Good morning. My name is Morgan, and I will be your conference operator today. At this time, I would like to welcome everyone to the Royal Caribbean Group Fourth Quarter and Full Year 2025 Earnings Call. All participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. I would like to introduce Mr. Blake Vanier, Vice President of Investor Relations. Mr. Vanier, the floor is yours.

Good morning, everyone, and thank you for joining us today for our fourth quarter 2025 earnings call. Joining me here in Miami are Jason Liberty, our Chairman and Chief Executive Officer, Naftali Holtz, our Chief Financial Officer, and Michael Bayley, President and CEO of the Royal Caribbean brand. Before we get started, I would like to note that we will be making forward-looking statements during this call. These statements are based on management's current expectations and are subject to risks and uncertainties. A number of factors could cause actual results to differ materially from our current expectations. Please refer to our earnings release issued this morning as well as our filings with the SEC for a description of these factors. We do not undertake to update any forward-looking statements as circumstances change. Also, we will be discussing certain non-GAAP financial measures which are adjusted as defined, and a reconciliation of all non-GAAP items can be found on our investor website and in our earnings release. Unless we state otherwise, all metrics are on a constant currency adjusted basis. Jason will begin the call by providing a strategic overview and on the business. Naftali will follow with a recap of our fourth quarter, the current booking environment, and our outlook for 2026. We will then open the call for your questions. With that, I am pleased to turn the call over to Jason.

Thank you, Blake, and good morning, everyone. I am very pleased to share our fourth quarter and full year 2025 results, our outlook for 2026, and our exciting strategic investments that will continue to shape and accelerate Royal Caribbean Group's future success. 2025 was an outstanding year, defined by strong demand for our brands and vacation experiences, disciplined execution of our strategies, strong balance sheet management, and robust financial performance. We delivered a record 9.4 million memorable vacations and a very high customer satisfaction score. Achieved nearly $18 billion of total revenue and 33% earnings growth, all while expanding our margins, increasing return on invested capital, and reducing leverage. We generated nearly $6.5 billion of operating cash flow and returned $2 billion to shareholders through dividends and share buybacks. Meanwhile, our scale and profitability enable continued investments in the differentiated experiences and innovations that delight guests and fuel the next chapter of long-term growth. I want to thank our team members worldwide for their passion and unwavering dedication to providing outstanding vacation experiences every day. Their efforts made our guest vacations memorable and contributed to a successful year for our shareholders. As a global vacation leader, we continue to broaden our vacation ecosystem across ocean, river, and land with unique experiences giving guests more ways to experience the world with our family of brands. Today, we are announcing a further expansion of Celebrity River Cruises with a commitment for 10 additional ships. This will expand Celebrity's River Cruise fleet to 20 vessels by 2031. The expansion will make Celebrity River Cruises one of the largest European river cruise operators, offering more itineraries and destinations than ever before. We are also announcing the launch of the Royal Caribbean brand's new Discovery class ships that will redefine how Royal's guests experience the…

Thank you, Jason, and good morning, everyone. I will start by reviewing fourth quarter results. Net yields grew 2.5% in constant currency, five basis points above the midpoint of our guidance. Yields grew across all key products, on 10% capacity growth, and were driven by both new and existing hardware. Total revenue growth in the fourth quarter was 13%. Net cruise costs, excluding fuel, decreased 6.3% in constant currency, in line with our guidance, as we remain focused on identifying sustainable efficiencies in our operations while further enhancing our vacation offerings. Adjusted earnings per share were $2.80. Earnings outperformance compared to guidance was driven by favorable revenue and better performance across our joint ventures. The fourth quarter capped an incredible year for us. As strong demand for our vacation experiences, coupled with strong execution by our teams, resulted in happy guests and robust financial results. Guest satisfaction continues to outpace industry standards and remains exceptionally strong. We consistently achieve significant improvements in financial performance. For the full year, total revenue grew 8.8%, adjusted EBITDA grew by 17.6% to just over $7 billion, and adjusted EPS grew 33% to $15.64. At the same time, we generated $6.4 billion of operating cash flow, achieved an investment-grade balance sheet, and returned $2 billion of capital to shareholders, all while investing more than $5 billion in our future. Since 2019, we have transformed the Royal Caribbean Group into a stronger, more profitable, and more resilient vacation platform, solidifying our strong financial foundation. Total guests increased 45% since 2019, with millennials and younger nearly doubling. At the same time, we saw strong growth from both new and repeat guests. Total revenue has increased by 64%, and adjusted EBITDA has surged 94% since 2019. Net income more than doubled, and operating cash flow grew 75%, supporting…

