Ladies and gentlemen, thank you for standing by and welcome to the Royal Caribbean Cruise Line's Fourth Quarter 2017 Earnings Conference Call. At this time all participants have been placed in a listen only mode and the floor will be opened for your questions, following the presentation. [Operator Instructions] It is now my pleasure to turn the floor over to Jason Liberty, Chief Financial Officer. Please go ahead, sir.

Thank you, operator. Good morning and thank you for joining us today for our fourth quarter earnings call. Joining me here in Miami are Richard Fain, our Chairman and Chief Executive Officer; Adam Goldstein, our President and Chief Operating Officer; Michael Bayley, President and CEO of Royal Caribbean International; and Carola Mengolini, our Vice President of Investor Relations. During this call, we will be referring to a few slides, which have been posted on our investor website, www.rclinvestor.com. Before we get started, I would like to refer you to our notice about forward-looking statements, which is on our first slide. During this call, we will be making comments that are forward-looking. These statements do not guarantee future performance and do involve risks and uncertainties. Examples are described in our SEC filings and other disclosures. Please note that we do not undertake to update the information in our filings as circumstances change. Also, we will be discussing certain non-GAAP financial measures, which are adjusted as defined and a reconciliation of all non-GAAP historical items can be found on our website. Unless we state otherwise, all metrics on a constant-currency adjusted basis. Richard will begin by providing a strategic overview of the business. I will follow-up with a recap of our fourth quarter and full year results, for 2017, and then I'll provide an update on the current booking environment and we will end with full year and first quarter guidance for 2018. We will then open up the call up for your questions. Richard?

Thank you, Jason, and good morning, everybody. It does feel good to be able to provide some color on our results of this beautiful 75 degree day here in Miami. You know for the last three years you have heard me talk repeatedly about the double-double and I must admit that it feels very good today, to formally say that we have accomplished what we committed to do three years ago. Our earnings per share have more than doubled to $7.53 and our return on invested capital is 10.5%. These figures are $0.75 and 50 basis points better than our targets. Our company worked very hard to achieve the double-double and now we’ve done it. The feeling is very fulfilling and I want to thank each and every member of the teams that reached these aggressive goals. I also think it's important to emphasize that while the EPS and ROIC targets were essential goals of the company and the program, our aspirations were actually much higher. In order to reach such inspirational goals, we had to raise our gain in many, many areas. We need to increase the preference of our brands earn in the market place. We needed to upgrade our already excellent revenue management systems. We needed to upgrade our onboard product, we needed to reduce our energy footprint and we needed to upgrade the caliber and engagement of the men and women who produce these results. We also used the double-double program to strengthen our credit metrics achieving investment grade and to return capital to our shareholders in the form of dividends and share buybacks. Because this achievement would not have been possible without the passion and the commitment of our people the company has decided to give them a surprise reward. Every one of our 65,000…

Thank you, Richard. I'll begin by taking you to our results for the fourth quarter of 2017. These results are summarized on Slide 2. For the quarter we generated adjusted net income of $1.34 per share being the midpoint of our guidance by $0.17 per share. Our yield increased 3.9% for the quarter which is 165 basis points higher than the midpoint of our previous guidance. Better-than-expected closing demand for our core products and continued strength in onboard trends drove the outperformance. On the cost side bet cruise cost excluding fuel were in line with our guidance up 8.7% for the quarter. Better fuel consumption, fuel rate and a weaker dollar benefited the quarter by $0.04. In our continued efforts to return capital to our shareholders we repurchased $100 million in shares in the quarter which was on top of the $128 million in dividend that we declare for the quarter. I will now discuss our full year results, which we have summarized on Slide 3. To summarize our revenue performance for the year strong demand for our North American and European products combined with increase spend on, on board experiences help offset challenges from the redeployment of our Korea sailings and the unprecedented impact from the 2017 Hurricane season. As a result, we generated more than $.6 billion in net income resulting earnings per share of $7.53 which exceeded the midpoint of our latest guidance by $0.16 and our January guidance by $0.53 per share. This result marks the fifth consecutive year of double-digit growth and earnings per share. Net revenue yield increased by 6.4% exceeding the midpoint of our November guidance by 40 basis points and our January guidance by 140 basis points. On the cost side, net cruise costs, excluding fuel, were up 2% which was in…

[Operator Instructions] Your first question comes from the line of Steve Wieczynski of Stifel.

