RCL - Earnings call transcript Q4 2018 | Royal Caribbean Cruises Ltd.

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Operator

Good morning. My name is James, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Royal Caribbean Cruises Ltd. Fourth Quarter 2018 Earnings Call. [Operator Instructions]. you. Thank to Officer, like Chief introduce now Mr. Financial I'd Liberty. Jason Mr. Liberty, the yours. is floor

Jason Liberty

thank Good Quarter joining Operator. you, you Earnings morning, Fourth Thank our and for for us Call. today

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

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

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

defined, be with on on year. do During will which that bit are this information the as currency-adjusted do do be measures, future making note will SEC we adjusted on call, metrics filings I and are Richard not involve non-GAAP our a of our all and year we detail change. will last financial in a Also, we other state in and described color discussing are not circumstances undertake be comments all and to performance Examples go non-GAAP Then we statements Richard? forward-looking. the begin will Please filings Q&A These update on more are figures Unless by basis. followed a found through items otherwise, reconciliation uncertainties. can certain as some our constant risks and disclosures. a this guarantee that session. historical website.

Richard Fain

XXXX results unusually to coming our and the Thanks, was more Jason, outlook and good XXXX measure, year. pleased busy By the everyone. morning, and an any successful year. share have I'm about our to opportunity for

four in Excalibur cruises, record stunning terminals opening Silversea's controlling acquiring implementing of achieved a vessels, financial new Our and fleet. results, half two cruise while about our on introducing teams interest

should EPS front, of net the growth that strong financial our is share XX%. with of simple XXXX, growth achieved outcome These those $X.X consumer and politics, the fundamentals about income are approached trade concerned remained fuel foreign have sidelines neutral supplies, as whatever. XX% positive we should about not driving earnings watch had important surprise results. per on X encourage very vocal Moreover, strong who point and strong exchange In been would This trends. the On have billion, during weather, be a we fundamentals year. the wars, rates

well buying how demographic shifting And have material First, the trends of trajectory Obviously, favorable cars, second, to are over focus demographic powerful these TVs, in company inexorable. overall in become that interruption, our trends. direction. for to of appears and experiences. We've These shifted positioned our our time, buying to think makeup their same goes talking brands experiences increasingly perfectly possessions; has been about from forever our now benefit direction our two and trend progress no population no is and and but or powerful, the our the the become I shift keeps linear trend without everybody. people favor from shifts. memories a long and obvious At so have cetera et time it's that

our Now, pillars. on strong rests several position

we profit. have delivers and appeals is guest on our stunning where overindexes The satisfaction that first market, the superior product, to hardware

technology. is pillar second The

you all digitizing XXXX also adapt wanted going to then for growth we unambiguously to the a culture solidify As Program, results believe opportunity was strong, profitability. and and all initiated are which springboard a believe I as that of that that in steppingstone. need objective base XXXX know, our emphasized to a we the and emphasized serve was would our experience. that that we to continues We realistic. Several our a our when evolve was years with analytics invested build we We ago, speed believe we that you data and the to Double-Double seriously in just know, believe as guest demonstrate improve is accelerate. not XXXX objective crew forward. We I but

our achieving momentum. Vision These I'm execute planting the XX/XX looking program, of As also importance forward positive seeds. to kind we now same X the to demonstrate work on of programs

Ours the is digital we and deem or new new a private ships, systems business, whether to long-term is destinations. that for invest future, new

past we reaping and of investments the are We investments the benefits current tomorrow. benefits reap today, will of

the them forward, as we of the Pursuit, of X Flora Looking Azamara very the Schiff XXXX XXXX from operation in Celebrity Symphony New well year and is the starting full Among some good Mein as first Seas, Celebrity are of Seas. with delivery cards. of and Edge Spectrum

the of of week confidence. levels our carry other any for been better. Bookings we XXXX our position higher the record-breaking history, to WAVE, WAVE at new even start week in with already we validates in book a than received for start, premiums vessels have these Happily, success. WAVE and in week during to And have help last first position wonderful WAVE fact, more significant the except second All than bookings continues was off in year, strengthen. which and our to good

in in volatility very good we our up. we have with for morning's noise of call, impressed past. consistent the demand from economy I in about looked is the in the are the all Actually, been and markets. So this at happy shaping preparing how been stock our guidance has Despite year the strength the market, how

or many record. we in during on Slide such X, other how accurate have has been. always impressed guidance. I'm As revenue have EPS yield can both delivered you years, the by consistently companies remarkable our doubt and adjusted team overdelivered management or track X industries past see a I that

but XXXX, all and Amongst per and exciting the they periods, and of demonstrated are capacity income of share. Of macro to all were in May. this stream And and Seas to revenue, well types able am will our cetera. during of we that record have of and past. Royal deliveries years, The island comes about Caribbean Celebrity future for virus have ability questions impressive and you always XXXX, ahead Zika from on past fears the in concerns Spectrum uncertain, we Flora the generate which weather the confident in I the Perfect the record ready the in will getting global in shake is know, year, development it. course, record things cruise tourism in love earnings International's an challenges XXXX, we also in and these as et supply Day up operating really project, short-term threats global XXXX, China market, guests Yet us experienced

back Jason, I like grow thanks my Royal prosper. it whose to call that, the at the I enable turn my admiration to and again would Caribbean, for express and I us to before turn skills back Now people Jason. and With to amazing passion