At this time, we will conduct the question and answer session. To ask a question, please press star, then the number one, on your telephone keypad. We do ask that you limit your questions to one per analyst. Once again, to ask a question at this time, please press star then the number one, on your telephone keypad. Your first question comes from Matthew Boss with JPMorgan. Your line is open.

Great. Thanks, and congrats on another really nice quarter. Thank you. So Jason, maybe to kick off, could you elaborate on the further acceleration and momentum into 2026 that you cited? And just larger picture, how do you see your portfolio differentiated today relative to that $2 trillion total vacation market with the opportunity to capture additional market share from here?

Well, thanks, Matt. I hope you're doing well. One, I think that, obviously, our business is growing. Our capacity is growing 6.7% this year. One of the things that we just see coming into this year, and we saw this even during the Black Friday and cyber sale activities, is that we've seen an acceleration in demand, which, of course, more than matches the capacity that we have coming on. So we continue to see a very strong consumer who is really attracted to our incredible brands and the experiences that they're delivering. Also seeing additional tailwind, and you can see that in our, you know, just in terms of on the loyalty side, you know, we're seeing an increase in the percentage of our guests that are loyalists. So our loyalty programs and now with that coming with Point Choice, yeah, we're seeing more and more high-quality demand for our guests. And, of course, you know, with loyalty, you're able to personalize more and put a very effective package in front of them in terms of what they're looking to achieve with their friends and family that they're sailing with. As we look at the business, you know, and you've heard me say this in the past, we really do look at that $2 trillion plus. I mean, it's growing now. It's even over $2 trillion leisure space for us to grab more share of. And when you get into why are we so focused on obviously, there's many reasons to do that, to close that gap. And focus less on our cruise competitors is that we think that we're able to increase our margins by putting a product in place that is really attractive to our guests. And so what you're seeing us do commercially, first is, you…

Just to add, one more thing to what Jason said. All these things that we're doing, as you can see this year, we're growing both capacity and yield. And as we look at it, we feel that this is a differentiation within the vacation marketplace. And that leads really to winning more share from the consumer in that $2 trillion market. So feel very passionate that, you know, we'll continue to innovate. And that's just us so continue to innovate and add more experiences like River and that sets us very well to continue to win that share from that $2 trillion, which is, obviously a very big market.

Your next question comes from Steve Wieczynski with Stifel. Your line is open.

Congrats on a strong 2025. So they want me to ask one question. I'm gonna do that, but it's gonna two different parts. So I'm gonna, you know, try to do it. So, Jason, obviously, there's, you know, there's a lot of concern on the market, you know, about Caribbean capacity and what that means in terms of taking price action, especially on the, you know, the close-end side of things. So, you know, if you could, could you walk us through maybe what you're seeing today in the Caribbean, maybe more so, you know, whether it's by brand, whether it's by itinerary, whether it's by specific product. And I guess what I'm trying to understand is, you know, what is doing well in the Caribbean? What might be lagging? And then I would assume that you guys are probably taking a conservative approach to what close-in pricing is going to look like in the Caribbean given the industry capacity increases? And then second part of my question would be, Jason, if you think about your 2026 yield guidance, 2.5% at the midpoint, just wondering if that 2.5% fits with your company tagline, meaning you guys talk about moderate yield growth. And I'm just wondering if 2.5% fits that profile or is this a year where yield growth might be, you know, more hampered given what's happening in the Caribbean? That's it.