First question is around at the yield guidance for the year and you guys have said in kind of a so-called normal year, you think yield growth should be about 2% to 4% meeting a midpoint of 3%. Obviously your 2018 midpoint is slightly below that at 2.5%, so I guess the question is, is that 2% to 4% range still in play long term? And I guess the second question would be if you didn’t have such a strong fourth quarter which made the year-over-year comparison that much tougher, would your midpoint have been closer to that 3% range and I hope all that makes sense.

Thanks, Steve. So first just to kind of address the 2% to 4%. I think that fairly represents on how yields have grown over the past four years and so it's tough to say that's how we will see it going forward but we do expect our yields to grow moderately. Your math is exactly right. Obviously Q4, the acceleration in close and demand and the better performance and on board increased our yield performance for the full year, by about 50 basis points. And of course, that increased the base and so mathematically our yields for 2018 if not for that acceleration would have been at a midpoint of 3%.

And then second question still about your yield guidance can you give us a thought about maybe how that breaks down in terms of how you're thinking ticket versus on board, the on board continue to grow really nicely and I guess what we are just looking forward is maybe some color on how you view that this year?

On the onboard side obviously, some of that onboard revenue include some of the packaging that goes on when we go-to-market and might include something like beverage or shore excursion or something like that, I would say that we expect onboard yields to trend slightly higher than ticket this year which has been a similar performance relative the past. But some of that just to stress again it's just a geography of the accounting of us selling that package some of that revenue gets recorded in onboard versus ticket.

One quick final question I guess around the Caribbean, there are clearly some concerns out there that the Caribbean has starting to see some softness pickup in kind of 2Q and 3Q. And given your prepared remarks I didn’t really hear too much of that. So, can you may be just address some of those concerns that are out there?

Hi, Steve its Michael. I mean I think, we're feeling pretty good about the Caribbean as Jason had commented earlier after the hurricanes in September, we saw that softness for about four to six or seven weeks but that recovered and picked up and we're in a good book position for Q1. And overall we're feeling pretty good about the Caribbean for '18. We’re fortune because we've got Symphony of the Seas coming into the Caribbean towards the end of the year, we have also got celebrity edge and we're introducing Mariner of the Seas after an extensive modernization and revitalization and we're putting that product into the short market, so that’s quite a lot of volume that’s coming into that market but we're actually very excited about what that products going to do, this bookings very well and still outside of its typical booking window because it’s a short product. So overall, we're feeling okay about the Caribbean.

Your next question comes from the line of Felicia Hendrix with Barclays.

Richard, now your hurdle's even higher on the vision 2020 given the double-double.

Thank you, I'm not sure I should thank you for that but I think we're well aware of it.

I just wanted to commend management as a whole on the recognition of your employees through the thank you-thank you, that was impressive.

Well deserved.

Michael maybe we could just stand Caribbeans for just one moment understanding that Royal Caribbean has introductions of ships and revitalizations and all that kind of stuff that might set you apart. Just trying to may be triangulate what companies see versus what we hear from the trade and I think there has just been this consistent commentary that recently there's been a bit of a lull in Caribbean bookings as people might be differing, there decision to go to the Caribbean. So, despite the fact that you guys are potentially well positioned, have you been seeing that on the margin more recently?

No, obviously we're coming off a very strong 2017 and when you think about the WAVE in 2017, it was really a strong WAVE. And our WAVE for 2018 has been stronger than '17, so we're feeling pretty good about what we're seeing in terms of both the rate and the volumes of bookings that are coming in. I think when you look at capacity overall certainly for Royal, capacity skewed more towards Q3 and Q4 because that’s where we got Mariner coming into the shorts market and symphony coming online into the Caribbean and of course Celebrity Edge. But all three of those products are in a good place and with, as I said before we're quite excited about what those products are going do for us. So, we’re not seeing that, your comments, we’re feeling pretty good about Caribbean.

