RCL - Earnings call transcript Q3 2018 | Royal Caribbean Cruises Ltd.

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Operator

Good morning. My name is Simon, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Royal Caribbean Cruises Ltd.

Third Quarter 2018 Earnings Call. After the speakers' remarks, there will be a question-and-answer session. to Financial like Mr. now would introduce Officer, Chief I Jason Liberty. Mr. is Liberty, yours. floor the

Jason T. Liberty

Thank you and today morning you, Good operator. thank third earnings for quarter for call. our us joining

Chairman President and of in Richard Miami our Joining Carola International; CEO Executive Investor Vice me Bayley, Fain, President Royal here of our Michael Officer; and and are Mengolini, Caribbean Chief Relations.

be our slides which posted on Investor During www.rclinvestor.com. few this have a call, referring to we website, will been

our to about would slide. like to which Before on forward-looking we get is you statements started, I refer notice our first

that are we These performance During be and in disclosures. this the then call, will involve note filings fourth full results. current do quarter do update found early making constant uncertainties. future on comments guarantee SEC and that some are for described currency Unless be with of other thoughts a our providing Richard follow forward-looking. of to our begin will information are which not the I Examples are basis. a third will all we reconciliation booking risks XXXX. all then statements as not will by non-GAAP guidance provide XXXX and and year metrics recap an business. provide I quarter will the can we Also, environment, historical the do on on up state a our the overview adjusted and on of otherwise, change. close as discussing a in certain financial website. we be items of defined, and circumstances undertake non-GAAP filings adjusted measures, update Please strategic with our

Richard? the call We will then for your up questions. open

Richard D. Fain

we're the share After good in week happy good you, everyone. news. morning, stock and a Thank to rough some Jason, market,

to business remains grow. continues and major spend healthy markets, Our source onboard our across

pleased points that's XXX particularly January which like-for-like to on a basis. now than yield guidance higher our and continue basis is are increasing our We almost estimate,

offset raised we I that have foreign frustrated million to both $X.XX guidance have fact, and and exceed our I that or face strong headwinds of guidance. and since overcome matter more a per still than fundamentals so share our January we am say we fuel, As from our and and to of $XXX we've forecasts. impressed hurdles impressed can that that such are still such had frustrated our headwinds – exchange

we As of adjusted quarter, $X.XX, to than past was higher third generated XX% it EPS pertains this which last year's an figure.

all-time an In it's record. fact,

meet Part and result the Given strengthens the of concerns wars is about reason product continued our characteristic evolving The that business attention so at our of the trend close looking we, remains of health for trade cruise guests. politics, of continues is market. definitely to. supply, this things evolve in a of the the weather, that experiences to demands our pay And instead characteristic. confidence it our to be people we Caribbean, Royal defining strong a buying

heard activities. of me I we you've shows program, and shore guest but X and the onboard as accelerated is new thought help guests. Slide where innovate. experiences that talk such preference share it's our our book our features guest with app one you other restaurants capabilities excursions, items Satisfying spot. highly accounts, and is various capabilities sweet as to includes providing to our shore Fortunately, one would Excalibur, we check-in, one previous form planned In you to onboard would current daily a focus launch Today, that the constant as to continue I about just already represent platform. investments excursions wanted emphasize as in these well its and to planner, ability a memories such specialty rolling are it I dimension ours in transformation visible consumer our schedule. the of digital the The out today. show how aggressively just it calls,

slide have in milestones call can run. to that represent them that we available the guests. highlighted crawl, see make the three walk, our We You the way app we

to phase, the the running app mode, When to are stage shift who This crawl, wishes of conditions When group with refers of it. to the to so up keep aggressively we it with stage. to of level, a only walk, mode. we gives reached users. testing group the In roughly very apps. It chance we walk get beta can we test most has so an comfortable but a to first test but us we app, the we use The to small everyone real-life crawl push but allow and do a is don't it it out equivalent quiet acceptable we is that under participants. functionality limited

vigorously vetted get run it. engaged anyone, Lastly, then as publicize many guests that guests guests so many The as and it. thoroughly we the the and as is when When we it want has possible we most run of we our app get available to to the it use phase, app been to love as and possible. stage, use

that for and has Our our of guests initial app process the been capabilities on boarding disembarking. We've priority prioritized other most also the easing things want.

easily facial chat stateroom book key. digital this sailing, A and been more such more bells the I as onboard that capabilities, efficient focus ability new and your refers on the use. that our repeat innovative an activities before more come our employees lot and make only has will to effective. Again, Next guests recognition, remain to also of to whistles, capabilities the capabilities want

Now so our The of can years, built have fleet. that, is this we quickly is reason one fleet scale and we over our sometimes to maximum take maintained the how advantage question out to asked I'm technology.

the a new find that to also this traveling behind We for more, demand cruise. already factor technology type segments capabilities. can such we need the not the and hassle ships using result, us We of of on investment, gives used expanding a and leg-up. improving we are Through reduce our definite offering of but the a As some to provide products. to only that be product technology increases but attracting have to lot these add this

