RCL - Earnings call transcript Q3 2019 | Royal Caribbean Cruises Ltd.

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Operator

Good morning. My name is Dorothy, and I will be your conference operator today. At this time, I would like to welcome everyone to the Royal Caribbean Cruises Limited Third Quarter 2019 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator

like Liberty, Chief the now Jason Officer, Liberty. Mr. floor to would Financial introduce Mr. I is yours.

Jason Liberty

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

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

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

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

During making performance other These and forward-looking. we our Examples this future risks disclosures. statements involve in call, and uncertainties. and will comments that filings do guarantee are be do not described are SEC

to defined do the financial of constant as a undertake metrics we be note filings our state we are as we basis. otherwise, non-GAAP all all discussing historical on change. can a certain in adjusted and Unless Please circumstances are that currency be website. information Also, on found measures, items our reconciliation adjusted non-GAAP which will update not

on XXXX, Richard recap then provide begin on our with I up will quarter by and some a for the provide XXXX. guidance thoughts the our fourth strategic the providing of follow close of and will overview results, booking on quarter an business. update update third environment, of a an early year full with

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

Richard Fain

morning, to some for Caribbean, pleased Royal Thank everyone. provide been quarter good and you, Its’ Jason, and another good very color. we’re

were quarter for third the expectation results encouraging. very fourth Overall, the all our for and

follow we expected. on had better to virtually or equal performance is operating any metric we Our than

we’ve us over Hurricane negatively, to elsewhere. impact this been course, offset Of with improved performance impacted able Dorian of half but

and any year exactly as no goes year. no certain in given and hiccups there always will industry be course, predicted, Of

just that issues, we in exposure they to and successful can secondly, minimize have and know these so. elsewhere job to background doing noise that objectives, two in Our full can to and them such expect us our so be compensate is things: years rare; do We report. to business, they been Firstly surprisingly accomplish for so our to the try over the remain both of in you

et Cuba, However, year XXXX all have of an for our simply in has and things of a Company’s which raising like cetera. history; our impact has unbelievable senses. that include in the unusual collapse who impact our in this, impacts cetera, Hurricane Dorian, such successful would an largest well been government very with I I differentiating while our towards the change been et amazingly the spate which Freeport, what hurricane give prices been year unusual result drydock into an of teams in is the to continue challenges. in the the operating year. change controlling never abrupt any perform happened; credit just the The of successful these from has would brands policy

of number success. in key a point I drivers to would this

our destinations to our at off. really example, our For amaze Day paying Caribbean boost bottom-line. guests investments are Perfect in and International Cococay Royal continues

more attractive bear love and is them our are demanding technology, are strong improve but These fruit. us or program which they our accordingly. expensive, investments driving in crew but guests for We alike. modernization results. are expensive They investments more These the vessel experience Our reward upgrades guests efficient. take make and to and us beginning

Undertaking so. these reward to our focus. control complex but and value low process, their these the teams support. is challenging, these advisors for significant the their long We to costs the treasure us and example, intern advisors of trust support single committed is take, And travel agent lasting. We digits controlling community, and always in our our which strong challenging add the so doing is are ever-changing while but is innovations, cost specially and to environment with

market, a focus is on at long-term in paying very which but the market our nicely. our terms performance. program, It’s off strategic And developing exceeded has China of look expectations the

to year. that that is last China despite strong, Europe, U.S. China, Our we whether holding expect in things wherever, sales been that’s in year, particularly China we shows North guidance a are our economic concerns. result very the but these geographical well is market of and up up The any from have all continue. serve markets America, and forward positive every The

of We characteristic, an its main and share own But to a trajectory. seems markets. has all out and diversification downs. ups consistent and upward source And This markets us destination markets same that the variety balance incredible operate time. allows over follow remarkably to in each market the

us material trajectory that consequence sweet nicely consumer an their experiential travel on relevant market. innovations for We fits shift expanding upward spot; is And and our are is inevitable making therefore attractive, demand role our spending possessions vacations consumers’ our growing experiences. cruise continue more wanting spending making to mainstream. to believe it The money of more habits for this more into the in in

book revenue on high As pricing. attractive with than books factors before this result, expect very with we to the a year end load at ever very more

an All of well attractive XXXX. that for bodes

feature essential overarching for us other is sustainability. one Now,

food to eliminate our our supplies, et cetera. reduce efforts with et footprint, our single source cetera, carbon continue use We board plastics and on ships, other sustainably relentless our

successful Perfect open recently deal of more destination. This Day that Vanuatu. is our project of exciting interesting finalized was one things our we Perfect second expands Day I But, worth is there also One also this Vanuatu amazingly because Perfect at noting. in second special very experience was the just it aspect the the on concept. is we Day announced in to there Lelepa where

the about world But, in explaining destination that to release Lelepa press will will issued private carbon a this be first the neutrality. achieves We in cruise be be more shortly.

that consumed Day energy of All Perfect and from major sources. Accomplishing major investment both, but rich in innovation, be Lelepa renewable will the will at generated requires be both.

that are change time important the all some do very defining to we neutral We to Global can in about is and want our using carbon the goal. accomplish to one we’re of issues we struggle. of game up this excited climate very of our techniques