Just to add one point, just more kind of broadly in our commentary around our book position, being at a strong book position also means that you have less inventory to sell and so some times when you are doing some of those channel checks, the volumes may not be what we are looking to fill because we are in a stronger book position, so the volume can sometimes be lower.

Well I can just say that’s a segway to my next question but I'd love to hear what you are about to say.

Well I was just going to say that there are occasions sometimes when a new product enters into the market and sometimes from competitors and they may have some challenges initially and you may see some fairly aggressive pricing going into the market. I mean that can be disruptive but it's very localized, so that maybe that's what you are hearing or seeing.

Do you want to be more specific on that?

No. But I would add just one other point, just also will always be mindful that when we are sourcing guests for our products that sourcing is happening globally and so again some of the trading activity might be taking place more a different market other than the local markets that you guys might be checking.

And then maybe can you guys just help us understand how booked you are for this second and third quarter in the Caribbean?

I would just comment that we are well booked for the year.

Okay, and then Jason can we just talk about project Excalibur for a moment. If I understand correctly that's going to be rolled out to 50% of your fleet this year. Is that fact giving you some of the optimism for onboard this year that you highlighted in the press release this morning?

No, I don’t think we think that it will have that immediate impact. We think it's simply part of the overall growth of the business obviously and also it tends to be a little bit back-ended as the rollout works well and it gets accelerated so I think actually we are thinking that is more something that will help us longer-term rather than have an immediate impact this year.

And just housekeeping, just the drydocks accelerated this year is '19, how should we think about drydocks?

On the drydock side it's more of a normal year, I mean very similar to what you would have seen in '15 and '16 and so I would expect going forward for us to have a similar drydock schedule to '18 mainly driven by the upgrade programs that we are planning.

If I can actually come back I just want to say I didn’t want to suggest that I wasn’t incredibly excited about what Excalibur is going to do and I really think it is going to transform -- you've seen sort of mark-ups of it. I think it's going to be fantastic but I think it will take a little while for us to rollout and so the public to see just how exciting it is.

Your next question comes from the line of David Beckel of Bernstein Research.

So, I just want to circle back to annual guidance if I could and I want to know if my math is wrong here but in 2017 if you were to remove the benefit of Pullmantur I believe your guidance for next year at the midpoint is implying a pretty steep deceleration at the midpoint and that's just like very strong global macro backdrop, potential increase in demand for the U.S. and after normalizing for hardware potentially even growth lower than inflation. So, I'm wondering one, if I'm missing something there and two, were there any sort of extraordinary demand drivers in 2017? You mentioned tough comps but it is a growing business that may not be expected to repeat in 2018.

Yes, so first the impact from Pullmantur was 125 to 150 basis points in our '17 yields. So yes, 2.5% is lower than your 4.5%. But I don’t think we look at this at all as deceleration. I think we look at this as a compounding off of a very strong 2017. I think the thing to keep in mind on the yield side is that your averaging up and averaging down as that business is coming on and I think as we pointed out through the course of all of last year you pretty much had everything on the ledger outside of Korea and the Hurricanes walking your way and that is not a typical year, its typically we talked about in the past like a stock portfolio of products in markets that you do better as expected and sometimes not as expected but in a given year. And I think again the acceleration that we saw in 2017, and not for that acceleration in the fourth quarter your yields would have been closer to the midpoint of 3.

David its Mike, I would just like to add that contrary to deceleration on demand drivers I think what we've seen is an acceleration of new to cruise coming to our brands and we feel pretty good about the kind of results that we are generating with our new to cruise strategy that we started to execute a couple of years ago. So, we are seeing a very good improvement in that segment.

And as a follow-up I wanted to know, it sounds like you might be pulling the curve back a little bit year possibly but I was also wondering part of the double-double program was installing a price integrity, program on short-term discounting. Now that double-double's been achieved are your willing to revisit that policy at all going forward?

Absolutely not, and I'm glad you asked, because the -- remember as we kept emphasizing, the double-double wasn't to be a finite period of time it was -- help galvanize everybody in the company to work in a certain direction. And the price integrity program was a part of that and we think the benefit keeps growing over time. So, the price integrity program has been a big success for us. We've been fairly religious about executing against it, and we continue to expect to do that.

