Q4 2019 Earnings Call
Thank you for standing by this is the conference operator.
Welcome to the ones I wore the fourth quarter fiscal year 29, <unk> earnings conference call.
As a reminder, all parties happens I don't listen only mode and the conference is being recorded.
After the presentation, there will be an opportunity to ask questions.
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I would now like to turn to compress over the Jessica Schmidt with I see our please go ahead.
Thank you good morning, and welcome to one Bob <unk> fourth quarter fiscal 2019 are you calling back out before we begin I'd like to remind you that there is it increased and made available on todays call in what.
Maybe deemed to constitute forward looking statement its forward looking statements reflect our judgment.
On the topic today and actual results may differ materially from current expectation based on a number of factors affecting [laughter]. Accordingly, you should not place undue reliance on these forward looking statement for a more thorough discussion of.
The risks and uncertainties associated with that I'll read the heat treatment.
In this conference call in what.
We refer you to the disclaimer regarding forward looking statements that is included in our fourth quarter 2018 earnings release, which was furnished to the FTC to hang on one 8-K.
We do not undertake no obligation to update or alter any forward looking statement, whether up rebuild of new information future events or otherwise. In addition, the company may refer to certain adjusted non-GAAP metrics on the.
Explanation of these metrics can be found in are you really filed earlier today. Joining me today are about her bachman executive Chairman and Chief Executive Officer, and prosperity, and even locker Chief Chief Financial Officer, and Chief operating Officer, Leonard well begin with its highlights of our fourth quarter and a year.
Yes, that's the key priority they're focused on in fiscal 2020 done well discuss our service offering innovation followed by Steven Who'll provide more details on the financials and Terra outlook, it's about the impact on our business.
And I'd now like to turn the call over to Leonard.
Thank you Jessica good morning, and welcome to once called Worlds fourth quarter fiscal 2019 earnings conference call.
Yeah, what the milestone for the company, we successfully entered the public markets. We grew sales an after tax free cash flow conversion, we initiated our first ever quarterly dividend and importantly, we increased training and stuff like 20% to prepare for a record number of new that's all in Twentytwenty.
Indeed, the s. so several accomplishments towards that strategy to leverage I robust operating platform to grow our market share its feet.
We are pleased took a little financial results in line with our updated guidance despite absorbing increased public company costs.
And an unprecedented unprecedented number of ships temporarily taken out of service.
In total for the fiscal year net revenues increased 4% to $562.2 million.
Adjusted net income grew by 4% to $32.5 million.
Adjusted EBITDA of $58.2 million increased from 4% from 2018 adjusted EBITDA.
$55.8 million inclusive of comparable public company costs.
An unlevered after tax free cash flow increased 2% to $54.1 billion compared to 52.9, rather than ever try yeah.
Highlighting some of our accomplishments made during the.
We commenced cruise ship contracts and extended existing agreements for health and wellness, let's see including extending agreements with Norwegian cruise line piano cruises.
The cruises windstar cruises and Crystal cruises.
Commencing services on cost of the needs Yeah spectrum of the sea to Sky Princess Norwegian Encore Carnival, Kinda, Roma and cost as far out there.
Being named Oceania, and Regent seven seas cruises official pockets to operate spa and wellness senses on their entire fleet.
Being named Virgin voyages official partner to operate health and wellness centers on that first ever crews offering.
Being named celebrity cruises official partner to upgrade health and wellness centers on their entire fleet, increasing the celebrity vessels operated on in 2025 nine.
We introduced new services in ready Spa, and fitness, while making it easier and more efficient to schedule spot business with expanded online and pre booking options.
This field increases in average weekly revenue per ship and average weekly revenue per stop ship.
Support stuff per day for the fourth quarter and physical yeah.
I would like to thank our entire team and the tend to staff for their dedication commitment and contributions to the.
We are entering fiscal 2020 with the highest market share.
Hi, especially account.
And largest vessel addition, inox history.
This along with strong free cash flow and a robust operating platform will continue to drive the company's successful expansion in the years ahead.
For fiscal 2020, we are focused on the falling priorities for the business.
First to efficiently and effectively introduce eye health and wellness programs across 27, new vessels have already begun to service on <unk>. She had a in one region vessels in late December 2019.
At the same time, we remain focused on maintaining excellent stuff.
Both across our entire funding.
Second expand our treatment products and services to our customers as we seek to grow onboard revenue.
Then we'll discuss just activity in greater detail, but then we shared some of the highlight.
