Carnival Corporation & plc (CUK) 26 Sep 192019 Q3 Earnings call transcript

Good morning, everyone, and welcome to our Third Quarter 2019 Earnings Conference Call. I’m Arnold Donald, President and CEO of Carnival Corporation & Plc.

Today, I’m joined by our Chairman, Micky Arison; as well as David Bernstein, our Chief Financial Officer; and Beth Roberts, Senior Vice President, Investor Relations. Thank you all for joining us this morning.

Before I begin, please note that some of our remarks on this call will be forward-looking. you cautionary refer press in must release. I to statement the today’s Therefore,

our closely business extend has Bahamas you our Hurricane company As know, whom of been for affected decades, were I’d Dorian, some concern employees for and tied like deepest to and our own those by partners. many the to

of imagine lived storm. of of hurricanes. number As of Orleans, New a wake a the my can through the only native this in type family and I hardships I

made of Now the Family efforts and already to we’ve meaningful matched rebuilding Arison in contributions were which by Madeleine Foundation. the the Bahamas, the generosity Micky

Our ships to Emergency Management partnership to our with region provided Tropical Bahamas. Agency Shipping in the very National the and directly supplies the quickly to as needed our important critically did collect supplies deliver

risen In our for and of our industry fact, entire at this time the need up partners Bahamas. in friends has

in Princess thankfully positive Half quickly. our region, Moon private of minimal damage and sustained for destinations destinations and and we’re Cays running Two up very very the our both Cays, guests,

of economic the to Grand back work in running needed Shipyard, providing although with is island. the at path joint venture, much up Our Bahamian also recovery Bahama residents the direct and and contribution

development and Half As developments, our second two development Moon fully our Island part major Cay. exciting of remain on recovery we rebuilding a and new the process, committed to Grand Bahama

and doubt ever. we Now than stronger we’ll the no more be months and of support have will and coming our overcome Bahamian to rebuild continue the in spirit that people resilient

$X.XX. results. per adjusted share That’s by quarter share delivered of $X.XX $X.XX than of record per our higher share last higher June Now financial midpoint turning to We per guidance third results. than and year’s the earnings

to by Lower cost by the and offset $X.XX revenue the we largely and to guidance. scale in currency. detail. an from narrowing guidance range $X.XX our more guidance our than our the to driven earnings unit $X.XX adjusting leverage from than to primarily you will $X.XX David of drag $X.XX, due lower fuel prior $X.XX For our guidance quarter midpoint to through adjusted yields in to full-year, are which our disruptions, contributed voyage greater in anticipated ongoing take efforts part fourth

Brexit, I’d our hurricanes employees Gulf. Arabian beyond countries like every headwinds an as voyage as unusually go of malaise key efforts shipyard disruptions, in Now high-yielding aforementioned who above close delivery some which geopolitical our of from who world-leading economic changes like to as us thank from necessitated was that cruise travel and It in in to XXX,XXX level our and thousands well including brands. uncertainty and support around day, Cuba and deployment well destinations, enabled professionals as heightened resulting their the delays, Europe, and high rise tensions, overcome the

last and guests we representing impacted segment, our geopolitical this As and and heightened discussed to operating continued performance our our quarter, roughly headwinds, year. which European EA macroeconomic sourcing face capacity primarily of UK has XX%

these in well, European the general environment to travel. performed especially Continental growth our has markets Our given very team continued and outpace

markets does a into impact growing However, prices. travel contracting ticket

we operating of performance uncertainty opportunities light political and Costa. across heightened the an further Continental in further already consumer Europe, reduced optimize future In challenging to economic deterioration environment the confidence, Eurozone been in at have evaluating

XXXX. accelerate by from Costa XXXX, and from fleet source followed the right-size evaluation May have demand implemented plan Southern capacity, disclosed, two We fiscal already are deep to Costa in and the by in ships removing Europe as fleet an previously leaving Mediterranean, action Europe into the our of

Costa in Europe of fleet. Diadema, be ship first which three Smeralda for X,XXX the still years, delivered is offset the by new these will efficient of the entire the our since highest capacity Smeralda. in returning extremely vessels The is Costa berth delivery smaller ships in among Costa five

In an these profile of Smeralda addition, fleet our Costa head the other by the acceleration moves efficient of larger, Combination with will strategy of to XXXX, to including the Costa straight long-term along Atlantica. previously This Costa smaller growth like Costa end the new will and of base and the five the Southern improve September XXXX. deliver of result the to the a XXXX. Europe in for China ships, removal the ships Costa Costa All Costa to in in will disclosed planned East the intentional in return leaving ships foundation Firenze provide more fleet continue told, brand. with Far addition the should rotation is reduction in capacity of two

component. on actions in current taken convenient have low-yielding we cruises costly and addition, exotic demand planning with itinerary the the air their replacing to along reducing Southern home and accompanying cruises, itineraries, optimize Europe eliminating to In affordable by them more repositioning with closer environment

operating time, provides price grown has this Concerning has year, but Germany, we streamlining environment. that efficiencies to land-based digits, demand significantly optimization further June, while unable travel costs. in double operator in same this the down AIDA tour itinerary by At past indicated hold trended as was

As period. we deceleration that alone we now disclosed know, that economic trends meaningful Germany in time over and were experienced recently experience, not a same