As we isn't have our only happening. where technology things exciting businesses grow, area the

are it the underway experiences are boost guests our CocoCay thereby nice our Bahamas, revenues That and in our the a Day buildup expenses reminder Day business ways. raising our metrics that some unexpected what well our our Perfect of because We of – as while the of it excited only in does we business serves complexity, geographically and our increase bottom-line Perfect a enhancing at as be also grows grows about very will increasing will to nicely our bit. that in a that impacts for and yields. in

the we of it was which our sailings those a lot lost APDs third our the bottom-line in lot our example, For sailings, came yield. hurt very last lower about ironic average than much, a revenue, actually so because That average. hurricanes, eliminating Thus, had metrics. quarter that revenue, yield improved while those improved year sailings of our canceled unfortunately, from slightly

example for is had beautiful, in doing Besides we being is than better us Miami. new our Another been terminal what economically Terminal previously. A here marvelous

impact structured higher but impact one I the would on The expense. example example, be higher the have it revenues new raise mention. metrics need I counterintuitive, positive, but is to would means I pleased on don't thought is both am revenue is quite one expenses. I positive. other our but it. The may think will share unequivocally I net our another like bottom-line this so The financings I Actually, and the will way However, that we about, we have and

You You, program, every in Thank equity after You Bonus. it that year we may the successfully Thank completing the We employee last company. called a recall awards Double-Double gave to

assume will turnover, have our rate XXXX, of amount would that attrition we always continue. financials assumed we Our certain normal a for that and employee

to Thank With rate Edge cost be lower performance the equity reduction outcome. the will November However, Lauderdale. experienced Fort say more yard and and I lastly, Lisa away all visit our out that in The that on about Jason. of in reduce that, about the are I'm thrilled of the guests improve a be we've That Personally, that you is will forward, forfeiture as innovation, are am seeing to and our in employee this talk to the the to cruising success. You terrific Every does going Jason? boost, ship pleased actually but quality, in It back the work new it mean a better. compensation get You, we will the done. launched higher not time happy I view I blown at and short-run, over Edge, and to to be before know review our for expense I is Thank to that call willing more sailing Jason, awards. to aftermath Celebrity call for due pay And I the Demand exquisite could turnover. teams we a that have turn back in design. bookings. a great the timing Celebrity want progress, of of impact and turn I booming,

Jason T. Liberty

These for I of the Richard. our about summarized XXXX. on you, will by quarter results Thank X. talking third slide results begin are

onboard demand same which we Better midpoint revenues, better-than-expected and adjusted higher core joint time guidance and results quarter. earnings of our quarter, of products, than $X.XX the generated our our approximately for the year. the ventures the better than share, in higher beat For close-in per $X.XX is from XX% drove last

from year-over-year, combined revenue the excursion our cruise products driven which fuel guidance. particularly basis drove demand, the Net excluding which net by outperformance. and mainly was costs our better XX down stronger higher Strong our beverage for was points points yield mainly guidance, basis X.X% were close-in timing. Europe and Asia-Pacific, increased shore than than Alaska quarter, Our revenue, with X.X% XX

last we On and the quarterly we QX, our front, $XXX dividends. in announced of XX% shareholder in return month, increase early repurchased share million a

trends the like the would seeing in share Now for balance we environment are XXXX. I of demand to

of and As and begin their winter fourth we transition Europe, the many Bermuda move ships quarter, our Alaska, out of season. in forward

the such, will will will in be and be Europe. As about region, XX% the be in of capacity XX% in XX% our Asia-Pacific Caribbean,

While nor in mix volume. Despite brands for ahead nicely our have of bring of QX it overall the a and capacity time on rate quarter, of a does impact distribution addition year increased new both our itineraries, of Caribbean portfolio, our same our significant booked sailings doesn't are fourth family to Silversea XXXX. for last short the of itineraries to number

product for we As including most accounts the expect, hardware. remaining Caribbean you and inventory, would a for strong both and of in the position book our new excluding are

premiums significant fleet the joined wait. Celebrity a ship the We been Caribbean fleet, are long for six has European Edge new been she's next booking Edge to Celebrity at since our year. worth month. next season It's the and very for the welcome excited into also clearly winter and season years

to Now for let's our turn slide talk the full about X guidance to year.

This and a to similar guidance note, in We are amount. $X.XX dollar previous our stronger changes $X.XX since also impacted negative share. the $X.XX guidance initial approximately includes our $XXX prices providing million have currency from Richard of now XXXX approximately $X.XX narrowing have our earnings and Also, by share. to These guidance guidance higher as by impact the our since impacted or includes our per operations. fuel our fuel to Silversea's per negatively Also, mentioned, share guidance. January, per earnings

a operations Silversea's bottom have XXXX, material we on our results our a As into not expect the incorporated and quarter for line. previously on impact announced, do lag to financials will be

in to XX% guidance also up We for of are consolidation it our operations the basis XXX approximately increase quarter XX $XXX improvement updated X% of From our an the the basis approximately increase third is revenue metrics, points. to points interest As per hedged earnings range the increase to The currency versus fuel million the our for net quarter. X.X% with and previous cruise per $XXX ton. expect the expense This at a adjusted contributing we summary, our technology-related is along $X.XX be of perspective, prices, based rates, of to in costs reflects price in basis driven improvement approximately points year. the the remaining the we expected being relates current and of range acceleration revenue to in we to consolidation are costs an XX basis fuel for outlook the net be fuel expect outperformance that by cost outlook of in excluding XXX metric relate contributing The X.X%. In a yields approximately points, represents business current share of fourth Silversea anticipate and is our an the year, of This Silversea's expectations. investments. and exchange on to $X.XX. key

on for be Now of which we of X% basis Silversea Net X.X% range approximately driving the the our slide year-over-year is in the fourth turn to can to X. of quarter, addition the XXX yields to expected up are guidance with points improvement.