Jason Liberty

the Thank results are XXXX. you, Richard. you Slide These quarter on through summarized I'll for results fourth begin of our by taking X.

net guidance quarter, X.X% per quarter, of with slightly by from from a yields our offset are our joint performance up Better-than-expected we was generated share, $X.XX. $X.XX the our the cost the For and brands income revenue midpoint Net ventures guidance. performance currency combined more midpoint of $X.XX which fuel. from than revenue adjusted for of our above headwind and beating the better

per result higher net We which summarized XXXX year discuss was $X.XX earnings I results, very the cost in $X.XX, X. guidance by timing. year-over-year. X.X%, net $X.XX cruise our This earnings of impact we approximately approximately $X.X than income, will share per million have the on up were of was This share. by our fuel, in of full fuel, midpoint guidance an By another unfavorable billion strong by year $X.XX. mainly costs, affected resulting the $XXX beat excluding which better despite side, and also the all negatively of and the now currency was performance. previous On Slide APCD guidance up driven or than adjusted accounts, per XX.X% from January generated midpoint

leading of our by supported at core the engagement our and strong spend employee net Our summarize up all-time key scores year-over-year outperformance. the addition Silversea from and drove markets, yields performance record To better were this performance onboard the X.X%. financial revenue Strong the year, products metrics. highs experiential for demand from brands with promoter

excluding changes, main behind the drydock year-over-year net were drivers of the increase more side, cost costs, investments days, in The Silversea's fuel, hardware operations. and consolidation technology the On up lapping X.X%. were of cruise the

what you on update the demand are I'll seeing environment. we Now in

three bookings season. year, Over all-important the last same positive past as months, WAVE the we have higher further time been than growing variance entered the

are We've booking seeing past strengthened a is the weeks rate position, and X record strong record been with These for been overall America. have have In pleased further trends booking the at out both the we XXXX volume. and trends book company. weeks particularly fact, in in our North high of X

strong for sides bookings our sailings up the X and position been quarters. of the guests in While in volume American both have North strong particularly with all on book Atlantic, rate from Caribbean sailings are

fleet strength Uncertainty from is and demand our key We in global addition have Caribbean than improved markets Edge well U.K., book and from has good has the means America up compensating. Mediterranean, that offering. surrounding our The a in created throughout is the North to the Perfect also year, in Europe the with superior position. is summer also booking further in the of some footprint rest and garnering inconsistencies shaping the the of however, other hardware our Brexit premiums portfolio Day Celebrity significant season price more

XXXX. Our ahead important saw Over us product growth mostly trending China. throughout us, same Asia Pacific with year, to China from sailings sail sailings of are Chinese each XXXX for time sailings and guests be booked continues on market an significant last million also China year. yield for been X.X well. we the have

with just have guests in the significant more guests are compared number Europe Chinese and than years double. XXXX non-China growth seen when we X outbound travel Alaska However, in a more to Chinese itinerary of in seeing on ago. a XX% Cruises

XXXX. give brief and of for I'll overview our you capacity changes a deployment Now

of Miami total, two In and full X% growth the just Our Symphony ships. sailing will year occur of the a of of Seas. year over over the in sailings Mariner X.X% of on capacity overall our will around and of Seas from the capacity the of Navigator Caribbean. our new ships, in driven contributing half the be by capacity stunning addition Caribbean Silversea with rest our growth of bulk the just and year-over-year will Seas the increase The with modernized

Alaska Seas our larger, arriving and hardware brand made to is first-ever capacity join our arguably Edge, XX-night the with be for Quantum Rome. to year, Most Celebrity most key region. in June. the our sailing both busiest itineraries the Caribbean Royal X% rearview XXXX, Asia and of improving region changes full in sister be we Seas year sailings a While China, XXXX with our Spectrum Europe in with account summer. now season. Australia her in which the addition of will XX% for region the is only this capacity from have for XXXX the product year Southeast the newer capacity, for few of Silversea Alaska core to our along of the capacity European exciting the notable what in Royal Celebrity our Mediterranean China for region we mirror, similar Pacific will are but accounts will is history. The X- Azamara's and have to for we deployment with high-yielding remains With in our a XX% in year. ships ship account Caribbean, entered This us Asia. of Barcelona and will a of early

year will XXXX first our with be Firstly, Silversea. full

of Secondly, have also in initiatives exciting Pursuit. Edge, while and Symphony summer, the coming for the finally, and Seas the sailings Azamara two Flora of of first enjoying land-based Spectrum fruition. Seas Celebrity Celebrity spring the we be will year we the to welcoming full And in

of waterslide terminal Port will We welcoming will And XXXX, in May of experience Miami. we in own America. stunning at CocoCay, our launch like Perfect are where the North new guests now our at here tallest guests Day amenities at

we XXXX. are year. These combined our cost and cadence and October, Miami a share there some Perfect and a have our additions contributing this year-over-year capacity items. each the in guidance that metrics increased to to turn the the will half period Silversea, variability guidance. in factors provide the Taking changes quarter in the of growth in our both differences. yield you see year, we into the the account, more throughout is these mentioned X, the the XXXX. guidance Slide greatest you I'll of transparency, To timing to both excluding yield first I yield The of growth with will occur where which in our bolsters have ship visibility. the lot yield yield of items In our This Day level in of terminal cost if of next, our years, whereas, all lot we visibility and including from moderate our As the of and confidence position of majority new XXXX, we deliveries mean capacity one in expect and for see further

