Q4 2019 Earnings Call

February 20, 2020

Frank Del Rio: The stairs now, they're clouding like the stairs. I'm walking on the air now, I'm walking on the air. They're clouding like the stairs now, they're clouding like the stairs. And when you will feel free.

The stairs now, they're clouding like the stairs. I'm walking on the air now, I'm walking on the air. They're clouding like the stairs now, they're clouding like the stairs. And when you will feel free.

And Stan.

So I don't think traveling back and then HM.

Dan on it and Oh walking on it.

[music].

Sam.

[music] cabin like that.

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. At this time all participants are in a listen-only mode. Later we will conduct a question and answer session and instructions for this session will follow at that time. If anyone should require assistance during the conference, please press star then zero on your touch tone telephone. As a reminder to all participants, this conference call is being recorded. I would now like to turn the conference over to your host, Miss Andrea DeMarco, Senior Vice President of Investor Relations, Corporate Communications, and ESG. Miss DeMarco, please proceed.

Good morning, and welcome to the Norwegian Cruise line Holdings fourth quarter and full year 2019 earnings Conference call. My name is annual and I'll be your operator at this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions for the session will follow at that time.

If anyone should require assistance during the conference. Please press Star then zero on your touched on telephone.

As a reminder to all participants this conference call is being recorded.

Now I'd like to turn the conference over your host Ms., Andrea Demarco Senior Vice President of Investor Relations Corporate Communications and SG Mr. Marco. Please proceed.

Harry Curtis: Thank you, Daniel. Good morning, everyone, and thank you for joining us for our Q4 and full year 2019 earnings call. I'm joined today by Frank Del Rio, President and Chief Executive Officer of Norwegian Cruise Line Holdings, and Mark Kempa, Executive Vice President and Chief Financial Officer. Frank will begin the call with opening commentary, after which Mark will follow to discuss results for the quarter and full year as well as provide guidance for 2020 before handing the call back to Frank for closing remarks. We will then open the call for your questions. As a reminder, this conference call is being simultaneously webcast on the company's Investor Relations website at www.nclhltdinvestor.com. We will also make references to a slide presentation during this call, which may also be found on our Investor Relations website.

Andrea DeMarco: Thank you, Daniel. Good morning, everyone, and thank you for joining us for our Q4 and full year 2019 earnings call. I'm joined today by Frank Del Rio, President and Chief Executive Officer of Norwegian Cruise Line Holdings, and Mark Kempa, Executive Vice President and Chief Financial Officer. Frank will begin the call with opening commentary, after which Mark will follow to discuss results for the quarter and full year as well as provide guidance for 2020 before handing the call back to Frank for closing remarks. We will then open the call for your questions. As a reminder, this conference call is being simultaneously webcast on the company's Investor Relations website at www.nclhltdinvestor.com. We will also make references to a slide presentation during this call, which may also be found on our Investor Relations website.

Thank you Daniel Good morning, everyone and thank you for joining us for fourth quarter and full year 2019 earnings call Im joined today by Frank del Rio President and Chief Executive Officer, Norwegian Cruise line, holding and Mark Campa, Executive Vice President and Chief Financial Officer.

Frank will begin the call with opening commentary after which mark will follow to discuss results for the quarter and full year as well as provide guidance for 2020 before handing the call back to Frank for closing remarks.

We will then open the call for your questions.

As a reminder, this conference call is being simultaneously webcast on the company's Investor Relations website at Www Dot NCL, aged Ltd, investor Dot com.

We will also make references to slide presentation. During this call, which may also be found on our Investor Relations website.

Harry Curtis: Both the conference call and presentation will be available for replay for 30 days following today's call. Before we discuss our results, I would like to cover a few items. Our press release with Q4 and full-year 2019 results was issued this morning and is available on our Investor Relations website. This call includes forward-looking statements that involve risks and uncertainties that could cause our actual results to differ materially from such statements. These statements should be considered in conjunction with the cautionary statement contained in our earnings release. Our comments may also reference non-GAAP financial measures. A reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release and presentation. With that, I'd like to turn the call over to Frank Del Rio. Frank?

Both the conference call and presentation will be available for replay for 30 days following today's call. Before we discuss our results, I would like to cover a few items. Our press release with Q4 and full-year 2019 results was issued this morning and is available on our Investor Relations website. This call includes forward-looking statements that involve risks and uncertainties that could cause our actual results to differ materially from such statements. These statements should be considered in conjunction with the cautionary statement contained in our earnings release. Our comments may also reference non-GAAP financial measures. A reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release and presentation. With that, I'd like to turn the call over to Frank Del Rio. Frank?

The conference call and presentation will be available for replay for 30 days following today's call.

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

Our press release with fourth quarter and full year 2019 results was issued this morning and is available on our Investor Relations website.

This call include forward looking statements that involve risks and uncertainties that could cause our actual results to differ materially from such statements.

These statements should be considered in conjunction with the cautionary statement contained in our earnings release.

Our comments May also reference non-GAAP financial measures.

A reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release and presentation.

With that I'd like to turn the call over to Franco wheel, Frank. Thank you Andrea good morning, everyone.

Stephen Gramling: Thank you, Andrea, and good morning, everyone. We have a lot of ground to cover today, and we fully understand that there is one topic on top of everyone's mind. So while we will address the coronavirus outbreak in detail, I will begin my commentary first with a brief overview of our record 2019 financial results, after which I will turn to 2020 and discuss the impacts of the outbreak. We aim to be as transparent as possible, but with the virus situation as fluid as it is and with so many unknowns at this time, please understand that there may be questions you have to which we simply will not be able to give you definitive answers to. So let's begin. The 2019 storyline for Norwegian Cruise Line Holdings can be best described in one single word: resilience.

Frank J. Del Rio: Thank you, Andrea, and good morning, everyone. We have a lot of ground to cover today, and we fully understand that there is one topic on top of everyone's mind. So while we will address the coronavirus outbreak in detail, I will begin my commentary first with a brief overview of our record 2019 financial results, after which I will turn to 2020 and discuss the impacts of the outbreak. We aim to be as transparent as possible, but with the virus situation as fluid as it is and with so many unknowns at this time, please understand that there may be questions you have to which we simply will not be able to give you definitive answers to. So let's begin. The 2019 storyline for Norwegian Cruise Line Holdings can be best described in one single word: resilience.

We have a lot of grounds that covered today and we fully understand that there is one topic on top of everyone's mind.

So while we will address that grown a virus outbreak in the tail I will begin my commentary first with a brief overview of our record 2019 financial results.

After which I will turn to 2020 and discuss the impacts of the outbreak.

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

Between 19 storyline for Norwegian Cruise line Holdings can be best described in one single word resilient.

Stephen Gramling: A theme that will surely carry over into 2020 as we confront the effects of the virus outbreak. Focusing on just 2019 and with headwinds from the sudden cessation of cruises to Cuba and the impact of Hurricane Dorian, the year that just ended allowed us to demonstrate once again the strength and resilience of our business model. A model founded on operating three award-winning global brands in each of the industry's major categories, a focus on sourcing the best guests from around the world but anchored in North America, consistently diversifying our deployments and quickly redeploying vessels as needed depending on market conditions, and our go-to market strategy of emphasizing value over price as the main lever to drive demand.

A theme that will surely carry over into 2020 as we confront the effects of the virus outbreak. Focusing on just 2019 and with headwinds from the sudden cessation of cruises to Cuba and the impact of Hurricane Dorian, the year that just ended allowed us to demonstrate once again the strength and resilience of our business model. A model founded on operating three award-winning global brands in each of the industry's major categories, a focus on sourcing the best guests from around the world but anchored in North America, consistently diversifying our deployments and quickly redeploying vessels as needed depending on market conditions, and our go-to market strategy of emphasizing value over price as the main lever to drive demand.

That will surely carry over into 2020 as we confront the effects of the virus outbreak.

Focusing on July 29 team and with headwinds from the sudden cessation of cruises to Cuba, and the impact of Hurricane Dorian that urologists and allowed us to demonstrate once again, the strength and resilience of our business model a model founded on operating three award winning global brands in each of the industry's major category.

He's a focus on sourcing the best guess from around the world, but anchored in North America consistently diversifying our deployments in quickly redeploying vessels as needed depending on market conditions.

And our go to market strategy of emphasizing value over price as the main lever to drive demand.

Stephen Gramling: Despite these headwinds, the company still delivered record financial results which reflects a doubling over the last 5 years of revenue to approximately $6.5 billion, adjusted EBITDA approaching $2 billion, and adjusted earnings per share reaching an all-time high and above the $5 mark for the first time in our company's history. In addition, our strong cash-flow generation enabled us to return meaningful levels of capital to our shareholders during the year. Aside from the strong financial results, 2019 was also a year of notable achievements, many of which strengthened the foundation for our future growth. Slide 4 highlights our top 10 milestones of 2019. This past fall, we took delivery of Norwegian Encore, the Norwegian brand's newest, largest, and most innovative ship to date. We have received the best feedback ever for a new ship introduction, generating over 2.4 billion positive media impressions.

Despite these headwinds, the company still delivered record financial results which reflects a doubling over the last 5 years of revenue to approximately $6.5 billion, adjusted EBITDA approaching $2 billion, and adjusted earnings per share reaching an all-time high and above the $5 mark for the first time in our company's history. In addition, our strong cash-flow generation enabled us to return meaningful levels of capital to our shareholders during the year. Aside from the strong financial results, 2019 was also a year of notable achievements, many of which strengthened the foundation for our future growth. Slide 4 highlights our top 10 milestones of 2019. This past fall, we took delivery of Norwegian Encore, the Norwegian brand's newest, largest, and most innovative ship to date. We have received the best feedback ever for a new ship introduction, generating over 2.4 billion positive media impressions.

Despite these headwinds the company's still delivered record financial results, which reflects a doubling over the last five years of revenue to approximately $6.5 billion adjusted EBITDA approaching $2 billion and adjusted earnings per share, reaching an all time high and above the five dollar mark for the first time.

The company's history.

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

Aside from the strong financial results 29 team was also a year of notable achievements many of which strengthened the foundation for our future growth.

Slide four highlight our top 10 milestones of 29 team.

This past fall, we took delivery of Norwegian encore than the region Brian's newest largest and most innovative innovative shipped to date.

We have received the best feedback ever for a new ship introduction generating over 2.4 billion positive media impressions in.

Stephen Gramling: In addition, you should know that Encore is the best-booked, highest-priced ship ever introduced in the Caribbean market in the Norwegian brand's history. In addition to exciting additions to the fleet, 2019 also brought excitement and enhancements to Great Stirrup Cay, our private island in the Bahamas. We recently unveiled Silver Cove, our new upscale oceanfront lagoon on the island, and the initial reception from guests has been phenomenal. This industry-first exclusive oceanfront luxury enclave includes 38 air-conditioned private beachfront villas, a Mandara Spa with full-service beachfront treatments, as well as the exclusive Moët & Chandon bar. The addition of Silver Cove adds an exclusive and luxurious element to complement the pristine beaches, water sport activities, action-adventure attractions, and other amenities available on the island. 2019 also saw exciting new build orders for the Oceania and Regent brands.

In addition, you should know that Encore is the best-booked, highest-priced ship ever introduced in the Caribbean market in the Norwegian brand's history. In addition to exciting additions to the fleet, 2019 also brought excitement and enhancements to Great Stirrup Cay, our private island in the Bahamas. We recently unveiled Silver Cove, our new upscale oceanfront lagoon on the island, and the initial reception from guests has been phenomenal. This industry-first exclusive oceanfront luxury enclave includes 38 air-conditioned private beachfront villas, a Mandara Spa with full-service beachfront treatments, as well as the exclusive Moët & Chandon bar. The addition of Silver Cove adds an exclusive and luxurious element to complement the pristine beaches, water sport activities, action-adventure attractions, and other amenities available on the island. 2019 also saw exciting new build orders for the Oceania and Regent brands.

In addition, you should know that encore is the best book highest price ship ever introduced in the Caribbean market and the Norwegian brand's history.

In addition to exciting additions to the fleet 2019 also brought excitement and enhancements to great Steward K., our private island in the Bahamas.

We recently unveiled silver co our new upscale Ocean front lagoon on the island and the initial reception from guests has been phenomenal. This industry Onest exclusive Ocean front luxury enclave includes 38 air condition private between villas Mandera Spa with full service Beach front treatments as well as the exclusive mode.

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The addition of silver Cove adds an exclusive and luxurious element to complement the pristine beaches water support activities action adventure attractions another amenities available on the island.

Many 19 also saw exciting newbuilds orders for the Oceania and Regent brands Oceania cruises announced in order for two new 1200 birth shifts that will add to the brands fleet and 20 to 22 and 2025, and Meanwhile, Regent seven seas cruises announced in order for a third vessel and its successful export class for delivery in 20.

Stephen Gramling: Oceania Cruises announced an order for 2 new 1,200-berth ships that will add to the brand's fleet in 2022 and 2025. Meanwhile, Regent Seven Seas Cruises announced an order for a third vessel in its successful Explorer class for delivery in 2023. Now turning to 2020. We find ourselves in an environment where the resilience of our business model will be tested once again by the non-controllable external factors. The effects of the coronavirus outbreak on our business have been swift and severe, and the continuous global headline news coverage has been substantial and unrelenting. I would now like to take you through a brief description and chronology of events prior to and during the outbreak and how these events align with booking patterns so far this year. Prior to the emergence of the virus, 2020 was shaping up to be an incredibly good year.

Oceania Cruises announced an order for 2 new 1,200-berth ships that will add to the brand's fleet in 2022 and 2025. Meanwhile, Regent Seven Seas Cruises announced an order for a third vessel in its successful Explorer class for delivery in 2023. Now turning to 2020. We find ourselves in an environment where the resilience of our business model will be tested once again by the non-controllable external factors. The effects of the coronavirus outbreak on our business have been swift and severe, and the continuous global headline news coverage has been substantial and unrelenting. I would now like to take you through a brief description and chronology of events prior to and during the outbreak and how these events align with booking patterns so far this year. Prior to the emergence of the virus, 2020 was shaping up to be an incredibly good year.

23.

Now turning to 2020.

We find ourselves in an environment, where the resilience of our business model will be tested once again by the Noncontrollable external factors.

The effects of the kroner virus outbreak in our business has been slip and severe and the continuous global headline news coverage has been substantial and unrealistic.

I'd now like to take you through a brief description and chronology chronology of events prior to and during the outbreak and how these events aligned with booking patterns. So far this year.

Prior to the emergence of the virus Twentytwenty was shaping up to be an incredibly good year without question another record year in a string of record years.