Well, thanks, Steve. I'm sorry. Yeah. Yeah. I think there were more than two questions in that, but I'll I think I think first off, just talking about the Caribbean and so my colleagues here can chime in as well. You know, I, of course, we read what everybody else is putting out there in terms of points of view on the Caribbean. I think first, what I think we need to point out is I think when you have the best ships and you have the best destinations, and you have brands that have incredible loyalty and trust with their guests, that equates to, which is what we're seeing, is very similar demand trends for the Caribbean as we're seeing in other parts of the world. Now, you know, there is a significant level of demand for Europe, which is great. But it's also not a place where we have, you know, over half of our capacity. But you're seeing very good trends in the Caribbean across all three brands. So if you wanna get into, you know, we're concerned about K shapes or too much supply, we're seeing it whether it's on the Royal Caribbean brand or Celebrity or Silversea. We're seeing high demand, wanting to go to the Caribbean. And so as Nav commented, we're not only seeing good volume, but our pricing is higher in the Caribbean than it was last year. And I know that may not feed into what maybe some groups wanna hear, but that is a reality that we continue to see strong demand for the Caribbean, and we continue to see strong demand for our broader organization. And that leads us when we think about 2026, yeah, I mean, there are a few things that we did not expect. For example,…

Your next question comes from James Hardiman with Citi. Your line is open.

Hey, good morning. I actually just wanted to continue down that same line of thinking. Maybe if you could help us think about your business sort of organic versus inorganic. Obviously, you've got another icon class ship coming on. You've got some calendar benefits from last year's icon and celebrity ships. And then you've got, you know, the Royal Beach Club coming on. I don't think you're gonna get any benefit from the second one in Cozumel. But at least that first one feels like you could get. So when I just think about the inorganic stuff, it sort of maybe north of 2% on that alone. So how should I think about the organic business? And then maybe specifically, the organic business in the Caribbean just given the idea that that seems to be if there's gonna be more capacity coming to the Caribbean, you know, those older ships, the older tonnage probably is taking on the brunt of that, you know, the competitive environment that you're seeing from one of your peers. Thanks.

Thanks, James, for the question. And I think first, as we look at our yield profile for this year, about half of it's going to come from new hardware. By the way, as we add new hardware into our environment, just because the denominator is bigger, it has less of an effect on our yield improvement. So half of it's gonna come from new hardware or new, and the other half is coming from like-for-like. I'll have Michael talk for a second here in a minute on the Royal Beach Club. But historically, if you look at when we launched Perfect Day, you know, we started very slow in the buildup of that business. And we do that very intently to make sure that we have mastered the experience. And Michael and his team are masters at doing that before we kinda ramp up to more significant levels. But when you think about our business, like, that's typically the tailwinds that we see. We see like-for-like yield growth, by the way. That also includes the Caribbean. And you're also seeing, you know, the benefits of the new hardware as it comes on. Sometimes in quarters, it's a little bit, you know, when some of the new ships are coming in, some of the deployment changes, especially even when, like, new ships come in. Like, a ship might have been in on a Saturday. Now it goes out on a Friday. That can sometimes play a little bit of a mix in.

Hi, James. Just to comment on Jason's commentary regarding the Royal Beach Club and the opening. You know, we typically start all of these new products slowly. We have capacity restraints when we open up just to make sure that we've got the product absolutely perfect, and that's exactly what we've done with the Royal Beach Club. The great news is that within four weeks, the Royal Beach Club has already become the number one top-rated experience in Nassau for our cruise guests. And it's already outperformed all other products that are available in the market. That's exactly where we want to be. So we're pushing it now to get to exactly the same level of satisfaction as Perfect Day. Latest results show at about 0.8 of 1% behind Perfect Day for a satisfaction delivery, which means that the NPS is really stunning. So we're moving towards that goal of making sure that we've got the perfect product and the demand now is really starting to ramp up. And we feel like we're gonna have a huge success with the product.

Just wanted to think about the yields and the like-for-like. You know, obviously, the yield is just one part of the equation. Also look at the profitability of the ships. So if you kinda look at the way we are expecting margins to grow this year and, of course, earnings, there is also the ability to not only benefit from new ships' efficiency and scale and just better margins, but we also make even if we make those deployment changes, we find ways to also run them more efficiently and deliver the guest experience in a better way. So the profitability is growing on both, not just the yield.

Your next question comes from Lizzie Dove with Goldman Sachs. Your line is open.