So, model, to unusual been an investments the people. has recap, very it robust. is our business future year, business, future, our about be bright. are operating The but in our we And to our continues optimistic our

I Jason an that, ask to of the with to overview And provide results. get

Jason Liberty

Richard. you, Thank

our results two. I will about These results begin for summarized by on third are slide of XXXX. talking quarter the

expenses location, share, operationally we than third higher Due products that experienced. lower lengthen Stronger adjusted APCDs and key The quarter. we and the the caused quarter, the in for offset Hurricane $X.XX ever which $X.XX the resulting our these timing financially core most to hurricanes had from have of of disruptive Hurricane in a temporarily we storm close our sailings, and same to our turnaround ports X% $X.XX of during timing a another guidance generated or the For shorten and reduction earnings with three cancel duration sailing is Dorian. impact for last a closures, than XX year. days. Florida time per Dorian to the demand partially of was combined of main one close-in one

during have impact meals for days. our of our our the to to contribute of than proud will very we this relief at some ongoing release that Cococay a The efforts efforts in while we financial Also, million help X.X of disrupted of deliver the more were Perfect crew, we Bahamas, XX size sailings financial operation from continue hot employees and to Day the guests side contributions, form in and time. are and difficult particularly prepare shore closed

impacted for relief reduction quarter. XXX revenue X.X% better exceeded expenses the costs metric by cruise by relate that The an hurricane On our increased were this excluding hurricane absolute by up million. costs expectations quarter. driven The expected, XX% yields excluding revenue to came $XX the timing. overall basis, negatively which, the and points. in net Our basis for fuel in Net Dorian, than APCDs year-over-year, impacted

that trend been in I have we balance the seeing XXXX. Now, demand share of for environment to want the the

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

of XX% Asia Pacific XX% QX line and be our with be region, XX% in at the higher be are will Caribbean, in expectations the in will Europe. about that will rates capacity such, As significantly be in bookings our continue to year-over-year.

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

range updating a and our are includes the to per of to that efforts. Hurricane $X.XX of to disruption This Dorian share. impact from negative the approximately $X.XX We relief relates $X.XX range guidance

expected some slightly and of below Excluding quarter better this our costs. effect outlook third than for fourth and the offsetting we by the increasing more are guidance line as the $X.XX, approximately results midpoint impact, revenue improved quarter in are higher improvements

relates for the to expect is in guidance hurricane. key X% our metrics, year. net is our strength previous impact approximately revenue offsetting environment with the This we the as in our to line revenue yield negative from it the As increase yields

the further expect by investments. XX%. is capacity hurricane, a perspective, cost from driven with increase in a be net and excluding costs The development efforts together we increase cruise From technology product to approximately fuel and relief in up in the guidance reduction

for fuel million price anticipate a and at ton. of the we $XXX metric We hedged expense XX% $XXX year are of per

are currency outlook fuel our business exchange current of interest earnings current adjusted share in to the on expected to based be summary, $X.XX. In along range the with $X.XX per rates, prices,

the and slide guidance approximately be improvement. X.XX%, Now, which with Day fourth A, quarter, year-over-year for on the expected Perfect addition points to yields at for. of can we is turn Silversea, Cococay basis of Terminal up driving the to XXX approximately are our Net

the cruise fourth XX.X%. Net for fuel increase expected costs are quarter to excluding

additional of in by for year, terminal drydock cost the has the our quarter approximately basis to basis by the the efforts for is days product technology, and points increase increased points. shift versus cost development Other cruise Silversea, in which metric affected Day. and expected Also, relief the an the some the third includes last XXX drivers that approximately of timing from metric metric cost quarter, impacted Our expenses operations the for and number Perfect XXX hurricane. related investments are include of

approximately outlook of earnings per exchange including share prices, the adjusted are be per rates, currency rates, to expected share. above expressed off the Now, our and and currency, interest based quarter $X.XX for fuel

some Three through which you welcome to Now, areas, will very and of insights incredible year take existing revenue staterooms currently still we fleet for the modernize preliminary our to adding to up be I’d shaping another for is new on-board while activities. continue by ships early, and like brands our will XXXX, Company.

at also number experiencing will the Cococay. Day guests of significantly We Perfect increase

Apex before are Muse Edge the transitioning will year itineraries. that Apex in April be as will back the fleet we’re joined additions, she to sailing cruises Apex regarding Celebrity a sailing and she Caribbean of spend a Now, Silver the Celebrity XXXX ship thrilled Silverseas. Moon joined transforming was will Celebrity’s summer variety transforming fall. about be Silver in Silver and this when And for XXXX. Moon Mediterranean Edge celebrity spend of and new by a summer will in game-changer are of August European the delivered just next fleet, ago.

we Silver In Silversea’s July. next are Origin adding ships addition, to fleet expedition of

