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Norwegian Cruise Line (NCLH)

Participants
Andrea DeMarco Senior Vice President-Investor Relations, Corporate Communications and ESG
Frank Del Rio President and Chief Executive Officer
Mark Kempa Executive Vice President and Chief Financial Officer
Harry Curtis Instinet
Stephen Grambling Goldman Sachs
Felicia Hendrix Barclays
Steven Wieczynski Stifel
Brandt Montour JPMorgan
Thomas Allen Morgan Stanley
Jared Shojaian Wolfe Research
Paul Golding Macquarie
Tim Conder Wells Fargo
Call transcript
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Operator

Good morning, and welcome to the Norwegian Cruise Line Holdings Fourth Quarter and Full Year 2019 Earnings Conference Call. My name is Daniel, and I will be your operator. [Operator Instructions] As a reminder to all participants, this conference call is being recorded.

I would now like to turn the conference over to your host, Ms. Andrea DeMarco, Senior Vice President of Investor Relations, Corporate Communications and ESG. Ms. proceed. please DeMarco,

Andrea DeMarco

President Good Vice us Daniel. XXXX and you and Del thank call. Norwegian Officer Thank Line and Cruise our morning, Chief fourth joining Holdings; Rio, Frank by for joined Kempa, year Chief quarter for Executive I’m of Executive you, Mark today everyone and President and earnings Officer. full Financial

well to opening as discuss before call the begin which, after will full XXXX commentary, year guidance call and provide with as for for handing results back will for Frank the to quarter follow closing Mark the Frank remarks.

then your questions. will the We call open for

a As at conference website www.nclhltdinvestor.com. simultaneously being webcast is on reminder, company’s Relations this the Investor call

may the also website. XX found Investor make Relations call replay available call. our conference be will presentation a We also which references on Both presentation to following today’s for for call, will and days be slide during this

would few our a like results, cover we Before I discuss to items.

quarter full XXXX Investor Our press available and and our year issued release results this Relations on website. is morning fourth with was

contained conjunction release. could the forward-looking statements includes that and should uncertainties statements. to our considered from actual involve results be in risks call statements differ statements These earnings that cautionary materially This in cause our such with

in comments contained comparable our to non-GAAP earnings GAAP Our may and associated financial directly are reference release reconciliation the financial other most also measures. A disclosures measure and presentation.

over Rio. to I’d Del call that, turn Frank the With like to Frank?

Frank Del Rio

you, Andrea morning Thank good and everyone.

to there is one of We everyone’s top cover and that lot understand topic have today a of we ground on fully mind.

our XXXX I begin my coronavirus outbreak brief financial the results, to detail, the commentary overview and will we the XXXX turn will a which will discuss impacts outbreak. I while address So after first with record of of in

which questions unknowns we but understand to be possible, situation there that aim be not able with many may fluid simply you so is the to definitive as virus be transparent as you this as to. at time, as give We it with have and to will please answers

So let’s begin.

Holdings best a theme the that Line word, confront Cruise as the Norwegian for virus can storyline of they in one single effects into outbreak. described XXXX be carry XXXX will over surely The resilience,

and from to and each sudden anchored industry’s award from as just the go-to-market business Dorian a our the and impact the the demand. redeploying emphasizing guests in of world, Hurricane the with market on sourcing Cuba diversifying main value allowed demonstrate over drive the deployments global of our headwinds strategy best model that the operating categories; needed just of resilience three North cruises but major America once vessels and our XXXX the around consistently to conditions; strength of cessation on founded brands quickly on of Focusing us to focus on in model. A again depending ended lever as winning year price and

all the the headwinds $X years earnings an time adjusted reflects above in these mark financial high company over revenue still billion; our of results, first billion; Despite to $X.X EBITDA delivered per share last $X five a which approaching adjusted time the company’s approximately the and and history. doubling for reaching record

levels cash the meaningful us during In return enabled to our our of capital shareholders generation addition, to year. strong

XXXX the foundation results, a financial notable our strengthen strong achievements, for of the from many which Aside growth. of was also year future

took XX Norwegian ship past to the Norwegian fall milestones we of brands top most XXXX. our delivery highlights of date. newest, innovative and largest Encore, X Slide This

generating new a best ship billion We media have for feedback received introduction, ever impressions. positive X.X over the

history. in in Norwegian addition, ship brands the the Caribbean should booked In know price you Encore that highest the introduced best market is ever

our the new private the exclusive Bahamas. well the Mandara initial the our air villas, The oceanfront first private enclave and We to enhancements luxury Chandon & Silver Spa been a lagoon includes This and exclusive oceanfront the Stirrup conditioned Great also fleet, to XXXX island Moët XX from as upscale additions reception Cove, addition on beachfront beachfront excitement as in In exciting Cay, to recently treatments island guests bar. brought phenomenal. with industry has full service unveiled

vessel will The Explorer third new addition element order the to saw XXXX. available an as two and a and and delivery Cove of brand’s pristine that Oceania Regent the for an to the it’s exciting for Cruises luxurious in meanwhile, and Cruises XXXX X,XXX beaches, the berth attractions announced other for And orders Regent successful an Class XXXX activities, announced fleet add action, amenities order Oceania XXXX. also build exclusive in water sport Seas brands. for new ships Seven Silver in on compliment adventure, island.