We are introducing new recovery treatment beyond acupuncture, an exclusive <unk> programs, well, adding medisoft services to new vessels.
This year were introduced Medisoft on 14, new ships.
Rather than a Hans outcropping product offering on new and existing bezel less additional body contouring and there's been some larger Alex.
Amongst other new services.
Overall, we will continue to build on our capabilities to reinforce our market position.
And as the pre eminent health and wellness provider my redefining these experiences.
Let me now I'll turn the discussion on the Corona virus and its impact on our business.
The outbreak of the current a virus continues to dominate headlines.
Yeah, we're closely monitoring the situation to first and foremost and show the safety of our employees.
As well as planned for business continuity.
Currently we kinda confirmed there are no suspected or confirmed Corona virus cases for any up once falwell employees.
Our guidance includes only the known impact from this health crisis sockets quarter performance as the situation remains fluid and continues to evolve.
Therefore, we are unable to determine the full impact on guidance to fiscal 2020 beyond the first quarter.
The Corona virus has also negatively impacted and increase the volatility of our stock price and that's that's the underlying trading value about warrants.
Significant progress had been made on our warrants retirement plan. The board of directors determined it was created to put this program temporarily on hold.
And now I'll turn the call ever took time to provide details regarding other operational highlights, including an update on that is far initiatives see book and dynamic pricing initiatives like thank you weather.
That's 100 mentioned, we remain committed to enhancing and expanding our services on product offerings that deliver superior experiences introduces Georgia.
We are increasing investment in our mid spot business this year to accelerate growth by expanding the sponsor new vessels as well as offering at <unk>.
We'll also continue to experience right pre book initiatives driving clinical so once bar world as long as our crews partner.
I would like to provide a few operational highlights the demonstrates the progress we were acumen.
And that's far we have seen an average spreads increased to 1400 dollar helping to drive year over year growth in our business on average three books and prepaid gift average spend within the once par world platform is over 30% more than a walking again.
Across <unk> pre booking.
16% to 24% of service argument is creep up.
And over 80% of where we used to offer pre booking of which 65% through the dynamic one spot robot.
I would also like to highlight a few financial metrics that demonstrate the success, we're delivering with our services.
Revenue per ship <unk> increased 4% in Q4 compared to prior year average revenue per shipboard stuff per day increased 2% in Q4 compared to the purge.
We continue to roll out the probable initiatives across the majority of our fleet as well as accelerate our but.
I don't offering new products services and so.
It's 20 Twond, we will launch next fall.
On 14 these goods.
I had body capabilities to 13 new vessels.
In the March Twentyth.
We will test I'd be therapy with any proofpoint partner.
We will likely lead to our menu that's been services.
We will test the expansion of our Detoxifying recovery capabilities with the state of the arc specialty treatment table and I'd say well he had been wellness program one of workers.
Well actively enhance this offering with the world renowned 45 drilling program that provides an exclusive fitness experience.
Well go to larger CBD product assortment of course <unk> for me with will initially be limited to select the patients in the United States as well as or are those platform.
We're excited to debut on celebrity cruises basketball that women and wellness program leveraging industry, leading influences. The highlights here is the world.
We're also beginning in December of other exciting initiatives and programs within health and wellness, which we'll update you.
In future quarters.
This year, we will launch an unprecedented number of new ships rules for world.
We will remain acutely focused on appropriately trading ourselves leveraging our robust platform for fully diluted support services who's going to guess.
With that I will turn the call over to Steve.
Provide additional information until fourth quarter financial they've got.
Thank you Glenn good morning, ladies and gentlemen.
I'll begin with a review of the fourth quarter and fully though and then update you on out 2020 guidance.
Total revenue for the quarter $159 million, which was right at the midpoint of our Q4 guidance and a 4% increase compared to the fourth quarter last year.
The increase from last year was driven primarily by seven incremental net new shipboard health and wellness centers edit to the fleet of cruise line partners.
They continue to trend towards larger an enhanced shipboard health and wellness centers and increase in collaboration with cruise line partners.
The split the revenue growth between service and product revenue was as follows.
Service revenue increased 5% to $107 billion and product revenue expanded 1% to $32 million compared to the fourth quarter of fiscal 2018.
Average weekly revenue per ship was $60965 up 4% from $58656 in the fourth quarter of the criteria.
Average revenue per ship bought stock per day increased 2% year over year to $461.
Every wiki revenue for land based resorts decreased 11%, which was expected due to the larger number of managed was you now makes during the quarter, which generate less revenue per location.