Our quite encouraging. yield outlook for is XXXX

net from costs, grow approximately to continued cruise driven and the Silversea, terminal growth excluding X.X% the revenue control development. be to to full for Perfect X.X% a strong makes are improvement of consecutive full focus to yield onboard of year, XXX strong expect XXXX This metric yields our yield our year Day the is points basis X% expected these in continues X.X% the up When of operation hardware growth. areas. XXth We be important Miami year. for Cost cruise underlying to includes excluding by fuel, revenue products, demand for Net the from ours. and core elements, the which new

includes from in terminal cruise this and Day metric of Silversea, Miami XXX the Perfect basis the development. However, operation the points

advantage we we returns. believe competitive strong our with these and that accelerate deliver projects strongly you have well As before, as differentiation shared as

is Our faster in XXXX previous the periods. year growing depreciation for than in

contributing our Moreover, elevated Silversea program technology are to useful a generally capital reminder, Excalibur our rate. of a is than As life projects of the larger investments becoming investments. have also mix addition like typical growth in shorter our the a and capital

As the and corporate is expedition significantly per average. previously higher depreciation berth than being discussed, luxury Silversea's in our segment,

$XX million we fuel $XXX year the per EPS rates, double-digit earnings included current of growth. have and year, between another are share for prices, exchange and We therefore and of expect expense on fuel share another and interest $X.XX hedged. XX% currency with we Based per year record-breaking

to walk the operation revenue Miami. approximately to includes Net in the yields Now our cruise are and metric I'd like be to the points you first from quarter X.X% range in basis of Slide terminal Silversea This expected through X. guidance on up XXX X%. of

operation, and of to and addition products. Symphony the excluding cruise from Caribbean in costs, fuel, relates it of the points yields of Day in benefit Celebrity for quarter will terminal cruise This the are metric expected operations includes at CocoCay. to be Silversea, the the for first the Net approximately start improvements As core Seas up operations Perfect XXX basis of approximately core quarter. Edge, XX% the yield from of the in Miami

is timing relates the operator $X.XX we a the to related increase it by ship approximately previous of scope shifts up from quarter. driven account, As this I into the adjusted our all open to per of expect With the some operation, share. Taking programs costs and the to in and be ask year-over-year modernization core our drydocks, mainly earnings session. call that, question-and-answer for to

Operator

UBS. Robin [Operator from Farley first the question your from comes Instructions]. of line And

Robin Farley

sourcing. you're in I results, of of also mean, about, in with it I ask giving, you in One say could giving terms guidance other just, kind major the was is your ask to things I maybe all market booking and but increase you I yield you're then these to in about Alaska of in seeing the going markets? worry not is with increases lot general, outlook. two with Obviously, European fair And in assume to yield your supply you're the us a

Europe sort bit there's the on and have mentioned of even I if of U.K. You comment quantifying. inconsistent demand that a in just wonder you little other

have Europe, comments exposure there? biggest to other European I but and don't think much your market that any actually U.K. is

Michael Bayley

a a performed market, has as for year looking for been high-yielding always year, great it well It's and market and well. us. It's Michael. exceptionally and Alaska it's last is good this

structure really up. geopolitical So one in balance quite with of any think shaping earlier global With sourcing, issues we pleased are significant we I to and us market. the is particular that international how any mentioned really that Jason European allow had a have does Alaska benefit

and aware all way, by with which through So North sourcing that planned but our we be I we'll has volatility quickly, the kind are think the hoping the has accordingly, out it And market including markets. the other strong. of Brexit, we're in of quite particularly market good some of we international U.K. American been move as would there been and well

Robin Farley

So actually outside you'd nothing in terms of demand? of the is out U.K., there call in softness

Michael Bayley

No.

night, that's and last I is quite pretty story. huge is week to news the think think and a a I happen. much a I sentiment, there it's debate what's almost was Nobody every there lot raging. There of U.K. knows and going inevitable. watched

when March better what's a in position happen. to and So guess, we'll I be all going hopefully passes, know

Jason Liberty

And comment side. the on Robin, just seen I'd to add, mentioned just that U.K. volatility. one we've

very in and have come So market around volatility There's in but seen also it's been in the cycle. all, just good still new have the strong us we that all market more volatility, been and a for quite well. bookings

Operator

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

Steven Wieczynski

first year guidance. yield Jason, to yield. you X% I Silversea talked the the barometer And growth X% for of as X% guess, the around kind X% strip obviously, have if on, question to always going of kind being we this a is pretty about But that all core essentially your you've business. core you're other to out stuff guiding us and guys good

than sense? that maybe what to ago, stripped months way this the I be way that hardware, as or so X% you And So you much we hardware your makes move X% would Edge would it's if out better about think question if Spectrum, still your six ask thought is new have range whether I to is, trending to still range? we like-for-like the the forward, gives right guess, another confidence guess, And is, in that what business?