Caribbean call will summer welcome of season Day. XXXX. it of XXXX Seas year. for for Europe She the with Royal the end the next of Finally, will in transition sail Perfect XXXX Odyssey the at Odyssey and Caribbean to a will then the winter

in new half. X% quarter year in in lag Silversea half ships under are growth of back to the result deliveries, capacity timing with more The first These increase than the contributing four the in reporting XXXX. just ship for the significant a combined of of

on like our I XXXX to deployment. Now, an provide update you would with

Day Caribbean Oasis of of Celebrity will In sailing about and products year-over-year more of Perfect based Apex on than the additions will the itinerary deployment. the is Our for Seas, our include of addition X% on growing quarter. and the both of the short Cococay. capacity at experience of Independence Caribbean and half Cruise Caribbean XX% changes year-round, Odyssey a total, in overall represent and fourth Key guests Seas sailings Seas, Northeast of

will itineraries capacity XXXX. for European of in account XX% our

in approximately by increased by capacity Europe driven for Moon. have Celebrity Apex inaugural and We an summer XX%, Silver season

immediately Barcelona, In $XXX addition, sailing modernization. million undergoing Allure of the a from Seas will be after

increased and Asia. Pacific China, represent Asia in will with capacity of itineraries year next Australia our Southeast XX% deployment

product we Finally, the account slightly although X% will Alaska, inventory. in increasing for overall only still are of capacity our

same than At of demand this ahead three now pricing levels the for are year to been last four time quarters and factors did APDs previous basis. last are months. booked slightly Bookings our XXXX trending nicely a point, up like-for-like We for have but experience ahead. are our surrounding on and brief Dorian year bookings same a low and time Hurricane higher rebounded quickly all in past load in

seen also same since time earnings window to last outwards shift have booking We relative call. in year the an last our

of to to continue first related are not yields QX to until yields for and are provide The changes January, periods timing guidance our visit The will of Cuba deliveries. Cuba high-yielding expected including vary to is brands, expect Azamara quarter during we the for our we will our I and our the itinerary do compress to most of quarter note half While the going likely with QX XXXX that ship when to significant to be scheduled the due three first new XXXX. Silversea impact brands island. by strongest

over in our I discussed base to coming our Last years. increases expense. expected depreciation that place year future I a at changes take moment cost want to will this certain highlight time, the to take

past fleet building our traditional and mentioned today are new investment lives but capitalizable strategy. some and destinations, will Also, result Richard As and areas attractive to investments. increase program than key returns, cost modernization in of not sometimes calls, have our our investments are technology base. depreciable These shorter elements in an offer technology our growth

a berth. and brands ship new will overall in return being higher a our of the in profile, for to yield additions have to larger add cost per and XXXX. Silversea are those Finally, These also expected Celebrity additions but percentage our mix result

pointing for robust and of strong combination growth. our guidance XXXX, certainly yields another demand an and early the it’s While accelerating position is book to to provide year environment too of earnings

open session. operator that, I'll a With call question-and-answer ask the to up the for

Operator

question [Operator from of line comes Instructions] Shojaian first Thank of Wolfe you. the Our Jared Research.

Jared Shojaian

everyone. taking morning, question. Good my for Hi. Thanks

the the earlier in checks bit So, saying. you're macro been little few the haven't weaker, months, year. agent positive none seen Obviously, you're we get a some with that in of and as seen what what reporting of as last seems reconcile to the we’ve of data some had what with

So, a about, can right why you talk think just is now? there disconnect you

Jason Liberty

if don't a Hey, Jared. disconnect. I morning. Good it’s necessary know

-- sourcing I of platform regularly us, guests community investment that that some the And we're is as we the think, I the connect the of to sometimes operate the some where throughout doing trade. does with global think checks itself for not world. price

has period low since has our last you As you our commented, our expectations experience, outside different, And the much experienced the at Dorian which least to. short were the time is sure, shown call referring on and the for been we around above Hurricane. environment us of acceleration

Richard Fain

ahead the lot impactful, Richard, very company-specific add. run momentum we’ve would I’ll an slightly just on of diversification improvements we've and get been willing which us the these be the things comment helps that normal this there's Besides it’s you. that are Michael technology the And to vessel over made. might been us, Jared, think And Perfect implementing of it’s all we We helping Day, that what support just period. awful in of and it's investments have, things upgrades,

Jared Shojaian

quick Great. Thank you. follow-up And just for one me.

it’s I position, the the the fuel, MGO. color have the then, refer and on you would you look more on today gave you I know you for here the Do Can know noisy, next you On hedge still forward curve, a know, expense just D&A us fuel like And that you're in at gave looking tell you Jason, what to? year. XXXX? your disclosure sit hedging can increased as us, I number the but

Jason Liberty

Okay.

our fuel the through we're process. planning still on side, again, So, going

similar to depreciation will early expense implemented obviously as and will will We've be significantly what just and our comment to fuel rapid for year invested systems, our on our mix it's be. in very this year. does AEP fuel too it what our expense So, pace a us still allow which next look

forward here curve. we so, of advantage in And the able the be we're should seeing that benefits to IFO take

say just their other again, what fuel of side, terms process, seen or the consensus. planning On the we one we in is generally where depreciation analysts estimates, -- I comment seems aligned in we fuel fuel on at the still our side, early from with see what while generally least what would that can have --

on on side. comment depreciation Same moving the onto

in here see investments XXXX to lives. continue mainly trend and the making, that you'll in saw technology much that space, You more shorter this we're have