Cost of service increased 5.2 million or 6% compared to fourth quarter fiscal 2018.
The increase was primarily attributable to the increasing service revenue and the non cash impact of purchase accounting adjustments related to the fair value stepped up a fixed assets in connection with the business combination.
[laughter] Costa products increased 2.1 million or 8% compared to the fourth quarter fiscal 2018.
Increase was primarily attributable to the non cash impact of purchase accounting adjustments related to the inventory step up in connection with the business combination.
Administrative expenses increased $1.6 million to $4 million compared to the fourth quarter fiscal 2018, driven primarily by expenses incurred in connection with the business combination and cost associated to support our operations as a newly publicly traded standalone companies.
Salary and payroll taxes decreased $200000 to 3.9 million compared to the fourth quarter fiscal 2018, as lower incentive compensation expense was offset by an increased headcount to support our operations as a newly publicly traded Standalone company.
Adjusted net income was $6.3 million and adjusted EBITDA was $12.5 million in the fourth quarter slightly below the midpoint until about guidance due to higher training costs incurred in preparation for the large number of vessels that we will serve in 2020.
Adjusted net income per diluted share totalled eight pennies on the 75.1 million diluted shares.
Cash at December 31st was $14 million and total debt.
Net of deferred financing costs at the end of the quarter was $221 million.
We had repaid $5 million of debt during the fourth quarter.
I love it off the tax free cash flow for Q4 was $54.1 billion.
Turning briefly to the full year.
Total revenue for the was $562 million, a 4% increase compared to prior to the increase from last year was primarily driven by seven incremental net new shipboard health and wellness centers added to the free to cruise line partners. The continued trend towards larger and enhance shipboard health and wellness centers and the.
I mean collaboration and improvement was cruise line partners. The growth was partially offset by the negative impact of an unprecedented number of ships temporarily taken out of service in 2019.
The split to revenue growth between service and product revenue was as follows.
Service revenue increased 5% to $431 million and product revenue expanded 1% to $131 billion compared to fiscal 2018.
Adjusted net income increased 2% to $32 million and adjusted EBITDA Rose, 4% to 58.2 million when intruding public company costs in fiscal 2018.
Adjusted net income per diluted share totals 44, pennies and 74 million diluted shares for the.
Moving onto the guidance.
As it is related to guidance then had mentioned we have included the known the impact to the Corona virus first quarter fiscal 2020 guidance.
However, given that youre still too many variables and uncertainties reasonably forecast the full fiscal year foot 2020, we're not yet able to determine the impact on guidance for the first full fiscal year beyond the first quarter.
Well the Q1, we have experienced that's for the non impact related to the Corona virus, including 141 cancelled and modified itineraries.
Lower short revenue associated with our land based destination resorts boss across Asia and associated expenses.
Combined these managers have an estimated impact on Q1 revenue of approximately $5 million and adjusted EBITDA of approximately $2 million. That's known impact. These included for a full year 2020 guidance.
Which is as follows.
We expect revenue for the full you're in the range of 100, and that's sorry for the first quarter I apologize for Q1 of 2020, we expect revenue of $142 million to $147 million. Adjusted EBITDA is expected between 11 and $13 million. This obviously includes the negative impact of the a full.
I mentioned 2 million from the Corona virus and compares to last years first quarter adjusted EBITDA of $15.3 million, which did not include expenses associated with being a standalone in public company as you recall, we went public in the.
Let a part of March.
Adjusted net income is expected between five and 7 million well between seven and 10 pennies per diluted share based on 75.1 million shares outstanding as of December 31st 2019.
Capex is expected in the range of $1 million to $3 million.
And now forecast assumes 176 ships at the end of the period with an average ship count of 163.
Every ship counter affects the ships that are expected to be in another service during the quarter. It also assumes 68 resorts at the end of a quarter with an average of short council that paired off 68.
Well first school 2020, we expect revenue between 620 and $650 million with adjusted EBIDTA expected between 58 and $64 million. This compares to 2019 adjusted EBITDA of 58.2, well 53.8 million.
Leading comparable public company costs and excluding the 2.8 billion dollar reversal of incentive compensation expense in 2019.
Adjusted net income.
As expected between 51 and $56 million and adjusted net income per share is expected between 43 and 48 pennies per diluted share based on 75.1 million diluted shares outstanding as of December 31st 2019.
For the full year, we expect capex to be should be between five and $10 million.
Our forecast assumes 191 ships and 69 resorts at the end of the year within every chip count of 175, and an average of short on 60 age.