Hey, thanks for taking the question and congrats on a great year. I guess thinking more, you gave a lot of great color in terms of some of the cadence for the year and the factors, like, on the dry dock side of things and deployment, islands, etcetera. Could you maybe share a little more in terms of how you're thinking about that net yield cadence for the year, I guess, in terms of the ramp of what's factored into your guidance? And I suppose specifically for 2Q given you kind of called that out on the dry dock side. Thanks.

Yes. We're not I'm not going to comment specifically about Q2, more about the first half and the second half. But as I said in the prepared remarks, there are really a couple of things that are driving that cadence. One is dry dock timing. So we do have more dry docks than last year. And, you know, I talked about them being more in the second quarter versus the first quarter. And, of course, towards the end of the year. One thing that is a little unique in this year is that we have also larger ships going into modernization or dry docks, and so those come obviously with higher yields. So the year-over-year comparison is different. And then we have also more Silversea ships significantly in the last year. And so those are, of course, also highly yielding. So this is more about, you know, how the comps work and year-over-year cadence. The second one is the ramp-up of the Royal Beach Club. Michael talked about. We wanna get the experience right. We're doing great, and we'll just make it better. So there's a little bit of impact there. And then some of the deployment and mixes, and the timing of new ships that we have every year. And so that's really the main impact of the cadence throughout the year.

Your next question comes from Robin Farley with UBS Financial. Your line is open.

Great. Thank you. Wanted to ask about the new ship order, the discovery class. There's not a ton of detail, but an industry chatter is that it's gonna be much smaller than the, you know, ICON Oasis, a lot of other ships you've done. And so I wonder if you could talk a little bit about I assume that means you can put them in higher yielding guest destinations or just kind of what's the trade-off between maybe those ships not paying as much capacity growth versus pricing. And then I'm just gonna squeeze in a part two. I won't make it but just on our next cruise cost, just, you know, this is, like, year two here of just incredibly low net cruise cost. Is this due to just the timing of, you know, two years in a row of dry dock days something related, or is this actually, like, a sustainable rate of net cruise cost growth that we would think about longer term? Thanks.

Hi, Robin. It's Michael. I'll talk a little bit about Discovery. Actually, I'm really not gonna talk about Discovery. We've been working on Discovery for the last couple of years. And from the business perspective, we are really excited with the innovation, creativity, and the kind of product that we've now created with Discovery. It really is going to be a game changer. Just as ICON was introduced, and kind of changed the game, Discovery is going to do exactly the same thing. We are really looking forward to sharing more details about Discovery with the marketplace, but we're not planning on saying much about it today or in the next couple of months. We have a promotional campaign that'll be ready to go soon, and we'll be very excited to visit multiple cities and start talking about Discovery. I can tell you that it really is gonna be a game changer. The many of the assumptions that are currently out there in social media, etcetera, in terms of size, capacity, etcetera, etcetera. Are probably, it's fair to say, inaccurate. So looking forward to introducing it. It's gonna be a big deal, and we'll make sure that you get an invitation.

Okay. And, Robin, I'll cover the cost. So I think for, you know, our formula, and we do subscribe to it. And that's the way we run the business. And so we wanna always have that spread between yield growth and cost growth. And we believe that that's the right way to do that. And so that's going to follow our formula. Right? And this year, it follows that formula. I think the first thing to really this is really important. We're very proud of how our teams, not only growing the commercial aspects of it and revenue, but how they are also delivering the experience and the cost management that we do that. And what's very, very important to us is we are not compromising on the product. Because for us, it's really important that we continue to deliver the best vacation experiences, and Jason talked a lot about how that will carry us and allow us to grow sustainably into the future and win share. The other thing that is, the two other things that are kind of helping us in terms of how we manage costs. First, our capacity growth this year is 6.7%. And so you should expect from us, and we expect from ourselves that we can leverage the scale of this business. We're now going to be an $8 billion company. That as we continue to grow, the capacity, right, there comes some economies of scale on the cost side as well. That's one. And the second one is that we're finding more and more ways and Jason talked about it in his prepared remarks, about how do we more sustainably and smartly run the business utilizing all the disruptive technologies that's out there, including AI and GenAI. And we talked a little bit about how we're doing that on large commercial activities, but it's really infused in what we do day to day, and the teams are really working through that and utilizing it to find better ways to run the business.