Jason Liberty

the you thank comment on the results. nice We're for firstly, 'XX quite happy obviously about it. Well, Sure.

commenting put guide our nothing And yield and So terms changed the philosophy into us just confidence been that guidance, bit consistency the again, number. here. little earnings. about chart of of in bring that that our was one, I talking has point slide we first on really there's a our -- up to our our to on that terms forecast Richard would in on lots But going

hasn't happened of time. for So business long this book We've one, been this of building a quite period overnight.

strong several in book future. rate that on As I commented the quarters into here basis, on, for both a very continues we on a position and and are volume

The thing on is capacity year comment first of year. most is I'll other for the half which that the our of really growth the in

to so of hardware. we coming that the amount in improvement the And both for new bolsters is portion out it from our coming which X% approximately booking growth yield X% we is we're you the really year. commented, where balancing have greatest is books, new just from not how into have like-for-like in by that, on the our A driven or being our really but That the what's is as and hardware, outlook X% business. visibility further confidence

combine So of that everything I that we lot there makes the off very of year kind today. that a is all confident when based together, know you think for feel us

growth, we've that obviously past on cost end past our X% good couple our and think forward. years, there. The in per rate very we've been of higher -- return our moderate range why I it that and been share out and control invested to But going a being healthy several that's the investments relates the of think capital. on of really improve thoughtful years, yield improves that how has As earnings it's also range at we is the X%, which trended of kind over kind

Steven Wieczynski

than cost is And stuff, forecasting out would a be great color. which That's little side. of And then we that folks without drydock up guess, see kind question component, X%, drydock to all cost that that of guess, expected. question the second I again, more Silversea, the impact of without X% what But are some probably you you able do is, guys keep core higher, bit be if is and CocoCay, on I business strip Okay. think, And to related there that to relatively as pressure the well. some technology still that technology have and might cost the bump some low? kind being probably I

Jason Liberty

Yes.

of impacts Port certainly one, weighing are of there have in drydock approximately XXXX from you So are onto we investments in the are because committed we software than into more costs things scale based et are the are we back growth costs having of providers and analytics, sure realize the Miami fleet. our being investments we with believe that the lot X%. or trying but a to our like out do effectively technology, XXXX, costs much days and are our costs, capitalized if these making managing that how selling Silversea, off market. data and to CocoCay, very that that's in Certainly now more comes not But of things cetera, are our and are

Operator

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

Harry Curtis

you Can on you Jason, you're the And return from that your do XX% uplift getting of revenue any making? with you -- the any on been investment you uplift? -- kind revenue have the more on of detail extent the you share have data are fleet. us that referenced you that on give us of can Excalibur

Jason Liberty

focused for talking ship, as going ship, rolling brings. in as leading Excalibur. they the especially things be will believe, out, the to business delivering easier on, also guest Excalibur they're yields which we That, taking think rising it cost making easier be on on net well customer very higher from when as us, additional the I think specifically buy what definitely promoter for for of us, think with to Certainly, ways we our is the out doing as are you'll online pre-cruise I is was when coming solid we Well, seeing we was about in that is much scores, on just deliver quickly is guest we're it very return tangible to very that are to friction Excalibur, and see us, a that's our we're the is it satisfaction experience. what

Harry Curtis

that. Just noticeable vessels uplift a from a those the in follow Is versus the the there up had revenue fourth that that Excalibur don't on quarter? difference in

Jason Liberty

well, We quarter. definitely fourth just it's -- the not

seeing a as their pay more strong as for people where Certainly ticket there are go that been we have to -- we is both seeing put on, We well satisfaction and guest onboard. benefits. relationship scores ships those up Excalibur

Richard Fain

Harry, if I just could that. amplify on

things of of is, One the single out. to lot they're a hard initiatives, these

and brand, to add all a the on which are these put example, to better of things would otherwise We brand. the do Obviously, easier anyhow. Excalibur is for ships, newer

say I'm not and And such way, we has that this on very we think entertainment looking them this on this or initiative at on good so are We're taking initiative in technology an sure or all holistic them isolating at out a a initiative out satisfaction, impact. food together little essentially of to and of those is amorphous difficult one X. it's a word mouth, drove an is construct, But isolate a of improved what brand a things guest drives and on all and this part brand. are specific

Harry Curtis

focused fourth It in you're I've on is more reflection time you more for the acquisition the while being? sheet noticed company of appear just the I the got quarter, that in Silversea purchased ratio that of And not impact your didn't, that leverage but and the noticed, the a stock -- would that Royal you, balance on Caribbean.

Richard Fain

Jason?