to news in headline and the Now continuous severe find by the been where substantial of factors. of swift and business coronavirus has unrelentless. resilience and once model ourselves The our global be turning an coverage We will the external business effects outbreak in XXXX. environment our been again has non-controllable tested the

brands higher volumes XXXX comparable during ways improved strong in of all at bookings three the in early the an entered accelerated strong like I’d in to pricing through through prior XXXX far question take brief of with and and another shaping volume position so January. year. to a Prior on the this This and record the good events experiencing of emergence a chronology during basis. record three to without further both as booking and and book was a how prices very events stages of of a record prices patterns year the now outbreak position to booking like all these incredibly higher book virus, you and up We string description aligned a year, be brands with years.

impacts early year We ways. have year were the provided XXXX we during the experiencing entering that of with strength the were virus excluding guidance, full and of part the commensurate

and range $X.XX track on $X.XX our growth to net Our of the adjusted earnings ahead XXXX in share we targets. XXXX was X% yield full year are to per with achieving for in be the to X% speed full to range expected of

called sailings sourcing originated a impact from very operators dedicated dedicated points approximately capacity coming China. viruses zero initial impact ports. who by Chinese The industry the had our Chinese the Chinese of With sales of of XX time. to China voyages with Pan-Asian brands cancellation that to outside began be basis but at global and from market only minimal with source The extended the which include ports. to on ships Chinese deemed the Concerns our the cruise and then of that number on market was quickly to of

and ports new of call with or American by cancellations China. were Asian ports outside a were replaced bypass the itineraries sailings of and these resulted other While for quickly in slowdown consumers to modified bookings in region. increased avoid and down in Chinese Trepidation Western

modifications outbreak shores, outside much new the February ships itinerary of more cruise the an of vessel more in cancellations of and unfortunately, to drastic began coverage for to docking sailings the do the cruise certain intensified and point, intensified due necessary, develop countries of slowdown At news cancellation allow the on meaningful focus greatly As throughout negative primarily media’s cruise in of sailings. their the into including bookings Asia Southeast Asia. refused this were and to and industry, broader increase Subsequent quarantine in Japan. a a competitors

Kong and the screening several of China, standards measures meet or crew Hong to embarkation that crew or cleanup strict includes by visited guests safety, have prior which Mainland to security mandated exceed began, has fleet, we embarkation the and outbreak denying the for days in guests that across or member our proactive XX and wellbeing our guests embarkation. aggressive assure and implementing protocols crew taken Since and any to Macau

Along and customers other In of quarter. travel the across with region. and guests currently are to brands an and proactive and voyages the throughout the due abundance our of health have new surrounding in the availability end entry our remainder safety also and three to booked reduce we of and taken Asia. Asia, these exposure And our most importantly, because destinations or we and the to reluctant and through sail potential third our uncertainty the steps berthing port in modified around have precautions, canceled region to to caution

brand, for be Cruise redeployed Cruises XX Seven for in XX Norwegian Line, the These Asia XX Eastern and XX Regent for cancellations Seas Norwegian and Oceania to all. are Cruises which voyages and Mediterranean. from modifications of comprise for six reposition Spirit, the the will which

deployment will change the Spirit duration Asia in provides circumstances. an leaves our the of have window this the assets as the upper with sailings, of of the company’s given revenue us redeploy to and demonstrates quickly given cancellations her nimbleness first our While, again extremely earnings ahead in that This voyages us quarter. condensed to we other third redeployment situation, zero and the and max opportunity necessary. best severity booking unknown with flexibility capacity mentioned once potential And through believe

share this as shorten expect compensation from XXXX to $X.XX approximately due window, of call, to per and and of direct share. with Norwegian of includes the itinerary In incentive adjusted near-term per this business, virus booking and the our redeployment Spirit refunds to modifications the cancellations a on stemming earnings guests which and voyage Europe of a impact direct we impact

outside be the which XXXX broader Please on additional demand as affecting targets impacts unknown full known which speed Asia, from of indirect quantified there virus, per our the time. note potential yet financial indirect be outbreak, extend that anticipate well by are end. Based longer no quantifiable and global may year material and the the impacts cannot impact of as direct not $X.XX the direct at and/or severity unknown we this ahead deployments achieving unquantifiable yet given and share of our direct the to consumer additional that duration environment, impact global

want a on we per balance capital to meaningful fundamental sheet While, share we to while shareholders. capital to our strong growing tenants invested that withdrawing maintaining clear committed of their returning return and are remain be and targets, we earnings

the however, recovery. linings near-term the to are and in immediate some time and reasonably point a underlying for silver the that of resilience our potential business There

Norwegian our a and fundamentals normal. potential the volume for returns strong position entering business a strong, position of book to remains slightly book comes redeployment and and First demonstrates comparable the year The basis. the ahead advanced strong our is adjusted pricing that our was so on time book of of that the of last bookings demand this for our business when year of back outsized Spirit, business,

Second, onboard our better are to sailings consumer any current demonstrating continue levels record revenue extent not expectations does perform that outside concerns year Asia year’s above guests per last once and than of onboard.

sail to both of cruises prior and expectations. sailing exceed year to onboard guests future record current the levels continued currently Third,

any we volumes and definitive given booking the it trend to being and week conclude is in week the previous in to And analyzed, most possible a when while three want turnaround And just over the least I have lastly, time period a five perhaps seen of compared do days, one not at positive importantly, relatively weeks. improvement decrease in short prior yet point data an cancellations change.

