thanks for taking my call. So maybe sort of a nitpick question, maybe it's a dumb question. But as I think about your forward booking commentary, I think coming out of Q2, you were saying you were in line with respect to load factors. But then I think in the press release, you spoke to sort of an acceleration in bookings year over year since May, which I would think would mean that you're now ahead on bookings, but I think you're still in line. So maybe it's just too close to call out in terms of the overall numbers but just wanted to clarify on that point.

Question: James Hardiman - Citi Infrastructure Investments LLC - Analyst : Okay. I'll definitely do that. And then as I think about the quarter, and really the last couple of quarters, the organic growth has been pretty stunning here, right? Particularly, you don't have any new ships coming online, and I think you've had the best yields in the industry, at least the ocean side of the industry. So maybe connect the dots between some of the programs that you've been talking about, Josh, right, i.e., the AIDA Evolutions program, and some of the things going on with Carnival, new marketing, the step-up in Caribbean destinations. Maybe connect those dots with how that's translating into pricing. And then as we think about moving forward, other low-hanging fruit, and how we should think about pricing moving forward in the context of sort of the brand-level initiatives that are underway. Thanks.

Question: James Hardiman - Citi Infrastructure Investments LLC - Analyst : Got it. That's really helpful. Thanks, Josh.

Question: Ben Chaiken - Mizuho Securities Co Ltd - Analyst : Hey. Good morning. I guess first on capital return, I guess, how are you thinking about timing leverage bogeys? And then is there any preference between dividends and/or buybacks? And then kind of like separately, longer term, how do you think about capital return as a percentage of your free cash flow, if that's the way you kind of bucket it? Thanks, then one follow-up.

Question: Ben Chaiken - Mizuho Securities Co Ltd - Analyst : Understood. And then near term, I think previously, there was a pretty healthy acceleration kind of implied between 3Q and 4Q yields. Obviously, 3Q came in better. Maybe talk about what you're seeing with close-in demand and how you're thinking about the remainder of the year. Thanks.

Question: Matthew Boss - JPMorgan Chase & Co - Analyst : Thanks, and congrats on another nice quarter. So Josh, could you elaborate on the ample opportunity remaining with net yields, margins, and returns that you cited in the release? I don't know, maybe there's a way to think about what inning you see the overall story in today, or just how would you rank the continued areas for ample improvement that you noted?

Question: Matthew Boss - JPMorgan Chase & Co - Analyst : And David, helpful color on costs for next year. Are there any constraints as we think about delivering on your algorithm for costs to grow below yields as we think about puts and takes for '26 and also as we think multiyear?

Question: Matthew Boss - JPMorgan Chase & Co - Analyst : That's great color. Best of luck.

Question: Lizzie Dove - Goldman Sachs Group Inc - Analyst : Hi there. Thanks for taking the question. So congrats on another great quarter, obviously really strong same-ship yields. I'm curious as you go forward, it feels like you're having really strong returns from things like the AIDA Evolution program. How do you evaluate, when you're thinking about building new ships versus maybe expanding that type of retrofitting type program to the other brands and the relative returns there?

Question: Lizzie Dove - Goldman Sachs Group Inc - Analyst : Got it. That's helpful. And then shifting gears, in Galveston, I think you're still the leading cruise line there in terms of volumes, number of ships there, et cetera. But you do have one of your peers mainly, I suppose, like trying to get more active in that space over the next few years. How does that impact or does it impact how you think of your go-to-market there? There's been a lot of expansion on islands in the Eastern Caribbean, which I know you can reach from Galveston. But whether it's more developments with the Western Caribbean or Mexico, Puerta Maya, that you have, Isla Tropicale, how do you just think about keeping that competitive edge in Galveston?

Question: Lizzie Dove - Goldman Sachs Group Inc - Analyst : Great. Thank you.

Question: David Katz - Jefferies LLC - Analyst : Morning, everybody. Thanks for taking my question. David, in some of your earlier remarks about capital allocation, there was some reference to a bit of a transition to getting to return capital. Should we think about leverage having to get inside of that 3 times before there'd be more substantial recurring, whatever adjective we'd like to put on it? How are we thinking about the progression from here before we'd see maybe a buyback and other forms? Thanks.

Question: David Katz - Jefferies LLC - Analyst : Understood, and that's what I intended. But just to follow up, thinking about other potential large capital projects or investments that may come our way, is there any -- I know this is not always the best place for hypotheticals, but just thinking about what might get in the way or defer any of that leverage come down, anything out there we should just consider or be aware of?

Question: David Katz - Jefferies LLC - Analyst : Understood. Thank you.

Question: Christopher Stathoulopoulos - Susquehanna Financial Group LLLP - Analyst : Good morning, everyone. So I'm going to keep it to one question. Really more of a strategic view, Josh, I know you're not talking about '26, but this is more of a high level as we think about the industry and really about Carnival's ability to, I would say, protect pricing power, brand equity in the Caribbean. So you have a competitor who's going to be adding on a lot of new hardware and pivoting to fun and some itineraries, as well as another who recently announced a new class of ships beyond their icons. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 29, 2025 / 2:00PM, CCL.N - Q3 2025 Carnival Corp and Carnival PLC Earnings Call So as we think about the Caribbean market, and maybe you want to kind of contextualize this in terms of the mix of premiums, so balcony and suites and the like, I'm guessing this is going to be growing year on year, low single digits for next year, perhaps at the same level through end of decade. What is the plan for Carnival to protect its ability to push yield to maintain its share? I realize you have two private destinations coming online, so maybe you could contextualize that in terms of a premium for that itinerary versus non. But I want to understand how you're thinking about the Caribbean, particularly as the market looks to evolve and capacity, perhaps grow at a rate that we haven't seen for some time. Thanks.

Question: Vince Ciepiel - Cleveland Research Co LLC - Analyst : Thanks. Just wanted to think a little bit longer term about the opportunity. I know in the multi-year goal, you guys are targeting low to mid-single-digit type per diem growth. When we look at occupancy here, still, I think about 1 point shy of where 2019 shook out. And I imagine something like 20% of the fleet might be newer. And we think it's overindexing the balconies and maybe have higher occupancy levels in terms of opportunity. So how are you thinking about the multi-year opportunity ahead in the occupancy side of the yield equation? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 29, 2025 / 2:00PM, CCL.N - Q3 2025 Carnival Corp and Carnival PLC Earnings Call

Question: Vince Ciepiel - Cleveland Research Co LLC - Analyst : Great. Thanks.