Royal Caribbean Cruises .(RCL) - 2019 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company generated adjusted earnings of $4.27 per share, which is $0.08 lower than guidance but 7% higher than the same period last year [20] - Net revenue yields increased by 6.4% year-over-year, excluding the impact of Hurricane Dorian, which negatively affected overall revenue by $21 million [22] - Net cruise costs excluding fuel were up 11% for the quarter, impacted by Hurricane Dorian and relief expenses [22] Business Line Data and Key Metrics Changes - The company reported strong performance in its core products, with stronger close-in demand contributing positively [20] - The vessel modernization program is driving strong results, with guests responding positively to upgrades [10] - The Perfect Day at Cococay continues to enhance guest experience and boost the bottom line [10] Market Data and Key Metrics Changes - The U.S. and China markets showed particularly strong performance, with all geographical markets up from last year [12] - The company expects to end the year with more revenue on the books than ever before, with high booking load factors at attractive pricing [14] - Bookings for 2020 have been trending ahead of the same time last year, with load factors up slightly [37] Company Strategy and Development Direction - The company is focused on sustainability efforts, including eliminating single-use plastics and reducing carbon footprint [15] - Investments in technology and destination development are key components of the growth strategy, with a new carbon-neutral destination planned in Vanuatu [15][16] - The company aims to modernize its fleet and expand guest experiences, particularly at Perfect Day at Cococay [31] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the operating model and business investments, despite challenges faced in 2019 [16] - The company anticipates a robust demand environment for 2020, with strong bookings and yield trends [41] - Management noted that the competitive landscape is more influenced by broader tourism trends than by individual competitors [71] Other Important Information - The company is increasing its guidance for the full year to a range of $9.50 to $9.55 per share, accounting for the impact of Hurricane Dorian [24] - The company expects net revenue yields to increase approximately 8% for the year, with net cruise costs excluding fuel expected to rise by 11% [25][26] - The company is monitoring macroeconomic conditions and adjusting sourcing strategies accordingly [95] Q&A Session Summary Question: Disconnect between macro data and company performance - Management explained that the company operates as a global platform, which may not align with macro data trends [44] Question: Fuel expense outlook for 2020 - Management indicated it is too early to provide specific fuel expense guidance for 2020 [46] Question: Impact of Thomas Cook on yields - Management confirmed a 15 basis-point impact on yields due to Thomas Cook's situation, primarily from distribution issues [60] Question: Competitive pressures from Carnival - Management stated that broader tourism trends are more impactful than individual competitor pricing strategies [71] Question: CapEx increase for next year - Management confirmed that the increase in CapEx is driven by investments in destinations, modernization, and sustainability [63] Question: Vessel modernization process - Management indicated that the company will continue investing in modernization to enhance guest experiences and returns [83]