XXXX. with balance highest and brand slower in second of our quarter, our AIDA income. the the cruise industry growth an outperformed market returning Despite a naturally in in growth double-digit is AIDA beginning which headwinds, among the cruise period has in the travel supply portfolio continued is Germany, supply brands foster German operating should entering in and demand current improved

was unfortunate Turning for our And, will all those to Cunard. Cook. concern of course, we it are Thomas who or on deepest protect our to impacted booked employees We news on extend the travelers. and guests P&O recent see the UK,

the profits grown past have and XXXX. year, fiscal yields ongoing Despite around UK Brexit our uncertainty revenue over in brands

their as as Iran of no Arabian expect, the volatility resulting deal very end, confidence. and and bookings As negative impact in headlines Gulf would seen high-yielding the Brexit necessitating you withdraw have between the tensions on consumer well voyages to UK we greater due close

capture and are with we UK, well well our holidays said summer XXXX, bookings and delivered ever prior believe proven for vacations. ahead uncertainty largest of five well by the the just going positioned year. positioned denominated years fleet for consistently brand that’s existing We is before will new of into Having our value sites Iona, consumers spends, that, to And for the for in ship sterling our UK holiday season. be great the and purpose-built the which business our ship peak UK to have the pound given our provided share through their both first UK

despite deliver expected, the significant economic confident, the to cannot in assets basis. overall we premium UK we Europe. other at cycle Continental ships build is to on a ongoing Now Iona continue our booking that that travel time the comparable will as UK outperform many into. years challenges we aware XX-year We remain take and in fully the We in we and them decisions advance market

one every we in see more life. XX-year than ship Accordingly, its recession assume will

make we to temporary Europe, we necessary demonstrating Southern in will profitably. than to are in grow can headwinds As and if we find changes be nature, the these more

value given believe As be will satisfaction in the attractive levels proposition cruise to to our of and we we’ve cruise, vacation the brands low high alternatives. relative recession-resilient, land-based shown penetration levels past, continue

the the the to our and we of In government’s that Caribbean product Medallion our remains change as that lift caused particularly throughout core and ticket are we our for trade, in disruption in marketing expand a strong, beginning North America, despite Cuba. in ramp the to continue we demand to see travel for price policy suddenness Princess U.S. Also, Medallion-class, by brands up the fleet. as for efforts

travel capacity in considering high-yielding increase. While demand temporary market Nonetheless, to XX% industry-wide us. certainly Alaska there healthy, a we Alaska for remains is of overconcentration for the is supply XXXX, believe a

meet demand With the already brands coming expected season X% the working our increase create capacity to we in close, more XXXX. to than are for XXXX to a

brands Our products. particularly way see Alaska, our best paired the when land-based offer with to

ranging to have through XX luxury XXX premium size the berths. from and segments We brands five in serving ships contemporary, X,XXX berths

share and largest land-based the product, through an share even HAL. have larger our We capacity cruise to in primarily of and Princess premium the Alaska of the cruise

leaders We in Alaska. have been long

and operate us a experience land to own Alaska cruise three we’re purpose-built product in own and National our We’re unique We largest, combined XX brought and our at our largest, we with and Park. best as position combine in experience. cruise the offer a Denali guests our

an have between rail exclusive fleet network. to XX and our transfer dome cars We service of seamlessly with scenically large our the ships a guests and

Tours Vancouver, programs round trip as and Canadian as port more remote to including from We Seattle, other more after including Yukon locations, Angeles Francisco. tour departures, options days cruise in cruise offer to weekend well sought see glaciers, more to opportunity and San Los more Tundra highly more Tours. unique have We

and guests XXXX the with is for line beginning in awarded the ships. Holland Alaska other just America America Holland best by Alaskan experience Award up as Cruise won Choice guest Line one in step in its one than any summer even Princess Alaska, consumers. number to Critic’s Koningsdam, in will more newer Line of taking Cruisers’ further cruise

provides our consumers that with as best our fact, to around Holland portfolio, in Alaska. to the land-based and footprint, cruise and awareness marketing our drive Alaska. experience In unrivaled coupled efforts communication ramping with America an the and are our step leverage up up to we greater And to strategic advantage trade Princess ways

efforts ongoing leverage focused side, we industry-leading to cost scale. savings our our through on the On remain driving

We’re bringing to now originally the expect total ahead and plan deliver $XXX $XXX $XX better the than million cumulative projected of million. and million to

opportunity return, and always, we an As invest. will see a generate to demand if drive we

Peter role as previously the broad-based functions help of that with excited talents, people to new roles On is Compliance. are and and and bringing to together announce processes Ethics and Anderson the and take to that compliance. best-in-class new us a That’s we across us leadership distributed has corporation front, were joined that that complementing Head

me. including prosecutor, ship’s storage a deployed a for wide cruise report as of to Also as will system AIDAperla ship periods will court-appointed ever background propulsion fitted battery power the the on whose a front, limited of Peter, and monitor breadth time. the operation first directly former to be lithium-ion experience, along sustainability federal cruise with on a with

This deployed technology and we’ve LNG. use to other will irony including already emissions, industry-leading of the complement reduce cold

the in to Angel be Germany’s to Federal Friendly AIDAnova, powered industry environment awarded cruise by Ship the for Blue Environmentally cruise certification the recently for ever its named first ship LNG be Design. first fact, ship was Ministry the solely the In by

ongoing friendly order. use of cruise These environmentally XX to on efforts ships are reduce and have industry air quality all develop systems emissions, innovative we solutions proactively LNG the leadership our next-generation for operations. pioneered advanced We to part an additional of

we of our guests of fully XX% with aware, Now outside truly as you are sourced nearly U.S. global company are a the

cruise guests U.S. million every sourced a leading in established travel outside cruise have the with annually X presence for We market over