Jason Liberty

Yes.

acquisition that's the But last that Silversea metrics. Harry, stress mean, on had the of as before call like. did I'll stock So if our on would right. let I credit exactly comment commented he Richard we his purchase,

We on are an credit. being focused investment-grade

of little to weigh which as and We make we an credit, are EBITDA, on an are a investment-grade certain Silversea some on when an short to on you metrics, maintain opportunistic shares. investment run, way the that our off to like that especially debt focus there and but gets maintain, can debt that bit, looking certainly that leverage in in is provide here buy and opportunity opportunity better burn back we EBITDA to there

Harry Curtis

in the second more half? Probably

Jason Liberty

is first There the of the year half half there than headroom is of definitely in year. second the the in more

Operator

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

Jared Shojaian

[Technical in So that that the contribution can point in break Difficulty] understand one because XXX with basis water seasonality isn't XXXX the know Silversea, terms And you months How the out I'm little the the quarter. park? just some the can the just bit me little basis by bit to quarter itself you better? XXX points between that Silversea help and for you I higher think there me X to impact about contributed it, I a guess, terminal is only fourth surprised understand there of would thought I X of X help but a the components? for the

Jason Liberty

side, especially August on into yielding quarter just highest what So of most first, the brought seasonality consideration. the that we being months the Silversea, fourth X probably X were for in with

the sparse Perfect out say what building as of Miami of why XXX volumes are well, impact and What a year. the exceptionally in won't bit of number of is Miami our over the there will is that the get will I we be and exactly that's vast Port time. Day adding quarter and versus there majority that of come marketing of Perfect for So each will also ramp bring one will as more relates the not time online, the offering, of doing obviously, full it's be and Day little elevated that more up in would over terminal we ramping the and to is it ships talked I is. Silversea. Port Obviously, May, it online online more or volumes up coming sure make just want coming right, ships CocoCay, -- in we be guests I that we And to about we CocoCay but that amenities the Silversea the these terms to of the things well. on the terms fourth has as

Jared Shojaian

here Jason, a be macro Okay. really positive, and just given I'm And second, relevant. of sounds some know but everything for I think shortsighted really going to I the concerns, it's

Is talked that X the implies think, you'd lighter which, Or most booking the anything I recent to out how WAVE? week or last weeks point last just decelerated there? week were record about X some. call that may You else that of weeks, a in normally have

Jason Liberty

have actually, Actually, think week. been happens X, weeks better all the third were three and the I that done X It than of it exceptionally have week well. very the well, second first just and the was

-- it's and And in second was it first first at that seen that the the it into records So we two. was won't the was looked it It very third. we if actually close I was one, have even the it to the read past.

Operator

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

Felicia Hendrix

that's kind continue that some looking at to to Steve by trying why wanted a you term had understand think of medium thinking just year. norm of our X%? you're just earlier in model, we we are about and about on investments the the going this new X% in call, so, tailing be of I we Or just are then? XX/XX explained if of starting should your as of base costs at I'm the thought or kind like off if to be the kind should cost

Jason Liberty

investments we costs. will focused highly things on managing not be APCDs that just but it, quite say you won't can -- a don't to of What that costs, they But some are I the the this associated a little bit. our like of making some year continue them knows have of optics are the necessarily pressure give sure there are and world normal, that but we X%. to the with what you revenues metric would effectively everybody course, Perfect very is elevate metrics we're our -- wouldn't be tell We're hopefully have it. to focused always that of but I number Well, that to Days specific on committed that I I'm that new in approximately

Felicia Hendrix

know you and of lot too. you don't break Okay. help buckets of, to question are we want you -- know kind just But And a trying about do these get new a think on us your Perfect just to of new yield. this of I can then kind Can it. model the I I'm different you or folks lot sure drivers of kind your, out Day. aspects the

number can passengers modeling just that parameters, be our of that us help there? some kind you coming anything maybe year, might So give a of with utilization, us pricing,

Michael Bayley

our look think, think calling believe Michael. you Caribbean the over deployment XX during year. XX portfolio Caribbean. is in at that we capacity for I Day. you ships have, International, in XXXX, those are Cruises, when Royal operating it's when in Caribbean then look the into total Caribbean Felicia, you XX I I at look Perfect of And the When of the I ships ships think to Yes, XX% Day total the at Perfect of the Royal

we year, next shy so X XXXX, by to be taking that Day. are of a guests will projections just year million Perfect Our

haven't -- we've scheduled bookings, we and and but certainly are Caribbean, go So what seen Day to only to those positive, quite ships that our the really Perfect yet. not it officially particularly for opened has in in been

our sales Day, So and we've I really then hope clearer experience. that a off other context gives for sales the activities course, and the pre-cruise associated experience on some of is element experiences paints the seen of take for Perfect our picture And in with and the sales you.

close sales. Day think, X, up for Perfect I our factor So by we're a to of

Richard Fain

CocoCay. Felicia, can we've take our the Day out add When account, the and and that question. costs occur to revenues and associated to something that with very And our I in expense are that hard what measure. it's into the that see only like the Perfect we we of and out related address -- part are could going we -- try I separately. obviously we've yield doing that that can't if identify said ticket isolated actual the Richard, costs if actually improves metrics the -- one and And you your and it directly adjusted revenue, that's is we've initiative isolate don't it's revenue an of on and of the CocoCay But and that impacts to just cost, on on. to

isolated out more it Michael Perfect things, of a expense these a side are quite but have said and in calls, changer said, X isolate to Silversea's, when Terminal those think We and separate that it's A there isolate than exciting, appear game lot Perfect revenue. we emphatically We've a Day, we for on us separate a ways more hard we things Day even But and previous think as us really helping that but little you aren't just it's as he actually others, the are out. on really is revenue quantifying. and a has and