eight-plus purchasing weeks normal As to when and we challenge this the will cycle the have matter no to a that a an return confident can events, time industry peaks new but will of we am takes similar the I experience we challenges of, occur, not faced and when. similar if remain that patterns overcome a from past this matter it as and past. of And it’s expect consumers From COVID-XX in confident be different. to company, usually

us as that long in geopolitical macro Slide year year preceding for I in followed presentations. any been as have the you in the more given around world. have For X events or people and economic cruise, to refer cruise proof, our further of have than occurred despite And many the it, earnings

there will resilient another And this as is an the is. overcome. I virus will that as Ours industry outbreak industry be believe example

like back call I’ll the final end words. to a review for over call I’d for to now, of results Mark and for the be of the some Mark? But guidance. turn at

Mark Kempa

XXXX on per Unless Frank. metrics, a you, commentary otherwise currency net cruise capacity fuel my noted, constant excluding XXXX net adjusted compares and Thank basis. day cost, yield and

of impacts unless addition, guidance any indirect XXXX exclude figures In COVID-XX direct outbreak. the noted, otherwise and

monitor to our potential results. situation We to this and continue impact its

on quarter year with fourth commentary our full XXXX begin outlook. followed I’ll results by and our

with driven exchange $X.XX, and by by foreign As can quarter, the previously see for earnings above $X.XX fourth pricing guidance expectations on beating headwinds X, adjusted from of Dorian you strong better EPS close-in bookings revenue of of Hurricane performance drove $X.XX, and Slide revenue expected impact inclusive disclosed rates. strong onboard than in $X.XX the from

Hurricane approximately the inclusive Dorian, top Cuba if drag growth of X.X% point to on Focusing the XXX and guidance net This is line, of the outperforming Dorian. yield prior was XXX year. fourth point in from not basis from basis flat quarter, both impact for

reached on quarter Slide the – would as yield our the strength line growth core in demonstrating we have of fundamentals. X, net top shown As X.X%

prior quarter of adjusted at guidance cost, costs, than increase Fuel X.X% net marketing in price as-reported slightly increased in excluding guidance, fuel, to hedges, an investments. cruise year due Costs increase an Turning than were net and in primarily driven basis. X% and the on higher was to versus by expense versus for expectations, fuel ton $XXX of per metric came an $XXX. which higher other

in yet per XXXX were the yield adjusted history. and external performance, to another company’s results, finished delivered Turning highest year of financial full net despite our and record the year significant earnings headwinds. strong, we all Revenue, share

of beating by noted. to foreign Revenue inclusive prior the of earnings for $X.X X.X%, over November Looking billion. in Outperformance products at a XX, top This strong on previously line headwind full was demand from earnings the continued portfolio Slide $X.XX X.X% $X.XX, beat. adjusted share reaching grew record year exchange also contributed was beat $X.XX. guidance year of capacity the per

well for EPS prior Pearl, our Slide To XX% our have refer $X.XX, XX. of If This not EPS would Cuba, would in of and to you versus put February $X.XX our headwinds the of adjusted perspective, $X.XX. from a have adjusted performance year. initial Dorian $X.XX I’ll guidance increase in represented to reached ahead

basis. net from the X.X% Adjusted guidance ton from year. per cost, hedges on by X.X% key $XXX fuel been X.X%. as-reported points. have exceeded in include as-reported the If XXX headwind And fuel, which XXXX point November the metrics increased Pearl basis metric Dorian, $XXX or and excluding full price or would for basis year our net yield Cuba, Other X.X% net to for cruise yield on XX of increased X.X% prior net growth basis, financial not of an an

indirect booking outbreak activity Shifting our the to resulted cancellation has Frank reduced and modification sailings impacts several direct well operations, XXXX, as including in weeks. as mentioned the and earlier, the certain COVID-XX of as over on last

Our XXXX last Splendor X.X%. expected be Norwegian addition due the Seas the growth capacity was voyages canceled to of approximately the and the to cancel month. of this sailings X.X%, November to prior Encore approximately increase is introduction our of capacity Post to Seven expected

COVID-XX sailing is figures redeployed up redeployed region. connection deploy capacity some as Cuba decrease in you out Note as to expected these highlights to XX were peak prior capacity deployment XX% outbreak. include Slide as review originally the ships sailings. to well main The direct the I’ll in Caribbean the be an season, highlights. Norwegian in region to summer impacts two were almost to versus deployment include with Europe as the XX the year ships expected we of additional Spirit that

initiatives innovative the we’ve region. destination Alaska of presence to with development strategically has both increased key been a new and capacity introduction the market increased hardware through and our

approximately market, seven itineraries up be offers primarily which a addition to of to ship expected Norwegian XX% intensive the destination Sun, day fourth Norwegian the to Seattle. is XX capacity Our due from to

in XX deployment including that Asia the now is Africa, to expected were be down capacity our year. XX mid-teens, factors to of modified redeployed the Norwegian X% sailings. low canceled, the region mix Spirit or voyages The recently just comprises Pacific Asia, for entire which

it centric market. deployed as the capacity with is to XX% quarter of over our year, deployment quarter is the similar First prior most Caribbean in

is speed includes COVID-XX. of $X.XX ahead XX, guidance which be in XXXX capital at $X.XX. are This from of as the allocation part direct withdrawn. Adjusted on indirect we range excluding to full targets, have of Looking providing XXXX our to guidance now for the expectations year and Slide full expected EPS impacts we

duration the Given will and this outbreak, quarter-to-quarter. extent around our uncertainty we of allocation strategy the evaluate capital

through the $X.XX our that well direct the of redeployed sailings, the – includes brands. in our from average, sailings to To-date, This as Regent eight and the of quarter Eastern Oceania the is Asia across total approximately Asia are the of adjusted impact close of which EPS as current Norwegian the window. yields modified almost booking an extremely sailings canceled have above share XX lost XX is three which revenue or end all brands, of COVID-XX comprised on per XX on of a and third and Spirit, corporate condensed garner redeployment on hot Med well canceled,

from potential The virus is while we resulting broader the situation business and indirect demand softer is extremely tourism. and global additional early to fluid to expect quantify for it direct travel and too simply impacts, headwinds