Excluding the impact of Corona virus are now 2020 guidance is in line with the got instead, we previously indicated for 2020.
And finally, and importantly, as we noted in our press release. This morning, the board of directors dictate a quarterly cash dividend a four cents per share payable to shareholders of record as at the close of business on April 10th 2020, which is payable on May 29.
2020.
And with that we'll open up the cold two questions. If you could take the question sternpost among please.
Yes, Sir Thank you we will now begin the question and answer session to join the question Q You May Press Star then one on your telephone keypad, you will hear a tone and knowledge in your request.
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Our first question is from Sharon Zackfia with William Blair. Please go ahead.
Hi, Good morning, I was hoping to get some more clarity on kind of current tried in your business.
Yeah.
I guess.
First could you remind us for the.
The contractual minimums that you have to pay the cruise line, how that might work I assume you would not be on the hub for the voyages that or cancelled, but if you could kind of clarify that and then secondarily bear any are you sensing RC in any one my sense of passengers to utilize thus far are you having to do.
Any kind of incremental this cloud in.
On the sourcing of south any kind of issue at this point.
[laughter] high share in Atlanta.
I'm trying to remember all your questions here. Firstly, you know from that perspective or have we seen any impacts it with regard to spending and thus far the U.S. can stand still remains very robust and I'm you know globally they might be some weak pockets, obviously Asia has dropped off relatively to the.
Our out of artists and the fact that less cruises.
And I can raise have been canceled in that region.
We have not seen a reluctance to come into this far in any of the given the crypts. The shipset all cruising here and in in the United States Caribbean et cetera, and quite frankly, it's too soon to even tell that and I don't think we presently under a threat and we don't have the visible.
The T to determine what if any impacts is happening with the crews on only to the extent that they've reported perhaps any softness in bookings, which some of them have come up and said there is some of that already let's remember the most important thing about the way one spot wealth platform and our ability to pay.
You don't need full ships, we just made great passengers and as long as we can fill continue to penetrate at 11%, we still going to continue to generate Houston weekly revenues.
On the stopping perspective, which I think was the last part of your question.
Clearly stuff in Asia, where sending home the ships are out of service.
You know that obviously.
Ships or canceled for voyages for longer than three weeks, we'll send them home and we'll get them back as soon as we can reactivate the and the threat to the current a virus has passed with respect to sourcing from any other parts of the wells. Obviously, we're focused on areas, where there may be potential risks not too.
Hi of from that region, but we have sufficient capacity and bandwidth to hire in other regions such that it will not put imminent pressure on I bet you just off.
The number of ships that were taking on this year.
I think the it's the other part of the question maybe wasn't addresses on your contractual minimums on <unk> companies.
How about yeah that market.
That said that Ted really should not be affected because you know a minimum is a knock on a on a weekly basis, So quarterly basis. They based on the prior years actual then they set.
We went into a whole new constructs off to the financial crisis in 2000, Kevin.
2009, and I do not expect any of those guaranteed to be an issue for us even with.
Lower passenger counts potentially through the.
Yes. Thank you.
Our next question is from Steven Wieczynski with Stifel. Please go ahead.
Yeah, Hey, guys good morning.
Obviously quantified the impact around Kobin for the for the first quarter, but.
[noise] hypothetically, let's let's say things.
Don't get better we see more cancellations I mean, we saw that last night out of Royal Caribbean.
<unk> I guess the question is how should we think about the impact moving forward I guess, what I'm getting out here is most of the cancellations I think you've seen so far for the first quarter been mostly Asian based sailings, which really should should probably have a less of an impact on your business and I guess, if we start to see more European or North American canceled.
Once wouldn't be impact be more than what's embedded in your your first quarter guidance I guess I, just don't want people to take that number and kind of pushing through the entire year I assume there might be more of an impact.
Yes, Steve Good morning, that's a Stephen yes, so that's exactly right remember.
Guidance only includes cancellations through March 31st so.
As you mentioned even as.
So recently as last night, there were additional cancellations because of the fluidity of this situation. We don't know yet obviously nobody knows how many crews as could be castle before the end of the your so they will be additional downside to out 2020 numbers as cruises continued to be cancelled and obviously.
We will do whatever we can in terms of driving revenue elsewhere, but.
The number so far is through March and cruises canceled subsequent to that we'll have additional downside throughout 2020 number.
Okay got you up and I don't know this might be for for Glenn but [noise].
Wanted to ask about the Prebook prepaid options and and maybe some of the conversations or lack of conversations you've had with no with other ship partners that don't have that capability, maybe why has that been so slow to adapt and I guess when you showed on the stats that you mentioned earlier in the call.