Felicia Hendrix

was to any the when know on this, or you have And but Was in time of -- I neutral can maybe it been I'm able Jason, have of down Okay. refinance on Silversea, but we then generate EPS? the dilutive? synergies was after when going sit calculate to and you cost side, help, any can do or then 'XX? the the call, come to earnings sure can you kind expect most of kind And synergies are to what the impact also generate next you debt, we year there

Jason Liberty

Yes. Sure.

is So the going we A one, to a to it accretive announced business. years. overall had said of same Silversea deal, at our financing take be to that few it tied time was the that the to we lot for

in the because just be. and business specific to growing general cost are be immaterial is or The exceptionally and won't it focused as really our I terms profitable very So very on team line. the Silversea The synergies business bottom making of amount in efficient well. the can effort synergy as and engaged going it's

our for side, are, have We within bit the a ahead accounted for cost year. this schedule do of would of I the synergies say, we and cost little on some synergy guidance

Felicia Hendrix

typically is implies that. is housekeeping, capacity consumption reverse fuel impact just And above guidance your growth, Silversea. capacity versus then of below last and more some now maybe capacity growth. your an quarters just Okay. We're But your and looking your your consumption where but growth, just might seasonality fuel fuel -- question, consumption at excluding this

driving So that? wondering if Silversea I'm is just

Jason Liberty

exactly That's on passengers scale overall don't XXX And them. sailing XXX passengers not as to not and Yes. benefit fuel-efficient right. they fleet. those even with really being as from Those ships are fuel-efficient are or between obviously, ships our as as close

driving the what's that's So consumption differential.

Felicia Hendrix

Do we that should see use just use going pattern forward, is we're there year? a rule the seeing of we thumb this we or that

Jason Liberty

Yes.

onto we done get on also some many existing to I think this our we of through Silversea focused part and trying opportunities fleet. trying very year, synergies that to the we're employ have get fleet, energy-saving of the on obviously the once initiatives of as those

Operator

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

Gregory Badishkanian

Great.

just America was growth was out? more positive? booking for Is pricing pricing really the to you? during North Just -- first with the it my the do And the question, specific stood Or sourced? it positive surprisingly a year-over-year regions also, Is on WAVE? just side was strength from of of that color WAVE, any just that for

Jason Liberty

Yes.

we has did the had of the first, So we Outside that well. U.K. of strength on seen more little been benefits I talked mean, side, which and -- WAVE bit to it on about that, market the and have a lot volatility only side we the pricing as both a volume

I past and again, -- of volume it's the WAVE, in we a at on over So weeks days least X X story pricing. have good seen is we're but still news early mean, the what the both to

Gregory Badishkanian

bookings line? it do I were think to just you up outperform, Is for that you to then mentioned performs fleet? for relative XXXX. China, going in How And you that overall Good. your market think year-over-year

Michael Bayley

we 'XX a about book in at We've continue feeling China the position, market over is really We're years, we there as It's the And are going over moment. pleased good is 'XX development. was for Jason many 'XX China. and performance time. with been XX mentioned, the outperform. conversations significantly quite and dynamics and to good Michael, Greg. This in improved had We've from

Operator

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

David Beckel

Terminal take million will additions stab EBITDAR. those could. I implies another Silversea, of your A, X contribute believe $XX the the if based of on guidance, at CocoCay I'll and math all I of about

is if have for contribute in those how how about there before? investments you think XXXX, we any should as second, that upside to off, may right? will in is first And so, chance think, I And XXXX? So alluded

Jason Liberty

Yes.

but relates comfortable giving as these as the metrics. it, guiding specifically well the how our So to it yield are as we our not items, cost of on EBITDA, it were impacts profitability we

a business the of as there on XXXX implemented business. about, through all first On Port into to into XXXX, take further accretive a amenities high be And ship we'll be their commented. I there and lot their we returning investments even which will Michael goes and contribution have volumes, of have in in be more of Miami island. XXXX, to as will The all X. off, synergies from to XXXX, these you our new when guests will because be think we X almost million will be and CocoCay, more it and going will XXXX and think more on for them Silversea more CocoCay in through guests expect certainly to improve of our available on Silversea, also those scale we're

David Beckel

would a bit a stand to Great. reasonably hitting schedule And as of year, of a level. question, ahead second Looks you XX/XX Vision. year double-digit which a like EPS higher relative be this good chance

inclusive Vision far? tracked expectations ROIC of quick double-digit second, has component the a your XX/XX and original two So EPS And remind us, thus of guidance according a of questions, to the the economic was your sort? please disturbance material of

Jason Liberty

Yes. Sure.