Stephen Gramling: Without question, another record year in a string of record years. We entered 2020 in a record book position at all three brands and at higher prices on a comparable basis. This strong book position further improved during the early stages of WAVE as both the volume and pricing of bookings accelerated, with all three brands experiencing very strong booking volumes at higher prices through late January. We have provided 2020 full-year guidance excluding impacts of the virus that were commensurate with the strength we were experiencing entering the year and during the early part of WAVE. Our Adjusted Earnings Per Share for full year 2020 was expected to be in the range of $5.40 to $5.60, with Net Yield growth in the range of 2% to 3%, and we were on track to achieving our full speed ahead 2020 target.

Without question, another record year in a string of record years. We entered 2020 in a record book position at all three brands and at higher prices on a comparable basis. This strong book position further improved during the early stages of WAVE as both the volume and pricing of bookings accelerated, with all three brands experiencing very strong booking volumes at higher prices through late January. We have provided 2020 full-year guidance excluding impacts of the virus that were commensurate with the strength we were experiencing entering the year and during the early part of WAVE. Our Adjusted Earnings Per Share for full year 2020 was expected to be in the range of $5.40 to $5.60, with Net Yield growth in the range of 2% to 3%, and we were on track to achieving our full speed ahead 2020 target.

We entered 2020 in a record book position, but all three brands and at higher prices on a comparable basis.

This strong book position further improved during the early stages of wave as both the volume and pricing of bookings accelerated with all three brands experiencing very strong booking volumes at higher prices through late January.

We have provided 2020 full year guidance, excluding impacts of the virus that were commensurate with the strength, we were experiencing entering the year and during the early part of ways.

Our adjusted earnings per share for full year 2020 was expected to be in the range of $5 in 48 to five dollar in 60 cents with net yield growth in the range of 2% to 3% and we're on track to achieving our full speed ahead 2020 target.

The viruses initial impact to the cruise industry began with the cancellation of a number of sailings by operators, who had ships dedicated to the Chinese market and which sales from Chinese ports.

Stephen Gramling: The virus's initial impact to the cruise industry began with the cancellation of a number of sailings by operators who had ships dedicated to the Chinese market and which sailed from Chinese ports. With zero capacity dedicated to the Chinese source market and with only approximately 10 basis points of our global source market coming from China, the impact on our brands was deemed to be minimal at the time. Concerns then extended very quickly to include Pan-Asian voyages that originated outside of China but that called on Chinese ports. While these itineraries were quickly modified to avoid or bypass Chinese ports and were replaced with Asian ports located outside of China, trepidation by American and other Western consumers resulted in increased cancellations and a slowdown in new bookings for sailings in the region.

The virus's initial impact to the cruise industry began with the cancellation of a number of sailings by operators who had ships dedicated to the Chinese market and which sailed from Chinese ports. With zero capacity dedicated to the Chinese source market and with only approximately 10 basis points of our global source market coming from China, the impact on our brands was deemed to be minimal at the time. Concerns then extended very quickly to include Pan-Asian voyages that originated outside of China but that called on Chinese ports. While these itineraries were quickly modified to avoid or bypass Chinese ports and were replaced with Asian ports located outside of China, trepidation by American and other Western consumers resulted in increased cancellations and a slowdown in new bookings for sailings in the region.

Which is zero capacity dedicated to the Chinese source market and with only approximately 10% 10 basis points of our global sourcing coming from China. The impact on our brands was deemed to be minimal at the time.

Concerns then extended very quickly to include Pan Asian voyages that originated outside of China, but that called on Chinese ports.

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

As the outbreak intensified into February and countries throughout southeast Asia refused to allow the docking of cruise ships under assures more drastic itinerary modifications were necessary, including the cancellation of certain sailings.

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

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

Subsequent negative news coverage greatly intensified unfortunately, the cruise industry do much of that Media's focus primarily due to the quarantine of a competitor's crews vessel in Japan.

At this point, a broader and more meaningful slowdown in new bookings and an increasing cancellations began to develop for sailings outside of Asia.

Stephen Gramling: Since the outbreak began, we have taken several aggressive and proactive measures to assure the safety, security, and well-being of our guests and crew by implementing strict embarkation and screening protocols for guests and crew that meet or exceed CLIA-mandated standards across our fleet, which includes denying embarkation to any guest or crew member that has visited mainland China, Hong Kong, or Macau in the 30 days prior to embarkation. Along with these and other health and safety precautions, we have also taken proactive steps to reduce our exposure to Asia.

Since the outbreak began, we have taken several aggressive and proactive measures to assure the safety, security, and well-being of our guests and crew by implementing strict embarkation and screening protocols for guests and crew that meet or exceed CLIA-mandated standards across our fleet, which includes denying embarkation to any guest or crew member that has visited mainland China, Hong Kong, or Macau in the 30 days prior to embarkation. Along with these and other health and safety precautions, we have also taken proactive steps to reduce our exposure to Asia.

Since we operate began we have taken several aggressive and proactive measures to assure the safety security and well being of our guests and crew by implementing strict embarkation in screening protocols for gas and crew that meet or exceed CLIA mandated standards across our fleet, which includes denying embarkation to any.

Yes, or crew member that has visited mainland China, Hong Kong Macau in that 30 days prior to embarkation.

Along with these and other health and safety precautions. We've also taken proactive steps to reduce our exposure to Asia.

Stephen Gramling: In an abundance of caution and due to the uncertainty surrounding port entry and berthing availability in destinations throughout the region, and most importantly because our booked guests and potential new customers are currently reluctant to travel to and sail in and around Asia, we have canceled or modified the remainder of our voyages in the region across our three brands through the end of Q3. These cancellations and modifications comprise 40 voyages in all: 10 for the Oceania Cruises brand, 6 for Regent Seven Seas Cruises, and 24 for Norwegian Cruise Line, 21 of which are for the Norwegian Spirit, which will reposition from Asia and be redeployed to the Eastern Mediterranean.

In an abundance of caution and due to the uncertainty surrounding port entry and berthing availability in destinations throughout the region, and most importantly because our booked guests and potential new customers are currently reluctant to travel to and sail in and around Asia, we have canceled or modified the remainder of our voyages in the region across our three brands through the end of Q3. These cancellations and modifications comprise 40 voyages in all: 10 for the Oceania Cruises brand, 6 for Regent Seven Seas Cruises, and 24 for Norwegian Cruise Line, 21 of which are for the Norwegian Spirit, which will reposition from Asia and be redeployed to the Eastern Mediterranean.

In an abundance of caution.

And due to the uncertainty surrounding port entry and birthing availability and destinations throughout the region and most importantly, because our book guests and potential new customers are currently reluctant to travel to and sale in and around Asia, we have cancelled or modified the remainder of our voices in the region our cross.

Three brands through the end of the third quarter.

These cancellations and modifications comprise 40 voyages in all 10 for the Oceania cruises brand six for Regent seven seas cruises and 24 note for Norwegian cruise line 21 of which are for the Norwegian spirit, which will reposition from Asia and be redeployed to the eastern Mediterranean.

[music].

Stephen Gramling: While Spirit will have an extremely condensed booking window ahead of her first sailings, we believe that, given the unknown duration and severity of the situation, this deployment change provides us with the best opportunity to max our revenue and earnings potential given the circumstances, and once again demonstrates our company's nimbleness and flexibility to quickly redeploy assets as necessary. This redeployment and the aforementioned cancellations of other voyages leaves us with 0 capacity in Asia through Q3. In the near term and as of this call, due to the direct impact of the virus on our business, which includes guest refunds and incentive compensation stemming from itinerary modifications, and voyage cancellations, and the redeployment of Norwegian Spirit to Europe with a shortened booking window, we expect a direct impact to 2020 Adjusted Earnings Per Share of approximately $0.75 per share.

While Spirit will have an extremely condensed booking window ahead of her first sailings, we believe that, given the unknown duration and severity of the situation, this deployment change provides us with the best opportunity to max our revenue and earnings potential given the circumstances, and once again demonstrates our company's nimbleness and flexibility to quickly redeploy assets as necessary. This redeployment and the aforementioned cancellations of other voyages leaves us with 0 capacity in Asia through Q3. In the near term and as of this call, due to the direct impact of the virus on our business, which includes guest refunds and incentive compensation stemming from itinerary modifications, and voyage cancellations, and the redeployment of Norwegian Spirit to Europe with a shortened booking window, we expect a direct impact to 2020 Adjusted Earnings Per Share of approximately $0.75 per share.

While spirit will have an extremely condensed booking window ahead of her first sailings, we believe that given the unknown duration and silver severity of the situation. This deployment change provides us with the best opportunity to Max or revenue and earnings potential given the circumstances and once again demonstrates our company's nimbleness.

And flexibility to quickly redeploy assets as necessary.

This redeployment in the aforementioned cancellations of other voyages leaves us with zero capacity in Asia through the third quarter.

In the near term and as of this call due to the direct impact of the virus on our business, which includes guest refunds and incentive compensation stemming from itinerary modifications and voyage cancellations and the redeployment in the region spirit to Europe with a shortened booking window, we expect a.

Direct impact to 2020 adjusted earnings per share of approximately 75 cents per share.

Stephen Gramling: Please note that given the unknown duration and severity of the outbreak, there may be additional direct impacts that are not yet quantifiable, as well as material indirect impacts affecting the broader global consumer demand environment, and which extend to our global deployments outside of Asia, which cannot be quantified at this time. Based on the known direct impact of $0.75 per share and the yet unknown and unquantifiable potential additional direct and/or indirect financial impacts from the virus, we no longer anticipate achieving our full speed ahead 2020 targets by year-end. While we are withdrawing our targets, we want to be clear that we remain committed to their fundamental tenets of growing return on invested capital and earnings per share while maintaining a strong balance sheet and returning meaningful capital to shareholders.

Please note that given the unknown duration and severity of the outbreak, there may be additional direct impacts that are not yet quantifiable, as well as material indirect impacts affecting the broader global consumer demand environment, and which extend to our global deployments outside of Asia, which cannot be quantified at this time. Based on the known direct impact of $0.75 per share and the yet unknown and unquantifiable potential additional direct and/or indirect financial impacts from the virus, we no longer anticipate achieving our full speed ahead 2020 targets by year-end. While we are withdrawing our targets, we want to be clear that we remain committed to their fundamental tenets of growing return on invested capital and earnings per share while maintaining a strong balance sheet and returning meaningful capital to shareholders.

Please note that given the unknown duration and severity of the outbreak there may be additional direct impacts that are not yet quantifiable as well as material indirect impact affecting the broader global consumer demand environment in which extend to our global deployments outside of Asia, which cannot be quantified at this.

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Based on the non direct impact of 75 cents per share and the yet unknown and unquantifiable potential additional direct and or indirect financial impacts from the virus, we no longer anticipate achieving our full speed ahead 2020 targets by year end.

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

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

Stephen Gramling: There are, however, some silver linings in the immediate and near term that point to the underlying resilience of our business and the potential for a reasonably timed recovery. First is that our book of business entering the year was so strong that, adjusted for the redeployment of Norwegian Spirit, our book position and pricing remains slightly ahead of this time last year on a comparable basis. This strong book position demonstrates the strong demand of fundamentals of our business, the volume of our advanced bookings, and the potential for outsized returns when business comes back to normal. Second, onboard revenue for sailings outside of Asia continue to perform above last year's record levels and better than our current year expectations, demonstrating that any consumer concerns does not extend once guests are onboard.

There are, however, some silver linings in the immediate and near term that point to the underlying resilience of our business and the potential for a reasonably timed recovery. First is that our book of business entering the year was so strong that, adjusted for the redeployment of Norwegian Spirit, our book position and pricing remains slightly ahead of this time last year on a comparable basis. This strong book position demonstrates the strong demand of fundamentals of our business, the volume of our advanced bookings, and the potential for outsized returns when business comes back to normal. Second, onboard revenue for sailings outside of Asia continue to perform above last year's record levels and better than our current year expectations, demonstrating that any consumer concerns does not extend once guests are onboard.

First is that our book of business entering the year was so strong that adjusted for the redeployment of Norwegian Spirit, our book position and pricing remains slightly ahead of this time last year on a comparable basis.

The strong book position demonstrates a strong demand fundamentals of our business the volume or advanced bookings and the potential for outsized return.

Returns when business comes back to normal.

Second onboard revenue per sailing outside of Asia continued to perform above last year's record levels and better than our current year expectations demonstrating that any consumer concerns does not extend once guests are on board.

Stephen Gramling: Third, the sale of future cruises onboard to guests currently sailing continue to exceed both prior year record levels and current expectations. And lastly, and perhaps most importantly, in the previous five days we have seen an improvement in week-over-week booking volumes and a decrease in cancellations when compared to the prior three weeks. And while I do not want to conclude any definitive turnaround trend just yet, given the relatively short time period being analyzed, it is at least one data point of a possible positive change. As an industry and as a company, we have faced and overcome challenges similar to COVID-19 in the past, and I am confident that this challenge will be no different.

Third, the sale of future cruises onboard to guests currently sailing continue to exceed both prior year record levels and current expectations. And lastly, and perhaps most importantly, in the previous five days we have seen an improvement in week-over-week booking volumes and a decrease in cancellations when compared to the prior three weeks. And while I do not want to conclude any definitive turnaround trend just yet, given the relatively short time period being analyzed, it is at least one data point of a possible positive change. As an industry and as a company, we have faced and overcome challenges similar to COVID-19 in the past, and I am confident that this challenge will be no different.

Third the sale of future cruises onboard to guess currently selling continue to exceed both prior year record levels and current expectations.

And lastly, and perhaps most importantly in the previous five days, we have seen an improvement in week over week booking volumes and a decrease in cancellations when compared to the prior three weeks.

And we'll I do not want to conclude any definitive turnaround tranches, yet given the relatively short time period being analyzed it is at least one data point of a possible positive change.

As an industry as a company, we have face and overcome challenges similar to cope with 19 in the past and I am confident that this challenge will be no different.

Stephen Gramling: From past experience of similar events, it usually takes 8+ weeks from the time the news cycle peaks to when we can expect consumers return to normal purchasing patterns, and we remain confident that it's not a matter of if this will occur but a matter of when. For further proof, I refer you to slide 7 in our earnings presentations. For as long as many of us have been in or have followed the cruise industry, more people cruise in any given year than the year preceding it despite geopolitical and macroeconomic events that have occurred around the world. Ours is as resilient an industry as there is, and I believe this virus outbreak will be another example that the industry will overcome.

From past experience of similar events, it usually takes 8+ weeks from the time the news cycle peaks to when we can expect consumers return to normal purchasing patterns, and we remain confident that it's not a matter of if this will occur but a matter of when. For further proof, I refer you to slide 7 in our earnings presentations. For as long as many of us have been in or have followed the cruise industry, more people cruise in any given year than the year preceding it despite geopolitical and macroeconomic events that have occurred around the world. Ours is as resilient an industry as there is, and I believe this virus outbreak will be another example that the industry will overcome.