Just to add one more point to this on the price integrity, we introduced several months ago nonrefundable deposit pricing program for the Royal brand and that has proven to be also very successful for us. So, we have a significant percentage of our 18 bookings are in this non-refundable category which means that we will see significantly less share in our bookings as we move through the calendar year for '18 and then to '19.

Your next question comes from the line of Greg Badishkanian of Citi.

I think did you mentioned that during way price was also up during that same period and then bookings you said were up.

That’s correct, we are up on both a rate and volume basis.

And for 2019, I don’t know if it's too early to ask this but how that looks, how much you’re typically booked at this point and particularly as it relates to Richard's comment that he doesn’t expect the booking curve to be as lengthen as it was coming into this year a nice surprise for your last two years, but are really well booked for 2019.

So how you started off was correct that it is too early to talk about 2019. But I think what I would say is, is obviously with assets like Symphony of the Seas coming in or full year of that ship edge coming in, there is a lot of excitement and demand for those assets which have a strong part of our 2019 picture.

Great just to add to that to Jason's points, we also opened deployment for Royal Caribbean International for 2019 four months earlier than we typically do. So, the small relatively small number but our book position for 2019 versus 2018 same time last year is significantly further ahead but there aren't very small base numbers because we open so much early for '19.

And Craig I just like to follow up on the question of the booking curve. Because one of the things I like to emphasize is, we really determine what the booking curve is, it's really our revenue managers who decided whether they want to take more bookings now or save their powder for later on. And they are making a decision, Michael at least or Larry have to choose exactly how they want to ramp up. And probably I don’t want to give the impression that the bookings are so strong, that the booking curve got longer out, it's really looking at all the factors our people felt that it should be a longer-term booking curve. And my guess is that next year, even if it’s a stronger year, they will want a slightly shorter booking curve but that’s a decision we make rather than something that is determined based simply on there is enough demand and so we book up ahead. So, if at the end of this year, we actually end up saying we want or we have fewer bookings for the following year but at higher prices, that wouldn’t be necessarily a negative sign.

Your next question comes from the line of Patrick Scholes of SunTrust.

My question concerns your various regions, if you think about in relation to what you gave for your net yield guidance, where would you place your various geographic regions, what would be at the higher end of the range, what would be at the lower end of the range?

We don’t obviously provide right yield guidance by market but I think some of the things that you would have heard in my remarks is strong demand from North America on both sides of the Atlantic, so meaning effetely Europe and on North American products seems to have very strong yield trend but overall, we're expecting yield improvement in our core products.

Okay fair enough and then as we think about 2018 as the year progresses, how should we think about the net yield growth candace by quarter.

Also as I comment on, the expectation is that Q1 and Q4 yields will be higher than in Q2 and Q3 yields and some of that is as comparable to our yield growth in the second quarter of last year was about 11% that quarter had Easter in it this year Q1 has Easter in it so there is some of those structural elements of it but that's the expectation is that it's effectively a smiley face fine Q1 and Q4 and lower than Q1 and Q4 for Q2 and Q3.

Your next question comes from the line of Jared Shojaian of Wolfe Research.

Can you give us the first quarter yield guidance excluding the benefits of the drydock?

We don’t give that specific breakdown Jared in terms of what's -- there is lots of things that are driving the differential in the quarter but certainly one of the drivers we had called out was that coming from the drydocks which has already APCDs in a rolling yielding period.

Okay so let me try asking it for the full-year than of the 2.5% yield guide can you just tell us how much of that is coming from same ship yield growth and then maybe how much is new tonnage related or anything else?

It's about half and half so half is coming from the new hardware changes for the year and the other half is coming from like for like business improvements.

And then do you expect your yields to be up in every single quarter this year and would you expect yields to be up in every single geography as well?

I'm not going to break it down by geography but we do expect our yields to be up in each quarter this year.

And then just one quick last one for me. If the higher CapEx guidance is that just the function of the weaker dollar and I know this is a record CapEx year do you expect to be free cash flow positive this year just looking at up cash and CapEx and would you still buyback stock regardless.