The global to sheet industry, produced aspect cash being capital on of strongest positive, global deepen forward has and our $X ongoing however, short proven the and number subject uneven our attractive we headwinds. returns be with around industry-leading results of our over position, operations, has billion balance of annual business are any drive steps from going actions concerning a economies the We’ve to the to a taken world mitigate to in run. in our additional analysis

Now continue beyond, we ourselves these we nature, year as southern with can Should capital and in to is and prove Europe to we’ll and that do on so Over we in in expect than XXXX have of time, believe it economic we to invested further of return capable some begun to these said, inherently makes we’re achieve as to for and sense will the in comments. headwinds December. the delivering. if short-term I provide double-digit business more line guidance positioning we’ve bring so, for our always do already be demand in capacity shared more next

call to I’ll that, With turn David. over the

you, Thank Arnold.

to ticket things results. my up full-year revenue, insights trends on with start and of summary with for XXXX few guidance unless begin, be and metrics will today Then and cost otherwise our prices XXXX I constant all note finish stated. some of I’ll I’ll on a in quarter update provide Before please consider a an XXXX. currency third other references XXXX booking to our

was midpoint EPS the without As driven to $X.XX. of cost of between guidance. improvements, quarters, the while Arnold The net improvement above remainder fuel, quarter due was indicated, the cruise third a for expenses favorability our our in quarter. This the the to during realized by adjusted were majority which of June was costs which was timing was the the $X.XX due

third Now, versus look operating the let’s our at prior quarter results year.

increased Our capacity X.X%.

brands NAA segment X.X%. as our Our North America Australian commonly and was known more up

known commonly more Europe our XX%. Asia and our While up as EA segment brands was

yields Our total down were net revenue X.X%.

net down yields apart Net yield. of ticket let’s were to Now X.X%. break components revenue two

NAA while X%, other our of by over down the yields yield Atlantic. increases improvements were EA driven in brands increased were both and brands sides Net almost with Our on up onboard the X.X%. Caribbean, X%

adjusted In $X.XX accretive from benefit summary, lower the higher by stock excluding the was the buyback per growth; finally, our impact third than X.X% driven program. net and cruise EPS quarter of cost from X.X% year, last ALBD, $X.XX capacity fuels;

me let full-year our now you September So provide update on an guidance. XXXX

our adjusted EPS Our our driving a guidance. of puts $X.XX than to XXXX the lower number is September versus in and The of $X.XX midpoint XXXX. of guidance. our for changes guidance $X.XX for is There $X.XX June midpoint the are takes

Costa of to tensions First, Smeralda previously Gulf in $X.XX. the $X.XX cost delivery delayed Hurricane the Arabian Dorian, and announced

are a yields net of revenue lower cost forecasted ticket yields and $X.XX, Second, combination net other revenue lower onboard yields. net driven and by fourth to quarter lower

expect to our the continue be guidance. our brands NAA to up but year, our slightly our are year, than be less for yields EA guidance, more to previous slightly We but while brand down for previous still the expected than

fuel is $X.XX. combined and prices $X.XX, Third, currency impact of cost price fuel the currency and $X.XX

of were program additional stock an was related efforts, by impact accretive offset depreciation cost of from as which our of items. buyback $X.XX to this $X.XX other gross of favorability as variety during a quarter, our third the All the and improvement expense, well finalized

ahead first-half prior cumulative point on of last year XXXX with Turning that are in our at the occupancy booking for to prices the year. trend. bookings are XXXX in line of At this time, advanced

higher Now let’s for occupancy year booked position the bookings into the than for line on drill cumulative down of price. are prior Cumulative in and NAA XXXX. the advanced first-half brands our on

year EA and in prior for cumulative While on the price. line are both bookings occupancy brands with advanced our

Now the turning to full-year.

occupancy for point are time, this line that year cumulative with While the in year. also it at advanced at is of full-year prior in are on early ahead XXXX bookings the also prior the prices

up net in reasons quarter excluding During on increase fourth cruise XXXX, step a in our versus the which fourth prior of one quarter bookings, is see ALBD, guidance. XXXX in cost the fuel focused for XXXX the you will promotional the our activity September year per

And other to finally, for consider a XXXX. few things

are X%. We of forecasting a capacity increase

revenue negative of for which mix by approximately first-half we our increase will and net Given the the yield. impact XXXX have brand, capacity XXXX, a will X.X% impact both full-year reported

the the For unfavorably prices guidance a those unfavorable are currency favorable you fuel about of of $X.XX, modeling are Lower lower prices XXXX fourth by using prices impact who $X.XX. quarter September fuel dollar will and is and impact while an XXXX FX fuel stronger $X.XX. rates,

we higher-priced impact on side, X, regulations, new XXXX, XXXX. addition, quarter percent fuel on of the emission total of January $X.XX. mix effect for prices, the the impact fuel XXXX fuel by would into go a Again, fuel of will guidance In our our MGO September a fourth sulfur which using increase the previously consumption of we indicated MGO result as as usage IMO unfavorably

We currently our approximately XX% of fuel to in XXXX approximately in MGO XX% XXXX. versus anticipate consumption represent

impact impact MGO fuel For price done calculation fuel the clarity, grades, so the for modeling price by calculation XXXX. are additive price one impact The fuel HFO price and is we when and changes do for changes. one mix

point uncertain HFO for Please than most what even given due expense will IMO in years this to or more XX% In the pricing of it year’s approximately mix change impact, in time grade the MGO. approximately type we fuel use. MGO we the XX% new at fuel regulations, this calculate MGO. change to either fuel the from that the While be in change next note case, is

the when we the fuel this mind in year-over-year fourth quarter Keep September impact guidance using calculated using prices.