number to well our ROIC is as we to really say see on what which first us growth. reach north. our So you allowing would investment The other but number and We bit, say growth. as that commented to double-digit as outperformed, we we'll we our move general work track. our Silversea of possibly reach higher do the have a certainly but the be, guidance as Obviously, weighs as in continue we XX/XX, little EPS can -- double-digit exactly did end on we is on, per on investments $XX high that to would is ROIC hard can in that didn't share,

higher into would if The So context, I I look XXXX comment the fuel be one the think that's to and things and last we're same time to FX about this number year, make, guide evolve. kind that to we given, something that at we actually what continue than of today. guiding would you had how rates if see $X.XX at put just we've

be might changes one there us, that to is that's going project in changed for economic forecasting we what trying our future. not forward, that has the but so do that And something for factor

David Beckel

disturbances? And inclusive EPS target was the economic original of

Jason Liberty

basically cost our in measured growth, and yield it was of good was off It moderate -- based No. control capital investments. being

Operator

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

James Hardiman

is, questions. circle I and I wanted and has little been and is to my start can yield than you the trend. back clarification the to is well as new it's yield XXXX like-for-like even on like-for-like Richard one to the positive, to than year Steve's get of think contributed is in I remember. better Silversea of years? Jason, clarification original previous that a the guess, obviously, sounded guide maybe core least this at hardware, a we, pretty the I start Obviously, on once just exclude bit better guidance

Jason Liberty

Sure. It on is past historically in higher the the seen what have like-for-like side. than we

is if coming we're So from out core, and hardware. the which of X%, we half calling of -- the more just the growth than at coming our like-for-like that approximately look that from balance is new

James Hardiman

there numbers? just capacity way for contribution helpful Miami and yield the year? maybe nonorganic to give think really any be us course the Is us models. contributor, to quarterly Obviously, of is give That's Carola of least a a question here. there going the then the to big directionally build way any housekeeping to calls that's us Silversea, basis? how Got we a or at over pretty about me, And that Port the stuff, you quarterly it. And encouraging. on really our Can give building CocoCay, some block phone how save out

Jason Liberty

that Well, and life she Carola's afternoon. to a to one, easier. it is make sure I my want make has life fruitful job

as moderation half as So year place certainly, the the our I'll as also consider. the the yield but of course the through capacity year of I growth of for first within take her for I most And our or commented, year. in to more cadence of yield details, our our the much will said, for leave same certain pretty I levels -- is

James Hardiman

that's a not basis, organic a And a it's cadence, inorganic? or on total on similar

Jason Liberty

has same. a a on the gross similar year. basis, the On it's combined also through cadence right. on exactly also course it's a the core, On That's basis, basis, but of total a the to it

James Hardiman

some but Okay. should of cost some I'm wash yields as and an guessing contributors, for And is Day, of timing sort that addition I yields costs. question but way in terms the assume also that then given nonorganic from assume and just Miami these to we the inflation early going on a be lastly, of too terminal well, Perfect would Silversea will in also to XXXX? XXXX,

Jason Liberty

but Silversea. going and more is Day, coming Well, coming to I there start to of days in I going volume early be all of terminal, the said, and would it's to be even Perfect considerations XXXX. grow it mean, year. out going next to volume -- and as Silversea cost is thinking about yield which more port to have XXXX, out of will both it is is focus and with on you more the CocoCay There

Operator

comes of from line from question Fargo. Your Timothy next the Conder Wells

Timothy Conder

did little for was on to state Europe. your out of want bit current to bit up, a the and maybe alluding I a of also implications drilling XXXX here, more little James follow bookings

and 'XX to the JV early ships okay, it's with Germany then TUI the with obviously, TUI a that JV nice TUI And you sure, called are appears the the it but significant JV then of how how out -- in are very in should So operation little just U.K., pretty from but coming a out considering and fleet, changes and how the as JV some Germany. obviously? out and think about we XXXX become volatility that's only is make contribution the bookings 'XX,

Jason Liberty

Sure. Yes.

side, talking the comment first EU ties which around your Germany. also into on just So

done First, doing there's quite we well, Europe has that that cycle volatility also has stabilized U.K. on and volatility piece, around TUI the really new just certainly the doing typically happens said volatility, again is U.K. Broader the well. in Germany typically been the but actually is well.

get take to that 'XX relates equity from comment don't would the one is ship, get, in good profitability. pickup specifically yield TUI as us for or to their which on will guidance will we specifically we we that it The on does another TUI's is say thing I So the income TUI.

XXXX, of that a expand margins their for of that that new bit driven continue pickups. so our they uplift for couple equity past not do that of In years get We're be now existing fleet we've lighter. and seen So next the the will of some will little to years. they off a off several more have ship the

And line how two about I those so items. that's would think

Timothy Conder

And How can this bookings, to up positioned in expectations year-over-year, budget? commentary Jason bookings that price you at previous are a then more what going point have and earlier how of pricing it's tracking have little question on to And the Okay. to just point was maybe CocoCay, versus Perfect Michael, this at responded you that? well. maybe then, uptake, your the any the alluded Day, built into if China, so China that guys you is speak,