So, the main driver on the CapEx increase is the weaker dollar and I think as it relates to share repurchase or just returning capital to shareholders the more of the guide for us is maintaining our net-debt-to-EBITDA on staying kind of within the 3 to 3.5 zone and so points that are lower than that will be opportunity to lever above and beyond any additional free cash flow that we generate.

Your next question comes from the line of Assia Georgieva of Infinity Research.

Congratulations on a great end of 2017 and that will double. I had one question which I never thought I would be the one to ask. Ships ex-China you've reduced capacity there but there seems to be continued reduction in price including when we compare to the post South Korean ban or advisory. Is that because capacity continues to be absorbed, is there anything structural that we can look forward to including more divide the business that could change that trend?

Capacity is down for the industry in China overall which I think for first year and then number of years the capacity is down. Capacity for Royal of us is down probably because we move Mariner slightly early than we had originally planned to put it until the show market but we are not seeing pricing down for our product in China, in fact current book position contracted cash down is significantly stronger than the previous year. So not quite sure what comparables you are looking at in terms of pricing, it could be maybe the -- I don’t know but it could be contracted pricing before the Korean situation, which certainly was higher before the South Korea situation hit, and then of course there was a lot of renegotiations last year as a result of South Korea that dropped the pricing down. But overall for Royal in '18 we are in a good book position and we are feeling pretty good about where market is going, of course it's China. So, every year China is a gifted that gives, so we were always aware of that but it's currently looking quite good in China.

And again, that is not that market that I find to be the most transparent of all the ones that I…

Exactly.

And you are giving me a very good Segway and maybe I can ask Jason so, Mariner is going to go through what I seem to think is 36 stages, right out of the drydock before it enters the Caribbean and that is going to affect Q2 we also have pursuit being in drydock. Should we expect similarly to Q1 to have a decline in APCDs and the higher cost level because of those two pretty significant drydocks?

Yes, the Mariner is of other drydocks that are going on but the fewer APCDs are relative to the absolute cost is a key driver for the cost increase in the first quarter as well as you know Richard's comments around timing of sales and marketing activities and those type of things.

And again, to some extent having Mariner out and in drydock should that help yield if you are looking at the same store basis Q2 '18 versus Q2 '17 which was a fantastic quarter. Do you think that Mariner being out of service in Q2 is helping yields somewhat this year because it's another vessel?

Yes, it helps a little but it's not going to be the main driver of yield growth for sure. As I said most of the yield growth was coming from hardware and like for like improvement.

Your next question comes from the line of Robin Farley of UBS.

I know you have addressed a lot of questions about the guidance and how things are shaping often. Maybe I'll just ask sort of one more clarification, not because we are picking up on weakness I don’t think that’s the case but just maybe to address the concern. Can you comment on whether bookings for the Caribbean during WAVE you said overall bookings have been up in price and volume, is that the case for the Caribbean specifically? Or is the situation just that you have so much [indiscernible] maybe it can't be up in volume but maybe that will be helpful for people to hear?

We are not looking to give commentary specifically product by product but we are -- as I have said in my commentary we are quite encouraged in terms of the booking volumes in pricing across our core products and I think to your latter point Robin that’s exactly right as our need is less overall and so if you are hearing some of that noise, some of that is volume need that is less and also potentially sourcing from other markets. But I just want to add, I mean, I think as Michael commented, I mean, we're feeling positive about the Caribbean and we appreciate that there might be some channel check concern that’s out there. Our trading overall is just doing quite positive.

Your next question comes from the line of James Hardiman of Wedbush Securities.

I guess the feeling to answer to this is either really difficult or really early but is there any evidence whatsoever that the recent tax cuts are going to stimulate demand from your customers, if you talk to the various travel agents, is there anything that’s showing up there, that would be helpful.

Hi James, nothing really but certainly we feel in the sense of the consumer confidence is in a really good place and we feel that really globally across many markets but that’s just the confidence that I think is coming through in people's vacation decisions and how they are buying up products. But nothing directly related to tax cuts.

Got it and then secondly here, obviously the dollars weakens pretty meaningfully over the course of while but certainly over the course of the last month, do you think that could potentially be an on board benefit for you, jog our memories here, your Europe customers are flexing for the most part in U.S. dollars and that should in theory help and over a number of years we were worried about the dollar going in the other direction help us understand that the potential impact of the dollar weakening here.