based give rules me thumb September price grades Let again of guidance you changes fuel quarter prices. fuel on the for current by fourth fuel

across of impact For in with an quarters spot the HFO, XXXX, XX% the four year. $X.XX evenly change current represents a spread for the impact price the

the for year. XXXX, the $X.XX the For price four spread in spot the MGO, impact of XX% across represents a is current change impact quarters a evenly again,

guidance be using billion billion XXXX around currently versus XXXX for for for full-year fourth quarter expect $X.XX XXXX. for We $X.XX the XXXX. billion $X.X.X expense $X.XX prices would versus to billion for be Fuel September fuel depreciation

interest current XXXX $XXX XXXX. net for million expense, around is $XXX our For for versus expectation million

the provide of during will as metrics remainder We the for guidance XXXX we each our call normally earnings do December year.

And call now, I’ll the to Arnold. turn over

line Thank questions. David. for please Operator, the open you,

question. Citi. please the ahead. Thank Greg Greg Badishkanian our you. moment [Operator first first is one open. is your question for with go Instructions] from Just line line Please Badishkanian, the And of

You may with your question. proceed

next the to on move question. we’ll Okay,

next of ahead. Research. with Please Our question Wolfe Shojaian go the line from is Jared

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

morning. Good

this it’s So your think well? exiting on what the that could to you’ve thinking morning. willing Is a this – about to entertain your the good yields fund you’re far are And in year headwind, the current then just potentially Thank year, reasonable that you there fourth suggests The in told that And you. contract guidance us as earnings dividend continue leverage XXXX for so how the do EPS contract low-end. could based for with you fuel to context? commentary, using rate? quarter booking max

well lot too out for Hey, give next guidance XXXX. a prepared there, early to the to thank is This There’s of we’ll on you. give guidance way call. noise be and

and will the that with there fourth answer the hard we’re considering to all all at going the there. happen to obviously the in be quarter things guidance out work that, So deliver noise

striking guidance the full-year. for previous We’re distance of within a

XX%. to as said times dividend target dividend concerned, our that many this ratio, far we’ve as XX% And we is payout the

in earnings the XX% with went we why believe balance chose believe XX% past, the up. we that to sustainable that’s sheet, where have And sustainable the that long down, run, the strong that. went payout when ratio at target dividend seen and is But is that we the we in level. So, situations,

wouldn’t raise course, back we the go saw until dividend earnings Of we up.

Got it.

CapEx year year, Okay. elevated look to this you And year this of we any similar CapEx. then, for a year, have at But now, next record is this earnings terms growth. as in obviously, don’t is right

look ROIC you’re know you. think, to but metrics I guidance of not I important declining. your XXXX now, similar. two right Next then now wanting I are on know could year, is these also potentially give for kind

capacity? mean, do appear Costa, here? on reduce and point if wrong you to point reducing tweaks capacity, I I get necessarily those don’t but there to overall you some a to some more needle meaningfully what at here to of So aggressive I’m be start capacity correct me mentioned with you know movers what the do But that? on at little start bit your

brand at look always what by is we it do. which by We’ll trade, brand, trade

again, example, I lot guidance time. have in we’ll for think, at next we given haven’t pressure AIDA Germany, some year. strength, on for we had substantial capacity obviously, in different monitor over what capacity We’ve we with going but on for had a things a the increase, there. all increase brand, where yields our places, where of And

introduced. even assets within we’re build capacity of time. planned that over recessions period given plan capacity managing know XX-year time. time XX-year overall, to country assets. always over the We and individually we that years produce economic We We or those trade, We various a but cycles We building assets mobile. XX-year are ahead going the with on perfectly But And to can face have. we capacity results ago. are for ships some on

X.X%, months we of is terms to which expected capacity X% XXXX, look over the in increase growth, three at sorry, ago. it below looks just XXXX, well be had And we as the

for and make. capacity within make brands trade we we the that the And – the that material moves are

Okay. Thank you.

you. Thank

the next Stifel. go Steven is Our of ahead. Please from Wieczynski question line with

Hey, morning. guys, good

Good morning.

have June a break since the know, you morning, know, down, gave So guidance. you had you can markets I good you commentary since we – and causing early. give you But volumes the gave release help in really terms coming which in I And Arnold. us going down bookings guess, weakened doing? to pricing you’re lot booking maybe commentary from concern. guess, XXXX of still a of How around I heard So this you I not point. at some back about geographies or June? in is it’s

the the about pricing Dorian, had had part noise that had there situation. hard bookings. Oceana. the Hurricane Arabian itineraries the booking Carnival Gulf. Cuba Vista, looking We we the and Remember, since is the the We volumes all tensions June in at for So, change is the out in to

is point. of it’s reasons noise, give uncertainty with bit degree XXXX very and So read little for a there’s to the feel And all greater through. uncomfortable why at why we difficult one to of that it this trying guidance

delay Dorian, to of top what that saying, now, a and in did good there’s were Just Cash the liquid Arabian We impacts. with going us damages. on going of to we be We reemphasize that’s line terms have flow Smeralda David impact Gulf. future data to wise, the cruise credits ramifications had Hurricane. ship But we’re other had short-term that. with

situation. Brexit persistent spike Europe the was clear as Vista. just in credits down cruise. versus got not rest fuel in environment price in positive the the the no Continental is of as the Cuba UK change it’s tour a and is in market travel a from travel market the and Germany outperformed environment, where had a we’ve nonetheless, But Germany, future deal it You’ve as cruise economic versus malaise constrained and then Obviously,