As results of quarter fourth such, one on costs so to Net the sales. in Silversea's and consolidation. basis increase XXX approximately September are higher-yielding for includes includes the lag, to expected August from the Silversea a which are reporting X.X%, we X% the Silversea fuel QX range excluding cruise of points quarter

the As that mentioned relate acceleration also above, costs increase in of to reflects technology-related our this guidance the investments.

current $X.XX the and approximately approximately for and $X.XX of impacting share our consolidation the per currency our year the expense quarter by earnings per impacting for our for expected Silversea to the share per the are is share. rates negatively negatively on quarter year fuel and $X.XX depreciation the of exchange $X.XX outlook expressed be full in interest the Additionally, per by and above, and Based quarter the interest share. to prices, adjusted range

Before key the drivers of on performance XXXX. to XXXX highlight booking trends, color providing I'd some some like for

new stunning have We hardware.

amping Day. destinations up Perfect with our We are private

from benefiting program. modernization our are We

world yields any dynamics and recent sure shape Our that a Seas XXXX our expedition from walk Spectrum more going and It From cost other Azamara Royal to and we'll Silversea's I welcoming Celebrity through seems will of some in busiest year own and XXXX hardware in line family Flora the with on year. our full ultra-luxury cruise the cruise terminal want year and of we second standpoint, the Celebrity next and the modernization than in Amplified, Symphony in programs, will a we in Celebrity more the have will in online, we portfolio. in make means have that and of port also in in while XXXX. new history, that enjoy be first Revolution, Seas, to drydock which the than quarter. our Edge, also the XXXX Invictus, benefit days definitely Pursuit

Perfect our relates operation these it both three our additions affecting we'll elements the we Port and numbers to will will A As CocoCay, Terminal other launch cost Day with the full Silversea, here of year, first year next increase of yield big of at at have the new All and Miami. metrics.

the fourth items for wanted on our I quarter to discuss details financial earnings more provide moment these spend will to call. below-the-line We impact a of during some considerations XXXX.

The first one is depreciation.

positive are As our useful capital very Excalibur, in program than about becoming larger and that note projects, our investments generally our very Richard discussed, excited technology been investments. we mix Excalibur program receiving. a we are have financial and would life typical significant feedback capital have a shorter like From I the a the of perspective,

average. luxury be our in corporate the expedition Silversea the than berth other is of and Being significantly The Silversea's area will note impact segment, depreciation per below-the-line. higher of

Silversea's which significantly bond debt. X.XX%, has addition, current is our than cost higher of of In a coupon

update with deployment. on you an our XXXX provide I'll Now

is of be Our driven expected X.X%, which to XXX basis XXXX of by are capacity the points approximately up Silversea. approximately addition for

of capacity half will be Asia-Pac the for XX%. over Europe XXXX in account Caribbean, Just while and approximately will our

the Caribbean Edge sail increasing expanded includes feature the her spring. and Seas her modernized Seas Europe, just to to Caribbean CocoCay addition at get over for Our her Spectrum about Also summer Symphony, and modernized home Edge in cruise quarter Navigator Mariner first the although the Caribbean capacity of Seas. an one Mediterranean on flat first is about soon-to-be short guests of after with a ships. newly driven is combined to the regions our Celebrity is in will experience of transition Capacity year. Perfect will by new of the a XX%, will Shanghai season delivery will the its Asia-Pac, of that of program by note the and Day both of year-over-year new in

are and Royal of Muse both Alaska the in larger Caribbean first-ever the We Alaska our Celebrity, hardware addition plus Silversea's improving ship, Azamara's season. and for newest with ships also Silver

some capacity products and smaller XXXX. only inventory of on our versus out for of in Celebrity pointed Silversea numbers noting before. the addition worth high-yielding products will for X.X% account with these haven't Flora, calls expedition of our X.X% approximately the it's But that XXXX in We

insight onto into bookings. early XXXX some Now

to Silversea. continue We see of booking for and strong XXXX booked excluding same and trends year including and are time ahead last currently both rate volume, in

position, next for is in strong that our will up, as particularly are of company groups book our pleased each how the capacity While with a region year. it larger the product is most the absorb Caribbean we're shaping

Although XXXX open insights earnings question-and-answer year fourth net call, we of don't to another point for will our quarter With our growth. call ask income that, these operator and a to guidance the certainly yield up for normally I provide until robust session.

Operator

just roster. for pause a We'll the Q&A moment to compile

UBS. comes question Farley line first Your Robin from of with

Your open. line is

Robin M. Farley

Great. Thank you.

Or Just representative looking last the share I been before get kind comment same volume a grow. you And know like insight you given growth also, the sort last maybe booked you booked feel just look; about QX have be would that? would then QX, don't I of any bit? may also that little comments hurricane do you you. comp? Thank around particularly yield a of Is QX of to you XXXX. sounds magnitude just that if how to we year. rate rate year thoughts any how season how you have wonder tough mentioned so could versus to little you're far time advance think into can about if in more on likely a and the ahead, so – the Can year yield's of of

Jason T. Liberty

Yeah, sure.

at the And very hurricane lapped we a basis. even volume and and in if rate up strong, And basis, volume been XXXX, on booking both consumer the acceleration have window up in months, we XX plans a for have the their on vacation look XXXX. a XXXX so bookings continue also and you extend we're next basis, comp. the for first been before strength the after on really So we rate as see for considers the and it quarterly to

rate up. as in As to – our my expect just strong is next do just commented, first improvement a of yield volume and we about relates quarter part quarter, year. a and to position. you expect that the which are first our volume picture, our and to QX We And the I do rate it of also remarks my in would also commentary and the big is point book Caribbean, I very