Yeah. And I just wanna just to add on the AI side because I think a lot of times, it's attributed to people, like you're gonna have less people. I think we look at AI as really allowing us to do more higher purpose activities to enhance the experience for our guests. And our business, because of the scale of our business, you can think about supply chain. You can think about how our ships get from point A to point B. You can think about how we yield manage, or just being able to get people to start, you know, kind of further up the chain in the activities that they do. That yields not only a better experience for our guests, a better experience for our employees, but also then provides cost opportunities for us. And so we see it as a huge commercial enhancer. It's a significant guest experience enhancer. We see it as really tooling our employees to make their experience better and for them to provide higher value. And it's less about what I think sometimes we think that there's just, like, less people. We actually see it as more as a, you know, it creates a lot of new things that we could be doing that's gonna drive higher margins into our business.

Your next question comes from Brandt Montour with Barclays. Your line is open.

Great. Thanks for everybody. Thanks for taking the question. So we spent a lot of time on the supply situation in the Caribbean. My question is more about how maybe industry participants away from you have reacted to that. Does it feel I mean, Jason, you've been watching this industry for a long time. Does it feel like, you know, a little bit more or less rational than maybe what this type of environment would have engendered in the past? And sitting here, you know, halfway through WAVE, with industry volumes so far seemingly pretty strong across the board, are we at a point now where maybe things can improve or sort of still wait and see?

Well, yeah, it I, you know, it's only been twenty years. So but I've a lot, and Michael, for sure, has seen a lot over the twenty years in terms of all the kind of promotional activities. For sure, this industry is so much more rational, so much more about price integrity. And there's always promotions in the market. And but those promotions in the market are we would say, very similar to what we saw last year or two years ago. And similar to what we saw in 2018/19, etcetera. Now there's a, you know, if you go back probably a decade ago, you saw some, you know, some irrational activity. But I think overall, we would say that it's rational. There's a lot of price integrity. You know, our travel partners are doing such an exceptional job in generating high-quality demand, as well as our other channels as we're for sure, a channel of choice. And so I think collectively, what I can see, there's a lot of rational activities. And that, by the way, also expands into really have a look at our true competitive set which includes our land-based vacations. And when we, you know, we, you know, and I think somewhat the cruise side of this a little bit insulated because of the price gap to land base. But we're certainly chasing to see how we can go about and close that.

Your next question comes from Conor Cunningham with Melius Research. Your line is open.

Hi, everyone. Thank you. Just maybe a comment around the close-in booking strength. I was just hoping you could talk about your skewed itineraries that are moving more towards three to four days versus, you know, seven plus. You know, it's not in the context of, like, you having less visibility. It's more in the idea of, you know, closing demand, you know, has the opportunity to move yields a lot more. So just can you talk a little bit about that and how the I think it was 20% in 2025. So if you could just maybe correct that number, but also give your thought process around '26 and beyond. Thank you.

Yeah. Well, first, Conor, I think that, you know, coming in, you know, I would say over the past, you know, call it three or four years, certainly have made it a priority to bring more short product to the market. And that is to really match how guests or certain segments wanna go out on vacation. They want more vacation experiences. They want them more often. They want them shorter duration. That's not everybody, but there's certain segments that want that great weekend getaway. And so we've, you know, we've certainly have added that into this, but we haven't, you know, we're now kind of in a more mature state with those short products. As you pointed out, it is closer in business. But the reason why I wanna combine those two thoughts about it's closer in business and we've kind of, you know, we've reached a good level of scale. Not that there's not more growth. It's just that it's not going from, you know, single digits into something that's more material into our business. The reason why those thoughts are important to bring together is that our yield management models, right? I mean, you know, they are AI-based. They do learn. And so when we think about close-in, you could see this in the fourth quarter, you we did see better demand, but it's not, you know, it doesn't necessarily mean that that better demand gonna result in what we saw in previous quarters with close-in booking. I think we have a pretty good handle now on close-in demand, how we market it, how we price it, how it comes in. And our yield management and our forecasting is informed by all of that. I think the other point I wanna say on the short product side that I think Michael and Laura have really, on the celebrity side, done an exceptional job is they have really elevated the experience. Our guests walk away with having the best vacation weekend, certainly, of the year. And, of course, we want it to be of the lifetime, but certainly of the year. And I think that when you're delivering that experience, you're building that trust. It's an incredible feeder for our broader part of our business, especially new to cruise because now they're hooked on the vacation experience. And that's also yielding more reps for getting out of our guests. And that's resulting in achieving that goal of delivering a lifetime of vacations.