And so, because costs be higher I still would why there's our that going there's that. I'm of a just in say, while emphasizing to planning we're process, depreciation reason

would point of I kind a that. so, to look And take just at

Operator

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

Steve Wieczynski

And question hold prepared how guys range gave point. year, is right the yield being a Jason, that you to starting or X% lot guidance have up. fair past, I does any now. about that this I be, of way a XXXX good the about not quantitative you? give true a guess, of in is, next to Jason, asking understand word So, Richard talked the shaping mean a somewhat and simple X% different you're still But, to should what details range would of robust I guess you for

Jason Liberty

as that X.X%, obviously going next yield it's So, year. noted, range. now a us you yields XXXX, on like-for-like how little generally That years. be yields represented our early to are for what several have grown comment it above our to X% is is on constant Obviously, for has guidance so on X% to a our begin to too for currency bit

year. robust guidance. lands that that we that when where we're in the more we'll But, a I have the of provide strong good what year, bookings in would show specific the next we and yield think, January very year terms will word I profile that is seeing by about mean trends for our be demand

Steve Wieczynski

that press try Okay, got to you. I anymore. won't

mean, developments. think these be do look obviously about returns be, far be, a top do of And announced you your ago. homerun, around investments? would I yesterday, I but of returns the island announcement Second question a couple how the South is question so how for Pacific guess, And these Antigua question on obviously, to on weeks you guys developments? going been future has Cococay would

Richard Fain

to I on that. be Michael willing just might think, comment

Michael Bayley

it’s would, I true. yes,

the we’ve mentioned into that ships I Day think, demand the of we’re mentioned, been for as Richard’s Steve, has also sell that one the put And and I a this delighted outstanding. you for Day opening product really been Perfect we performance So, to point, Jason's at day. they on and has outstanding. price demand Cococay year that the the XX seen with overwater we’ve Perfect Day, February, and Perfect great are for products in $X,XXX then, are selling mean, give cabanas our

really we that we have in amount exactly the the and And of is demand this is So, Australian we’re product. from same of demand product to work kind there we’ve got that with think the of market. great Perfect believe doing a Day going Vanuatu huge

generate that that product, and get, the its in returns look investment we’ll simplest genuinely And we that think, have form, the then, returns. experience. a good announcement Club, to kind I a And we understanding put about this this, Antigua, when Club the to I Jason have lot about the and in the of we of the revenue yesterday we talk Royal creating into from with analytics we’re Beach we and thoughts delighted Beach made of that because at the

Jason Liberty

looking yielding add authentic for we to quite in on that pay to have, just that on to making the our that’s we’re we we our those have we’re guests on high very experiences, returns volumes island our with ships. guests it’s Steve, those is investments especially as modernize really been that that. investments it, investing these find while our experiences making. And are what considerably And for all willing And ships clear are we

Richard Fain

the Independence, point, through Amplified years the And I and taking of Day, shore And Marine the cruise that with for Jason’s Royal entire strategy putting just about launched that combine is to the market of XX% into the that segment changer been real we are a the by and American cruise add has segment them couple Perfect a combined [ph] market. Navigator of on market. game now think, market and literally ago of

we those demand So, scooped we’ve a and continuing. products, lot that up demand of for see really

Michael Bayley

some things, question And think we returns. of you’re checks. and back three of We’ve actually comes differentiate And we earlier price is higher about will said this are your people with differently that those Steve, off I paying why we focusing doing areas us, really one think than think to the are and emphasis maybe on strategically, technology. seeing destinations, help

Steve Wieczynski

Got you just Thomas and you. simple get prepared think, Jason from one you quarter. if I’ll want Cook, in one in out. the about saw then, your Jason, see any But, I And mentioned to and Okay. for remarks anything impact them guys

Jason Liberty

Steve. Thanks, Yes.

our been So, obviously, monitoring with about quarter. been time. But, in Cook circumstance events, the did points XX the unfortunate by for the recent with it third situation some yields Thomas a we’ve impact has basis

that Now, any expect teams Thomas they’re demand distribution and and sales our situation from there use really healthy feel in business environment other a don’t And our to saying forward in like we able support UK. marketing in very we’re the the be to in. Cook to kind being that, of impact

Steve Wieczynski

guys. great. I Thanks it. Okay, appreciate

Operator

of question Robin comes the Farley Your with UBS. from next line

Robin Farley

projects going of the that refurb. ask it quarter biggest what by CapEx or And getting since you've to Freedom for your about last -- Is million I know, wondering I chunk I wanted Seas that $XXX talked up think $XXX $XXX the development of the just other you looks to announced destination like since million about year the thanks. the Great, then, million. is is? next

Jason Liberty

we're destination, increase. additional new in the of well investments sustainability of that Robin, as investments that our that Thanks, and the for part the ships, of modernization investments our drivers also investments some noticing. Sure. some of of the the did terms technology up. go of as key are that ship And It in making in are

Robin Farley

but about said know -- rate, don’t not outlook, were like-for-like. Okay, distinction a And if you just talked factoring great. one then, And I release XXXX or I or load were to up, is drawing way for the just up other? you clarify, saying the also rate the you up like-for-like in on really

Richard Fain

Yes.

So, like-for-like just are nicely for in the whether APDs, up or absolute, XXXX.