Net top year. year This basis growth, XXX of increase X% excludes on expected to weighted approximately basis. on delivered of first X.X%. to and of coronavirus the to constant a the direct we range primarily for performance impact, as-reported both yields This known in strong XXXX the in half X% is the points of of guidance the is

days prior Moving on to to two the and approximately Norwegian both extended and quarter. and associated constant total on expected dry is in of primarily increase XX-plus quarter Spirit reported due fuel, dock a to costs first and Pride costs, higher adjusted America in basis. is net for be versus cruise the The X.XX% dry includes year cost, up docks day excluding second

as well our to at future and investments growth. improvement technology aimed process support other As

a metric XXX,XXX tons. is capacity prior resulting the an now our shift in to price higher Focusing provided of XXXX than expectations. in We expected $XXX, growth XX, is of higher hedges is with fuel due per pricing. which to expectations Fuel in XXXX, on year. in net ton increase in increase consumption in This effect be at-the-pump November, Slide approximately from metric approximately IMO regulations an slightly anticipate XX% MGO expense fuel XXXX to versus consumption fuel line driving XX% with in with from coupled expense approximately previous environment resulting on are our consumption in in

Due are throughout impacts the of impacts, There resulting we second mind to from the the cancelled, our right the keep or XXXX. year. from shift a fluid the quarters expectation redeployed now is direct in modified and key for primarily of items the nature can first few may cadence will COVID-XX the share balance to the have largest that outbreak, What sailings.

is the XXXX. be half the growth price tough expected first comparisons to sailings yield of still to Cuba in lower from year, due primarily in Net

to XX-plus the be America, the quarter tough versus service comps, We to expect days repositioning Pride the net year, where of day docks dry result with prior yield the yield high dock growth yielding Joy quarter Cuba and dry Alaska. growth lowest Norwegian second the as of capacity for incremental out during and a of was her of she associated

expected Now expectations basis, yield let’s at approximately impact expected an on take a be X.XX% quarter, our any adjusted tons. or excluding consumption as $XXX or of net is on exclude per cruise first hedges XX. metric to and with Slide basis. up reported approximately flat fuel metric price be of on cost, We to net look fuel, which ton the X.X% found expected COVID-XX, reported which Net a to can for XXX,XXX our is X.XX% approximately from be increase anticipate

adjusted quarter this Taking account, be is $X.XX. expected EPS to first all into approximately of the for

COVID-XX, $X.XX year yield for approximately basis the terms In from equates $X.XX impact the a to point growth. that on first XXX the we which net into of quarter, impact the of direct will fall known impact expect

year to year, through and the another team the were business current first time, Frank, shareholders temporarily call as on were is tirelessly our coming record core believe our into its again. Cruise our its our The ever our want environment while Before working for few demonstrated protecting we time well which is is to business that guests, We in the I fundamentals and of what Norwegian weeks, the to Holdings to equity solid way returning business. and do has while model brands. crew our impacting at resilience Line right and reiterate

back call closing to Frank over the provide commentary. hand I’ll to that, With

Frank Del Rio

Mark. you, Thank

to focus future strengthening growth. continue our We foundation for on company’s the

and Slide on see our enhancing underway XX, of can deepening to several you environment, our initiatives social governance commitment strategy. demonstrate the As

ESG of as these departments the with the launch safety initiatives as across Board the coordinate Directors. security will of dedicated department was environmental, our of which of technology, One committee well closely with organization a and

Forum to in Australia commitment significant and female recently our our bushfires, recognized after Directors, Women’s to devastating Bahamas the has the on our in in representation ways. From our which contributions greater was the company of stepped Dorian New by up relief to help Hurricane of to York Board combat meaningful emergency

environment front, known Carbon positive our the disclosure marks, CDP. a better minus On receive as first the Disclosure to in Project we B

We the LEED which Pearl infrastructure. developing spring, all port here of game-changing we constructed at XX% will right focused board Miami This annually. on welcomed nearly we standards are Miami, of being and to also Port officially are key is stunning guests unveil we terminal where first Gold

to continue market. projects to continual strengthen to world. initiatives steps in our These very profitable destinations our and the and also our presence presence We several and Alaska in this ensure in develop efforts around latest in enhance strategic important the ports marked

reception the to ship ship, record-setting Miami Explorer, with pleased has christening. incredibly coincidentally, her her were crossing outperformed the And in XXXX. we from for Seas introduced who Transatlantic prepare Seven which shipyard, in Splendor, Seas was her of today Regent’s arrived sister Splendor after Lastly, Seven newest

forward will christening community I valued media, at her at a her industry. ceremony, look upcoming throughout black-tie the deserving in ship her showing off She past and And her of resonating which is travel any investment bet the and Port be with is guests tomorrow perfected. of sailings I’ll truly to Ocean she inaugural is why our Miami. magnificent loyal garnering guests, cruise fleet. evening alike, to our held yields highest billing partners, at past in affair of luxury new is yields the and Splendor highest which and both the

you from some Q&A, to XX. today the our takeaways like on with key Slide Before turning call I call over leave to

of several demonstrated record in the company the significant of in another financial year once XXXX. of the headwinds delivered again its First, results resilience business face and model