Robin M. Farley

in Okay. Great. concerns been guess, Spectrum There's And is that any U.S.-China with going relations. obviously, selling lastly, you're China – then selling any but about with sellers there? a focus, it's, I to be any early year? do impact to maybe lot you of travel your as just next have discussions thoughts there about market, And in

Michael Bayley

this a as been recently for pleased Robin. received the in strategy. as We've the just another Michael. the We've China. long-term years. really been award XX you and Hi, the of top know, with performance line market We It's year, it's China in market cruise

about we're Spectrum So XXXX. excited in Shanghai into coming

coming to recall, you Alaska, doing is in well Alaska. which is going out Ovation very If China, of

fundamentally next flat. China overall capacity year our so is And in

with and already the slightly of for capacity. a I we're think in is bookings. terms the lot ship of overall sits enthusiasm We've Spectrum, forward where in forward in pleased had bookings of terms market of very terms down

issues or have travel through still to Chinese stock market, there's fundamentals consumer the we what I seem concerns mean, some from tariffs you, – our nothing in just American ups We've coming stock but market, been terms volatile. and slightly the partners. everything's of been the downs of in confidence in it's think okay. be seen the and on In terms see as I

Robin M. Farley

Okay. you. Great. Thank

Jason T. Liberty

of of been some strength out because the some And, QX Robin, we noted for I a just reason in has seen add, coming have the as also the in outlook increase the in close-in the would strength I the China my as commentary in market. well business of

Robin M. Farley

Thank Great. Interesting. Oh. you.

Operator

of with question Wieczynski Stifel. from comes next Your the line Steve

open. line Your is

Steven Moyer Wieczynski

guys. morning, Good hey. Yeah,

a X% the maybe I the question word that that X% Jason, guess talked yield, You a – definition what you about simple I but XXXX. point is around have can what of is, does of us guys for help you to robust? about little bit talked So, think better start robust know your about Is kind mean?

Jason T. Liberty

into at of take of excluding booking think improvement. general I book think environment of Silversea the next Miami very, are whether items XXXX the a been has a and But and the encouraging. been has There the led rate good that's hardware, in. Edge, our position for second the year, new I say volume talked like into has at be for it's come to Port We in demand course and us I which Silversea probably hardware, would and we I premium, and strong, about tailwinds especially coming a our look basis, profile whether our has for Well, and really excluding on for think, new CocoCay which what it's yield when those for like-for-like a business, Port I and would remarks. on lot CocoCay, high strong very a

also like-for-like so And in what of the very for based booking on we we're a basis. expect business our environment, far, comps good seeing off

Steven Moyer Wieczynski

for the I bit quarter, year, you and but guidance give cost interest you quantitative D&A know how fourth that in next then Those Thanks. are investments think you. little helped XXXX your about about want Okay. then you for drydock you thinking next perspective in of versus should quantify about year, at days the And a XXXX? to also for talking Got prepared XXXX? in us remarks. don't be those – from terms And a can we point this technology

Jason T. Liberty

Sure.

as really a the of on technology off investments side, it, components to as relates the kind the side technology-related into which going is depreciation are mix there's to two larger of starting of our on just it So cost one projects.

in a average remarks, As lower results useful I investments. in on said for my those that life

technology XXXX to will our over for our in so XXXX, do well of also an saw being higher would percent – of more our with We as increase investments our with as from a be to as higher Silversea. we a even XXXX, so depreciation an the also and for in the like XXXX we to XXXX expect, investments our revenue. expect XXXX for revenue And percent elevation depreciation just

technology rolls on of will on those kind our weigh the services is component more side, our other on the within The And a subscription-based costs become side OpEx so operating cloud-based to or put more that services continue our do of the out, we pressure next for and more are and that lot costs. the the look more year. services do cost But, course, we of how at structure. efficient on

get, – days. it days, in and for in just about no, had about days, drydock so drydock – we and in have pull up me had we I'm As XXX XXX about drydock here it drydock XXXX, days relates let Silversea, including sorry, XXX XXXX we XXXX,

Steven Moyer Wieczynski

guys. it. Okay. Great. Appreciate Thanks,

Jason T. Liberty

it. got You

Operator

Barclays. from comes with line Felicia question of Your next Hendrix the

line Your open. is

Felicia Hendrix

Hi. you. Thank

it So to for outlook, every sounds volumes the for quarter year? you're like looking higher XXXX, just pricing confirm and next your because higher

Jason T. Liberty

up both and every Yeah, in next months, volume for we're rate XX quarter. the in

Felicia Hendrix

to less quarter, to had? you bookings the I this about half, and Great. upside report that we've mean by kind curve curves, year-and-a-half, be a the because not look points, net your looked by about that a your at historic – beat ability close-in maybe back does there's kind XXX And ex just limit basis of extending extending then over just does year yields historic of past you the if – – booking booking of phenomenon

Jason T. Liberty

on Yeah, closer that by doing close-in that will we sailings, But is have – because to yields is we as think limiting business of mean that so. us be inventory obviously, those get the business, it more taking we I more is purpose to optimizing sell. we less

Felicia Hendrix

of And on quarter then your a clarification. just couple just fourth points of guidance, Okay.

want looks just doing previously of XX like that I I'm raised implied by sure right. right? points? Is basis my you to So your It make the guidance midpoint math

Jason T. Liberty

correct. That's

Felicia Hendrix

$X.XX, cost, in mentioned increase to that And estimating you Okay. project just the that's was then that earnings? right? about We're the Is Excalibur. $X.XX $X.XX?