On there quarter some new builds our in -- side look making terms timing load we at the last up. factors structural in, flattish, are in Still, which you coming factors want where load general, were is them the if lag. structural you things are in the were the just of load of just be exactly But, to of they adjust the some elements, our to relative for year. we to when nicely factors are

Robin Farley

Great. distinction. That's a helpful you. Thank

Jason Liberty

bet. You

Operator

question Your Instructions] [Operator of Hendrix Barclays. next comes line the Felicia from with

Felicia Hendrix

a lot. Thanks morning. Hi. Good

clear, distribution the from So, the Thomas side. back the side getting just that are seeing impact the was Correct? XX just Jason, and more be to you Cook answer, there yields not basis-point to competitive

Jason Liberty

fulfill we purely for guests they cruises, was on. they payment from that course, to had not elements that or we want to really to that a sure had the if side. to vacation sold It And not, those distribution want sure had whether collected experience make And more we of cash we debt relate make related that paid promised. cruises to that bad those were the that gotten had

Felicia Hendrix

pressures Yes. be maybe or that just may environment globally. picture, seeing for competitive clarification. bigger you not switching competitive Thank some kind you to may then, and the And that of

And of Caribbean. a there about now brand. with of the drop out affect might narrative some is particularly challenges, your is a those, but only to the also alleviate the facing, Europe in and or community I that of facing company that that’s prices, some a in think investment may challenges that perhaps in Carnival they kind brand the there Caribbean, in the is not lot concern

if or wondering be in maybe just you about that relative you I'm by the Caribbean, pricing more why talk make? could Carnival, affected decisions to not are positioned and you they but may So, also how globally, specifically

Richard Fain

that we're things that Richard. So, other ultimately think, Felicia, just and We land cruise think is force the competitor I to or lines. And -- from flat comment, biggest be the much tourism, it’s more like elsewhere TVs. industry, really tourism, from continues coming not Carnival I from from our would in is competitive screen

the for to because of whether a cruise I of vacations But, else, especially we've change screen pricing the TVs. Carnival way major we factor. flat think, people going versus or see competitors, if terms berths vacations company of out its And fact we of to the the just the fill bookings. and the it that is pricing equal the price of lowers a industry of that in roughly But, the number manages ship, in I more in think, affect timing going number bookings one seen it's from buying period, will end, there. a and anyone other

any So, impactful. say, is the industry strong are I from demand is doing seeing how in is the cruising we I particularly would general competitor actually benefiting way change think buying. one in general, think in people are But, don’t I

think and that other kind all competitive choices it's the and economy have. people of it's industry and it's the I the

Jason Liberty

And Felicia. to comment just it, add other to one just

can you very we apply our could Our products. volume, and to that rates, you feel commentary that whether of core commentary every one around XXXX, to good that, obviously core on commentary markets, it's about our apply

mean, we on that a in applies markets. and on product demand hear of to the core kind basis, acceleration Europe, to as when our really the your But, on you So, said, products tough in question. from I you just core up a it's it's of -- we all sourcing the things specifically things bring Caribbean, comment like basis bring whether the like strength up or environment

Felicia Hendrix

use particular guess, more is in that factor more cruise? was you a market, attractive price to kind asking to Okay. if of prices they the question, I just one starts putting I getting only take a deciding of competitors your

Michael Bayley

and for used discounting Felicia. go We times the the price mean, This seekers and a this. after a the of an they're are reasons. of a almost normal satisfaction to And specific customers lower families. ongoing either certain different for or of to guarantee found price, think there's but a the Hi, willing will we brands I products, see seeking operating their them for value kind multiple of experience kind I kind there's product. at probably pay amount And, XX% we're environment. isn't who of higher of

in So, the brands between they there and I realize customers, is difference And the that. products for marketplace. informed the a and think educated

true can lower but travel fairly in long the quality we pricing products our of the And it's know well, the passes customers. how our I know Caribbean. to disruptive, feel of relationship and right to position that’s our the quickly. extremely temporarily confidence think also brands is the Royal towards So, partners strength brands sometimes be with in marketplace. that They have we something they And, terms and a brands of the it degree certain

problematic something times, we deal but it's frequently. it's that quite So, at with

Felicia Hendrix

And assuming several implemented that ago, years Correct? price your would intact anyway. integrity I'm strategy stay you've that

Michael Bayley

yes. Absolutely,

Richard Fain

That's -- that, Felicia, you for Yes. thank an been important because factor. it's been

more the doing been time. integrity kind the the helpful. -- cruise. yes, And that something than done their about have it buy current is most to agent the of brands Every I And the point, do our think, quarters do worse. price the we made some stand Michael’s see travel has back and company, own. field strategy don’t and also better, But, other that we coming they’re fact the, on situation same itself, it’s consumer And the industry some the thing distinguishes both quarters over brands the industry. to cruise homogenize has they is anything resisted we’ve what their when temptation confident

Felicia Hendrix

you. quick just housekeeping. And Jason, Thank a

in if results. was in slight could like-for-like quarter for third impact then, the from Dorian the and your I a full quarter quantify was there said And wondering the what that. just third were year? yields you you So,

Jason Liberty

Yes, sure.

basis up a basis, XX were quarter. for about our the points like-for-like yields third on So,

So, on XX yields basis but Hurricane up in a basis was XX impacted bit little was there But, top little little things were Thomas the there there few over basis the the I about were was the about said bit a XX like-for-like our over quarter side. on and one, line rounding, a points; Cook, then, that points. other us points; basis,

Felicia Hendrix

can how for that okay, Okay. full -- we And year. then, just figure was

Okay. Thank you.