From past experience of similar events are usually takes eight plus weeks from the time, the new cycle peaks to when we can expect consumers returned to normal purchasing patterns and we remain confident that it's not a matter of if this will occur but a matter of one.

For further prove I refer you to slide seven in our earnings presentation.

And for as long as many of us have been in or have followed the cruise industry more people crews at any given year than the year preceding it this by geopolitical and macroeconomic economic events that have occurred around the world.

Ours is as resilience in industry as there is and I believe this virus outbreak will be another example, the industry will overcome overcome.

Stephen Gramling: I'll be back at the end of the call for some final words, but for now I'd like to turn the call over to Mark for a review of results and guidance. Mark.

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

The back at the other call for some final worth but for now I'd like to turn the call over to Mark for a review of results and guidance.

Yeah.

Operator: Thank you, Frank. Unless otherwise noted, my commentary compares 2019 and 2018 net yield and adjusted net cruise cost excluding fuel per capacity day metrics on a constant currency basis. In addition, unless otherwise noted, 2020 guidance figures exclude any direct and indirect impacts of the COVID-19 outbreak. We continue to monitor this situation and its potential impact to our results. I'll begin with commentary on our Q4 and full year results, followed by our 2020 outlook. As you can see on slide 8, strong revenue performance in the Q4 driven by strong pricing for close-in bookings and better than expected onboard revenue drove earnings above expectations with adjusted EPS of $0.73 beating guidance by $0.04 inclusive of the previously disclosed $0.09 impact from Hurricane Dorian and $0.04 of headwinds from foreign exchange rates.

Mark A. Kempa: Thank you, Frank. Unless otherwise noted, my commentary compares 2019 and 2018 net yield and adjusted net cruise cost excluding fuel per capacity day metrics on a constant currency basis. In addition, unless otherwise noted, 2020 guidance figures exclude any direct and indirect impacts of the COVID-19 outbreak. We continue to monitor this situation and its potential impact to our results. I'll begin with commentary on our Q4 and full year results, followed by our 2020 outlook. As you can see on slide 8, strong revenue performance in the Q4 driven by strong pricing for close-in bookings and better than expected onboard revenue drove earnings above expectations with adjusted EPS of $0.73 beating guidance by $0.04 inclusive of the previously disclosed $0.09 impact from Hurricane Dorian and $0.04 of headwinds from foreign exchange rates.

Thank you Frank unless otherwise noted my commentary compares 2019, and 2018 net yield and adjusted net cruise cost excluding fuel per capacity day metrics on a constant currency basis. In addition, unless otherwise noted 2020 guidance figures exclude any direct and indirect impacts of.

The cobot 19 outbreak, we continue to monitor this situation and its potential impact to our results.

I'll begin with commentary on our fourth quarter and full year results followed by our 2020 outlook.

As you can see on slide eight strong revenue performance in the fourth quarter, driven by strong pricing for close in bookings and better than expected onboard revenue drove earnings above expectations with adjusted EPS of 73 cents, beating guidance by four cents inclusive of the previously disclosed nine cents.

Impact from Hurricane Dorian and four cents of headwinds from foreign exchange rates.

Operator: Focusing on the top line, net yield growth was 1.8% in Q4, outperforming guidance of flat to prior year. This is inclusive of approximately 110 basis point drag from Hurricane Dorian. If not for the 440 basis point impacts from both Cuba and Dorian, as shown on slide nine, net yield growth in the quarter would have reached 6.2%, demonstrating the strength of our core top line fundamentals. Turning to costs, adjusted net cruise cost excluding fuel increased 4% versus prior year and 3.4% on an as-reported basis. Costs were higher than guidance, primarily driven by an increase in marketing and other investments. Fuel expense for the quarter was slightly higher than expectations due to an increase in fuel price per metric ton, net of hedges, which came in at $508 versus guidance of $498.

Focusing on the top line, net yield growth was 1.8% in Q4, outperforming guidance of flat to prior year. This is inclusive of approximately 110 basis point drag from Hurricane Dorian. If not for the 440 basis point impacts from both Cuba and Dorian, as shown on slide nine, net yield growth in the quarter would have reached 6.2%, demonstrating the strength of our core top line fundamentals. Turning to costs, adjusted net cruise cost excluding fuel increased 4% versus prior year and 3.4% on an as-reported basis. Costs were higher than guidance, primarily driven by an increase in marketing and other investments. Fuel expense for the quarter was slightly higher than expectations due to an increase in fuel price per metric ton, net of hedges, which came in at $508 versus guidance of $498.

Focusing on the topline net yield growth was 1.8% in the fourth quarter outperforming guidance of flat to prior year.

This is inclusive of approximately 110 basis point drag from Hurricane Dorian.

If not for the 440 basis point impact from both Cuba, and Dorian as we as shown on slide nine net yield growth in the quarter would have reached 6.2%.

Demonstrating the strength of our core topline fundamentals.

Turning to costs adjusted net cruise costs, excluding fuel increased 4% versus prior year and 3.4% on an as reported basis.

Costs were higher than guidance, primarily driven by an increase in marketing and other investments.

Fuel expense for the quarter was slightly higher than expectations due to an increase in fuel price per metric ton net of hedges, which came in at $508 versus guidance of 498.

Turning to the full year results 2019 finished strong and we delivered yet another year of record financial performance. Despite significant external headwinds revenue net yield and adjusted earnings per share. We're all the highest in our company's history.

Operator: Turning to the full year results, 2019 finished strong, and we delivered yet another year of record financial performance despite significant external headwinds. Revenue, Net Yield, and Adjusted Earnings Per Share were all the highest in our company's history. Looking at slide 10, full year Adjusted Earnings Per Share was $5.09, beating November guidance by $0.04. This beat was inclusive of the $0.04 foreign exchange headwind previously noted. Outperformance in the top line from continued strong demand for our portfolio of products also contributed to the earnings beat. Revenue grew 6.7% over prior year on capacity of 2.1%, reaching a record $6.5 billion. To put our performance in perspective, I'll refer you to slide 11. If not for the $0.67 of headwinds from Cuba, Dorian, and Pearl, our adjusted EPS would have reached $5.76, well ahead of our initial February guidance of $5.20 to $5.30.

Turning to the full year results, 2019 finished strong, and we delivered yet another year of record financial performance despite significant external headwinds. Revenue, Net Yield, and Adjusted Earnings Per Share were all the highest in our company's history. Looking at slide 10, full year Adjusted Earnings Per Share was $5.09, beating November guidance by $0.04. This beat was inclusive of the $0.04 foreign exchange headwind previously noted. Outperformance in the top line from continued strong demand for our portfolio of products also contributed to the earnings beat. Revenue grew 6.7% over prior year on capacity of 2.1%, reaching a record $6.5 billion. To put our performance in perspective, I'll refer you to slide 11. If not for the $0.67 of headwinds from Cuba, Dorian, and Pearl, our adjusted EPS would have reached $5.76, well ahead of our initial February guidance of $5.20 to $5.30.

Looking at Slide 10 full year adjusted earnings per share was $5.09.

Meeting November guidance by four cents.

This beat was inclusive of the four cents foreign exchange headwind previously noted.

Outperformance in the topline from continued strong demand for our portfolio of products also contributed to the earnings be.

Revenue grew 6.7% over prior year on capacity of 2.1%, reaching a record $6.5 billion.

To put our performance in perspective, I'll refer you to slide 11.

If not for the 67 cents of headwinds from Cuba, Dorian temporal our adjusted EPS would have reached $5 in 76 cents.

Well ahead of our initial February guidance of $5 in 20 to $5 in 30 cents.

Operator: This would have represented a 17% increase in adjusted EPS versus prior year. Other key financial metrics for the full year 2019 include net yield growth of 3.6% or 2.9% on an as-reported basis, which exceeded our November guidance by 60 basis points. If not for the 200 basis point headwind from Cuba, Pearl, and Dorian, net yield would have been 5.6%. Adjusted net cruise cost excluding fuel increased 6.2% or 5.5% on an as-reported basis. Fuel price per metric ton net of hedges increased to $491 from $483 in the prior year. Shifting to 2020, as Frank mentioned earlier, the COVID-19 outbreak has resulted in direct and indirect impacts on our operations, including the modification and cancellation of certain sailings, as well as reduced booking activity over the last several weeks.

This would have represented a 17% increase in adjusted EPS versus prior year. Other key financial metrics for the full year 2019 include net yield growth of 3.6% or 2.9% on an as-reported basis, which exceeded our November guidance by 60 basis points. If not for the 200 basis point headwind from Cuba, Pearl, and Dorian, net yield would have been 5.6%. Adjusted net cruise cost excluding fuel increased 6.2% or 5.5% on an as-reported basis. Fuel price per metric ton net of hedges increased to $491 from $483 in the prior year. Shifting to 2020, as Frank mentioned earlier, the COVID-19 outbreak has resulted in direct and indirect impacts on our operations, including the modification and cancellation of certain sailings, as well as reduced booking activity over the last several weeks.

This would have represented a 17% increase in adjusted EPS versus prior year.

Other key financial metrics for the full year 2019 include net yield growth of 3.6% or 2.9% on an as reported basis, which exceeded our November guidance by 60 basis points.

If not for the 200 basis point headwind from Cuba Pro and Dorian that yield would have been 5.6%.

Adjusted net cruise costs, excluding fuel increased 6.2% or 5.5 on an as reported basis and fuel price per metric ton net of hedges increased to 491 from $483 in the prior year.

Shifting to 2020 as Frank mentioned earlier, the covert 19 outbreak has resulted in direct and indirect impacts on our operations, including the modification and cancellation of certain sailings as well as reduced booking activity over the last several weeks.

Operator: Our 2020 capacity prior to the canceled voyages was expected to increase approximately 8.9% due to the addition of Norwegian Encore last November and the introduction of Seven Seas Splendor this month. Post the canceled sailings, our capacity growth is expected to be approximately 8.1%. I'll direct you to slide 12 to review some deployment highlights. Note these deployment figures include impacts in connection with the COVID-19 outbreak. The main highlights include an expected decrease in Caribbean capacity versus prior year as two ships that were originally sailing to Cuba were redeployed out of the region. Europe capacity is expected to be up almost 30% as we deploy additional ships to the region in the peak summer season as well as the 21 redeployed Norwegian Spirit sailings.

Our 2020 capacity prior to the canceled voyages was expected to increase approximately 8.9% due to the addition of Norwegian Encore last November and the introduction of Seven Seas Splendor this month. Post the canceled sailings, our capacity growth is expected to be approximately 8.1%. I'll direct you to slide 12 to review some deployment highlights. Note these deployment figures include impacts in connection with the COVID-19 outbreak. The main highlights include an expected decrease in Caribbean capacity versus prior year as two ships that were originally sailing to Cuba were redeployed out of the region. Europe capacity is expected to be up almost 30% as we deploy additional ships to the region in the peak summer season as well as the 21 redeployed Norwegian Spirit sailings.

Our 2020 capacity prior to the canceled voyages was expected to increase approximately 8.9% due to the addition of Norwegian Encore last November and the introduction of Sevenci splendor. This month.

Posted canceled sailings, our capacity growth is expected to be approximately 8.1%.

I'll direct you to slide 12 to review some deployment highlights.

No. These deployment figures include impacts in connection with the Cobot 19 outbreak.

The main highlights include an expected decrease in Caribbean capacity versus prior year as two ships that were originally sailing to Cuba, we redeployed out of the region.

Europe capacity is expected to be up almost 30% as we deploy additional ships to the region and the peak summer season, as well as the 21 redeployed Norwegian spirits sailings.

Operator: Alaska has been a key market, and we've strategically increased our presence through both destination development initiatives and increased capacity with the introduction of new innovative hardware to the region. Our capacity is expected to be up approximately 20%, primarily due to the addition of a fourth Norwegian ship to the market, Norwegian Sun, which offers destination-intensive 7- to 15-day itineraries from Seattle. Asia capacity is expected to be down low- to mid-teens, which factors in the 40 voyages that were recently modified or canceled, including the 21 redeployed Norwegian Spirit sailings. The entire Asia, Africa, Pacific region now comprises just 5% of our deployment mix for the year. Q1 deployment is similar to prior year as it is the most Caribbean-centric quarter with over 60% of our capacity deployed in the market.

Alaska has been a key market, and we've strategically increased our presence through both destination development initiatives and increased capacity with the introduction of new innovative hardware to the region. Our capacity is expected to be up approximately 20%, primarily due to the addition of a fourth Norwegian ship to the market, Norwegian Sun, which offers destination-intensive 7- to 15-day itineraries from Seattle. Asia capacity is expected to be down low- to mid-teens, which factors in the 40 voyages that were recently modified or canceled, including the 21 redeployed Norwegian Spirit sailings. The entire Asia, Africa, Pacific region now comprises just 5% of our deployment mix for the year. Q1 deployment is similar to prior year as it is the most Caribbean-centric quarter with over 60% of our capacity deployed in the market.

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

Our capacity is expected to be up approximately 20% primarily due to the addition of a fourth Norwegian shipped to the market Norwegian son, which offers destination intensive seven to 15 day itineraries from Seattle.

Asia capacity is expected to be down low to mid teens, which factors in the 40 voyages that were recently modified or canceled, including the 21 redeployed Norwegian spirit sailings.

The entire Asia Africa Africa Pacific Region, now comprises just 5% of our deployment mix for the year.

First quarter deployment is similar to prior year that isn't as it is the most Caribbean centric quarter with over 60% of our supply capacity deployed in the market.

Looking at expectations for the full year 2020 on slide 13, we are providing guidance, excluding direct and indirect indirect impacts from cobot 19.

Operator: Looking at expectations for the full year 2020 on slide 13, we are providing guidance excluding direct and indirect impacts from COVID-19. Adjusted EPS is expected to be in the range of $5.40 to $5.60. This guidance includes capital allocation as part of our full speed ahead 2020 targets, which we have now withdrawn. Given the uncertainty around the duration and extent of this outbreak, we will evaluate our capital allocation strategy quarter to quarter. To date, the current direct adjusted EPS impact of COVID-19 is approximately $0.75 per share and is almost all comprised of lost revenue from a total of 40 canceled, modified, or redeployed sailings in Asia through the end of Q3 across our three brands.

Looking at expectations for the full year 2020 on slide 13, we are providing guidance excluding direct and indirect impacts from COVID-19. Adjusted EPS is expected to be in the range of $5.40 to $5.60. This guidance includes capital allocation as part of our full speed ahead 2020 targets, which we have now withdrawn. Given the uncertainty around the duration and extent of this outbreak, we will evaluate our capital allocation strategy quarter to quarter. To date, the current direct adjusted EPS impact of COVID-19 is approximately $0.75 per share and is almost all comprised of lost revenue from a total of 40 canceled, modified, or redeployed sailings in Asia through the end of Q3 across our three brands.

