Carnival Corporation & plc (CCL) Earnings

Management highlights

### Quarterly Operational Results - Delivered a record quarter across all key metrics, outperforming prior March guidance by $100 million driven by strong commercial execution and intensified cost efficiency efforts - Achieved these results despite extreme geopolitical volatility, historically low consumer sentiment, and unusually high fuel prices - Customer deposits reached an all-time high of $9 billion; 93% of full-year 26 capacity is already booked, with less unsold inventory than last year - Book position entering Q3 remains ahead of last year, with record pricing for all remaining 2026 quarters; bookings for 2027 and beyond are already running ahead of 2026 levels at higher prices ### Strategic Investment Priorities 1. **Commercial Capabilities**: Continuing to enhance revenue management, personalization, marketing effectiveness, and pull forward onboard spending to drive stronger pricing and higher guest spend across the portfolio 2. **Fleet Investment & Modernization**: Maintains a disciplined, measured capacity growth cadence of 1-2 new ships per year; placed orders for 3 new Princess Cruises ships for delivery 2035-2039, bringing total order book to 10 ships. Launched mid-life modernization programs: the AIDA evolution program has upgraded 3 of 7 planned ships, and the new Holland America Evolution program will upgrade 6 ships starting in fall 2027, including adding new cabins to boost capacity and earnings 3. **Exclusive Destination Portfolio Expansion**: Completed a pier extension at Celebration Key, enabling it to accommodate up to 4 ships and 13,000 guests per day, with 3.5 million annual visitors expected in 2027. Opened a new pier at RelaxAway Half Moon Cay, increasing capacity to over 12,000 guests per day, allowing both Celebration Key and RelaxAway to be included on a single Caribbean itinerary for differentiated vacation options. Completed upgrades to Isla Tropicale in Roatan to strengthen Western Caribbean itineraries. These exclusive destinations are expected to welcome over 9 million guest visits in 2027, with 85% of Caribbean itineraries calling at one or more exclusive ports. Carnival maintains a fully integrated land-sea platform in Alaska that provides long-term competitive advantages, with ongoing lodge expansion to meet growing demand ### Capital Structure & Shareholder Returns - Completed unification of its dual-listed company structure under single parent Carnival Corporation, simplifying governance, improving stock liquidity, and reducing administrative costs - Has repurchased $450 million of stock under the approved $2.5 billion opportunistic share buyback program - Net debt to adjusted EBITDA improved to 3.1x at the end of Q2 26, a more than 0.5x improvement from one year prior - The company has financial flexibility to simultaneously invest in growth, reduce leverage, and return capital to shareholders

Guidance

- Full-year 2026 EPS guidance is set at $2.22, $0.01 above prior guidance, driven by EPS accretion from Q2 share repurchases - Full-year yield growth guidance was revised down 1 percentage point relative to prior guidance, a $0.14 per share impact from prolonged Middle East geopolitical volatility concentrated in European Mediterranean deployments; management views this yield revision as transitory and not a change to the company's long-term underlying trajectory - The 1 percentage point yield downward revision is fully offset by a 1 percentage point improvement in cruise costs without fuel, driven by intensified cost management initiatives - Normalized full-year cruise costs without fuel per ALBD are now expected to be up approximately 1.3% year-over-year, including $0.06 per share in permanent cost savings from new efficiency initiatives - Management continues to expect record yields in the second half of 2026 - Q3 26 occupancy is expected to be relatively flat year-over-year, down from prior expectations for a small increase - The loyalty program accounting adjustment will result in a 0.4 percentage point headwind to full-year 2027 yield growth - Management reaffirmed confidence in the company's long-term moderate multi-year yield growth target outlined in the PROPEL plan, with no change to that outlook

Segment performance

The transcript does not break out financial performance by separate product segments, only reports aggregate company-level results for the quarter. Aggregate Q2 26 results: record net income of $569 million, up more than 20% year-over-year; record total revenues, yields, EBITDA, and customer deposits which hit an all-time high of $9 billion. Yields grew 2.2% year-over-year, marking the twelfth consecutive quarter of record yields. Fuel efficiency improved over 5% year-over-year, building on a 6% gain in the prior year. Cruise costs without fuel per Available Lower Berth Day (ALBD) were essentially flat year-over-year. Full year 2026 expected EBITDA is over $7 billion.

Risks & headwinds

- Prolonged Middle East geopolitical conflict created transitory headwinds for the 2026 business, impacting European Mediterranean deployments through reduced demand from guests, elevated airfares, and reduced international flight capacity for North American guests traveling to Europe - Ongoing geopolitical volatility could create continued near-term disruption to booking trends and results if conflicts persist or escalate - External market conditions including sustained high fuel prices, weak consumer sentiment, and air travel capacity constraints can negatively impact demand and pricing - Outside of Carnival, Caribbean cruise capacity has grown 27% over two years, creating a more competitive operating environment that is already factored into the company's planning

Analyst Q&A

• Q: The full-year 100 basis point yield cut from the Middle East conflict falls on the last 15% of unsold 2026 inventory booked after March. How does demand for European itineraries differ between North American and European sourced guests? /

  A: Overall occupancy for European deployments was ahead of last year for both guest segments. North American-sourced bookings for Europe had a larger early occupancy advantage that unwound more than European-sourced bookings during the conflict. Recent booking trends have started to improve, and management expects positive yields for European deployments moving forward.

• Q: What returns and ROI does Carnival expect from its fleet modernization programs, and what is the decision framework for these investments? /

  A: Modernization has three components: mandatory below-waterline maintenance, guest-facing venue and cabin refurbishments, and adding new cabins where feasible. New cabin additions pay for themselves in just a couple of years. Guest-facing refurbishments are approved to meet a high teens ROI hurdle, similar to new builds but with much lower upfront capital.

• Q: The yield guidance cut includes lower occupancy for European deployments. Are you intentionally leaving cabins unsold to preserve pricing rather than discounting, and could occupancy snap back next year? /

  A: Management reduced Q3 26 occupancy expectations for Europe by a couple of points to prioritize long-term price integrity, accepting lower near-term occupancy to protect long-term business health. Management views the current occupancy impact as fully transitory, and expects occupancy to fully rebound as geopolitical conditions normalize next year.

• Q: The 100 basis point improvement in cruise costs ex-fuel is better than prior guidance. Are these cost savings structural, and do they change the long-term low single-digit cost CAGR embedded in the PROPEL plan? /

  A: The overwhelming majority of the cost savings are structural and permanent. The company identified hundreds of small efficiency improvements across all areas of operations that add up to material permanent annual savings, and is also capturing lower vendor rates as suppliers implement their own efficiency gains. The savings align with the long-term cost discipline already built into the PROPEL plan, with no change to the long-term framework.

• Q: What is the outlook for dividend growth and share buyback pace for the second half of the year? /

  A: Dividend levels are a board decision, but a moderate gradual dividend increase over time is viewed as rational and reasonable. For the $2.5 billion buyback authorization, management does not expect to spend the full amount in 2026, and the first half pace of $450 million is higher than what should be expected for the second half. Buybacks will remain opportunistic, with plenty of headroom remaining under the authorization as the company generates cash and hits deleveraging targets.