Jason T. Liberty

of combination of the commented Well, fourth a lost as quarter some side. quarter, obvious going because third APCDs of our on it's a some to on there's which into due one incidents the ships is be quarter, ships, the some I our in the some on that's well which not as we hurricane incidents may as around things, shifting mechanical third few

are then QX QX, the costs our forfeiture Richard which of shifting we're commented, competition that and are are there that then also, mildly. is lower in cost So from increasing to balance and experiencing lower rates as Excalibur, turnover,

Michael Bayley

nonrefundable bookings. to Hey, XX% we other about forward point deposits Royal with Felicia. brand, and for the bring Michael. have nonrefundable. are It's that and half One bookings ago of that is And of the the that's introduced year a a we our now over helped really stickiness the

and churning. earlier they're these when bookings on, they're us So with not staying we're getting

a I contributing that's been think also factor. So

Felicia Hendrix

finally, affecting the just great. of are XXXX, just which for of costs, That's – that, moving Silversea. you for all And initiatives then a have parts terms lot given ex in just

to like-for-like of your offset you thinking the kind a those from about how costs XXXX things about, basis, that yields, yields XXXX on talked robust been So currently? we incremental we've can expect

Jason T. Liberty

will around are you in past, costs forth, seen look Silversea that things have the the our than what basis expect like-for-like as that optics – possibly But for our efficient think obviously. cost into to very taking sure focused so we account We be higher Yes. behavior other and like a on certainly continue can. on we're will and I making as like

Richard D. Fain

positive and we've recently think where together has if our other operational just one moves heavy But an to does cost and us, taking because – our have Richard, bottom-line, investments but could is positive just these control revenue One our been we of think somewhat emphasis like think important think things envious is up over bottom-line. ownership, going I is example – still And these good will could we Yeah, to it's on to with we out are overall, to Terminal Excalibur. I a line, something for as and constructive add Felicia, we increases and that. the that our we I done would our if thing be it factor for most it that And A industries, the bottom We're which expenses. think are, these an coming mechanical some be to of things. for two I are pointed which which will people these be cost we come things really it.

Jason that counterintuitive the says, you intend a our off may the don't look we be little numbers eye So ball. as across But in until way comes important to at take the details. it bit

Felicia Hendrix

Thank Okay. you.

Operator

Instinet. question line next Harry Curtis with the Nomura from comes of Your

Your line open. is

Harry C. Curtis

Hey. Good morning.

Just Early in about when discussion, I are numbers being there wonder you like you those there and more days, think it, if go actually looked you could drydock less. a it clarification. through defined I talked again. your

Jason T. Liberty

Harry. Sure,

Harry C. Curtis

like you went is I to I think to get that like it from just right. XXX want down – so XXX,

Michael Bayley

around. Harry, was XXX it other way was to It the XXX.

So XXX XXX and in XXXX in XXXX.

Jason T. Liberty

Exactly.

Harry C. Curtis

XXX? Okay.

it's obviously when you older. So difficult get

Okay.

it's did that's I'm in into unlikely us And particularly to development fourth quarter a expenses the sense of next elevated the fourth down. begin give flowing trying the to example, quarter costs if come in you to a of in get is XXXX, sense whether year. – So for elevated recur could what

– accruals these come of bonus Some down? will they

Jason T. Liberty

accelerate can. trying efforts I se, that don't point to per I because, a, really Yeah, mean, we think we are to to Excalibur this the element very our there's much timing

decrease guest as what the increase experience January a wouldn't we're our some we certain better the the revenue December. capabilities as guest in is which just employee as are as because think will lead ships, capabilities I are on-demand the to we have believe in the expected and can for to to at investments Excalibur guest shifting to, ability for had friction sooner stakes this well into we – experience little table making we the mentioned, our satisfaction This better look so experience online that and from a think we customers costs within And looking on than them that better that and bit quicker come Richard we're get crew.

would I as we at ability as had look anticipated. at to bring this So I this than element, on wouldn't sooner capabilities timing look our a

Harry C. Curtis

there to cruise Okay. X.X%. consensus Silversea costs X%, metrics next it of, folding probably net last a think, year I on was prior was maybe is, And in the consensus then estimate question around for acquisition,

you the the directionally, assumption? neighborhood Street of Just in do that that kind was with think right

Jason T. Liberty

we that with still also pinpoint in in much are it's and also very make will that And the the we besides so to planning that. that sure Port process, our Well, I would tough point Miami. Silversea, there's of Perfect incur just for costs to Day consideration,

number, also year. will that So I'm comment impacting our that elements metric those but will next on cost be specifically not be going to

Harry C. Curtis

you walking? And from (XX:XX) final just one real walking made quick crawling gone Have application. technology question to are you from going just to comment to running? back the going about a you Or

Jason T. Liberty

point mean, would to depict chart. that I down. going the you Well, I and that we're really path cadence the does that

fleet being are chart because and as that was leaning kind much certainly chart, will going that's can the get and slide But that certainly our of done of we on are on we we're doing. think as can out grow, to get we would cadence at much that we I expected how benefits we think it. also accelerate what we the if implemented our in I on capabilities of X across as how So of of it this the we're to how look to and that plan the shows path

Harry C. Curtis

Okay. Very good. Thanks help. for your

Jason T. Liberty

Harry. it, Thank got You you.