Richard Fain

got it. You

Operator

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

Harry Curtis

a modernization. if one give question many in question yield. have refurbishment inning a to ship could specifically got how might if And us of on and sense fewer drydock on process? quick the I’ve road, you in everyone. Good down XXXX? you’re on cost The morning, further it’s days cost what you vessel And relates the then

Jason Liberty

Yes.

So, start off is with which easier question, the XXXX. I’ll

days On have are similar side, the though yard drydock number we availability. those drydocks expect drydocks different, timing the little on the to of depending bit next of year,

to to more In we we onboard our in see terms to find which modernize of for paying in ability return continue venues, our stay yields modernization improving rooms, more overall opportunities further which side, guests is our add the ways profile. ships

for venues to and as onboard more them are and them modernizing would sure ships making I we ships many the for make are willing well for that pay So, as current a expect to as sure several and to point continue, least on. more at in the to for that future investing able spend our experience relevant guests the activities that it’s they revenue years, to be next having money do will to we where have -- to certainly and to

Harry Curtis

in done good. a And yields kind then, variety modeling, we Very revenue the XX% XXXX, kind slowdown. were a some is down really go in of one And garden you’ve economy. Back probably the gross related into a question. rough should of cyclical

would question managed least you how you top-line, And as are so, how is, at XXXX are differently, your, my into make vulnerable. somewhat go or XXXX we positioned that less

Jason Liberty

Harry. question, great A Sure.

this, a ‘XX. is and elements there lot we relative position derisks of to to the which think, ‘XX in I So, were us

First marketing be globally more than that sales the less little platform able a to our half trends -- the of from seeing. depending sourcing sourcing U.S., and and that outside a bit off, having guests we're diverse ship of to globally we're around business on much demand

We’re also And of set diverse their our different much really in more lead -- segments. a brands brands.

support And and then, are are very brand also would platform of we cruising. that lead in off our our support trends of lots for so, I manage demographic is a able to into that And had there of before. inventory based forth, than -- different business so the we much underlying consumer our

better much those a posture. I us be And so, all combination point that cycle. things a at in of to you prepared allows business when stronger course, think, a in us a of sheet, better change puts is then, balance consider different And some there

picked been ‘XX model night. you an course, we our is has the in to which extreme business feel situation, the but business, period ‘XX, able be to time, Of broader of that positioned through well ride bumps

Operator

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

Fred Wightman

on Greg. Wightman guys. It's Fred Hey, for actually

Wondering in activity capacity return like if primal it that decline. you years’ growth a after overall. what I results way, looks times might going in strong could talk that mentioned for mean, the concerned you about is there or or about to form yields few few going [ph] mean shape China. market Are just forward? industry a You've any to

Michael Bayley

been lot quite channels. journey development confidence we the been We've the done Michael. is sure. thoughtful It's made a lot for on have We about and in all We’ve China progress the market. quite distribution. we've from market. this we've a a progress years weeks Spectrum of a of and ago, with We've distribution been China be and that Oasis entered the the the of work Shanghai a made we’re in XXXX. XX the with Spectrum that Shanghai pleased And Seas. comfortable going in more And would there recently, been year X market of couple the in feeling we've results of We, announced with very into that a

distribution, have stuck bit the we opportunity, there as But little with marathon, partners if the built treated we relationship gets supply good in seen think, we whack, and out and demand So, and like big travel if brand I a customers. is and a of the we've and really sometimes our a course we a as we’ve we've past. we've feel built feel as it got the

And so, strategy. we're with our comfortable relatively feeling confident and China

Fred Wightman

And areas. was in with that improved prepared remarks, of Richard's other in the over trends offset Perfect. think, That's he impact half hurricane mentioned then, I helpful.

a guys that you that to is number cited, that is gross were $X.XX was able that or offset? So, number net you of what

Jason Liberty

is gross $X.XX That a number.

if had to our before year, look $X.XXX. of to so, of earnings midpoint a we at we're $X.XX, just for guided we midpoint the guiding And

$X.XX impact that. offset half strengthen hit that and has our us us of business so to helped And

Operator

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

Jaime Katz

I'm discussed program have quantify when the so modification we way the side. get fleet, getting. the lift you But are wondering if those vessel that guys better You to there's ships ROI about on ships just those the a can that cost think the return to

Jason Liberty

to double-digit would think, day our number. I that we Well, ROIC the Jaime, improve up wake is, I at it every trying look way

an come And on or better -- And looking look modernization that investments ROIC line. what wouldn't we to that time. the ROIC them move that -- per clearly, had will have take for -- or certainly would investment. would as seen that investment target. that north, by we not public we that they certainly we on in be an that to a so, typically expected is we we pull do have over to the our better, that investments work on dragging be make target way, make But, We than se, up not internal much do don't help number investments internal mid

Jaime Katz

next sort you your thought Thanks. about economic, on global with environment sourcing thinking of any year are you’d an economic to us? guys that share way process, Okay. And in shifting meaningful then, care