James its Michael, I think that’s right, it's a great point and its correct. I think as the dollar is strong then we see a little bit more softness in the international on both spend and as the dollar weakens we see a little bit more strength but it has no material impact to the American customer. So that’s right we will see an uplift because of that.

Got it and then I guess lastly from me, Richard you have some comments in the preamble about net cruise cost and how the timing of cost doesn’t necessarily sync up with expenses. May be dig in a little bit more on that, help me understand the one and half to two for 2018 on top of about 2% growth in 2017. Is the point that is out of line with what the normal is or is the point that that’s the new normal. And I guess as we look forward, should we expect after some really fantastic years, where cost was down in some instances. Is this more sort of the normal in terms of what we would expect and you touched on the new fleet upgrade program, does that play any role in 2018 long-term in terms of the net results.

No that wasn’t what I intended to convey. I think rather than say that that cost was likely to be higher, it was likely costs were likely to be bumpier, I think that’s a theme that we had before, people look at the fourth quarter and the first quarter and I think my comments were specifically focusing on the quarter to quarter type numbers. And cost is bumpier whether we do a drydock or we do a special bonus for our employees or whatever it is, it will distort particularly when you look at individual quarters and I think overall, we've continued I think, we've got a very good culture at a stage of people being careful about those costs but not so much being obsessed if saving money is going to cost us in revenue. So, I wasn’t trying to communicate anything other than it was bumpier and I think I was mostly focusing on a relatively high number for the quarter both in the fourth quarter and in the first quarter.

And again, just add to that I think just to keep in mind that it's now been several quarters where we had capacity declines and really now as we start getting into the back half of this year we're kind of again in that posture where we can take advantage of economy to scale as capacity improves which has been kind of one of our levers on cost management.

Well let me ask you this way if I may. You had a couple of years there where net cruise cost were down 60 basis points, last year it was up 200 basis points. I'm struggling with what the normal cost increase that is that we should think about it. Is it closer to that minus 60 or closer to the plus 200?

So, I'm not going to guide for '19 and '20 but I would say is that, I think we expect to behave and we've installed a culture to behave similar to how we imagined cost over the past several years. So, we don’t think '17 is a reflection or '18 is a reflection. We look at the period as continuing to effectively managing our cost and a lot of that again comes from taking advantage of innovation and taking advantage of scale as we manage cost in the forward-looking period.

Your next question comes from the line of Harry Curtis of Nomura Instinet.

In your comments you referenced the acceleration of new-to-cruise strategy and the increase in your technology spend impacting 2019. My question pertains to the list in supply growth in 2019 and to what degree does this incremental tax spend focus on new-to-cruise, how does that help you get ahead of this incremental capacity coming in 2019 and what else are you planning to get ahead of it?

We've been shifting marketing investment, marketing, organization and expertise gradually an increasingly more aggressively over the past few years towards the different channel in terms of moving more digital and traditional and certainly we've seen the results of that in terms of the growth of our new-to-cruise customers coming to the brand so we are continuing on that journey. So in terms of marketing investment more and more if our marketing dollars are going towards that channel rather than traditional and then off course our focus on social media and our whole integration in terms of our organization and our product into this kind of digital universe is going to be massively accelerated by Excalibur which really is going to take us to into the future and so we are quite excited about what Excalibur will deliver for our customers and for our business over the coming years so it's really part of the overall strategy that we have in place. In terms of '19 overall with regard to capacity obviously we have been -- we are planning for the future and we have been looking at '19 and '20 for some time so we have the benefit of a very large and maturing global infrastructure. So that's one of the benefits that we believe we have overall competition in terms of our global footprint. And so, a lot of that capacity will be spread across our brands across our markets and most importantly across segments which is where we come back to our focus on new to cruise.

Do you feel like you need to lift your marketing budget ahead of the capacity increase in 2019?

You know what's interesting about the marketing is that digital is a lot more accurate than we believed in traditional. And so, we have a significant marketing budget and investment that’s pretty much related to our capacity and increasing capacity but what we are seeing is an improvement in the efficiency of that marketing investment over time because of digital, because it's a lot easier to track and understand the results that you are generating through digital versus traditional. So, I think it's yes, we are investing more in our marketing and yes, we are investing more as we look into the future but we are also seeing an improvement in the efficiency of that investment.