So all of things. those

fourth that, Cuba, top And quarter the Caribbean strong. of then to this is us last for is in on fourth us of fourth quarter not top pricing in the the comparison Cuba available quarter. in very although, year a versus

positioned that, the next basis. we And So guidance all be to and striking those picture on all headwinds preparing the the And had distance with of lot we’re on results in earning of in gave things noise within a June paint take us of with year a it. well. our

that you’re that to issues? or I that question business, more Europe, But pressures your or related related be is issues, I guess, seeing that more macro of the would to be, to is if equal we guess, overcapacity, of the in European both basically those balance on over an would add

and no it’s had I to geopolitical matter again, planning, the – you’ve then grow matter of of the changes. think constraint that. things, where, on time. just at a same capacity ability these the yields the question there’s got grow There’s macro a constrains, sudden a it’s environment not And we

So when you the with of you change dynamics then – instances book was to have shorter have booking a Oriana having lot in that and to booked and changed in different that create suddenly much with of window. with well some And an now a hurricanes. situation itinerary, to that Cuba noise. happen, itinerary kind Those the similar a will

of Europe we ex-U.S. with. would things In to always Roy index. guests This true. have three of [ph] go wrong. even I a that longer-term, are some But short-term, overwhelmed plethora we’ve dancing kind number that times our just things that strong we we is the guess is market, only planning, year, as a say have the it’s Now, for of and had plan we

We have NCL number, the XX times ex-U.S. we have

So have well great the anything get going with served not strongest and we returns us it we sheet well. we have more But scale reality the overall. there, the on largest longer-term, is, balance impacted. that’s the And

don’t think terms quick if know, in bit David, if a maybe expand fourth could higher, the more can I you for to in were more at today. I you referring one on quarter one the what in also you’re terms said And can costs? little add you of I of David. out is, us promotional advertising about help going mean doesn’t what I’m here you maybe I And get assume? or there marketing environment that guess, And price, promotional to getting that’s

No, no.

to environment That’s like sure, doing terminus, It’s the demand the investing and create a to overarching we’re only going not promotional increase then of fact, we’re wave create we is, And all, the to to the need year. successful in discounting in X% of capacity comment course, season have coming next can First on. demand, we’re we we everything given the and But… so pre-invest, be to make that.

Yes.

ahead. …go

driven guess the relating cruise use higher higher I year-over-year fourth net my that being was in advertising. basis. in you should a relating being word It extent advertising the some was hindsight, by And the comment – to quarter. cost to on

Okay, sure want thanks. guys. Thanks. want Appreciate to just that. make I clarify just I it, to

you. Thank

next question with Instinet. the ahead. go from Our is of Please line Curtis Harry

Good morning, everybody.

morning. Good

the you of Were I mean, wanted – capacity on I – to your – follow a that’s all, capacity, first it’s amount that’s going? is not where out of but shifting of huge up markets? it

The in are China, we’re sent cost, being strength you’re ships different places, assuming to that we markets that and… where the other I’m some to about have sent talking referring are being some to

.and some are leaving yes. the fleet,

And some are leaving the fleet…

Yes.

…some sold. are being Yes.

Okay.

and the example, So the improve being next pricing as would to ships, Jared’s capacity, of retire for a sense make brand to actually to old you on considered? these just – question. tier up image, not because lift Does some going to is it back sell give but that that opportunity theoretically an

ships an have our they’re have people tired images. not all, with do sell the and well. The of First doing brands old tarnished really brands are on We guests. The strong resonate to don’t ships.

it still great could be and service with any maybe and but hotel, on ship have, so a hotel pristine so And say, XXX-year so we forth.

So that’s thing. first the

disposing terms of Second when sell sell markets. ships, them of don’t is we into thing them, in we competing

where So directly be to we’re not into it. selling competing ships we’re markets, going with

type we’re speaking, the market, type say travel we’re cruise And experience that So that fleet, is do and leaving of of it’s I mean, the the operating capacity our not market marketing. that I leaving we that generally when in. only

outside scrap would see to, feel ship to afraid it market a obviously very confident But, that the to to a we’re or we to sell two At the get of So point comments. not that’s if right the those again, there’s to. where this a trade need make. closely be if there’s and our we market again, need not every we we there’s every are pretty path. if are on moves we examining additional to We feel point,

going the of past efficient time of in persistence this to We replace there Costa kudos and it been Southern felt in And other Continental right with now, performance Costa some team much Smeralda. done Europe. improving over is And job currently on time, malaise Europe, have especially dynamics good very a capacity smart capacity, more saw has we they’ve economic the because our with year. over we all his to was persistence which

that opposed much time And moderating capacity with more an the of replacing And us so adding be efficient help, both operating but expense give capacity, as to next standpoint, that for we’ll also from period capacity some capacity. will here.

performance we So can continue Costa. improve to of the

related trend and question And and XXXX, last and maintenance maintenance to is of looking respect are you CapEx $X renovation kind maybe existing your or achieve with renovation billion? you’re How XXXX and just you expense good. about are is and – believe I and in some look And XXXX? this trying what the to that between CapEx, inning particularly to out to with fleet? CapEx my likely in spending to of year XXXX Very what renovation upgrading

So the XXXX XXXX we pretty out. move as in numbers should be and consistent

take every what to as release inning in port go brand. we’re put we that Bahama. port our about out far as facilities the Grand press of at the fleet towards to Yesterday, will you Some got addition to And a development. look CapEx in, a in

of indicate have There consistency as continually the them some different retrofitted continually little mean, the the age, his ship I and keep bit have, as to tried fleet. maintained comments across a is to average brands different Arnold in

but time brands ongoing that and across will good goes our of at in as on. It’s consistency an point, do shape we’re never be done. to more good we always one process. each But there’s So feel this

Okay. Thank very you much.