Adjusted EPS is expected to be in the range of $5.40 to $5 in 60 cents. This.

This guidance includes capital allocation as part of our full speed ahead, 2020 targets, which we have now withdrawn.

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

To date, the current direct adjusted EPS impact of Cobot 19 is approximately 75 cents per share.

And is almost all comprised of lost revenue from a total of 40 canceled modified or redeploy redeployed sailings in Asia.

Through the end of the third quarter across our three brands.

Operator: This includes 10 canceled sailings, eight of which are on our Regent and Oceania brands, which garner yields well above the corporate average, as well as the close-in redeployment of the 21 Asia sailings to the Eastern Mediterranean on Norwegian Spirit that have an extremely condensed booking window. The virus situation is extremely fluid, and while we expect additional direct and indirect impacts, it is simply too early to quantify potential broader headwinds to the business resulting from softer global demand for travel and tourism. Net yield for the year is expected to increase in the range of 2% to 3% on both a constant and as-reported basis. This performance is on top of the strong growth we delivered in 2019 of 3.6%. This guidance excludes approximately 300 basis points of known direct coronavirus impact primarily weighted to the first half of the year.

This includes 10 canceled sailings, eight of which are on our Regent and Oceania brands, which garner yields well above the corporate average, as well as the close-in redeployment of the 21 Asia sailings to the Eastern Mediterranean on Norwegian Spirit that have an extremely condensed booking window. The virus situation is extremely fluid, and while we expect additional direct and indirect impacts, it is simply too early to quantify potential broader headwinds to the business resulting from softer global demand for travel and tourism. Net yield for the year is expected to increase in the range of 2% to 3% on both a constant and as-reported basis. This performance is on top of the strong growth we delivered in 2019 of 3.6%. This guidance excludes approximately 300 basis points of known direct coronavirus impact primarily weighted to the first half of the year.

This includes 10 canceled sailings.

Eight of which are in our hot on regent and Oceania, Anna brands, which garner yields well above the corporate average.

As well as the close and redeployment of the 21 Asia sailings to the eastern Med on Norwegian spirit that have an extremely condensed booking window.

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

Net yields for the year is expected to increase in the range of 2% to 3% on both a constant and as reported basis.

This performance is on top of the strong growth we delivered into in 2019 of 3.6%.

This guidance excludes approximately 300 basis points of known direct Corona virus impact primarily weighted to the first half of the year.

Operator: Moving on to costs, Adjusted Net Cruise Cost excluding fuel is expected to be up approximately 1.25% on both a constant and reported basis. The increase is primarily due to higher total Dry Dock days and associated costs versus prior year and includes two extended 40-plus day Dry Docks for Norwegian Spirit in Q1 and Pride of America in Q2, as well as technology and other investments aimed at process improvement to support our future growth. Focusing on the fuel environment on slide 14, IMO 2020 regulations are now in effect, resulting in a shift in MGO consumption from approximately 30% in 2019 to approximately 60% in 2020, which is in line with our previous expectations. This, coupled with an increase in consumption resulting from capacity growth, is driving fuel expense higher versus prior year.

Moving on to costs, Adjusted Net Cruise Cost excluding fuel is expected to be up approximately 1.25% on both a constant and reported basis. The increase is primarily due to higher total Dry Dock days and associated costs versus prior year and includes two extended 40-plus day Dry Docks for Norwegian Spirit in Q1 and Pride of America in Q2, as well as technology and other investments aimed at process improvement to support our future growth. Focusing on the fuel environment on slide 14, IMO 2020 regulations are now in effect, resulting in a shift in MGO consumption from approximately 30% in 2019 to approximately 60% in 2020, which is in line with our previous expectations. This, coupled with an increase in consumption resulting from capacity growth, is driving fuel expense higher versus prior year.

Moving on to cost adjusted net cruise cost excluding fuel is expected to be up approximately 1.25% on both a constant and reported basis.

The increase was primarily due to higher total dry dock days and associated cost versus prior year and includes two extended 40, plus day dry docks for Norwegian spirit, and the first quarter and Pride of America and the second quarter.

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

Focusing on the fuel environment on slide 14, IMO 2020 regulations are now in effect, resulting in a shift in mgo consumption from approximately 30% in 2019 to approximately 60% in 2020, which is inline with our previous expectations. This coupled with an increase in consumption reason.

Nothing firm capacity growth is driving fuel expense higher versus prior year.

Operator: We anticipate our fuel price per metric ton net of hedges to be $560 with expected consumption of approximately 885,000 metric tons. Fuel expense is slightly higher than expectations provided in November due to an increase in at-the-pump pricing. There are a few key items to keep in mind for the balance of 2020. Due to the fluid nature of the impacts from the outbreak, cadence may shift throughout the year. What we can share right now is our expectation that Q1 and Q2 will have the largest direct COVID-19 impacts primarily resulting from the canceled, modified, or redeployed sailings. Net yield growth is still expected to be lower in the first half of the year primarily due to tough pricing comparisons from Cuba sailings in 2019.

We anticipate our fuel price per metric ton net of hedges to be $560 with expected consumption of approximately 885,000 metric tons. Fuel expense is slightly higher than expectations provided in November due to an increase in at-the-pump pricing. There are a few key items to keep in mind for the balance of 2020. Due to the fluid nature of the impacts from the outbreak, cadence may shift throughout the year. What we can share right now is our expectation that Q1 and Q2 will have the largest direct COVID-19 impacts primarily resulting from the canceled, modified, or redeployed sailings. Net yield growth is still expected to be lower in the first half of the year primarily due to tough pricing comparisons from Cuba sailings in 2019.

We anticipate our fuel price per metric ton net of hedges to be $560 with expect the consumption of approximately 885000 metric tons.

Fuel expense is slightly higher than expectations provided in November due to an increase in at the pump pricing.

There are few key items to keep in mind for the balance of 2020.

Due to the fluid nature of the impacts from the outbreak.

Cadence may shift throughout the year, what we can share right now is our expectation that the first and second quarters, we'll have the largest direct cobot 19 impacts primarily resulting from the canceled modified or redeployed sailings.

Net yield growth is still expected to be lower in the first half of the year, primarily due to tough pricing comparisons from Cuba sailings in 2019.

Operator: We expect net yield growth for Q2 to be the lowest yield growth quarter as a result of tough Cuba comps, the 40+ day dry docks, and the high yielding of the high yielding Pride of America and the incremental capacity days associated with Norwegian Joy versus prior year where she was out of service during her dry dock and repositioning to Alaska. Now let's take a look at our expectations for Q1, which exclude any impact from COVID-19, which can be found on slide 15. Net yield is expected to increase approximately a quarter point or flat on an as-reported basis. Adjusted net cruise cost excluding fuel is expected to be up approximately 4.5% or 4.25% on a reported basis. We anticipate our fuel price per metric ton net of hedges to be $602 with expected consumption of approximately 232,000 metric tons.

We expect net yield growth for Q2 to be the lowest yield growth quarter as a result of tough Cuba comps, the 40+ day dry docks, and the high yielding of the high yielding Pride of America and the incremental capacity days associated with Norwegian Joy versus prior year where she was out of service during her dry dock and repositioning to Alaska. Now let's take a look at our expectations for Q1, which exclude any impact from COVID-19, which can be found on slide 15. Net yield is expected to increase approximately a quarter point or flat on an as-reported basis. Adjusted net cruise cost excluding fuel is expected to be up approximately 4.5% or 4.25% on a reported basis. We anticipate our fuel price per metric ton net of hedges to be $602 with expected consumption of approximately 232,000 metric tons.

We expect net yield growth for the second quarter to be the lowest yield growth quarter. As a result of tough Cuba comps, the 40, plus day dry docks and the high yielding of the high yielding pride of America, and the incremental capacity days associated with Norwegian Joy versus prior year, where she was out of service during her dry dock and repositioning to.

Alaska.

Now, let's take a look at our expectations for the first quarter, which exclude any impact from covert 19, which can be found on slide 15.

Net yield is expected to increase approximately a quarter point or flat on an as reported basis and adjusted net cruise costs. Excluding fuel is expected to be up approximately 4.5% or foreign a quarter percent on a reported basis.

We anticipate our fuel price per metric ton net of hedges to be $602 with expected consumption of approximately 232000 metric tons.

Operator: Taking all of this into account, Adjusted EPS for Q1 is expected to be approximately $0.48. In terms of the impact from COVID-19, we expect that of the $0.75 known direct impact for the year, approximately $0.25 will fall into Q1, which equates to a 450 basis point impact on Net Yield growth. Before returning the call to Frank, I want to reiterate that coming into the year and through its first few weeks, our core business fundamentals were solid as ever and we were well on our way to another record year. While the current environment is temporarily impacting our business, the team at Norwegian Cruise Line Holdings is working tirelessly to do what is right for our guests, crew, and shareholders while protecting the equity of our brands. We believe in our business model, which has demonstrated its resilience time and time again.

Taking all of this into account, Adjusted EPS for Q1 is expected to be approximately $0.48. In terms of the impact from COVID-19, we expect that of the $0.75 known direct impact for the year, approximately $0.25 will fall into Q1, which equates to a 450 basis point impact on Net Yield growth. Before returning the call to Frank, I want to reiterate that coming into the year and through its first few weeks, our core business fundamentals were solid as ever and we were well on our way to another record year. While the current environment is temporarily impacting our business, the team at Norwegian Cruise Line Holdings is working tirelessly to do what is right for our guests, crew, and shareholders while protecting the equity of our brands. We believe in our business model, which has demonstrated its resilience time and time again.

Taking all of this into account adjusted EPS for the first quarter is expected to be approximately 48 cents.

In terms of the impact from Cobot 19, we expect that of the 75 cents known direct impact for the year approximately 25 cents will fall into the first quarter, which equates to a 450 basis point impact on net yield growth.

Before returning the call to Frank I want to reiterate that coming into the year and through its first few weeks, our core business fundamentals fundamentals were solid as ever and we were well on our way to another record year.

While the current environment is temporarily impacting our business the team at Norwegian Cruise line Holdings is working tires tirelessly to do what is right for our guests crew and shareholders, while protecting the equity of our brands. We believe in our business model, which has demonstrated its resilience time and time again.

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

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

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

Frank Del Rio: Thank you, Mark. We continue to focus on strengthening the foundation for our company's future growth. As you can see on slide 16, several of the initiatives underway demonstrate our deepening commitment to enhancing our environmental, social, and governance strategy. One of these initiatives was the launch of a dedicated ESG department, which will coordinate closely with departments across the organization as well as with the Technology, Environmental Safety, and Security Committee of our board of directors. From our commitment to greater female representation on our board of directors, which was recently recognized by the Women's Forum of New York, to our significant contributions to emergency relief in the Bahamas after Hurricane Dorian and in Australia to help combat the devastating bushfires, our company has stepped up in meaningful ways.

Frank J. Del Rio: Thank you, Mark. We continue to focus on strengthening the foundation for our company's future growth. As you can see on slide 16, several of the initiatives underway demonstrate our deepening commitment to enhancing our environmental, social, and governance strategy. One of these initiatives was the launch of a dedicated ESG department, which will coordinate closely with departments across the organization as well as with the Technology, Environmental Safety, and Security Committee of our board of directors. From our commitment to greater female representation on our board of directors, which was recently recognized by the Women's Forum of New York, to our significant contributions to emergency relief in the Bahamas after Hurricane Dorian and in Australia to help combat the devastating bushfires, our company has stepped up in meaningful ways.

Thank you Mark.

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

As you can see on slide 16, several of the initiatives underway demonstrate our deepening commitment to enhancing our environment, social and governance strategy.

One of these initiatives was the launch of a dedicated SG department, which will coordinate closely with departments across the organization as well as with the technology and environmental safety and Security Committee of our board of directors.

From our commitment to greater female representation on our board of directors, which was recently recognized by the women's form of New York to our significant contributions to emergency relieving the Bahamas after hurricane Dorian and in Australia to help combat the devastating Bushfires, our company has stepped up and meaningful way.

Frank Del Rio: On the environment front, we receive positive marks, a B minus, in our first disclosure to the Carbon Disclosure Project, better known as CDP. We are also focused on developing key port infrastructure. This spring, we will officially unveil the Pearl of Miami, our stunning, game-changing terminal right here at PortMiami, which is being constructed to lead gold standards and where we first welcome nearly 25% of all guests we board annually. We also continue to develop several projects in Alaska to ensure and enhance our presence in this important and very profitable market. These initiatives mark the latest steps in our continual efforts to strengthen our presence in strategic ports and destinations around the world. Lastly, we were incredibly pleased with the reception of Regent's newest ship, Seven Seas Splendor, which has outperformed her record-setting sister ship, Seven Seas Explorer, who was introduced in 2016.

On the environment front, we receive positive marks, a B minus, in our first disclosure to the Carbon Disclosure Project, better known as CDP. We are also focused on developing key port infrastructure. This spring, we will officially unveil the Pearl of Miami, our stunning, game-changing terminal right here at PortMiami, which is being constructed to lead gold standards and where we first welcome nearly 25% of all guests we board annually. We also continue to develop several projects in Alaska to ensure and enhance our presence in this important and very profitable market. These initiatives mark the latest steps in our continual efforts to strengthen our presence in strategic ports and destinations around the world. Lastly, we were incredibly pleased with the reception of Regent's newest ship, Seven Seas Splendor, which has outperformed her record-setting sister ship, Seven Seas Explorer, who was introduced in 2016.

On the environment front, we received positive Mark a b minus in our first disclosure to the carbon disclosure project better known SDDP.

We're also focused on developing key port infrastructure. This spring, we will officially unveiled apparel of Miami, our stunning game changing terminal right here at Port Miami, which is being constructed LEED gold standards and where we first welcome nearly 25% of all guests we bought annually.

We also continue to develop several projects in Alaska to ensure idling and enhance our presence in this important and very profitable market.

These initiatives Mark the latest steps in our continual efforts to strengthen our present and strategic boards and destination around the world.

Lastly, we were incredibly pleased with the reception of reagents newest ship Sevenci slender, which has outperformed a record setting sister ship seven seas explorer was introduced in 2016.

Frank Del Rio: Coincidentally, after her transatlantic crossing from the shipyard, Splendor arrived in Miami today to prepare for her christening. Splendor is truly magnificent and deserving of her billing of luxury perfected. She is resonating with both new and loyal past guests alike, which is why she is garnering the highest yields in our fleet, and I'll bet the highest yields of any ocean cruise ship in the industry. I look forward to showing her off to our valued past guests, travel partners, media, and the investment community throughout her upcoming inaugural sailings and at her christening ceremony, which will be held tomorrow evening at a black-tie affair at PortMiami. Before turning the call over to Q&A, I'd like to leave you with some key takeaways from our call today on slide 18.