You know what's that response to that.
Yes, [laughter] your mouth to God's ears, do we continually or are working very hard and collaborating.
Partners a weekly if not you know daily basis, you'd be regarded as far as working to develop our own.
For <unk>.
That's a reasonable LIFO widget right now to offer a stopgap measure 65% Oh.
Well, let me address where were little bit over 80% of all of our vessels have a pretty book platform to some degree 65% or was it once by world platform, which is a pretty both prepay that's really a dynamic delivery system for our guests.
And we're working towards its simply a resource issue on the cruise line side to integrate the platform and they have priorities.
And they're working all tremendous you know digital platforms in order to technology on their side and it's on the list. It's just not the possible. So we're making headway we added two cruise lines in the latter half of.
20 million team, we're working towards some of the.
Larger cruise lines is over one large cruise line that remains that we're working with some of the sister company and then we have started in the mid size guys. The big guys. We certainly huh.
So it is important they see it they understand it is the resources. We were very that worked alongside them its a big big priority for Steve and they understand it again, but you know we can't drive their resources.
Okay got it and real quick Stephen can you just help us think about when.
I guess from modeling perspective, when celebrity would be kind of fully ramped up this year.
So it will only be fully ramped it right towards the end of the U.S. Steve.
Yeah.
As you know generally about one quarter about revenue occurs each quarter with a little bit more in Q3, because its north American school holidays et cetera.
In 2020, though we do expect that Q3 would be higher than that probably somewhere around 27, or so percentof. Our revenue in Q4 also little bit higher than one quarter. So you'll see a gradual tick up Q1 Q2 little bit more in Q3, and there's a little bit more in Q4.
Okay, great. Thanks, guys appreciate it.
Our next question is from Harry Curtis with Instinet. Please go ahead.
Hi, good morning, everyone.
One is more of a technical question around free cash flow now that though the warrants settlement is on hold you still will be generating or.
Are accumulating cash.
And so.
What a what strategies have you have you talked about or deploying that free cash or is it just wise in your view a two accumulated for awhile until the storm passes.
So with regards to the.
Cash generation Harry the.
You know obviously, we have the Democrats dividend program, which is perhaps nominal but at the do some cash that returning to shareholders, but we still.
We remain focused on reducing our debt levels to at least $175 million.
At the end of 21 and $140 million by the end of 22.
Obviously as you say to the extent something happens with a war.
And that does get resolved and well at some point.
That'll change that equation, but it but that's simplistically speaking like now I think the focus would just be remaining on paying the dividend and reducing debt.
And my second question is related to.
Maybe looking beyond this current crisis.
And thinking about the the mix of kind of full met as spot opportunities. There are yet to be had on your 176 ships can you can you talk about the amount of greenfield or semi greenfield opportunity there is still room.
Meaning to rollout met a spot.
On on the 176 ships.
Hi, how are you. This is Glenn if I may.
First of all we have to look at it on annual basis as I said it varies change first and foremost it's a vessel slas geography, geography, driven strategy. So it has to work it has to work on the property scenario in the proper geography with the proper demographic. So I don't ever feel I feel that will never be a board an entire.
Lee the margins doesn't do six origin going to be one vessels just because.
The the mix and dimensions lot all along.
We certainly have meds paused, where it works today and as well as I mentioned the weather mentioned were added 14 vessels that are anticipated to have all of the stars align accordingly.
So.
You know, we put it where we know the program will work, where it will flourish, where the doctors have the ability to drive into as the guest experience on board and really keep.
That's by service is just as a great offering and vacation investments due to the vacation experience. So.
Again, it will never be on a full fleet, if we have opportunities to increase those numbers, we certainly will.
We are doing or whatever is increasing our investment we determined that spoke to in essence and brought in the breadth of offerings within them as a drive that average spend up.
Increases the options guests will have cool from that modality in particular, and we're really no reaping the benefits of that and the average spend a little before $200 will start to see a better really be solidified or more and more vessels.
The ramp up and you know these working interest in 2020, I think we'll be very nice.
Addition for us and we're adding surmised heavily with doing body contouring heavily so we're just putting efforts where we are as we go.
Thanks, and just a housekeeping question on salary and payroll.
Given the increased training costs, what's a reasonable level of.
Same store or increases in salary and and payroll and what I mean by same store is.
Adjusted for the ships that if that or the cruises that have to be taken out of service.