Thank you.

from with is Please the Felicia ahead. line Hendrix Our Barclays. go next question of

lot. a just you thanks give can us… Hi, David,

Hi, Felicia.

some sounds just you got segment more updated us. since remainder color NAA for was just brands incrementally time I you It of just us driving XXXX? can like the last that? David, there. was that the on Hi what worse give And wondering your

on as in between NAA Vista and in a Hurricane and the Alaska of a challenges challenges lot late things there’s of and lot So brands, Cuba a season North America. well. noise going saw Dorian, lot there We of

both attributed $X.XX. the taken down and brands. to in overall, so prepared was had And the we America as North EA we said remarks, our guidance had That

Overall ahead. – I’m Go sorry.

No, Yes. no.

very yields was, but have year say NAA just have NAA is is strong. it yields – guess overall, the year. what the for the increasing in for from the I brands in And is Yes, forecast brands, overall, going down was again, in to overall we slightly I increase we Caribbean in

of it Cuba knew and The Okay. Vista, crux – – that for okay, you quarter. are those about so issues last Cuba so and

thought? or some like So just I a sounds like could the it things more noise lingering bucket than maybe out is out, there bit little things you of segment if

it. of combination a It’s

not and about So and credits rebooking you yes, those when have some suddenness et cetera. booking it them, but creates because them, then get future claimed claimed, the curves noise. cruise of we changes or just of and knew it And

and again, there. is you’re I the lot And a Caribbean since want do out noise of very to there’s you’re But talking so, Vista, strong. Cuba talking that point

I there that just Hurricane that, was Hurricane a Thank you because that XXXX. out – a has might Dorian. other threw there not items there an been And in and might low has you booking impact extended of Dorian. think have concern been into There post that that for one that I think, the

So, change too. of into there, because language that XXXX your also, segue some might a be

So could you things? just one that on if we how driver, are focus seeing maybe

where the see on are. exactly starting the first-half But we to booking more We months and already pricing. comments we not of it I in We’re for all booking year of have in first-half six ahead relates and say, this that go would given noise next XXXX. line to the share for last But guidance. there, we’re trends that talked the out about the of booking about trends we the all trends

But little you I guidance that XXXX, is from that mainly seeing giving for XXXX. in not it too, are for know bookings you’re just Caribbean? the a is changed now language the or your – ahead. well continued bit ahead EA, But versus noise Okay. because And are noise the

third has it with to down America the we’re more still America ahead. the the do brands, quarter both North was activity the quarter. during the North booking and both that during Just – EA But but in the brand, the booking the activity third but was NAA

Right.

the look, is group year, single to next this than industry on the Alaska I And high less is Okay. grow in going just know significantly it digits year. Alaska, but supply industry just,

it’s an is really year-over-year? know early? Alaska opportunity So do better there for to you I in

less comments, I recognized. clearly, and communicated but my mainly certain early, investing, we is make additional is that creates for we’re as to growth have capacity strong brands in But opportunity. It us, advantage mentioned true the Alaska effectively in without

well. Caribbean capacity out high-yielding above increase, a bit. the And kind Back us. temporary above time, that south five with today, went for But strong, supply for overconcentration in previous It’s ago, high five substantially the way. But well we in more will capacity It’s our Alaska similar base the the of years years things peak, I a it. was fade market over yield there think very doing Caribbean a of is market. at the and on peak guess, pricing ago probably same well really return are brands

final guys IMO, clarification your XX-XX. for was Okay. MGO me. previously you said And just mix had finally – I thought that

What now So it’s XX-XX. changed?

as No, did said quality Remember, for number we these as usage well couple It had account are the the advanced we points. some of it come. systems we installations yet always commissioning XX% We up port, percentage a numbers. into approximately. by that move in refined of time air – round of took the taking about to

or I from chance And Speakers] now, what because pricing, [Multiple you’re the is IFO there – seeing that improves those a anticipated? the lower gets guess pricing

pretty forecast worse But could in then. we could shape. good the IPO knew we reality the is, overall get it could If be improve, Yes. it would

forward it tell that be timeframe. the the significantly forward look in you will you curve curve, at the will lower January-ish If

always curve a However, is say forward good predictor. I won’t the

here can thing do but So the to fact. on give to you want with I’m not mix that I I forecast, that other MGO. fuel And point the out

this XX%. XX% that over advanced time we continue systems, as the towards we’ll air back decline We installation have of that quality see the before, the said

put the – using today? your forward not curve in so But to forecasts Okay. you’re

was I No, that very guidance. specific. fourth We quarter prices we use for spot the use current

Thank Okay. you. All right.

question is with from Our Robin Farley of Please go UBS. next line the ahead.