XXXX prior booking the record to in coronavirus a outbreak. activity late entered through strong the impact January, of with position we book Second,

reduce steps our brand modifying, exposure our build. aggressive or to taken initiatives and our continue the foundation And significantly term guests, protect port for We and by growth, future canceling crew ESG, lastly, have including proactive to we our around Asia. sailings XX to equity new long in infrastructure and lay redeploying

to the that call with open for like Q&A. I Daniel, And

Operator

Rio. you, Our Del Instructions] Thank Mr. with [Operator Harry comes question first Curtis from Instinet.

line now is Your open.

Harry Curtis

related of everybody. My is your early too least Frank, not current being notion excited, stabilizing. about morning, Good about comment, bookings the question to too getting at

I agents Alaska? particularly, the probably it’s this think Europe worth and that what at not customers in interest What particularly giving some impacted seeing additional really are color are And rebooking point, they on domestically that. in their Continental markets about your saying of there? been have

Frank Del Rio

Thank And reasons Yes. end we in the panic and then for forefront, know, became at a of news headline I to sailing as you industry right was near of the just know. virus business the the news. January, that unfortunately, public. earlier, Harry. And said as traveling has that you, headline Look, cruise through caused really the was

And so for one is to see similar bookings, the sailings, this events, new past be And decrease about throughout in we’ve seen meaningful little we in seen a whether cancellations. increases cancellation, have but in bookings bit we have et not financial the our different we in crisis, they – What’s cetera. geopolitical the increase what just a Asia is the similar in deployment. meaningful decrease seen during

has the is that days news booking moderated. beginning five over that Saturday, good last The decline

a declines trend. can that, acceleration of consumers as the hopeful cancellations, longer a eight to we’ve make again, takes worst cycle healing process are the definitive after in moderation the we the of five I’m new bookings that only we seeing days hopeful booking and that it’s and week-over-week end I’m So more we’ve we’re return not seen in because to does and no say typically peak normal. But hopeful. the And slowdown, seen could increasing I about before of past, the begin weeks seeing the

to, what travel, their similar scared I’m customers portfolio Business on not partners, business broad do tell airplanes, what that people see are they’re before ship. travel are first, get on time. the people across not many cases, of on they on poster destinations child But off our continue ships. the me are may is just cruise long-haul for now, some industry, seeing is And the require partners This in right scared. an the of People virus. business a our leveling have – we soft, being talking worried. cases, until for get And first, cruise airplane But new to to about. we

Harry Curtis

you, Thank Frank.

Operator

Thank you.

from comes question with Goldman Grambling Sachs. next Our Stephen

is now open. line Your

Stephen Grambling

Good morning. taking the for question. Thanks

quantify the As to of just is Can and how other Coronavirus itineraries modifications, cancellations $X.XX. a that’s for markets on existing and/or Asia follow-up, in itineraries net much you moving just on ships? this cancellations, from on impact yields any estimated Thanks.

Mark Kempa

Hi, Steve, it’s Mark. Yes.

say take of sailings. future on impacts canceled any demand. is very indirect $X.XX potential the our not does into and sort So of We to this what were we that know all explicit for today modified account

a our Eastern Eastern So have were had sailings, window. short somehow remarks, impacted, condensed which had as been we those said prepared XX very to with booking of Med over redeployed we out Asia – Europe, in of we XX

sold we and voyages, OCI Regent canceled Diems. – came And X.X importantly, more brands. over of to completely very they to period XX Those eight But out. cancel off outright were months. two high with very those remember, the booking the time span you voyages voyages long And itineraries next a those lead have Per are

us. canceled we for a though. impact significant So That’s

just have could give information reasonable the what to into not do have we not demand account, of future picture. look we assessment a enough a So taken like softer from

Stephen Grambling

cycle. of lapping peak Frank, normalized that in that data, weeks as after does you take demand eight at the the a effectively that see you mentioned quick a consumer Or it catch-up very spending are maybe year the Great. the returns see a to you And the alleviates? typically When follow-up. look full typically do of news trend?

Frank Del Rio

time, take we XXXX that it we string No, V-shaped, XXXX modified mashed was a return. there saw XXXX a not is even either. doesn’t geopolitical events after was this instant it a full in better. of I very year. but of the saw last in good U-shaped somewhat year, occurred. But potatoes – mean, it’s was

situation. all extent of very the fluid this So depends it duration, again, on severity

Stephen Grambling

Great. of Best luck. Thanks so much.

Operator

Thank you.