How much how much of a cost inflation is reasonable to expect this year and.
Maybe in the next year.
Yeah.
So heavy as you know as it relates to onboard.
Sadly restarted speak the the vast majority of what the folks are going on board is variable based in terms of commission and so this charge that they earn and they both from a pure just inflationary standpoint.
It doesn't there's no increase it really just becomes a function of a percentage of the revenue generally and so as the revenue goes up and therefore, we are making more and the stock is there any credit Commission and service charge. The number goes up but there is no sort of annual increase so to speak in the face amount.
Yeah, I think Harris, <unk> Harris, and Harry I mean, the most but most important thing is that we've made the initial investment by.
The pre training that we did in 2019 as I mentioned, we increased our trading in recruiting on a double basis to be prepared for this year, but once they're on bought it becomes part of the operating model and it doesn't it doesn't move towards inflation at all it just becomes part of the operating costs on board.
So the training costs should be should pretty much level off in 2020, and 21 that was really where I was going with this yeah, yeah, yeah exactly.
Very good thanks, everyone.
Yep Okay.
Our next question is from Stephanie we see <unk>, we think we Jefferies. Please go ahead.
Hi, it's sub Barbara for stuff I'm, just first question swish of parts of the difference between the product sales growth on the product cost of sales why such a drag if anything change or anything that that we're missing here.
No the V. the change release related to the true up for the purchase price accounting adjustment and remember the purchase price accounting adjustments will fall away at the Q1 of next year. So it's just a noncash impact of the final balance sheet purchase accounting.
True ups that our accounting for the majority of that its noncash they will be at amounts again in Q1, and then by Q2 the purchase accounting will have been completely kid in that regard.
Got it and just a follow up.
As for you look and I was just thinking about cruise operators I'm looking to fill capacity are they offering any on bodo any spied credits to offset perhaps had lower ticket bookings.
How should we think this is catalyst for how you spend a little high utilization.
Yeah. So we've seen than we've seen them do that because suddenly they have to play those kind of incentive is back in 2000 1009.
But to the extent that.
Bookings decline was substantially over the next set of month platoon you know it certainly the discounts that would probably be offered by the cruise lines.
Be augmented by spot credits like they've done before.
But I think it's just too early to say because you know we already starting to see how they dealing with some of the decline in bookings, but we certainly saw them deployed you know incentives elsewhere for onboard spanned a along with ticket price reduction. So that's possible that could happen is there anything that's a good thing for us.
Typically would be in the form of shipboard credits that specifically, one area, where it departments or would be up to the guests and other related.
Got it thanks.
Our next question is from I see Georgieva within sanitary search. Please go ahead.
Hi, Good morning, guys. A couple of quick questions. One is on the Moody's by expansion. They think Glenn you did a justice a in great detail.
A hold up that's preventing you from rolling those out even faster or is it space is it a availability of doctors because that seems to be a problem has closed business for you right now.
No we have a great bench of doctors would have a fabulous program last year. It really is as I mentioned to hiring we just have to have the stars aligned it has to be on the right to generate which moves the right month of voyage with the right demographics on board.
Sailing in the right geography, which gives us the right time to really sell the program. So it doesn't work in certain markets. It doesn't work on certain itineraries. So we just have to have.
The entire strategy. We you know when we've been doing this now for a decade. So we know where it works where it doesn't work and lastly, we like to do is put a doctor or the program to Trident enforced.
Where's the Mets bar offerings, where we have already had reasonable experienced the say, it's just a little work here.
It becomes expensive and then you've implemented something though you have to retreat and we try not to do that we really try to go in knowing it would be a winning program. So again based on our decades of experience doing this you have formula and we wait for those variables to align and that's where we implement our new.
So additional meds bugs, so where we can add new businesses. Then we go wide and we had to the breadth of offerings.
Great. Thank you Glenn in Don a quick question, maybe Stephen you can help me out in the impact that you're factoring into Q1 is there a significant costs related to a leap day trading staff or I'm not so much at this point given that we only have a couple ships where the cancellations.
Have been really extended.
So there is not that significant to date, although obviously that can get larger part of the incremental cost because obviously, we're having to pay staff are on some of these cruises when there is no revenue being generated.
And so that does account for some of the incremental cost related to the shutdown.
Okay, great. Thank you so much.
This concludes the question and answer session I would like to turn the conference back over to they are not Saxon for any closing remarks.
[noise] right. Thanks, everybody for joining us today, we look forward to speaking with you all when we report Q1 results.
Thanks again for joining our call today good bye.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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