Operator

the question Patrick of comes Scholes next Your from line SunTrust. with

is open. Your line

Patrick Scholes

recent the In you. what last-minute for about wondering you booking year-to-date. questions results, in last-minute had, trends. Two I'm call, booking observed travel and morning. in for trends talked had XQ you in Good XQ earnings for strength Hi. most

Jason T. Liberty

Sure.

one. just start that on So I'll

bookings. QX, saw from We trends our close-in accelerated to similar we also saw,

bit I in probably thing only the in different QX we further strength a that think is specifically little Asia-Pac, the was quarter. close-in environment some second China the and in saw versus

Patrick Scholes

your you you. if that bookings trends pet hotels high-end Then I'm whether Certainly brand. more pricing wealth of core market next has the my difference notable wondering seeing sort but Thank Okay. also of brands? luxury helping Silversea are any by the been you're in (XX:XX) seeing effect and by, or booking with question, it's your

Jason T. Liberty

sure. Yeah,

for the on is we're I So seeing seeing just spectrum by but would Silversea the we're Caribbean the the very Royal comment won't the demand brand to demand I for similar customer say that customer.

or have spectrum that quite So is, been in the booking of similar. strength terms patterns

my with both for further and I volume customer as books well much without on quarter But the and in we Silversea. as out. Silversea the and at course, rate a and look Of remarks, commented next on as rate We're basis up year. volume in

Patrick Scholes

Very Okay. Thank you. good.

Operator

the of Bernstein. David from comes Beckel question line next with Your

open. is line Your

David James Beckel

surface Obviously the for in One Hey. smooth on a Royal of on Richard. wondering... your Richard, reference paddling past the But said the a Thanks ships. you've of hard top. like not the is your the below people, question. despite I'm to for appearance glide water kind that a duck

Richard D. Fain

you for Thank clarification. that

David James Beckel

that was Yeah, I needed. thought

the of I obviously. being into part cycle with investors stock is slowing concern price that's reflected think

in extends to So same harder paddle has do at it this company further, point, your the the as feel the cycle like than past deliver you has to results?

Richard D. Fain

No.

you're think have that here a cultural paddle used want fast. a opportunities reflection advantage them to many take just have I actually means to of we we so norm that think I and is using metaphor that the in that really we past there the that of are

would positive this mantra, on be, things of would Our don't travel on would other focused doing lot on as we're always for we online Maybe I doing are things. is that know, improvement as with have much very and other are that. today us. really The today are I think very We different. have difference the coming continuous always focused new as describe one, the are not a But I that different. that, think, situation I focused things. we described working are partners that any agent you

three example, next a naming And about Pursuit so coming we'll we about Azamara Edge of, the Celebrity which have a year. do weeks. Seas, December. did and here and in It's early Symphony of confluence ago month Flora half be for We a just

hardware the talked market of XX, here to now many Terminal a more probably dramatic Perfect seeing coming and are very Excalibur. ways. Lauderdale Terminal in the of at new We in A Day. about helping talked new we both Obviously, terminals, And us about Miami quite in Fort up we're things. there at So lot really non-ship things are which

there are there of lot never a is a a on. is hope those and always think lot there's stops. I I things so simple that lot a So – and on, going There answer going lot is going the on here,

David James Beckel

you Fair ways booking booked – at splicing lot finely, of in remove excellent to And I I booked wondering would maybe higher at ahead which color you've Thanks. and but on But just that enough. is ahead was a prices. a higher color. you for which follow-up effects things too lot, prices? question new given understand, Jason, curve. the you're were of still about be hardware, Thanks the if the a

Jason T. Liberty

would. we Yes,

David James Beckel

Okay. you. Thank

Operator

with question the next Your from comes of Research. Wolfe line Jared Shojaian

open. Your line is

Jared Shojaian

cash to somewhere everyone. $X Hi. year I to deployment taking my decelerating Thanks taking billion because the is And flow, for that's of target additional morning, my maintain for around on getting next bit, math, free billion Good $X.X Jason, want cash CapEx on leverage. XXXX. before for you first you're ask debt I'm about your question. a and guiding

want returned plan all to in year that expect that, should don't that give including just just follow on XXXX? on EPS. to available that So of guidance Is you buybacks correct? we full cash confirm do be I the up any to And you question is, my when in

Jason T. Liberty

allocation starting front. on just off so capital Yeah, the

said much return look we've past, As capital do in to very to shareholders. the we

we X within have as to there terms said, target. that will for additional target to that's about – as cash you to of us in We leverage produce ratios of our there opportunities X.X the that times, And be shareholders. is talked available leverage

is this time. to to lever, if there's what and thinking buyback that, of outside our opportunistically. in best opportunities dividend in So see to is continue grow I point then basis do the at a would you And on believe think profile we continuing our shares moderate CapEx

on. it given lot of we would in our relates be guidance not something what buybacks factors of do to, As go not, at time. point into or guidance it's comment will our I put that a a kind in There's

Jared Shojaian

you to Okay. would think I here, ask talk yield your X% just back this I to differently. target. a longer-term to And little past, demand growth used then just the I about gears sort as X% to to to side, of switch annual try think a the In

Silversea X.X%. Excluding year, doing you're this about

is that X% have on that to there tailwinds excluding side? seeing target feel do year demand, about robust I So and the Silversea, saying the as sit long-term any shouldn't today, X%, why is considering excluding hardware you're reason waterpark Terminal, next guess for we for you next you're especially these year, excluding my you good question the here

Jason T. Liberty

on begin well, for comment Yeah, our next year. again, kind we're to guidance of going to not yield

past moderate Certainly, as our the that's is, at that these And will other the Day at profile I it. as years, a that to kind growth. think is the yield X% have how you over improve our X% of look items if grown such of of as – the cost well increase Perfect yields look metrics. I way average our CocoCay would and several range kind yield

where to start and today, rate because at So in this it's But very point of on are at a off early I process things for ranges based XXXX. we're again, basis. the looking volume in still environment XXXX, for the setting happy of it time kind wouldn't

Jared Shojaian

Okay. Thank you.