Our next question comes Barclays. from Felicia with Hendrix

Your line is open. now

Felicia Hendrix

know in the this if so data was said Hi, time. strategically can cancellations, you terms upon are strategy and And of I days stimulating integrity. But price touched strategies thank past you for very thank demand on clear your how and your about you seeing you bookings wondering you’ve just in you a Frank, improvement could again. talk much. small five been I to discuss and about been confusing that thinking that you’ve given drop in in the seems you and sacred how affects price And But to the demand estimates your are the free the free then terms impact wanted I where all full in mean, a that. and prior in ahead. of cash use know bucket. I kind $X.XX just bit have flow our in XXXX? terms just cash that of a you goals, flow of that you a speed as it not I driver? little said, like something of clarify

of powder dislocation? your Or to take just So the to dry? keep price you’re will advantage if wondering seek you opting stock

Frank Del Rio

seven or was all. That Felicia. them try one. questions to I’ll eight remember in morning, Good

Felicia Hendrix

a was It question. one was one. It long

Frank Del Rio

take see around overall you going full earnings through that last ahead the the metrics we’re with Look, targets, the of lose cash at terms least our forward XXXX. to speed impacted capital move all risk is one is look our the ROIC, $X.XX withdrawn and profile, which the time, cash how price the per reward share, at we impacted to allocation. any Look, stock get our of revolve situation, we’ve why like earnings of I’ll first other in flows.

shareholders. ever We’re to capital still return to as much as committed meaningful

began, dividend know, was As can the you when we the that of the continue of the to that dislocations were price, year. introduce year with in thought going advantage of half a the our in back hope stock market the we taking

are the While I year. to want don’t table goals those say this that off for

year, I this think achieve be given the coronavirus. more unknowns to may difficult goals surrounding those

seeing our that you affect strategy to a over across I we question and not to – our to in it situation need we what the how strategy, low long-term primarily, brand competitors do to hurt pricing value as But in proven how we’re stimulate which not us a Having pricing equity our competitors and reacting our price pricing and long-term to you’re what allow the we’re see temporary will going believe go-to-market way a desires to using action said will we derail we going increase lever from are this given our of on what spectrum, to Pivoting tell stay year-over-year. focusing competitive. believe long-term of that, go-to-market demand. consumers is will QX does in to the

to pre-financial that you yet returned guard with is back recession remind And in our there lives not we that something companies that literally. I that their yield have are XXXX levels.

in price. opposed So to outright I I the think pressures, the you’re competitive you’re will see going decrease yields with I term, because in see we value-focused short going to short again, focus, overall, of the decreases But think pricing as term. to some in offers go-to-market think, we way deterioration

Felicia Hendrix

know not said among deterioration to short clarify. you? want from – you I see you you say, the When I some wanted you just time, when mean pricing competitor, will just to in

Frank Del Rio

think, say, I our not in mean, we as the I sand to Well, respond. can’t just stick well head we’re us and going

see But with compete again, forecast value that lure may as way of heavily elusive pricing we customer a do customer, there. out it proposition does that to but I in the marketplace that will in the imagine to skewed going that be action a I price the that main have not us, and towards, combination you We’re from driver.

Mark Kempa

our Felicia, say We’ve vocal positive. And flow flow very cash going been are still that flow free on be is to be question. positive intend to One thought to cash we And other cash Mark. free year. this this we

We amounts off are cash. significant of spinning

derail So while outlook, small a certainly does the dent does it put this in not us.

Felicia Hendrix

Thank you.

Operator

you. Thank

from with Our next question comes Wieczynski Steven Stifel.

Your line is now open.

Steven Wieczynski

sailings that impact called you rebooked? we what high little those out. we guys. might those use better guess, back guys saying are the you don’t bit itineraries? does example, a if here guess, I’m XX morning, want canceled I to Mark, kind a I for it way from I that be changed number good those seems Yes, us. of I go are saying just guess, are you Spirit, to $X.XX And that that clarify $X.XX of assume something. is get yield Or canceled? itineraries Norwegian is contribution any assuming Spirit like assuming to

Mark Kempa

So I in question parts, will two answer that Steve.

So to the sailings, are we first not resell part is, those. of canceled the trying XX

a loss is that So revenue. definitive of

primarily the we yes, her. the On are Spirit, sailings redeploying that remaining

A you region sail. you on are right door was are from an But what lure we to itinerary, is her It’s putting remember that went where zero. have essentially customer region from in. back to the We B next where starting we can not

base. So essentially a starting zero from we’re

on to anticipate we So some there’s do be itinerary. dilution going yield that that

delta Eastern what to Asia out with a Mediterranean. Spirit represents we of close-end get expecting the of on the were the really nature it versus So out

Steven Wieczynski

of books if Is So $X.XX would lowered. months. that the next okay out over fair? be Spirit couple actually That

Mark Kempa

rebooking a exceeds certainly are getting You’re our we on anticipate load going action. we absolutely to correct. it factor and good If to expectations her take where back price

to demand the not if price table going leave there. the We’re is on

Steven Wieczynski

have and with bookings and there’s probably material And a that on long-term that. Okay. about the say, being is Frank, is And fear couple this weeks floating virus we’ve impossible going Got Diamond of general. from called prison to like a then, of stuff a think to of in Princess this crews, gotten – a the over impact investors headlines but and what’s lot past you. I – questions

now how Or do to going that? of counter panicking and – attack blip question would back is that kind you this normal? I just how the long radar the is this do to And right Or guess, that? you another think think kind investors is I things do you will linger how are of on for go absolutely time. a you

Frank Del Rio

Consumers Yes. have memory, is thank Look, short a God. relatively do nothing permanent.