And, Conor, just to add to Jason's comments. I mean, for Royal, we've got, you know, now we've got two Oasis class ships, one out of Port Canaveral, one out of Miami. Moving twice a week carrying around 12,000 people per ship per week. So that's 24,000 a week. Going to Perfect Day in CocoCay. And now, of course, with the Royal Beach Club, and they're also going to the Royal Beach Club. So when you think about the proposition in the marketplace to the customer, the fact that you can get on these incredible ships just packed full of activities and entertainment features, multiple restaurants, then wake up in the morning and take the kids to Perfect Day CocoCay and then have a great show in the evening, and the next day get to the Royal Beach Club and be back in work on Monday morning. It's really a fantastic proposition. And we've seen the demand for those products really accelerating. And of course, the kind of the margins that we generate on those products are really quite significant. The other comment is the simplicity of booking, the ease of being able to get on board these ships. It's become increasingly easier. And then with all of the investment that we've made over time in the pre-cruise planning and the ability to start communicating with our guests about opportunities to book and buy products before they come on board. All of that is really combined to make this a very seamless, easy product to buy, and that's exactly what we're seeing. And so in many ways, it does encourage people to wait a little longer before they book because they know how simple it is, and they also know what a great time they're gonna have.

Your next question comes from David Katz with Jefferies. Your line is open.

Good morning, everybody. Congrats, and thanks for taking my question. Can you just talk about what information or inputs you have with respect to River? That, you know, are driving the increased commitment there? And, you know, the degree to which you believe you can induce trial of your current customer base versus, you know, taking share from existing river cruise companies? An update there would be great. Thank you.

Sure. Well, obviously, we are very excited about River. Of course, when we announced River and we announced the first 10 ships, also, at the same time, I said this was not gonna be a hobby. And so we are, you know, this is another, I think, point of evidence that this is not a hobby for us. And we feel, well, obviously, we've done a lot of research even, you know, announcing this or getting into this. About the trust that we've built with our customers, how loyalty affects them, and that really their desire for an elevated river experience. And so we, you know, we felt very strongly just based off of, you know, we have nine and a half million guests a year. This year, we'll have over 10 million guests sailing with us. We have a massive database of loyalists that our ability to generate high-quality demand is, I mean, very strong. That really availed itself when we began to tease it and build waiting lists and so forth that you immediately saw, but specifically from our loyalty guests, not just with the celebrity brand, but across our three brands, a strong desire to take a vacation on River with us. And, of course, that, you know, we see that every day in terms of the demand from the trade and from our customers for any open spot that they could possibly get. So we feel very good about it. And, you know, I think we always just need to remember that these are not 20 seventy-five hundred passenger ships. These are, you know, these are, you know, sub-200 passenger ships. And we're very excited. And we think that, you know, Europe is just one area of the world where our guests wanna go on a river.

Yeah. Just one two other things to add is as we were opening for sale, obviously, the demand actually exceeded our expectations, so that gave us a lot of confidence also as well. And that's both on the volume, but also on the price. And then one other maybe data point that really was encouraging to us because this is what we thought it's gonna happen is that, you know, roughly 80% of the people that booked are actually existing customers, but they've never RiverCruise before. And so they're very excited because they trust the celebrity brand to actually experience another different vacation with the celebrity brand. And that's so that tells you that we can have an opportunity not only to attract other river cruisers, but also expand the market.

This concludes the Q&A period. I'd like to turn the call back to Naftali Holtz, CFO, for any concluding remarks.

We thank you all for your participation and interest in the company. Blake will be available for any follow-ups. We wish you all a great day.

Ladies and gentlemen, this concludes today's call. Thank you for your participation. You may now disconnect.