Coincidentally, after her transatlantic crossing from the shipyard, Splendor arrived in Miami today to prepare for her christening. Splendor is truly magnificent and deserving of her billing of luxury perfected. She is resonating with both new and loyal past guests alike, which is why she is garnering the highest yields in our fleet, and I'll bet the highest yields of any ocean cruise ship in the industry. I look forward to showing her off to our valued past guests, travel partners, media, and the investment community throughout her upcoming inaugural sailings and at her christening ceremony, which will be held tomorrow evening at a black-tie affair at PortMiami. Before turning the call over to Q&A, I'd like to leave you with some key takeaways from our call today on slide 18.

And Coincidently after her trans Atlantic crossing from the shipyard.

Blender arrived in Miami today to prepare for her christening.

Slender is truly magnificent and deserving of our billing of luxury perfected.

He is resonating with both new and loyal pass gas the light, which is why he is garnering the highest yields in our fleet and I'll bet, the highest deals of any ocean cruise ship in the industry.

I look forward to showing our off to our valued Pascagoula travel partners media and the investment community throughout her upcoming inaugural sailings and at her christening ceremony, which will be heard we held tomorrow evening at a black tie affair at Port Miami.

Before turning the call over to hear any I'd like to leave you with some key takeaway from our call today on slide 18.

Frank Del Rio: First, the company once again demonstrated the resilience of its business model in the face of several significant headwinds and delivered another year of record financial results in 2019. Second, we entered 2020 in a record book position with strong booking activity through late January prior to the impacts of the coronavirus outbreak. We have taken aggressive and proactive steps to protect our guests, crew, and our long-term brand equity by modifying, canceling, or redeploying 40 sailings to significantly reduce our exposure in Asia. And lastly, we continue to lay the foundation for our future growth, including initiatives around ESG, port infrastructure, and new builds. And with that, Daniel, I'd like to open the call for Q&A.

First, the company once again demonstrated the resilience of its business model in the face of several significant headwinds and delivered another year of record financial results in 2019. Second, we entered 2020 in a record book position with strong booking activity through late January prior to the impacts of the coronavirus outbreak. We have taken aggressive and proactive steps to protect our guests, crew, and our long-term brand equity by modifying, canceling, or redeploying 40 sailings to significantly reduce our exposure in Asia. And lastly, we continue to lay the foundation for our future growth, including initiatives around ESG, port infrastructure, and new builds. And with that, Daniel, I'd like to open the call for Q&A.

First the company once again demonstrated the resilience of its business model in the face of several significant headwind and delivered another year of record financial results in 2019.

Second we entered 2020 in a record book position with strong booking activity through late January prior to the impact of the Corona virus outbreak.

We have taken aggressive and proactive steps to protect our guest crew and our long term brand equity by modifying canceling a redeploying 40 sailings to significantly reduce our exposure in Asia.

And lastly, we continue to lay the foundation for our future growth, including initiatives around SG port infrastructure and Newbuilds.

And with that Daniel I'd like to open the call for QNX.

Thank you Mr. Deloria, if you have a question at this time please press the star.

Operator: Thank you, Mr. Del Rio. If you have a question at this time, please press the star, then one key on your touch-tone telephone. In order to get as many people through the queue as possible, please limit your time to one question. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Our first question comes from Harry Curtis with Instinet. Your line is now open.

Then one key under touched on palace in order to get as many people through the Q.

As possible. Please limit your time to one question. If your question has enhance or you wish for Weve yourself from the Q. Please press the pound cake.

Our first question comes from Harry Curtis within Sir Your line is now.

Hi, good morning, everybody.

Harry Curtis: Good morning, everybody. My question is related to your comment, Frank, about not getting too excited, at least being too early, about the notion of current booking stabilizing. I think it's probably worth giving additional color on that, and particularly, what are your agents saying about their customers rebooking interests at this point, particularly in some of the markets that really have not been impacted, domestically in continental Europe and Alaska. What are they seeing there?

Harry C. Curtis: Good morning, everybody. My question is related to your comment, Frank, about not getting too excited, at least being too early, about the notion of current booking stabilizing. I think it's probably worth giving additional color on that, and particularly, what are your agents saying about their customers rebooking interests at this point, particularly in some of the markets that really have not been impacted, domestically in continental Europe and Alaska. What are they seeing there?

At my question is.

Related to your comment Frank about not to.

Not getting too excited at least being too early about the notion of current bookings stabilizing.

I think it's probably worth giving.

Additional color on that and particularly what are your agents, saying about.

Their customers Rebooking.

Interest at this point.

Particularly in some of the markets that really have not been impacted.

Domestically in Continental Europe, and Alaska, what are they seeing there.

Frank Del Rio: Yeah, thank you, Harry. Look, as I said earlier, business was just sailing right through to the end of January, and then the virus really became headline news, and, as you know, the cruise industry was at the forefront, unfortunately, of headline news for reasons that we know. That has caused near panic in the traveling public. So we've seen a meaningful decrease in new bookings. We have seen meaningful increases in cancellations, not just for our Asia sailings but throughout the deployments. The decrease in bookings is similar to what we have seen in past similar events, whether they be geopolitical, during the financial crisis, et cetera. What's a little bit different about this one is the increase in cancellations.

Frank J. Del Rio: Yeah, thank you, Harry. Look, as I said earlier, business was just sailing right through to the end of January, and then the virus really became headline news, and, as you know, the cruise industry was at the forefront, unfortunately, of headline news for reasons that we know. That has caused near panic in the traveling public. So we've seen a meaningful decrease in new bookings. We have seen meaningful increases in cancellations, not just for our Asia sailings but throughout the deployments. The decrease in bookings is similar to what we have seen in past similar events, whether they be geopolitical, during the financial crisis, et cetera. What's a little bit different about this one is the increase in cancellations.

Yes, Thank you Harry look.

I said earlier businesses, just sailing ride through through the end of January and then the virus really became headline news and as you know that cruise industry was at the forefront. Unfortunately have headline news for reasons that we know.

And that has caused near panic in the in the traveling public.

And so we've seen a.

Meaningful decrease in new bookings, we have seen meaningful increases in cancellation, not just for our Asia sailings, but throughout the.

[music].

The deployment.

And.

And the decreasing in bookings is similar to what we see we have seen in past.

Similar events, whether they be geopolitical during the financial crisis et cetera, what the little bit different about this one is the.

Increase in cancellations. The good news is that over the last five booking days.

Frank Del Rio: The good news is that over the last 5 booking days beginning Saturday, that decline has moderated so that we are no longer seeing week-over-week acceleration in the declines of bookings and in increasing cancellations. We're seeing a moderation. And I'm hopeful, and again I could only say hopeful because it's 5 days does not make a definitive trend, but I'm hopeful that we've seen the worst of the booking slowdown and we can begin the healing process that, as we've seen in the past, typically takes about 8 weeks to be after the end of the peak news cycle before consumers return to more normal. But our travel partners, our business partners, tell me that what they're seeing across their broad portfolio of business is similar to what I'm talking about. Business is soft.

The good news is that over the last 5 booking days beginning Saturday, that decline has moderated so that we are no longer seeing week-over-week acceleration in the declines of bookings and in increasing cancellations. We're seeing a moderation. And I'm hopeful, and again I could only say hopeful because it's 5 days does not make a definitive trend, but I'm hopeful that we've seen the worst of the booking slowdown and we can begin the healing process that, as we've seen in the past, typically takes about 8 weeks to be after the end of the peak news cycle before consumers return to more normal. But our travel partners, our business partners, tell me that what they're seeing across their broad portfolio of business is similar to what I'm talking about. Business is soft.

Beginning Saturday that.

That decline has.

Moderated so that we are no longer seeing week over week.

Acceleration in the declines of bookings and increasing cancellations were seeing a moderation.

And I'm hopeful and again I I could only say hopeful because its five days does not make a definitive trend, but I'm hopeful that we've seen the worst of the bookings slowdown and we can begin the healing process that as we see in the past typically takes about eight weeks to.

To be.

After the end of the the peak news cycle the for consumers returning to more normal.

But our our travel partners our business partners tell me that we're seeing across their broad portfolio businesses similar to what I'm talking about.

Businesses soft people are scared to travel not just on cruise ships, but first on airplanes in many cases long haul of destinations do require customers to first get on an airplane before they get on a ship and.

Frank Del Rio: People are scared to travel, not just on cruise ships, but first on airplanes. In many cases, long-haul destinations do require customers to first get in an airplane before they get on a ship. And right now we have people are scared. People are worried. And until we see the leveling off of new cases, the cruise industry not being the poster child for the virus, this may continue for some time.

People are scared to travel, not just on cruise ships, but first on airplanes. In many cases, long-haul destinations do require customers to first get in an airplane before they get on a ship. And right now we have people are scared. People are worried. And until we see the leveling off of new cases, the cruise industry not being the poster child for the virus, this may continue for some time.

And right now we have.

People are scare people are worried and until we see the leveling off of new paces.

On the.

The cruise industry not being the poster child for the virus.

This may continue for some time.

Thank you Frank.

Harry Curtis: Thank you Frank.

Harry C. Curtis: Thank you Frank.

Thank you. Our next question comes from Stephen Grambling with Goldman Sachs. Your line is now.

Operator: Thank you. Our next question comes from Stephen Gramling with Goldman Sachs. Your line is now open.

Good morning, Thanks for taking the question.

Stephen Gramling: Good morning. Thanks for taking the question. As a follow up, just on coronavirus and the $0.75, can you just quantify how much of this is from cancellations, modifications on Asia itineraries, cancellations on other itineraries, and/or any impact that's estimated to Net Yield in existing markets for moving ships? Thanks.

Stephen Grambling: Good morning. Thanks for taking the question. As a follow up, just on coronavirus and the $0.75, can you just quantify how much of this is from cancellations, modifications on Asia itineraries, cancellations on other itineraries, and/or any impact that's estimated to Net Yield in existing markets for moving ships? Thanks.

As a follow up just on current virus in the 75 cents can you just quantify how much of this is from cancellations modifications.

On Asia itineraries cancellations on other itineraries and or any impact that's estimated to net yields in existing markets removing ships. Thanks.

Hi, Steve its March yes. So the 75 cents is what we know today for all of our cancelled and modified sailings.

Mark Kempa: Hi, Steve. It's Mark. Yeah, so the $0.75 is what we know today for all of our canceled and modified sailings. We were very explicit to say that this does not take into account any sort of indirect potential impacts on future demand. So, as we said in our prepared remarks, we had over 40; we had 40 sailings which were somehow impacted. 21 of those have been redeployed out of Asia to Eastern Mediterranean with a very short condensed booking window. But more importantly, we outright canceled 10 voyages. 8 of those voyages came off the Oceania and Regent brands. And you have to remember those are very long lead booking itineraries with very high per diems. Those voyages were completely sold out, and they span a time period over the next 2 to 2.5 months.

Mark A. Kempa: Hi, Steve. It's Mark. Yeah, so the $0.75 is what we know today for all of our canceled and modified sailings. We were very explicit to say that this does not take into account any sort of indirect potential impacts on future demand. So, as we said in our prepared remarks, we had over 40; we had 40 sailings which were somehow impacted. 21 of those have been redeployed out of Asia to Eastern Mediterranean with a very short condensed booking window. But more importantly, we outright canceled 10 voyages. 8 of those voyages came off the Oceania and Regent brands. And you have to remember those are very long lead booking itineraries with very high per diems. Those voyages were completely sold out, and they span a time period over the next 2 to 2.5 months.

We were very explicit to say that this does not take into account any sort of indirect potential impacts on future demand. So as as we said in our prepared remarks, we had over 40, we had 40 sailings, which were somehow impacted 21 of those have been redeployed out of Asia to eastern Europe.

Eastern med with a very short condensed booking window, but more importantly, we canceled outright cancelled 10 voyages.

Eight of those voyages came off the OCI and region brands and you have to remember those are very.

Long lead booking itineraries with very high per Diems, those voyages were completely sold out and they span of time period over the next.

Two to two to two and a half months. So we canceled though thats a significant impact for us. So we have not taken into account. We just do not have enough information to give a reasonable assessment of what the future could look like for from a softer demand picture.

Mark Kempa: So we canceled, though that's a significant impact for us. So we have not taken into account, we just do not have enough information to give a reasonable assessment of what the future could look like from a softer demand picture.

So we canceled, though that's a significant impact for us. So we have not taken into account, we just do not have enough information to give a reasonable assessment of what the future could look like from a softer demand picture.

Great and many of the very quick follow up Frank you mentioned that the consumer spending typically returns eight weeks after the peak of the new cycle. When you. When you look at the data do you typically see a catch up in demand as that alleviates or does it take effectively a full year of lapping that to see the normalized trend.

Stephen Gramling: Great. And maybe as a very quick follow-up, Frank, you mentioned that the consumer spending typically returns 8 weeks after the peak of the news cycle. When you look at the data, do you typically see a catch-up in demand as that alleviates or does it take effectively a full year of lapping that to see the normalized trend?

Stephen Grambling: Great. And maybe as a very quick follow-up, Frank, you mentioned that the consumer spending typically returns 8 weeks after the peak of the news cycle. When you look at the data, do you typically see a catch-up in demand as that alleviates or does it take effectively a full year of lapping that to see the normalized trend?

No it doesn't take a full year, but it's not anything mashed potatoes, either I mean, there is.

Frank Del Rio: No, it doesn't take a full year, but it's not instant mashed potatoes either. I mean, there is somewhat of a modified V-shape, U-shape return. But we saw it; the last time we saw this was in 2016 after the string of geopolitical events that occurred. 2017 was a very good year. 2018 was even better. So again, it all depends on the duration, severity, and extent of this very fluid situation.

Frank J. Del Rio: No, it doesn't take a full year, but it's not instant mashed potatoes either. I mean, there is somewhat of a modified V-shape, U-shape return. But we saw it; the last time we saw this was in 2016 after the string of geopolitical events that occurred. 2017 was a very good year. 2018 was even better. So again, it all depends on the duration, severity, and extent of this very fluid situation.

Somewhat of a modified be reach V shape, you shake return.

But we saw in last time, we saw this was in 2016 after the string of geopolitical events that occurred.

2017 was a very good year 2018 was even better so again it all depends on the duration severity extent of is very fluid situation.

Great. Thanks, so much best of luck.

Stephen Gramling: Great. Thanks so much. Best of luck.

Stephen Grambling: Great. Thanks so much. Best of luck.

Thank you. Our next question comes from Felicia Hendrix with Barclays. Your line is now.

Operator: Thank you. Our next question comes from Felicia Hendricks with Barclays. Your line is now open.