other will specific. may or and company be seen that cruise have not-too-distant that the We the past events quickly overcome major brand affecting in industry

of we is to that don’t moving Asia, complete happened of the the action took of in the a refer and Japan that want – brands. aggressive our repeat reasons completely what fleet One we any of to we took in out canceling cruises

a of than on think we our else. had base things Asia. annual less anywhere major us, from it to So is zero was We That more chin X% Asia. market, deployed to the I the fleet Luckily we’ll a in than capacity done, among had short-term withdraw in that the which Chinese the for is the market, take one. have our Steve, is we’ve Asia, presence in big that step never

marketers. so to all product. market We well know serve strategy more our And that and our we’re drop We how market challenging think will if than us was did I price, times, over price. good value go-to-market these we in

the So exciting is the in I It’s this management ships, great, viability whether confident company others or to travel marketplace, it’s a cruise that long-term superior industries. terrific remain on offer, the industry fleet, to the young new products team. of broader

meaningful of of to even especially this no I potential And going going earnings, ROIC and this so what one has shareholders think flow great earnings of wants that a go and to through company, not capital company, greater we’re while the on be cash XXXX, return was changed. grow long-term way we’re XXXX to the the that a generation what to heels through today, what the promises

Steven Wieczynski

Okay. it. Thanks, Appreciate guys.

Operator

Thank you. JPMorgan. [Operator question Instructions] Brandt from with Montour comes Our next

is line open. Your now

Brandt Montour

a as for had one XQ you kind I’m called of to of virus. what and Good surprised just people maybe trying ex wanted was questions. other – that also taking my I the to peers and in could Cuba on XQ the impact larger everyone. Australia of XQ morning, out bushfires well downside and Thanks things. a guidance us just in the remind talk about the understand, couple your as maybe

you the net of other in kind back yield any was like-for-like there the if trying for wondering understand maybe XQ? peel was Thanks. clean could things to in I us So

Mark Kempa

Hi, Mark. Brandt, is this

we’ve commentary, impact half. as we the drag and both obviously, said the that in So the at was prior first when year-over-year QX Cuba main primarily, QX. impacts And look that

this $X.XX at you yield is a – that’s of Cuba basis, There’s look rolling when that a bit that said evenly core we’ve about delta looking split QX. at impact. there. That’s relatively coronavirus. So the of and headwind the we’re between But yield, year, ex $X.XX is QX that on the a the to

said our We in to We we were well. were were this outbreak, prior booked at As prices. prepared doing our higher brands ahead. booked remarks,

spending had our revenue month they first consumers very, it in QX results more our today, are much at more Board. the our it look it but great haven’t the touched onboard that to ship expectations. on money And of still We onboard even onboard XXXX, revenue, on you January, are revenue, We now exceeded continued and our who today, strong. when across perform very

So to there, is once they’re consumer not the spend. afraid

Cuba but So a comp. was tough

on and – the always we’ve said, onboard apart So really of revenue. upside, that back from comes

Brandt Montour

then for on just Thanks in info, that extra have sort situation that of commentary you And that’s bookings made. virus helpful. the guys quickly shorter-term the

Asia call or "safer’? differentiation seeing any customers can away other that preferences like further out? are shifting are from booking that Anything sort are locations data, deemed the sort that any sort areas at looking between of you might you to of of be You’re that

Frank Del Rio

Board. others. dive. even the American has pretty by the and back of onion safer impact seeing especially be on do the What we’re they a that deem virus bookings cancellation When destinations been The faring better across those the is, deeper and customer, peel are to than you

and those closer So the far-flung example, to get the Alaska many In the better They’re more Caribbean. some to have an home. to to be you on ports seem get don’t for or than Caribbean to doing exotic airplane destinations. cases, of

Brandt Montour

lot Great. Thanks guys. a

Operator

you. Thank

with question comes from Stanley. Thomas Our Allen Morgan next

now is line open. Your

Thomas Allen

many coronavirus many cases carried passengers had? how you’ve you’ve had then quantify you of year-to-date? and And sailings how Can

Frank Del Rio

it’s talking Do There’s know been me? absolutely with? which with kidding not and only to, you us. Are There company is one who one, you’re outbreaks, talking zero. you’re you coronavirus company

Thomas Allen

understand say you’ve of lots many you So that how that people could you had had sailings sailings? So

Frank Del Rio

Dozens. sailings. of Dozens Dozens.

Next question, please.

Thomas Allen

impact? bookings So quantify if so a is – bookings I has quantify so about the how far month. normal – commentary assume to went way a the to way there question, indirect tomorrow, a made weaker being If the back for to past been you’ve is bookings follow-up about were there

Frank Del Rio

impact. indirect no be will There

Thomas Allen

month there’s said about been for weak you bookings But a so…

Frank Del Rio

the on up lineup one please. Next

Operator

Thank you.

comes question Jared next from with Wolfe Research. Our Shojaian

Your line open. is now

Jared Shojaian

I will Good the given just related taking question, Thanks for so ask far. morning, focus Hi. a amount question. everyone. my non-coronavirus of

came and I for would the can up guidance, why XXXX. expected. XXXX CapEx is talk initial the XXXX about higher On for you have also that than And just guidance

year. record a it’s think I

specific So you. Thank can talk CapEx you this Why raise you time? driving what’s if just needed? kind do have about at then CapEx of to what flexibility that? reduce And

Mark Kempa

Jared, Hi, Mark. it’s

balance should because, and for certainly, So a it’s gains. investing this have CapEx where you We continue – to and short-term course, on needed. It’s is we building of be and always In long-term the couple XXXX as of needed. we our reduce But a brand have result is delicate increase damage flexibility we always primarily CapEx – plan of contract a new want plan C to XXXX, B course, to of becoming effective. to business, that. certain want the relation the for and don’t a

our commitments, Explorer ship over we subsequently, had back related in look the the third and you into contractual our vessel, shipyard filings, If payments included all of Q Oceania vessels and not two received contracts effective in that credit export on we from very agency, we’ve all been explicit actually and became of Italian the wherein of quarter, authorization two the course that the filings. our those of to

the just contracts. it’s effective necessarily fact new that CapEx online It’s not CapEx. So building is coming general for an in increase our that