Jason T. Liberty

You it. got

Operator

next from comes Your Katz question of line the Jaime Morningstar. with

open. is line Your

Jaime M. Katz

as profile costs of get morning. to XQ, in side allows yours? reverse platform, first quick as And cost to cost It their Good Silversea. forward, Thanks. question and revenue some on margin how or more a sort close there's of half? that EBITDA impact come they think benefit of timing-wise have like Royal's there's I'm bit one Silversea Royal, I better curious looks Thanks. and and operating to heavier than to the anything a the those the going if managed impacts that differential bringing about XQ little onto we then do in both that margin

Jason T. Liberty

sure. Yeah,

quarter first, July quarter. third hit quarter August will since So we their ones lag, be closed the XX, impact on the no that on onto the because and there's the results fourth and September of

that on $XXX, more higher and and our standpoint, is cost average, is it's than higher just will our APCD inclusive yielding I than But per much is platform much average Silversea's product the improve about much yield And so, this average. a profile. cost mean, some our is math. our obviously because of

metric about weigh as metric our our will is to And it twice much cost our on so on our yield metric cost to because disproportionately how metric. that's going as weigh yield

and work definitely of that's cost of period of would easier be to time, was over mean, as them technology-related, XXXX, will those reasonable that which comp those one. some efficiencies acquisition, efficiencies, that them time talked will happen in we two, take that would happen I but the time. some some of our that some taking Silversea opportunities, did advantage we to are supply of time there implement over Point more synergies and through. make into chain, that about, XXXX focused I beyond. will we So a point continue thought on, and think when we of goes as contracts we and less on – will in And But

Jaime M. Katz

you. Thank

Jason T. Liberty

it. got You

Operator

line from next Your Conder comes Fargo question of Wells Tim the Securities. with

Your line open. is

Timothy Andrew Conder

you. Thank

into making a seen some side for and early yourselves their couple this, the Turkey like on hotel we've wants seeing, few they're itineraries Eastern XXXX seeing to Med, folks comments and that we're others add maybe folks here. maybe Just TUI comeback, some Richard, XXXX. whoever and take start in Jason, a

forward know is? that approach? be And the today, the the XXXX, Just from curve Jason, up? your Eastern agent but Med would how seeing point anticipate impact cranking has that? your IMO to XXXX, How you're your And at I then, Neutral? flat? Positive? hedging thoughts, the any for anticipate thoughts here, this demand changed And base back it's travel where given customer, you what you

Jason T. Liberty

Okay.

Mediterranean currently was definition we Med in first before and to Med Eastern more to Eastern can I more when monitor Obviously, the Eastern ports continue be product sure the are I perked So even that were caught would the Eastern so has of the experience increasing obviously very a say situation attractive, we Med. what's historically offering side, say continue consumer too watch, demand the there but Eastern that to interest, and would Med sustainable making the little much or area. available bit, or within interest attached we're up on

program very As IMO, scrubber the to it has relates our successful. been

roll continue our out We ships. to it onto

the to mix much is be it still via versus as same low today. what able be we'll will MGO Our pretty fuel burn of sulfur

And should so mix same. our pretty much of the about fuel be

the as relates happens bit side able the see prices, because little price Now more we'll a MGO the fuel sulfur et sulfur scrubbers, be than we on but where the with side is bias to the to to mean, do be higher we'll IFO sorry. that because I cetera, burn on the say hedging, fuel and what it we'll hedge able burn I fuel a would lower to – have of

Timothy Andrew Conder

going as So the you're that historical potentially that... skewing higher your Is hedge going to up given and cost down. the and more other the MGO

Jason T. Liberty

backwardation. yeah in – though all today Even those curves types are fuel right. the That's for –

Timothy Andrew Conder

Okay.

there. so question. into the a you takes the know obviously, has continuing income is folded line? the in a maybe TUI in of could Last Pullmantur about the here Okay. just vein, puts lot but been and equity XXXX, I XXXX, that that, is talk on part little large of of focus

takes perspective, in we've XXXX? seen XXXX Just any that versus from puts and what

Jason T. Liberty

and both doing and mean, are exceptionally well. in TUI in of doing said is drivers we I which you to of there terms core Yeah, those brands continue pickup I growth brands. think is of is Pullmantur, the equity line, the expect which TUI both those well

will – small and us will improve the definitely that that there, biggest those are the probably of two and are that, takes are pickup in puts drivers. there XXXX. but help be line something those equity here two Outside the so And

Timothy Andrew Conder

Okay. Thank you.

Jason T. Liberty

Sure.

Operator

Your of Hardiman with James next question line Wedbush Securities. the from comes

is Your line open.