Felicia Hendricks: Hi, thank you so much. Thank you for the very clear data in this confusing time. Frank, I was wondering if you could talk about your strategy on price integrity. I know you said you've been seeing a small improvement in the past five days in terms of bookings and cancellations, and you just touched upon that again. But can you discuss how you've been thinking strategically about stimulating demand and how sacred are your strategies to not use price as a demand driver? Then I just wanted to clarify something that you said just in terms of your prior kind of goals, the Full Speed Ahead.

Hi, Thank you so much and thank you for the very clear data is confusing time.

I was wondering if you could talk about your strategy on price integrity.

I know you said you've been seeing a small improvement in the past five teams in terms of bookings and cancellations and you just touched upon that again, but can you discuss how you've been thinking strategically about stimulating demand and has secret are you strategies to not use price as the demand driver and then I just wanted to clarify something that that you said just in terms of your prior kind of.

Goals the full speed ahead.

Felicia Hendricks: I know that you have the $0.75 impact and that affects free cash flow and all that, but given where our estimates are in terms of free cash flow in 2020, I mean it seems like a little bit of a drop in the bucket. So just wondering if you're opting to keep your powder dry or will you seek to take advantage of the stock price dislocation?

I know that you have the $0.75 impact and that affects free cash flow and all that, but given where our estimates are in terms of free cash flow in 2020, I mean it seems like a little bit of a drop in the bucket. So just wondering if you're opting to keep your powder dry or will you seek to take advantage of the stock price dislocation?

I know that you have the 75 cents impact and that affects free cash flow and all that but given where our estimates are.

In terms of free cash flow in 2020, I mean, it seems like a little bit of a drop in the buckets. So just wondering if you are opting to keep your powder dry or will you need to take advantage of the stock price dislocation.

Good morning, Felicia that was.

Mark Kempa: Good morning, Felicia. That was 7 or 8 questions in one. I'll try to remember them.

Mark A. Kempa: Good morning, Felicia. That was 7 or 8 questions in one. I'll try to remember them.

Seven or eight questions in one I'll try to really bring one question.

Felicia Hendricks: It was one question. It was a long one.

So it's all along.

Okay.

[music].

Mark Kempa: Okay. I'll take the last one first in terms of our cash flows. Look, anytime you lose $0.75 of earnings per share, cash is impacted and all the other metrics that revolve around earnings get impacted, like ROIC, which is why we've withdrawn our full speed ahead targets at least through 2020. Look, we're going to look at the overall situation, the risk reward profile, the price of the stock to see how we move forward with our capital allocation. We're still committed as much as ever to return meaningful capital to shareholders. As you know, when the year began, the thought was that we were going to continue taking advantage of dislocations in the market of our stock price with the hope that we can introduce a dividend in the back half of the year.

Mark A. Kempa: Okay. I'll take the last one first in terms of our cash flows. Look, anytime you lose $0.75 of earnings per share, cash is impacted and all the other metrics that revolve around earnings get impacted, like ROIC, which is why we've withdrawn our full speed ahead targets at least through 2020. Look, we're going to look at the overall situation, the risk reward profile, the price of the stock to see how we move forward with our capital allocation. We're still committed as much as ever to return meaningful capital to shareholders. As you know, when the year began, the thought was that we were going to continue taking advantage of dislocations in the market of our stock price with the hope that we can introduce a dividend in the back half of the year.

Ill take the last one first in terms of our.

Cash flows look anytime you lose 75 cents earnings per share catches impacted.

And all the other metrics that revolve around earnings get impacted like ROI C, which is why weve withdrawn our full speed ahead targets.

Lease through 2020.

Look we're going to look at our the overall situation.

The risk reward profile the price of the stock to see how we move forward with our capital allocation, we're still committed as much as ever to return.

Meaningful capital to shareholders as you know when the year began the thought was that we were going to continue taking advantage of dislocations in the market of our stock price with the hope that we can introduce a dividend in the back half of the year, while I don't want to say that those goals are off the table for this year.

Mark Kempa: While I don't want to say that those goals are off the table for this year, I think those goals may be more difficult to achieve this year given the unknowns surrounding coronavirus. Pivoting to the question of pricing and how does this affect our go-to-market strategy, I will tell you that we're not going to allow what we believe is a temporary situation to derail us from our long-term proven go-to-market strategy of focusing on value to consumers over using low price as a lever to stimulate demand. Having said that, given what we're seeing in Q2 primarily and how our competitors are reacting, you're going to see pricing action across the spectrum.

While I don't want to say that those goals are off the table for this year, I think those goals may be more difficult to achieve this year given the unknowns surrounding coronavirus. Pivoting to the question of pricing and how does this affect our go-to-market strategy, I will tell you that we're not going to allow what we believe is a temporary situation to derail us from our long-term proven go-to-market strategy of focusing on value to consumers over using low price as a lever to stimulate demand. Having said that, given what we're seeing in Q2 primarily and how our competitors are reacting, you're going to see pricing action across the spectrum.

I think those goals may be more difficult to achieve this year given the unknown surrounding corona virus.

Pivoting to the question of pricing and how does this affect our our go to market strategy.

I will tell you that we're not going to allow what we believe is a temporary situation to derail us from our.

Long term proven go to market strategy of focusing on value to consumers overusing low price as a lever to stimulate demand having said that given what we're seeing in Q2, primarily.

And what our competitors our competitors are reacting.

You are going to see pricing action across the spectrum.

Mark Kempa: We need to stay competitive, but we will not do it in a way in which we believe will hurt the long-term brand equity and our long-term desires to increase pricing year-over-year. I remind you that there are companies that have not yet returned to their pre-financial recession back in 2008 yield levels, and that is something that we guard with our lives, literally. So, I think you're going to see, because of competitive pressures, some pricing deterioration in the short term. We will focus again the way we go to market with value-focused offers as opposed to outright decreases in price. But I think overall, I think you're going to see yields decrease in the short term.

We need to stay competitive, but we will not do it in a way in which we believe will hurt the long-term brand equity and our long-term desires to increase pricing year-over-year. I remind you that there are companies that have not yet returned to their pre-financial recession back in 2008 yield levels, and that is something that we guard with our lives, literally. So, I think you're going to see, because of competitive pressures, some pricing deterioration in the short term. We will focus again the way we go to market with value-focused offers as opposed to outright decreases in price. But I think overall, I think you're going to see yields decrease in the short term.

We need to stay competitive, but we will not do it in a way in which we believe will hurt the long term.

Brand equity and our long term desires to increase pricing year over year I remind you that.

There are companies that have not yet returned to their pre financial.

Recession back in 2008 yield levels.

And that is something that we guard.

With our lives literally so I think you're going to see because of competitive pressures.

Some pricing.

Deterioration in the short term.

We will focus again the way we go to market with.

Value focused offers as opposed to outright decreases in price, but I think overall I think you're going to see yields decrease in the short term.

Felicia Hendricks: I just want to clarify. When you say you will see some pricing deterioration in the short term, you mean among competitors, not from you?

Just to clarify let me say I just wanted when you say print you will see some pricing determination in the short time, you mean among competitors not from you.

Frank Del Rio: Well, I think us as well. I mean, we can't just stick our heads in the sand and say we're not going to respond. We're going to compete in the marketplace for that elusive customer. We do it in a way that does not have price as the main driver, but I imagine and I forecast that you will see a combination of pricing action from us but heavily skewed towards again the value proposition to lure that customer that may be out there.

Frank J. Del Rio: Well, I think us as well. I mean, we can't just stick our heads in the sand and say we're not going to respond. We're going to compete in the marketplace for that elusive customer. We do it in a way that does not have price as the main driver, but I imagine and I forecast that you will see a combination of pricing action from us but heavily skewed towards again the value proposition to lure that customer that may be out there.

I think.

US as well I mean, we can't just stick our heads in the San and say.

We're not going to.

Response, we're going to compete in the marketplace with that elusive customer we do it in a way that does not have price as the main driver, but I imagine I forecast that you will see a combination of pricing action from us, but heavily skewed towards the again the value.

Oh proposition to lower that customer that may be out there.

And Felicia this is mark one other thought on our on our on our cash flow question. We've been very vocal to say that we are going to be free cash flow positive. This year, and we still intend to be free cash flow positive. We are spinning off significant amounts of cash. So while this does put a small dense in the in the outlook.

Mark Kempa: Felicia, this is Mark. One other thought on our cash flow question. We've been very vocal to say that we are going to be free cash flow positive this year, and we still intend to be free cash flow positive. We are spinning off significant amounts of cash. So while this does put a small dent in the outlook, it certainly does not derail us.

Felicia, this is Mark. One other thought on our cash flow question. We've been very vocal to say that we are going to be free cash flow positive this year, and we still intend to be free cash flow positive. We are spinning off significant amounts of cash. So while this does put a small dent in the outlook, it certainly does not derail us.

Okay.

It certainly does not derail us.

Felicia Hendricks: Thank you.

Thank you.

Thank you. Our next question comes from Steve was Zinski with Stifel. Your line is now.

Operator: Thank you. Our next question comes from Steve Wieczynski with Stifel. Your line is now open.

Good morning, guys.

Steven Wieck: Yeah, hey, good morning, guys. Mark, if we go back to the $0.75 impact that you guys called out, I want to clarify something. I guess, does that $0.75 assume those canceled sailings don't get rebooked? And I guess a better way of saying that is, we use Norwegian Spirit, for example. Are you assuming any kind of yield contribution from those changed itineraries, or are you just assuming those 21 Spirit itineraries are canceled? I guess what I'm saying here is, it seems like that number might be a little bit high to us.

Steven M. Wieczynski: Yeah, hey, good morning, guys. Mark, if we go back to the $0.75 impact that you guys called out, I want to clarify something. I guess, does that $0.75 assume those canceled sailings don't get rebooked? And I guess a better way of saying that is, we use Norwegian Spirit, for example. Are you assuming any kind of yield contribution from those changed itineraries, or are you just assuming those 21 Spirit itineraries are canceled? I guess what I'm saying here is, it seems like that number might be a little bit high to us.

Mark if we go back to the 75 cent impact would you guys called out I want to clarify something.

I guess does that 75 cents assume those canceled sailings don't get rebooked and I guess, a better was saying that is used Norwegian spirit. For example are you assuming that's kind of yields contribution from those seems itineraries are you just assuming those 21 spirit incinerators, our canceled I guess.

What I'm, saying there is it seems like that number might be up a little bit high does.

Mark Kempa: So I will answer that question in two parts, Steve. So the first part is of the 10 canceled sailings, we are not trying to resell those. So that is a definitive loss of revenue. On the remaining sailings, that primarily the Spirit, yes, we are redeploying her. We are putting her back on sale. But what you have to remember is we are essentially starting from zero. It's not an itinerary where we went from region A to region B that was right next door where you can lure the customer in. So we're essentially starting from a zero base. So we do anticipate that there's going to be some yield dilution on that itinerary. So it really represents a delta on what we were expecting to get out of Asia with the Spirit versus the close in nature out of the Eastern Mediterranean.

Mark A. Kempa: So I will answer that question in two parts, Steve. So the first part is of the 10 canceled sailings, we are not trying to resell those. So that is a definitive loss of revenue. On the remaining sailings, that primarily the Spirit, yes, we are redeploying her. We are putting her back on sale. But what you have to remember is we are essentially starting from zero. It's not an itinerary where we went from region A to region B that was right next door where you can lure the customer in. So we're essentially starting from a zero base. So we do anticipate that there's going to be some yield dilution on that itinerary. So it really represents a delta on what we were expecting to get out of Asia with the Spirit versus the close in nature out of the Eastern Mediterranean.

So I will answer that question into part Steve. So the first part is of the 10 canceled sailings, we're not trying to resell dose so that as a definitive loss of revenue on the remaining.

Sailings.

Primarily the spirit, yes, we are redeploying her we are putting her back on sale, but what you have to remember is we are essentially starting from zero.

It's not at not a night center, where we went from region to region eight to region be that was out right next door, where you can lower the customer end. So we're essentially starting from a zero base. So we do anticipate that theres going to be some yield dilution on that itinerary. So it really represents a delta on what we were exposed.

Acting to get out of Asia with the spirit versus the close in nature out of the eastern Mediterranean.

So spirit spirit actually books out okay over the next couple of months that 75 cents would be lower is that fair.

Steven Wieck: So if Spirit actually books out okay over the next couple of months, that $0.75 would be lowered. Is that fair?

Steven M. Wieczynski: So if Spirit actually books out okay over the next couple of months, that $0.75 would be lowered. Is that fair?

It's you're absolutely correct, if I if it exceeds our expectations on on Rebooking and getting her back to a a good load factor, where we anticipate we're certainly going to take price action, we're not going to leave price on the table. If the demand is there.

Mark Kempa: You're absolutely correct. If it exceeds our expectations on rebooking and getting her back to a good load factor, where we anticipate we are certainly going to take price action. We're not going to leave price on the table if the demand is there.

Mark A. Kempa: You're absolutely correct. If it exceeds our expectations on rebooking and getting her back to a good load factor, where we anticipate we are certainly going to take price action. We're not going to leave price on the table if the demand is there.

Steven Wieck: Okay. Gotcha. And then, Frank, we've gotten a lot of questions from investors over the past couple of weeks about what's the and this is impossible to probably say but I think there's the fear that this virus is going to have a material long-term impact on bookings and cruise in general. And with headlines of Diamond Princess being called a floating prison and stuff like that I think investors are absolutely panicking right now that this is going to linger for a long time. And I guess the question is how do you counter that or how do you do you think this is just another kind of blip on the radar and things will go back to normal or how would you kind of attack that?

Steven M. Wieczynski: Okay. Gotcha. And then, Frank, we've gotten a lot of questions from investors over the past couple of weeks about what's the and this is impossible to probably say but I think there's the fear that this virus is going to have a material long-term impact on bookings and cruise in general. And with headlines of Diamond Princess being called a floating prison and stuff like that I think investors are absolutely panicking right now that this is going to linger for a long time. And I guess the question is how do you counter that or how do you do you think this is just another kind of blip on the radar and things will go back to normal or how would you kind of attack that?

Okay got it and then and then Frank.

We've gotten a lot of questions from from investors over the past couple of weeks about what's the ins is impossible to probably say, but I think theres. The fear that this virus is going to have a material long term impact on on bookings and crews in general in with headlines of Diamond for instance, being.

Call to floating prison and stuff like that I think investors are absolute panicking right now that this is going to linger for a for a long time and I guess the question is how do you how do you counter that or how do you do you think this is just another kind of blip on the radar and things will go back to normal or how would you kind of attack that.

Yes look nothing as permanent.

Frank Del Rio: Yeah, look, nothing is permanent. Consumers do have a relatively short memory, thank God. We have seen in the not too distant past other major events affecting the cruise industry that were quickly overcome, and that may be brand or company specific. One of the reasons we took the aggressive action that we took in canceling cruises and moving the fleet completely out of Asia is that we don't want a repeat of what happened in Japan to occur to any of our brands. So among the things that we have done, Steve, is to withdraw our fleet from Asia. That is a big step one. Luckily for us, we've never had a major presence in Asia. Less than 6% of our annual capacity was deployed to Asia.