Michael Bayley

Michael. macroeconomic currency Hi. conditions. It's always We're and monitoring

and we significant to pretty infrastructure. global place have marketing a process We think disciplined is what a in as relates sales utilizing it

the our and obviously different that an but upon annual and on sourcing markets, other and based groups different demand monthly So, teams basis, and in to we quarterly currency influence literally targets basis factors on may are market. our a moving

And going this. think, U.S. wrong very direction, dollar the typically we're the of on market the and of I a been, of course, and company, for we're of the one of is then, that factors. of drivers obviously that strongest currency. we're market of American when achievements has the we're different monitoring, sourcing we're I and shift all a state in fortunate these a us. mean, in currency I sourcing has say, So, been change targets -- good But, the constant around. would focused fundamentally always key and will currency American kind and out is the demand very is

Operator

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

James Hardiman

another quarter, this in obviously headwinds another you've list had growing So, of year. to overcome a that

Bahama hurricane, from maybe of my Shipyard, question for what think be from XXXX $X.XX about sort the word? better lack $X.XX I is, from a So, of have and think you Grand Cuba. adding we back, I should $X.XX as Obviously, the

the the then a could But So, cost I net you math? some good But, Silversea. prepared really that that year you mix I was have guess, about commentary potentially remarks is about seems there XXXX. of on benefits Does line the side, secondly, in $X.XX. it of might some like year? that that a on that that then, most increased potentially cruise Celebrity and in is first, undo get of next guess, and good

Jason Liberty

a of month. -- that sorts one-timeish, Well, Bahama kind for The kind where see out which how there of effectively about are things over we’ll incident is clearly to is had of time. how operations Grand Cuba of certainly more that that a the out are Oasis lot Okay. thing,

to to do -- move We those able have ships to those a that time that’s recover cruises. attractive now of our will proper sell to question period that. be, expect -- with we around we all very have market of bit. a of been will that We sell itineraries impact lot associated recover to that The and

that hurricane impacted. I’d ports was the was and of more say is one it side there always that in it -- thing So, on we that turnaround because years, it we for difficult there this much hurricanes long out experienced the experienced, most the ports how one

a of premium certainly, in And Silversea mix the operating of a Celebrity which has was ships ultra one cost, the of and side comments twofold, a higher but higher is they an product or operating My depreciation to Silversea cost is more pointing and expedition product. higher I luxury those have obviously around a are are which of per ships product, their is berth. kind more the as costs really

way so, And the that model not just the -- going an may taking appreciation you’re forward. average rate to be

James Hardiman

of use buybacks on for And capital didn’t quarter. the the helpful. sort side, see secondly, of That’s in then, me, any Okay.

the talked talked to trying it in I is out, the more somewhat of I interest then, some to taken of refinancing about about CapEx interest has being some updated think opportunity of is that backseat? you on the figure maybe maybe about the as in previous side, if, I’m year. the back question, guidance for is resume, And Obviously a next share just than with will think, there that year. or thoughts guess, we how up there? when opportunistic XXXX, Silversea repurchase the the half in

Jason Liberty

Sure.

sure position behave buyback end quarter, comfortable in more to we leverage a at like course, on a side, continue a bookings in the stay third are our grade of range. And making standpoint credit we very debt-to-EBITDA to an of the that we the on is where us. were So, investment and important within

going that we’ve reached we have buyback kind and standpoint. position now be -- program, about is as on $XXX in forward. of an will stated something before, that will our so, But, our opportunistic we will we on consideration And be that we million certainly that doing that left

the reduce that first forward, core out our next year. to, do interest be for to going interest expense bond. kind if is time pointed really of action And we in On Silversea of side, the the to take us the you will first will available the it, quarter that’s which do

James Hardiman

it. you. Got Thank

Operator

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

Tim Conder

you. Thank

about a years joint Just travel the ago? context what overall on year of are the is mix little maybe your follow markets, the this traditional were of UK charter of sourced and China you XXXX? gave And talk Can you then, a from where how those versus development. you three wanted where through direct kind Germany distribution versus cadence venture, bit call cadence pricing exiting particular, Germany how little on to those you’re up that just, versus let’s Jason, bit seeing agents just the maybe it is second you and of within the question your going bookings in is in

Richard Fain

lot a the that, few give learned lessons the with the impetus that tell years, change. probably and model, we to during I hesitant progress -- we we've you of our Tim. significant to change and businesses to And period, percentages, the a of upon gave was really the distribution. that look us with Kind charterers, back if through XX% the we Hi, can charterers. that dependent you progress XX%, that's made of you made heavily were

rate. XX%, if grown And the cetera our somewhere X% So, look It's business and web probably that. is significant at at our of you we've I really around business. et utilization if been charter direct to now, it’s pleased direct with high. a in development of mean, China

with the we've pleased very progress been we've So, that made.

remarkably the versus few So, ago is a landscape of our years different. distribution today

Michael Bayley

answering I we like-for-like your better one than before clarifying quarter. talking expected to just was about I what quarter, basis-point basis versus third in our referring Tim, was by points our to was And guidance the point. XX question, third wanted had When I that make XX to was in the improvement the

about year-over-year, had from came of expected. than over half doing little growth better yield that like-for-like like-for-like we our half -- business a Our