Michael Bayley

into not or I So going over specific products I to go we're that market, coming are I China seeing good details in increases into think, can and we've we seen 'XX. mentioned earlier, 'XX by on now 'XX, the through but price tell improvement market, similar you overall improvement

that's Of our China the the course, addition going Spectrum into Seas, we've of the ship, newest market. of got

of excited consumer new and our we're that introduction well excited as as product the that about about partners. to So trade seems be the

the So in are market. China things looking quite good

in capacity industry XX%. XX%, of an of region been has the there overall, course, decrease Of somewhere

on in terms of consumer very that's we've sales of Perfect hear products pre-cruise seen been terms also good Day, be regards uptake that's we mentioned though things be the have in Day, that So seems seen we good terms into a course Caribbean of negativity China. that seem China through relatively Perfect pleased even I there that with shape, overall of In earlier occurring, is to of experiences and demand quite our but in health we've on that coming really and to the confident, trade lot real the in with is of quite a And we've the positive driver Day. the think battle bookings. products to and been in news the Perfect good

quite these of positive. are both really So

Timothy Conder

to talked trends there? in Day, right, the provide an additional an that at there, and that Excalibur Analyst of color 'XX. of on can laid with latter alluded you Jason, half lastly, you you're top if I had coming Any enhanced the about remember seeing engine e-commerce maybe you And being over

Jason Liberty

Yes.

and added lots being attributes of platform. onto is are there So elements the that Excalibur

we will that to as customer curate to have able more book easier -- they get And to onto to recommendation book we on able for the get ahead our before also to for spend the the in of past, as ship. guests be engines also One will we to allow we things know and be ship. to they're the us easily them be of when the are are consumer be it get to if cruise, the able can

online a would So those but XXXX, course expect coming year impacting XXXX. full through impact capabilities more will in the of be I us of

Operator

from of comes question the next line Sachs. Your from Grambling Stephen Goldman

Stephen Grambling

two guess, I ups. follow

about regions onetime there the is of what are the at Day, then cost something ultimate other to the questions percentage further Silversea you or strengthen coming it identified and differentiate terminal costs ongoing brand? and you've develop opportunities are angle, that could ROI Perfect guess, expenses? I a on First, early, Perfect think from the versus different or similar, still as Day, And

Jason Liberty

Yes.

Day, to that onetime, nothing call I relating only So onetime. there because really as it or relates think out, that is I the would Perfect to CocoCay is thing

many we modernize Project many, bought their which Invictus, really As we ships. ago we months when announced to announced Silversea, help was

on want opportunities comment, launched, thing say this obviously the side, how We not the consumer lag, to future get are -- will do takes little then 'XX quickly a Day fourth more major quarter us more level. inflating that since focus would in understand is I for they consider that a had metric bit on just quarter, for us Perfect is consider. they the that whether we to gross And is to activity and our course have or there quarter of and of first of which it a so -- a why that's cost in drydock -- quarter the highest the it's ours. to cost on

Stephen Grambling

other helpful. of itineraries follow-up And give one efforts play kind incremental distribution us you there update to whether the any demand China. into Nice, non-China could alter for and the Can that? perhaps just model potentially on on the

Michael Bayley

China, the and been pleased Michael. of are Steve, few now I that's the pretty that to system. on progress having is been distribution the think with we that the we're we've on part Yes. distribution journey feel we success the past it's We've of develop growth And years, that the in been for and journey the making.

So we're pretty that. good feeling about

was? And question sorry, second the part of your

Stephen Grambling

I into are the itineraries can guess, it, just, non-China whether there plays was earlier It booking? potentially you it and if accelerate but maybe demand seeing that, greater

Michael Bayley

out I the brand China to have it outbound Yes. the One which a guests good the one as Europe, group opportunity then world's few really strategy and are and and known visa course, Alaska what the broader, more we there that's deeper mean, an Mediterranean quite through largest China, think in that products to we we Chinese of more starting market, in becomes with was the regard travel of the element going restrictions to you things our for and elements proven are us distribution, terms then, market outbound see of improvement was for who be opportunity, in as our to market ex and becomes wider, of that establish other third on the was the It in has number focus an you, and and is China well and terms distribution, And particularly growth. China. and in adding longer travel the outbound. itineraries the are pointed successful. changing itself, is

Operator

question line from Brandt JPMorgan. your last of comes And the from Montour

Brandt Montour

help I for a of the was you unpack be would your spread, helpful. us MGO are the you're what anything of assuming and what pricing, the backwardation of you your hoping bit full giving understand at-the-pump or -- that could just curve little in if guidance for credit if assuming fuel you're maybe terms more

Jason Liberty

Sure. Yes.

it the We the fuel guidance curve. we we off our what as the fuel fuel pivot hedged XX% then of for based speculate look or to it to of obviously, and So forecast relates off are side, don't it as on when prices price, forward today. relates year are about you

Brandt Montour

spreads MGO today. as just be would includes that and that sorry, -- includes that And well

Jason Liberty

you today. all a you Thank assistance, I up and might That's exactly your we all for have, James, wish with any for right. and wish thank will follow the right. you That's great And for call be participation company. and very available the you day. we interest you your in Carola

Operator

This concludes call. today's conference

You may now disconnect.

Royal Caribbean Cruises (RCL) 30 Jan 192018 Q4 Earnings call transcript