Jared Shojaian

in pre-virus, and Or excluding XXXX you. was you’ve shaping well. yield to in of season X% guiding, strong. that’s what that said And X% wave you then Thank really given Okay. know all growth? were I the all you’re very Demand we impact up terms guiding guess, is coronavirus that

Cuba the effects. lapping You’re

X% have coming as X% would ships seem accretive to environment doesn’t to marketing tie on, new got lot been. to really I seemed the guess, of well to yield a spend, have as You’ve

And maybe help somewhat may you X% have me you yield what that in Thank chance that into been you. just any went can conservative that to growth? So understand X% number?

Frank Del Rio

which year. of a that that on our cautious those Well, That’s early very, net to think to always is we’ve line. outbreak. said to going the of bit bookings have top were season think, as And accretive the guide two over of prior Splendor, we to do neutral. the the Encore, or I be combination Yes, going annual rolling we incremental we’ve well very we be tend a X% a of really the always of said a will yields. coming somewhat then – Encore. some the rolling said, take approach. in We it’s online, doing we’ve to And offset are And to by the the which corporate be we’re over X%

So ticket very certainly, and and on that earlier, been revenue our range on in doing and well going both X% board. to from X% on would has come is said on-board despite marketplace. And the outperformance what’s as I

would that think been variable. I So have key the

Jared Shojaian

All right. Thank you very much.

Operator

you. Thank

Our next question comes from Paul Golding Macquarie. with

Your now line open. is

Paul Golding

question. Thanks for my taking

you just redeployment. the remediation wondering into detail more there was the So corona baked that as far comp of sort might around with as piece any Spirit what’s yield, the impact? give was of Med the here $X.XX if how Eastern could first I

Mark Kempa

that, booking receive the new I it’s And is a you’re would to to expectations, do window. given window. is great commensurate just and with of our be not what had listen, the in short pricing typical expect We That that short very nature itinerary. that in our booking some on the terms with are load Spirit think is commented Well, expectations of the I what around I market. a Steve, think referring

our versus So much going in very extract short window. zero, starting can. importantly, as garner market we do, there power as believe of everything we’re to But more planned can was to from we price is of that to delta out again, she and that do what actually but we what a a it’s we’re

in have to keep We that mind.

Frank Del Rio

runway that that to don’t three, And of to stray kind months a that the lines we in XX especially have typical fill would only from cruise to our two, compared the give you’re ship, to runway And see therefore, months fill with failing. going themselves to XX not want action go-to-market to us four strategy. to marketplace the pricing require

she normal stated to between stayed generated see. would current under the circumstance, differential ship is wait had circumstance tell would what early she and the have what ship had in the done, have perform, too it’s So and under will in what the on what to she Asia we’ll the Asia have impact actually yield

Paul Golding

in Understood. there? from Miami, that, price in not And of then Anything is new there to far start cruising at potential can with about terminal just we that how the anything out from that’s as from that? dynamic you guidance as looking think the tailwinds anything

Frank Del Rio

because pay of have of I make that number get port customers, more is those a look, once anything cruises know most which the level time higher our will question. attractive, who we Daniel, spend attract think, after, more they’re we’re one our to always certainly one we to Well, the can on. help embarkation, which of out do Miami, for on we most

Operator

Thank you. from And our Fargo. Tim with final Wells Conder comes question

Your line is now open.

Tim Conder

we your first Frank, love of for zero, all, appreciate passion, you, thank and your particular. in

though, So that is I that did direct $X.XX want to impact. know what reconfirm, as the you

seeing the of in to the that guidance. any $X.XX So $X.XX impacts you’re that’s not indirectly

anticipate of there’s unknown So we there’s some that other unquantifiable. some fair? reconfirm indirect, number yet should piece that Is the just to

Mark Kempa

this of correct. some at on basis. We general the differential is It on include simply what indirect $X.XX cruise is It point quantify only impact level that cannot not from know softness is canceled reasonable explicitly space. Tim, we from and sailings exactly Spirit. that a does our in just the any the

Tim Conder

see update maybe how of going mix be. the the here, XXXX, fair. your us coming, year, to due updated just How do XXXX, cadence jump IMO the Okay. this in may that from XXXX we maybe see total something fair. to other XXXX to And mix on fuel? Mark, from of XXXX? But very you guidance You whenever for talked to what Very fuel. how number. that should Very, then going about you that the lastly, we anticipate out or normal question XXXX should gave progressing that’s as to

Mark Kempa

in And place, Certainly, in were exhaust gas MGO. scrubber to will Yes. anticipate program mix in out and so it XXXX, the online XXXX years builds XX% MGO that simply come of thereafter, this shifted we XX%. XX% would our somewhere year. reduce about new prior, today level about would went our in help with burning XX%. And that the all around that we following It

XX-XX be and about So see say to XXXX then for we’ll would a I each some it’s going year. thereafter XXXX, slight mix, decrease and

Tim Conder

Okay. all. Thank you

Frank Del Rio

Okay. your Thanks, informed most time. And for your everyone, questions. for part, the

available will you today. As Bye-bye. be later we have any questions to answer always, other

Operator

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

You may now disconnect.