may early could I bookings And the you of guess, last that XXXX how bit give to maybe three continue. been commentary things flooding Thank a Continental that a months? on to about be I thinking rate North have you expect would would talked storms which about the little of you. and in maybe more Europe the ask you’ve color disrupted lot your been. us America, comments what about be things the last temporary some about if and I versus month decline wonder in maybe Great. little and a maybe has in wanted by of that

growth from hasn’t that last of there’s less have passengers the Just months of kind that fact change supply to much after Is levels try normal the an on? though of up general also, or disruption? kind been? for forward recover about a and that rate year assuming get a you thinking North lower in three your high – I North American feel even shaping better, the Germany? be of take know how rate Do in German Hurricane early And then here from next that for to commentary to market, volumes just

Okay.

and David may comments and as well. Beth have start some I’ll So

don’t the a sentiment, your team capacity with in industry clearly, the increase our Germany. start substantial give cruise market kudos, faith let’s and outperformed they’ve been of travel all, rest there have first, the change in has in last we because consumer one have the this outperformed which industry is that I of Again, year. in and Germany travel overall, to totally want First has of declined Germany. But they

capacity the next Looking to growth and year, for there’s less for industry. forward us

well. grow the noise this their and on. was even to with so year, background, So, Germany that earnings bodes the able in

results try to how Germany. to opportunity in whatever the we definitely and extensive, deep And to And malaises affect year. so I is think our it team have will is how would But is next see us. persist drive well positioned see Germany there to in

Costa that Europe tension on the were of UK, shorten which for is, us with list, itineraries also about, situation and modifications later numbers as recently in and as in we’ve an future some we three bookings rest short-term last will so on already The reported caused to that these forth. credits involved and disruption talked so that what Arabian the have impact summarizing Gulf the over XXXX said, did But geopolitical have made change impact and the you. There’s cruise that I’ve has months, brand.

one even a strong. And vacation as appetite Cruise UK I for tends call, market do well healthy the pound UK benefit is might P&O there of when based. brands having that’s not we economy holiday go have from is have as on standpoint that of overall, as like. an with consumer still things Also, advantages and good mentioned But it the national the the you to in the sterling and

of might avoid of things that can the fluctuation, have. can currency offerings And so choice it other a lot that impact travel

America what’s you to noise really overall. performed the without see strong Caribbean they’ve and very going is if happening again, And North were Carnival study We absolutely. even year. to brand is move closely into better is well, continues perform the but very to reality North America, the going strong. But next into

to lot early on that. and guidance it’s some happening see too of other general give and geopolitical this are noise noise You far softness predict that even a and today. from But things

Yes. And time. specificity by there,. I at all competitors than point more stop more want – giving give these to our to should think really because to we trends information far booking will relating information I this to provide in

Okay.

know think up that know share don’t Okay, that you do an I tour give previous you sort couple any terms market market if operators vacation operator have that? vacation it’s tour and I years, whether if the thoughts picking taking Thomas been of that’s you you a ultimately think in UK. broader about just market that Cook the out – of fine. market? when have the times – I out that any don’t the have but opportunity of of around in come comments supply And of Will on then and is know of

impacted are travelers any being We don’t a been of kind the impacted. lot obviously a sad employees a because of have predictions ramifications. have around been day, and number It’s of

to on or on. not protecting even and we’re – those this that. do the travel better all comments others still us that comment for a will my versus UK of we’ve bode and find have on it a people As don’t I the in they’ll that at cruise we end, said does in And versus point [indiscernible] for way booked that

about you just them through last Maybe distribution? through or you direct on think when is, to do your that through other kind expect been a question distributing channels able replace UK, just in are have in what any change the you your channels, point you distribution of and

from book, think ability yes. I to

down performing. to and We’re be we’ll healthy our and are brands able change UK to go the to continue and able perform, in situation a to be

Okay. right, great. Thank you much. very All

Thank you.

the from line of go Brandt comes ahead. Please JPMorgan. question next Our Montour with

Great, thanks. guys. Good morning,

yield So just quarter a quick growth. net question on around fourth commentary the

David, you mentioned, onboard your in think pathway growth. I that lower

onboard that passengers what kind kind remind this generally the little – you’re of you range something be put with one near-term there? cautious you the growth causing of sort is Just guys us And what’s onboard quarter your of a to seeing out? more is in

up is Brandt. this in that year. over again. EA, quick, I and there’s XX, only segments the year year last and onboard, at think revenues I both once just they’re to NAA been XX one an we’ve And up years both out real existed again point have would Yes, onboard like increase

So revenues. But I’ll question. answer onboard specific that’s overarching the David your comment let on

again… Yes,

and modifier guidance. the the …of

other on we typically, minus So plus two-ish something in around the quarter or and depending guidance, provide itineraries things. our

in So up that fourth June as We they’re in this saying the quarter. wouldn’t in particular be quarter. the fourth quite just had in – were as much we we’re the guidance case, just up still they

with to ship. to people onboard that were given Cuba, do to to which And relating had of credits some onboard

been The have and got about just split talking small onboard may movements here numbers, correct. Cuba off between but we impact think give noise we’re in may little have ticket the been to total There other a some and bit. some trying direction. people I the

forecast on revenues. We really can’t our

So see we’ll working what to teams and onboard revenue. the drive are happens

Correct.

that the given brands is lead, that’s pricing the in maintain. discipline So been revenue inventory to been are near-term onboard has put all the our into impacting occupancy market the part of what and trying

one, on on a little versus on lower are knock our the onboard last revenues. has in bit impact marginally the which We forecast a occupancy

That’s to And back really Thank helpful. the then quickly commentary. on circle advertising just you.