And then a quick one for Jason. The 80 million in the thank you-thank you, was any of that realized or expensed in the fourth quarter. If not, how do you see it being expensed by progressively throughout 2018?

So, some of was going to '17 and then most of it is a three-year grant that investor over the three years so it really spreads itself through '18, '19 and '20 but there are costs related in Q4 and the forward-looking periods.

And then the fourth quarter can you give us a sense of how large those costs were?

No, no.

Your next question comes from Jaime Katz with Morningstar.

I'm curious how you guys are thinking about share re-purchases versus dividend given the run up in share price over the last year and whether you feel there is a more tactical road this year on reallocating capital in the year ahead?

I think our objective very much remains the same as we are going to continue to be opportunistic in repurchasing shares. We have over a couple of 100 million left in our share repurchase program but our point of view is to do it opportunistically over the period. But we do continue to believe that there should be a mix between our share repurchase and dividends.

And then can you just remind me, I think in the past you have talked a bit about on asset disposals and that the capacity growth that you guys have given does not include asset disposals. Do you have an idea maybe what that might be if you continue to tear back a ship a year? I think you offered those numbers at the November Investor Day?

Yes. That’s exactly right. we have on average, sort about a ship a year, and obviously depending on the size of the ship that could make a 5200-basis points impact on the capacity, fewer growth with a period.

Okay and then lastly is there any commentary that you guys have on how you guys are reallocating the square footage on some of the revitalization programs that you're doing, are you taking out may be, some of the retail and putting in some other more activity-based opportunities to drive that onboard spend because it seems like that’s where the consumers are going.

I would just say where we're constantly looking at, how to improve the guest experience as well as how to improve the performance of the ships on a per square foot basis. So sometimes that comes from us having cabin, sometimes that’s lease more onboard revenue and many times that’s just creating more fun activities for people to do whether that’s in culinary or other elements, so it's not a perfect formula except that, we’re just constantly revisiting it to see how we can enhance the experience and off course leave stability to enhance the yield.

Your final question will come from the line of Timothy Conder of Wells Fargo Securities.

Whoever wants to take these, first a couple of clarifications, Jason the double-digit that you talked through 2020, was that EPS or earnings just to clarify that and then on the new to cruise, here Michael is that new truly new to cruise is that first timers on, RCL related brands.

So, on the first one Tim, the double-digit is earnings were obviously already at 2.5% ROIC, so our goal is to continue to improve that ROIC metric and then for our earnings per share in 2020 to be double-digit.

Hi Tim, it's new to cruise as in new to cruise, not new to brand.

Okay, okay and then on the capacity what I wanted to ask here is, given the emission requirements tightened further in 2020, do you see the potential for second tier players to have a greater desire for ships that yourselves, Carnival, Norwegian, may sell? Would that have a longer life of that ship to make those emission investments. So therefore, could the secondary market get hotter and we see a little bit faster retirement over the next couple of years. And then related to that, how do you see the Eastern Med potentially rebuilding over the next couple of the years and the industry going back there.

On the used ship market, it's possible that us having ships that can fulfill many of the eco regulations can make those assets more valuable. Yes, we will see how that comes to view overtime, so it's possible at this point, I wouldn’t say that a trend that’s out there.

Tim, on the Eastern Med, I think what we're seeing is kind of stabilization and there is certainly an -- it’s a relatively small percentage of our total capacity, although in '18 we increased that number but from a small base and we are seeing a lot of the Northern European and European tour operators and returning to some of those Eastern Med destinations so with the stability, if it continues then I think we should see the Eastern Med and that coming back in the next couple of years.

Michael remind me isn’t that historically been one of the higher yielding reasons somewhere to Alaska and Northern Europe.

It's done very well for us in the past.

Okay, thank you, for your assistance with the call today and we thank you all for your participation and interest in the company. Carola will be available for any follow-ups you might have and we wish you all a great day. Thank you.

Thank you. That does conclude today's Royal Caribbean Cruise Line's fourth quarter 2017 earnings conference call. You may now disconnect.