Frank J. Del Rio: Yeah, look, nothing is permanent. Consumers do have a relatively short memory, thank God. We have seen in the not too distant past other major events affecting the cruise industry that were quickly overcome, and that may be brand or company specific. One of the reasons we took the aggressive action that we took in canceling cruises and moving the fleet completely out of Asia is that we don't want a repeat of what happened in Japan to occur to any of our brands. So among the things that we have done, Steve, is to withdraw our fleet from Asia. That is a big step one. Luckily for us, we've never had a major presence in Asia. Less than 6% of our annual capacity was deployed to Asia.

Consumers do have a relatively short memory. Thank god.

We have seen.

Not too distant past other major.

Events affecting the cruise industry.

That.

That will quickly overcome and that may be.

Brand or company specific.

One of the reasons, we took the aggressive action that we took in canceling cruises and moving complete the fleet completely out of Asia is that we don't want a repeat of what happened in Japan to record 20 of our brands.

So among other things that we have done Steve is to withdraw our fleet from Asia that is a big step one.

Luckily for US we've never had a major presence in Asia less than 6% of our annual capacity was.

Us.

Employed to Asia, we had zero.

Frank Del Rio: We had zero based in the Chinese market, which is the market I think that will take it on the chin in the short term more than anywhere else. We're good marketers. We know how to market our product. We market value over price, and I think that our go-to-market strategy will serve us well in these challenging times more so than if all we did was drop price. I remain confident that the long-term viability of this company is superior to others in the marketplace, whether it's in the cruise industry or the broader travel industries. We've got a great young fleet, new ships, exciting products to offer, terrific management team.

We had zero based in the Chinese market, which is the market I think that will take it on the chin in the short term more than anywhere else. We're good marketers. We know how to market our product. We market value over price, and I think that our go-to-market strategy will serve us well in these challenging times more so than if all we did was drop price. I remain confident that the long-term viability of this company is superior to others in the marketplace, whether it's in the cruise industry or the broader travel industries. We've got a great young fleet, new ships, exciting products to offer, terrific management team.

Based on the Chinese market, which is the market I think that will take it on the chicken in the short term more than anywhere else.

[music].

And were good marketers, we know how to market our product we market value over price and I think that our go to market strategy will.

Serve us well and these challenging.

Times more so than if all we did with drop price. So I remain confident that the long term viability of this company is superior to.

Two others in the marketplace, whether it's on a cruise industry or the broader travel industries.

We've got a great young fleet, new ships exciting products to offer a terrific management team and so while no one wants to go through what we're going through today, especially.

Frank Del Rio: And so, while no one wants to go through what we're going through today, especially on the heels of what was a great 2019 and what promised to be even a greater 2020, I think that the long-term earnings potential of this company, the cash flow generation of this company, the way that we're going to grow earnings, ROIC, and return meaningful capital to shareholders has not changed.

And so, while no one wants to go through what we're going through today, especially on the heels of what was a great 2019 and what promised to be even a greater 2020, I think that the long-term earnings potential of this company, the cash flow generation of this company, the way that we're going to grow earnings, ROIC, and return meaningful capital to shareholders has not changed.

On the heels of what was a great 2019, and what promise to be even a greater 20.

I think that the long term.

Earnings potential of this company.

Cash flow generation of this company the way that we're going to grow earnings ROI, and we turn meaningful capital to shareholders has not changed.

Okay. Thanks, guys appreciate it.

Steven Wieck: Okay. Thanks guys. Appreciate it.

Steven M. Wieczynski: Okay. Thanks guys. Appreciate it.

Thank you as a reminder, ladies and gentlemen that Star then one question.

Operator: Thank you. As a reminder, ladies and gentlemen, that's star, then one to ask a question. Our next question comes from Brent Montour with J.P. Morgan. Your line is now open.

Operator: Thank you. As a reminder, ladies and gentlemen, that's star, then one to ask a question. Our next question comes from Brandt Montour with J.P. Morgan. Your line is now open.

Our next question comes from Brandt, Montour with JP Morgan Your line is now.

Brent Montour: Hey, good morning, everyone. Thanks for taking my questions. I just wanted to talk about the Q1 guidance ex virus and just try and understand maybe you could remind us what the Cuba impact was in the Q1 as well as one of your larger peers had a Q1 that also kind of surprised people on the downside and they called out Australian bushfires and a couple other things. So I was wondering if there was any other things you'd kind of peel back for us and try and understand maybe the like for like clean net yield growth in the Q1. Thanks.

Brandt Montour: Hey, good morning, everyone. Thanks for taking my questions. I just wanted to talk about the Q1 guidance ex virus and just try and understand maybe you could remind us what the Cuba impact was in the Q1 as well as one of your larger peers had a Q1 that also kind of surprised people on the downside and they called out Australian bushfires and a couple other things. So I was wondering if there was any other things you'd kind of peel back for us and try and understand maybe the like for like clean net yield growth in the Q1. Thanks.

Good morning, everyone. Thanks for taking my question I just wanted to.

Talk about one Q guidance.

Viral.

And just trying to understand maybe you could remind us what Q the impact.

Roger one Q as well as one of your larger peers.

Hello, everyone can would also kind of surprise people.

Downside and they called out Australia Flyers and a couple other things. So I was wondering if there was any other things you kind of core back from China.

Like for like.

Okay.

The walk here thanks.

Mark Kempa: Hi, Brent. This is Mark. So as we've said in prior commentary, the Cuba impact was the main drag year-over-year when we look at the first half, and that primarily obviously impacts both Q1 and Q2. So we've said that Cuba this year on a rolling basis is about $0.20 to $0.25 of yield impact. That split relatively evenly between Q1 and Q2. There's a bit of a delta there, but that is, when you look at the yield, that's the core headwind that we're looking at ex the coronavirus. As we said in our prepared remarks, our brands prior to this outbreak were doing well. We were booked ahead. We were booked at higher prices. We haven't touched on it much today, but our onboard revenue, when you look at our Q4 onboard revenue, it continued to perform very, very strong.

Mark A. Kempa: Hi, Brandt. This is Mark. So as we've said in prior commentary, the Cuba impact was the main drag year-over-year when we look at the first half, and that primarily obviously impacts both Q1 and Q2. So we've said that Cuba this year on a rolling basis is about $0.20 to $0.25 of yield impact. That split relatively evenly between Q1 and Q2. There's a bit of a delta there, but that is, when you look at the yield, that's the core headwind that we're looking at ex the coronavirus. As we said in our prepared remarks, our brands prior to this outbreak were doing well. We were booked ahead. We were booked at higher prices. We haven't touched on it much today, but our onboard revenue, when you look at our Q4 onboard revenue, it continued to perform very, very strong.

Hi, Brent this is mark so as we said in prior commentary.

Q the Cuba impact was the main drag year over year, when we look at the first half and that's primarily obviously that impacts both Q1 in Q2. So we've said that Cuba. This year on our on a rolling basis is about is about 20 to 25 cents of yield impact that split relatively evenly.

Between Q1 in Q2, there is there's a there's a bit of a delta there but that is the when you look at the yield that's the that's the core headwind that we're looking at X the Corona virus.

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

We havent touched on it much today, but our onboard revenue.

When you look at our Q4 onboard revenue at continued to perform very very strong.

Mark Kempa: We had great results in our first month of 2020, January. It exceeded our expectations. Even onboard revenue, now that consumers who are on the ship today, they are still spending more and more money across the board. So once the consumer is there, they're not afraid to spend. But Cuba was the tough comp, so and we've always said upside apart from that really comes on the back of onboard revenue.

We had great results in our first month of 2020, January. It exceeded our expectations. Even onboard revenue, now that consumers who are on the ship today, they are still spending more and more money across the board. So once the consumer is there, they're not afraid to spend. But Cuba was the tough comp, so and we've always said upside apart from that really comes on the back of onboard revenue.

We had great results in our in our first month of 2020 January it exceeded our expectations and even onboard revenue now that.

Consumers, who are on the ship today, they are still spending more and more money across the board. So once the consumers there they're not afraid to spend so.

But cubo was a tough comp so and we've always said upside apart from that really comes in the back of onboard revenue.

Thanks for that extra and so that's helpful. And then just quickly on the virus.

Brent Montour: Okay. Thanks for that extra info. That's helpful. And then just quickly on the virus situation and sort of the shorter-term bookings commentary that you guys have made. You're looking at the data, are you seeing any sort of differentiation between customers that are booking sort of maybe shifting preferences to locations that are further away from Asia or other areas that might be sort of deemed safer, quote unquote? So, anything like that you can call out?

Brandt Montour: Okay. Thanks for that extra info. That's helpful. And then just quickly on the virus situation and sort of the shorter-term bookings commentary that you guys have made. You're looking at the data, are you seeing any sort of differentiation between customers that are booking sort of maybe shifting preferences to locations that are further away from Asia or other areas that might be sort of deemed safer, quote unquote? So, anything like that you can call out?

So the were shorter term bookings accounted for you guys.

Looking at the data are you seeing any sort of differentiation between customers are broadloom simultaneously.

Locations that are removed from Asia or other areas it might be deemed.

Correct.

Anything like that you can call out.

No the.

Frank Del Rio: The impact of the virus on bookings and cancellation has been pretty even across the board. When you peel back the onion and do a deeper dive, what we're seeing is especially by the American customer those destinations that they deem to be safer are faring better than others. So, for example, Alaska, in the Caribbean, they're closer to home. In many cases, you don't have to get on an airplane to get to the Caribbean ports. Those seem to be doing better than some of the more exotic or far-flung destinations.

Frank J. Del Rio: The impact of the virus on bookings and cancellation has been pretty even across the board. When you peel back the onion and do a deeper dive, what we're seeing is especially by the American customer those destinations that they deem to be safer are faring better than others. So, for example, Alaska, in the Caribbean, they're closer to home. In many cases, you don't have to get on an airplane to get to the Caribbean ports. Those seem to be doing better than some of the more exotic or far-flung destinations.

The impact of the virus on on bookings and cancellation has been.

Pretty pretty even across the board.

When you Peel back the uneven and do a deeper dive what we're seeing is.

Especially by the American customer dose destinations that day deemed to be safer are faring better than than others. So for example, Alaska.

In the Caribbean, they're closer to home.

In many cases, you don't have to get on an airplane to get to the Caribbean ports those seem to be doing better than some of them more exotic are far flung.

The nations.

Great. Thanks, a lot.

Brent Montour: Great. Thanks a lot, guys.

Brandt Montour: Great. Thanks a lot, guys.

Thank you. Our next question comes from Thomas Allen with Morgan Stanley. Your line is now.

Operator: Thank you. Our next question comes from Thomas Allen with Morgan Stanley. Your line is now open.

Thomas Allen: Thanks for joining. Can you quantify how many sailings and passengers carried you've had year to date and then how many cases of coronavirus you've had?

Thanks, Good morning.

Can you quantify how many scaling within passengers carried you had year to date and then how many cases that occur on a virus you've had.

Frank Del Rio: Are you kidding me? Do you know who you're talking to, which company you're talking with? 0. 0.

Frank J. Del Rio: Are you kidding me? Do you know who you're talking to, which company you're talking with? 0. 0.

Are you Kidding me.

Do you know you're talking to which company you are talking with.

I think will.

Zero.

Thomas Allen: I've got to make that point.

John.

Frank Del Rio: There's only one company with coronavirus outbreaks. One. And it's not us.

Frank J. Del Rio: There's only one company with coronavirus outbreaks. One. And it's not us.

Hopefully word corona virus outbreaks, one and it's not us.

The secondary say how me failing to you had so that people understand that you had well clauses that settling doesn't.

Thomas Allen: Can you say how many sailings you've had so that people understand that you've had lots of sailings?

Frank Del Rio: Dozens of sailings. Dozens. Next question please.

Frank J. Del Rio: Dozens of sailings. Dozens. Next question please.

Yes.

Okay.

Please.

So follow up question.

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

As our way to quantify how if bookings so I assume the commentary you made so far about bookings being weaker has been for about the past month at bookings went back to normal tomorrow is our way to quantify the indirect impact.

There will be no indirect impact.

Frank Del Rio: There would be no indirect impact.

Frank J. Del Rio: There would be no indirect impact.

So, but you said has been weak bookings that are about amount. We're now of next next.

Thomas Allen: But you said there's been weak bookings for about a month so.

Frank Del Rio: Next one up on the lineup, please.

Frank J. Del Rio: Next one up on the lineup, please.

Next went up and on the on the lineup. Please.

Thank you. Our next question comes from Jerry So giant with Wolfe Research. Your line is now open.

Operator: Thank you. Our next question comes from Jared Shojaian with Wolfe Research. Your line is now open.

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

Jared Shojaian: Hi, good morning, everyone. Thanks for taking my question. I will ask a non-coronavirus-related question, just given the amount of focus so far. On the CapEx guidance, can you just talk about why that came up for 2020 and 2021, and the initial guidance for 2022 is also higher than I would have expected? I think it's a record year. So can you just talk about what's driving that? Why raise CapEx at this specific time, and then what kind of flexibility do you have to reduce CapEx if needed? Thank you.

Jared H. Shojaian: Hi, good morning, everyone. Thanks for taking my question. I will ask a non-coronavirus-related question, just given the amount of focus so far. On the CapEx guidance, can you just talk about why that came up for 2020 and 2021, and the initial guidance for 2022 is also higher than I would have expected? I think it's a record year. So can you just talk about what's driving that? Why raise CapEx at this specific time, and then what kind of flexibility do you have to reduce CapEx if needed? Thank you.

I will.

Ask a non current about isolated question just given the amount of focus so far.

On the Capex guidance can you just talk about why they came up for 2020 and 2021.

And the initial guidance or 2022 was also higher than I would've expected. It's a record year. So can you just talked about what's driving that why raised capex at this specific timing on when what kind of flexibility do you have to reduce capex if needed. Thank you.

Mark Kempa: Hi, Jared. It's Mark. So certainly we have flexibility to reduce certain CapEx where needed. It's always a delicate balance because, of course, you don't want to damage the brand for short-term gains. This is a long-term business, and we want to continue investing on that. But of course we always have plan B and plan C should be needed. In relation to the CapEx for 2020 and 2021, the increase is primarily as a result of a couple of our new building contracts becoming effective. If you look back in all of our Q filings, we had not included in our contractual commitments shipyard payments related to the two Oceania ship vessels and the third Explorer vessel. And subsequently, over the course of the quarter, two of those contracts actually became effective, wherein we received authorization from the Italian Export Credit Agency.