– And maybe will sense what sort this regionally when spend? of up focused do done be that that stepping really benefit you were the or those dollars most? that think then Just in past? give a analysis And you you the marketing the brand-specific? you’ve What can cost do us or around can for

But going to set of they’re anticipate, word be markets term past probably combination we’ll broadly obvious is we is, line the create the a And obviously – those. detail, would revealing in going of terms efforts level I’ll We anticipate just and you demand. advertising some there’s versus bottom competitive that that into go so when stuff. Providing use line. want of do to we let

it you. from Thank That’s me. Great.

you. Thank

will because go We’ll questions, we more or take over. two one

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Our Please line Fargo question go Conder is Tim next from the ahead. with Securities. of Wells

schedules can give comment Bahama you Shipyard then or your the I to to to the other the in circle related that anything may then North did mean, several on I side on with out back break Yes, a just the how items. your you. your impact dock Grand And Is Dorian you Dorian fiscal dry want way impact from consumer America. from And that? any bump to XXXX at for here? position? disrupt ownership there Thank

decision desires to were Yes, the coming up want finalizing shipyard real for what shipyard to been of those our joint I’ll all dock that of venture of ensure available talk most the made That being damaged. in have The with That we to we there. be do dry dock was terms decision mind cost-effective the shortly. made partners about in that scheduled. relatively exactly reviews that are has quickly,

all finalizing that So with we’re in the middle of partner. the

certain that hasn’t being needs the of and making or yet is in the context the we the new various in but way in servicing are cost-effective go in partners are repair ultimately, whichever build, been yard. in finalized, that the finalized we Some of

they press say, today, we speak release their a running did fair indicating ships it’s believe that. I – to So and the ships as out servicing shipyards there, and up put

as work people the mean, business. to economic as Dorian is the impact island. had our So to far And I back concerned, are it Hurricane contributing of viability an on

We day. to and change couple of and where couple itineraries embarkation the had cruises change a canceled of a had we cruises

We a of about the of result some haven’t else. particular different trends always hurricane. any noise than booking that booking anything trends seen see each anything this in terms and every hurricane is or other in as We

on you is been some And you cruises, give could Dorian whatever number trying Okay. XXXX? in questions on North help that the there that to focus – the to guess, cancel would America? that put I credits, specific specifically, can David, related impact cruise or that any color everyone’s have I of think prior on on

And then ask wouldn’t to if I’d one thing you Thank for Europe. the on mind. like you color other

would Asia you’re Chinese a did or travel press your from cruising any the that Can there, in go Asia You mention is guests are seeing additional industry How general Asia, you. Australia, Costa UK to in you on in Thank reduction outbound seeing you any color in who to for Just there? Asia? much release. some over putting yourselves weakening talk maybe there? or capacity about of ships that due higher

is strong the segment. Asia. you I and at say refers press if think in Asia, And year. the very it’s define this We the we segment release and the way to Europe the look business

We’re up overall.

very a Japan. China so had year both in Asia, And we’ve good in in and

good for has business And so, this a Asia year. us been

we seen year. And in Asia not so this have weakness

Dorian, we the was October. combined $X.XX of in that tensions in us just Arabian interesting changed Smeralda in delivery did cost the is, $X.XX to Gulf and What say the Arabian the late And itineraries the Costa delayed the Gulf quarter. remember, fourth

So that to Dorian and $X.XX. Smeralda part big $X.XX of a were

you, Thank Okay. Gentlemen.

last One Thank question. you.

And Please line with Goldman from Stephen Sachs. go of Grambling our final the question is ahead.

Thanks for in. sneaking me

I what’s all I should weak even have ask of costs? net Maybe, talking profitability remain the the are further? a environment to to costs protect this levers cruise or more range deteriorate guess, the bit think and cut what saw you the XXXX, you in what you’re about I’ll little headwinds Given such aggressively another way, quarter? as

improvements. I year. this on $XXX well put demand. to I north can historically, choose Again, it’s $XX cost. we’ve be million will as give we What the million $XXX of think, from guidance million up be to set just how of sourcing the tell line year that reinvest I processes, few I think $XX target internal in How savings to in which part won’t our and much reported, here will planning is, million, you of this And we we That’s wrapping much create of a bottom leaks. to

efficient more case so we fronts, in do multiple with in. sourcing much happened to as what demand And look be will have flexibility look opportunity across you see and outside past Costa obviously, we Costa – quarter, will doing make we that But specific be what ahead. as for of savings this continued of advising ahead, are we hardware as we’re we that changes though, is part that things to just need also is Smeralda putting the of saw

so the out you ships. only And moderate do taking capacity other by not the

operating improving this vessel. just in cost a lower, We’re actually because your net effect, is cruise operating base,

have and So those across things are make doing David the a base. we’ll I’ll continue we’re comment.

Yes.

we go guidance we’ll XXXX. tremendous I’ve more economies the think of repeat result planning XXXX cost they’re guidance that So the there. that, In our given in scale, that for larger new let believe both as But me what cost better as I we will the because we XXXX, And and We’ll a X% capacity of site. be you those of before. well ships, December. increase a give the through onboard said get for than couple stop short we’ll coming, as have times detail process

much. Thanks Super so helpful.

look Okay. Thank really Thank it in follow-up forward much. appreciate We to and coming weeks. guys you the you, everyone. with very you

you. Thank

for We participation for does lines. ask you disconnect That conclude please thank today. call and that your conference your the you