James Hardiman

morning. Hey. taking Good my call. Thanks for

year of XXXX, told terms So to us you I can... think but us all in you've tell like you'd probably full the maybe

Jason T. Liberty

try again. you'll But

James Hardiman

admittedly a I'm well, Yeah, bit but... little fishing here,

Jason T. Liberty

Okay.

James Hardiman

than be Or we there some call of people mean, out I bit. might comparisons. about this are models thinking in there January to are now when takes: lumpiness? like that geographic, puts hardware, earnings? experience lots and sort to at better little of a phasing be get drydocks, even set. My those fairly you'd about it's Should talk is there's where point generally ...maybe reasons that

Jason T. Liberty

again, wouldn't Well, in operating still by plan flows we're about so be process, and I once within I in would ebbs our to say significant position start quarter. talking earnings a

in say think thing one Day one of starting kind I the online. that's year or more is and thing comes in phasing Perfect CocoCay think phased so I CocoCay will I that structurally it at kind really really that's be May would of is when next will be that

China I not just the that And on into I that ship be focus XX get So call the and China. be would Certainly it we would bit be would within on as is quarter ship and the other when thing things we weigh would a go – for XX there out. something and do in impact a the or when beyond some will earnings quarters. that take first delivery of will to will but then into on – good likely take probably be mention little costs we from Europe it the Those from quarter to help we reposition about the that the thing it's bit cadences second the side, a the in will days yields quarter. weigh Europe little on that January, Spectrum, days would will second

Richard D. Fain

do we you and the we has shift the can a just of I understand if drydock, the that or of between characteristics will at time save like a look in to decision Jason that But – use by I change I if way tend business of lumpiness it desire can of actually that of James, and either April we timing carries assume or to have ahead in and know throughout a bucks blocks to that. do anticipate March example we everything doing direction, sort you as and, those few it try the if the one a said And in our understand in And is just for of Yeah, things flukes one the it a but in lot try year. minor and all shift that drydock between and or reasons. to the large X, some we tends help to is case, before, we've done, things you'll a moving an quarters. of basis. opportunity various come things an and do issues and have annual understand as two that because on flow really big XX our quarter, but could we we'll on manage at a most out causes look In companies week a just

to out we tried always I cause full of is we to there some ought point of disclosure, that a think in things telling lumpiness, know lumpiness degree will So I we sort but already that you be think the we've that don't predict. of certain

Michael Bayley

James. Hi,

Jason T. Liberty

ahead. Yeah, just go

Michael Bayley

Michael. It's

keep we and to because just it had was it jump Perfect I I no mentioning because promote have there's Sorry. get opportunity for second hoping a an I'd about in to talk left this two and minutes I've only opportunity in hour to all. Day you to

waterslide which terms we're Royal to kind And in Day market opening in quickly excited the and takes largest bit, we're in of just running So of sports, quite cabana's, really we're going of Amplified excited name Perfect chill up Obviously our about line, these of Perfect of got short year, balloon after think as ultimate pool freshwater really America, we've XXX feet promote is the you all. zip X,XXX into mix interest feet want the just in seeing it, of that And we're the a that special, largest Lagoon, of thrill out you ships cruise the the I Oasis Caribbean, Day. will XXXX be seeing ships in sky. is what Caribbean, pool it's the the North of little to and about so and wanted for for Day you the time, we a Perfect wave tallest to four I next May the literally with Caribbean. talk to and because ships Caribbean Oasis-class all operating Royal ride

Richard D. Fain

done. Well

Michael Bayley

Thank much, yeah. you very

Richard D. Fain

an answer Yes. That's lumpiness. to

Michael Bayley

Take go. there Yeah, you that.

Jason T. Liberty

And been Royal by sponsored the Caribbean has call this way, by International.

Michael Bayley

you. Thank

Jason T. Liberty

take one more question. Operator, we'll

Operator

Certainly.

the comes question from Greg Citi. of next Your Badishkanian with line

line is Your open.

Gregory Robert Badishkanian

even have a Great. and as little compares volumes color beginning few Thank provide bit started where maybe more easier see you. normalized on on booking bit a September in to have weeks your of a you how last basis? Could you might trended it the those little early year-over-year

Jason T. Liberty

rate, hit but are, you remarks Greg. you sure, in tried easier it's whether up to look at I or it Yeah, this our it's has the before volumes been today, my if look factor, load comp it even year-over-year. at whether

So us. before very trends seen an for positive it comparable even we've became easier

Gregory Robert Badishkanian

Okay. All has about talked look customers business right. And North last how American changed in business going then but if Europe. at I to that know few European cruising you sourced Europe few Europe, versus east quarters? the or you months west or European about versus sourced How over sourced

Michael Bayley

to from a European It's of there demand I for to North of there's, good be degree, Hi. mean strength dollar the euro. the very a we've between the relationship think I Michael. has market seen and product and the the weakness American certain

and demand So sourcing good good the in couple products it's European been also North years European a terms it's for of well. American of for been as

seeing it's been with good. start if demand particularly markets But we the well. out think European the currency, a I probably improvement pretty an in sterling, then of the and in euro see we'll shift as to

Gregory Robert Badishkanian

Great.

Jason T. Liberty

your Carola company. Okay. for participation and you assistance, that Thanks, the day. wish any be follow-ups call a for and I might you for will the in have, you all and with thank all interest of you your good today, Simon, Greg. Thank your available very we

Operator

call. concludes gentlemen, today's and conference this Ladies

may You disconnect. now

Royal Caribbean Cruises (RCL) 25 Oct 182018 Q3 Earnings call transcript