Mark A. Kempa: Hi, Jared. It's Mark. So certainly we have flexibility to reduce certain CapEx where needed. It's always a delicate balance because, of course, you don't want to damage the brand for short-term gains. This is a long-term business, and we want to continue investing on that. But of course we always have plan B and plan C should be needed. In relation to the CapEx for 2020 and 2021, the increase is primarily as a result of a couple of our new building contracts becoming effective. If you look back in all of our Q filings, we had not included in our contractual commitments shipyard payments related to the two Oceania ship vessels and the third Explorer vessel. And subsequently, over the course of the quarter, two of those contracts actually became effective, wherein we received authorization from the Italian Export Credit Agency.

Hi, Jared its mark so certainly we have flexibility to reduce cat certain capex where needed.

It's always a delicate balance because of course, you don't want to add damage. The brand for short term gains. We this is a long term business units and we want to continue investing on that but of course, we always have plan being planned see should be needed.

In relation to the Capex for 2020 in 2021. The increase is primarily as a result of a couple of our newbuilding contracts, becoming effective if you look back into all of our Q filings.

We had not included in our country contractual commitments.

Shipyard payments related to the two oceana ship vessels and the third explore vessel and subsequently over the course of the quarter two of those two of those contracts actually became effective wherein we received.

Authorization from the Italian export credit agencies, and we've been very explicit on that and all of our filing so it's not necessarily an increase in general Capex. It's just the fact that that's our Newbuilding capex is coming online for effective contracts.

Mark Kempa: We've been very explicit on that in all of our filings. It's not necessarily an increase in general CapEx. It's just the fact that our new building CapEx is coming online for effective contracts.

We've been very explicit on that in all of our filings. It's not necessarily an increase in general CapEx. It's just the fact that our new building CapEx is coming online for effective contracts.

Okay. Thank you and then I guess pre virus you were guiding 2% to 3% yield growth Thats. What you are guiding excluding the current of ours will impact given all that you've said and all that we know in terms of 2021 shaping up very well demand. The wind season is really strong you're you're lapping the Cuba facts, you've got new accretive ships coming.

Jared Shojaian: Okay. Thank you. And then, I guess pre-virus, you were guiding 2% to 3% yield growth, or that's what you're guiding excluding the Coronavirus impact. Given all that you've said and all that we know, in terms of 2020 was shaping up very well, demand and Wave Season is really strong. You're lapping the Cuba effects. You've got new creative ships coming on. A lot of marketing spend. I guess 2% to 3% yield doesn't really seem to tie to as well as the environment would have seemed to have been. So, can you maybe just help me understand what went into that 2% to 3% yield growth and any chance that you may have been somewhat conservative in that number? Thank you.

Jared H. Shojaian: Okay. Thank you. And then, I guess pre-virus, you were guiding 2% to 3% yield growth, or that's what you're guiding excluding the Coronavirus impact. Given all that you've said and all that we know, in terms of 2020 was shaping up very well, demand and Wave Season is really strong. You're lapping the Cuba effects. You've got new creative ships coming on. A lot of marketing spend. I guess 2% to 3% yield doesn't really seem to tie to as well as the environment would have seemed to have been. So, can you maybe just help me understand what went into that 2% to 3% yield growth and any chance that you may have been somewhat conservative in that number? Thank you.

On lot of marketing spend I guess, 2% to 3% yield doesn't really seem to tied to as well as the environment would have seemed to have been so can you maybe just help me understand.

What went into that 23% yield growth and.

Any chance you may have been somewhat conservative in that number. Thank you.

Mark Kempa: Well, it's early in the year, and I think as we've always said, we tend to take a bit of a cautious approach. Yes, bookings were doing very, very well prior to the outbreak, and we've always said that we guide 2 to 3% on the top line. We do have Splendor, which is coming online. That'll be a credit to our net yields. That's going to be somewhat offset by the Encore, which we've said we think the combination of the two of those are really going to be a net neutral. And then we're rolling over some of the incremental or rolling over the annual season of Encore. So certainly 2 to 3% is our range, and outperformance on that would come from both revenue, ticket, and onboard.

Mark A. Kempa: Well, it's early in the year, and I think as we've always said, we tend to take a bit of a cautious approach. Yes, bookings were doing very, very well prior to the outbreak, and we've always said that we guide 2 to 3% on the top line. We do have Splendor, which is coming online. That'll be a credit to our net yields. That's going to be somewhat offset by the Encore, which we've said we think the combination of the two of those are really going to be a net neutral. And then we're rolling over some of the incremental or rolling over the annual season of Encore. So certainly 2 to 3% is our range, and outperformance on that would come from both revenue, ticket, and onboard.

Well, it's early in the year and I think as we've always said we tend to take a a bit of a cautious approach, yes bookings were doing very very well prior to the outbreak and we've always said that we guide 2% to 3% on the on the topline we do have splendor, which is coming online that will be accretive to our corporate.

Holds that's going to be somewhat offset by by the encore, which we've said we think the combination of the two of those are really going to be a net neutral and then we're rolling over some of the the incremental are rolling over the annual season of encore. So.

Certainly, 2% to 3% as our range and outperformance on that would come from both revenue and ticket and onboard and as I said earlier onboard has been doing very well despite what's going on in the marketplace. So I think thats that would have been the key variable.

Mark Kempa: As I said earlier, onboard has been doing very well despite what's going on in the marketplace. So I think that would have been the key variable.

As I said earlier, onboard has been doing very well despite what's going on in the marketplace. So I think that would have been the key variable.

Alright, Thank you very much.

Jared Shojaian: All right. Thank you very much.

Jared H. Shojaian: All right. Thank you very much.

Thank you. Our next question comes from all Golding with Macquarie. Your line is now.

Operator: Thank you. Our next question comes from Paul Golding with Macquarie. Your line is now open.

Hi, guys. Thanks for taking my question.

Paul Golding: Hey guys. Thanks for taking my question. So the first piece of the corona sort of remediation here with the Eastern Med Spirit redeployment, I was wondering if there was any more detail you could give around yield, how that might comp just as far as what's baked into the $0.75 impact.

So the first piece of the.

Corona sort of remediation here with eastern Med Spirit redeployment I was wondering if.

There was any more detail you could give around yield how that might comp just the as far as what's baked into the 75 cent impact.

So I think I think what you're referring to is in terms of what our expectations around the spirit in the into new market and and I think I had commented on on that with US Steve is that listen it's a very short booking window that as a that is a great itinerary, we do expect to receive.

Mark Kempa: Well, I think what you're referring to is in terms of what are our expectations around the Spirit in the new market. And I think I had commented on that with Steve, is that listen, it's a very short booking window. That is a great itinerary. We do expect to receive some pricing and load that would not be commensurate with our typical expectations just given the short nature of the booking window. So there is a delta of what we believe that we can actually extract out of that market versus what she was planned to do. But we're going to do everything in our power to garner as much price as we can. But again, more importantly, we're starting from zero and it's a very short window. We have to keep that in mind.

Mark A. Kempa: Well, I think what you're referring to is in terms of what are our expectations around the Spirit in the new market. And I think I had commented on that with Steve, is that listen, it's a very short booking window. That is a great itinerary. We do expect to receive some pricing and load that would not be commensurate with our typical expectations just given the short nature of the booking window. So there is a delta of what we believe that we can actually extract out of that market versus what she was planned to do. But we're going to do everything in our power to garner as much price as we can. But again, more importantly, we're starting from zero and it's a very short window. We have to keep that in mind.

Some pricing and load that would not be commensurate with our typical expectations just given the short nature of the booking window. So there is a delta of what we believe that we can actually extract out of that market versus what she was planned to do but.

We're going to do everything in our powered to to garner as much prices, we can but but again more importantly, we're starting from zero its and its a very short window, we have to keep that in mind.

Frank Del Rio: We don't want to stray from our go-to-market strategy, and therefore you're not going to see the kind of pricing action that would require us to have in the marketplace to fill that ship, especially with only 2, 3, 4 months runway compared to the typical 15 to 18 months runway that cruise lines give themselves to fill a sailing. It's too early to tell what the yield impact is and the differential between what the ship would have done had she stayed in Asia under normal circumstance, what the ship would have generated in Asia had she stayed under the current circumstance, and what she will actually perform. We'll have to wait and see.

Frank J. Del Rio: We don't want to stray from our go-to-market strategy, and therefore you're not going to see the kind of pricing action that would require us to have in the marketplace to fill that ship, especially with only 2, 3, 4 months runway compared to the typical 15 to 18 months runway that cruise lines give themselves to fill a sailing. It's too early to tell what the yield impact is and the differential between what the ship would have done had she stayed in Asia under normal circumstance, what the ship would have generated in Asia had she stayed under the current circumstance, and what she will actually perform. We'll have to wait and see.

And don't want and we don't want to stray from our.

Go to market strategy.

And therefore, you're not going to see that kind of pricing action that would require us to having a marketplace to fill that ship, especially with only 234 months.

Runway compared to the typical 15 to 18 months runway that cruise lines give themselves to fella assailing. So it's too early to tell what the yield impact is on the differential between what the ship would have done Hatchi stayed in Asia under normal circumstances what.

The ship would have generated in Asia had she's state under the current circumstance and whats, you'll actually perform well have to wait and see.

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

Understood and then.

Just looking at the new terminal in Miami is there anything that we can start to think about as far as potential tailwinds from that anything from the dynamic with how you price.

Cruising out is there anything that's not in guidance from that.

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

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

Well look anything we can do to make our our crews is auto Miami, which is our number one part of embarkation more attractive I think will certainly help attract.

A higher level of customers, which we are always after because we know that those who pay the most ticket on spend the most once they're on.

Daniel we have time for one more question.

Operator: Thank you. Our final question comes from Tim Conder with Wells Fargo. Your line is now open.

Thank you and our final question comes from Tim Conder with Wells Fargo. Your line is now.

Frank first of all.

Tim Conder: Frank, first of all, thank you. We appreciate your passion and your love for zero in particular. So I did want to reconfirm though that the $0.75, that is what, you know, is direct impact. So any of the impacts that you're seeing indirectly, that's not in the $540 to 560 guidance, so there's some unknown piece of the indirect. Just to reconfirm that that we should anticipate there's some other number yet unquantifiable. Is that fair?

Timothy Conder: Frank, first of all, thank you. We appreciate your passion and your love for zero in particular. So I did want to reconfirm though that the $0.75, that is what, you know, is direct impact. So any of the impacts that you're seeing indirectly, that's not in the $540 to 560 guidance, so there's some unknown piece of the indirect. Just to reconfirm that that we should anticipate there's some other number yet unquantifiable. Is that fair?

Thank you we appreciate your passion your love for zero and in particular.

So did want to reconfirm, though that the 75 cents.

That is what you know as direct impact so any of the impacts that you're seeing indirectly.

That's not in the 540 to 560 guidance. So that there's there's some unknown piece of the indirect just or just to reconfirm that that.

That we should anticipate theres some other number yet unquantifiable is that fair.

Mark Kempa: Tim, that is exactly correct. It is the $0.75 is only what we know from our canceled sailings and some level of differential on the Spirit. It explicitly does not include any indirect impact from general softness in the cruise space. We just simply cannot quantify that at this point on a reasonable basis.

Mark A. Kempa: Tim, that is exactly correct. It is the $0.75 is only what we know from our canceled sailings and some level of differential on the Spirit. It explicitly does not include any indirect impact from general softness in the cruise space. We just simply cannot quantify that at this point on a reasonable basis.

Tim that is exactly exactly correct. It is the 75 cents is only what we know from our canceled sailings and some level of differential on the spirit explicitly does not include any indirect impacts from general softness in the and the crew space.

We just simply cannot quantify that at this point on a reasonable basis.

Tim Conder: Okay. No. Very, very fair. Very fair. And lastly, total other question here: fuel. Mark, you gave the updated guidance for 2020. What should we anticipate the mix of your fuel? You talked about how due to IMO 2020 that's going to jump this year. Just maybe update us on that number. But then how should we see is the cadence of that coming maybe going to something normal out in 2022 or whenever it may be? How do you see that progressing from the mix from 2020 to 2021 to 2022?

Timothy Conder: Okay. No. Very, very fair. Very fair. And lastly, total other question here: fuel. Mark, you gave the updated guidance for 2020. What should we anticipate the mix of your fuel? You talked about how due to IMO 2020 that's going to jump this year. Just maybe update us on that number. But then how should we see is the cadence of that coming maybe going to something normal out in 2022 or whenever it may be? How do you see that progressing from the mix from 2020 to 2021 to 2022?

Okay, No very very fair very fair.

And lastly.

Total total other question here fuel.

Mark you gave the updated guidance for 2020.

What what should we anticipate the mix of your fuel you talked about how do the IMO 20 point, that's going to jump. This year, just maybe update us on that number but then how should we see as the cadence of that coming maybe.

Going to something normal out and 22 or whenever maybe how do you see towards that progressing from the mix from 20 to 21 to 22, yes, certainly are so our mix shifted out today and 19 and prior we're burning about 30% mgo.

Mark Kempa: Yeah, certainly. So our mix shifted today in 2019 and prior; we were burning about 30% MGO. It went to about 60% MGO this year. And with our exhaust gas scrubber program in place in 2021, we anticipate that it'll level out somewhere around the 50%. And thereafter, all of our new builds that would come online in the following years would simply help reduce that 50%. So I would say for 2021 and 2022 it's going to be about a 50/50 mix, and then we'll see some slight decrease thereafter each year.

Mark A. Kempa: Yeah, certainly. So our mix shifted today in 2019 and prior; we were burning about 30% MGO. It went to about 60% MGO this year. And with our exhaust gas scrubber program in place in 2021, we anticipate that it'll level out somewhere around the 50%. And thereafter, all of our new builds that would come online in the following years would simply help reduce that 50%. So I would say for 2021 and 2022 it's going to be about a 50/50 mix, and then we'll see some slight decrease thereafter each year.

And when it went to about 60% Mgo this year and with our exhaust gas scrubber program in place and 21, we anticipate that it will level out somewhere around the 50% and thereafter all of our Newbuilds that would come online in the in the following years would simply.

Help reduce that 50% so I would say for 20 Watt for 21 and 122, it's going to be about a 50 50 mix and then we'll see some slight decrease thereafter each year.

Tim Conder: Okay. Thank you all.

Timothy Conder: Okay. Thank you all.

Okay. Thank you all.

Frank Del Rio: Okay. Thanks everyone for your time and for the most part your informed questions. As always, we will be available to answer any other questions you have later today. Bye bye.

Frank J. Del Rio: Okay. Thanks everyone for your time and for the most part your informed questions. As always, we will be available to answer any other questions you have later today. Bye bye.

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

As always we will be available to answer any other questions. You have later today.

Bye bye.

Ladies and gentlemen, this concludes todays conference call you may now disconnect.

Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

[music].

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