Perfect the from But healthy quarter. to was we the points the So, business. XX a performance that and wanted in course, of I to quarter just Day. the actually clarify Silversea, growth Miami was Port expected that of very for that excludes our than had third And be like-for-like basis better

I demand going it's they’re has for bit -- expected overall, fortunately been a is feel of softness standpoint. very on Germany question, a for side, mean, the immaterial. There certainly, And been market. to to done Germany a but challenging of on revenue little On a their bit but continue has a to very little bit brand the has of perform that pressure, I well. expectations bottom-line little more as cruises, two pricing

Tim Conder

Okay, great. gentlemen. you, Thank

Operator

line next JP Your comes of question Brandt from Morgan. with Montour the

Brandt Montour

taking question. everyone. for morning, my Good Thanks

infected that ex or lines of the a market, that a hoping market little versus basis, So, cruise Cuba maybe obviously, markets or half a little Caribbean dig strong on market choices, the XXXX along will looking short longer by the tonnage commentary. I maybe helpful? in in the just the at bit was are Cuba with you potentially -- qualitative cruise XXXX those in be first could tonnage any differences

Richard Fain

a out. my in that guests bit the on kind your further to the those supports question the just QX, side. in headwind it, talked are book Silversea. to we bookings of of pointed basis to the seeing and higher remarks, to much so, Caribbean and I because the much on relate little on we're first about Well, rate those What what has and focusing half which Caribbean. volume more And Azamara and yielding very

first on of our half to which the But, for our XXXX. environment the you very that So, the look the year, we at if of be Caribbean a for the little point back also half good, of QX. view will is expect bit weigh

Michael Bayley

came Day was It's compensated as dropout think also worth that out of Cuba. more that Cuba than And for on out, pointing line. I Perfect dropped

Brandt Montour

And then, value exciting to there. an add announcement obviously on

could Just, fair if around, some of anything that of context but give helpful. sort expect when you Thank potentially to could opportunity. CocoCay, that what it you us smaller out maybe kind thinking assume you. you else eventually or guys can like also help about feels to what's That passenger capacity annual investment, absolute opportunity open maybe, all than would be us the be think and Obviously, it anything the be it’s able to handle? sort -- daily total dollar

Richard Fain

or connected of volume it the Beach XXXX, how of collection is late ‘XX relates and to the for the destinations. ships it'll Vanuatu. much the to collection Day we growth itineraries, early brands; Club we'll open the thinking we’re those So, as Obviously, to very Perfect take see brand in

kind five-year Vanuatu, we’ll have into take the and XX-year view a Australian a volume development the that of So of we the market. upon of based

Perfect can obviously going volume these Perfect working destinations. take volume think at That's currently as we yet. volume plans. years don't doesn't of reach Day which is get a Vanuatu to Beach and the same the The kind carefully, but I offerings close would number reaches Perfect there. The at less that. X to of Beach Club. is to of we Cococay, through investment few number, But million why really Day about quite XXX,XXX significant got that in to a is its the Perfect people our think I talking so, levels for lot number will through than the really volume we've Day. XXX,XXX, close peak details in the And and we've be two Club We're the still thought think I investment started Day

Jason Liberty

we one have for question. Dorothy, time more

Operator

question last the Zackfia of with Blair. line comes your from And Sharon William

Sharon Zackfia

recession differences the cruise? during I kind used big mine spending the prior versus now think, coal availability initial gets prebooked carry kind the to the today onboard the of before how last or prebooking to the given is of how the you one just bundle of I'm alternatively ship? with of any curious, much onboard even kind spending your the have that is the much that on in of slowdown, of be somebody purchase

Michael Bayley

really over but the much we've spectrum past decade. of I the dramatically improved number got several I really our marketing so whole the years, what over sophistication opportunities. we're level across imagine pre-cruise is was technology So, and delighted is today can't decade ago, our the just number with even with And the our And revenue. of past certainly this significant. that we've think a got better

dollar onboard. pre-cruise. for spend we're been you you'll And making the So, another we get before theory proven that $X.XX out the progress the pleased spends every with get in I just by normal that -- is who said guest that pre-cruise, we're with we that's onboard think,

software that on relates even positive we excited it revenues. very in will bringing We're it's XXXX, as improve to pre-cruise start So, that sophistication new environment. line further our

we’re think level So, it’s a software all a I got made new this we’ve reached of sophistication. good and we lot We’ve environment, of the time. And of and progress coming. improving

quite we with feel it. think comfortable I so, And

Sharon Zackfia

much metric Is there at is on you’d how pre-booked a share this plan?

Michael Bayley

No. I every single year metric, that improving say that we’re would significantly.

Jason Liberty

growth be Sharon, do significant new the we rolls that think, number And in, as technology XXXX. will in that in there

Sharon Zackfia

Okay. Thank you.

Jason Liberty

it. got You

Company. for today. we Carola Okay. have. your available will a you be good call And of might all you assistance Take all calls the or Thank follow-up day. thank your any wish you and very Dorothy, care. in for questions the participation for you interest And with

Operator

conclude conference gentlemen. Thank you, and does today’s That call. ladies

now may You disconnect.

Royal Caribbean Cruises (RCL) 30 Oct 192019 Q3 Earnings call transcript