Arnold Donald - President and Chief Executive Officer Micky Arison - Chairman David Bernstein - Chief Financial Officer Beth Roberts - Senior Vice President, Investor Relations.

Robin Farley - UBS Steve Wieczynski - Stifel Harry Curtis - Nomura/Instinet Felicia Hendrix - Barclays David Beckel - Bernstein Research James Hardiman - Wedbush Securities Greg Badishkanian - Citi Tim Conder - Wells Fargo Securities Jared Shojaian - Wolfe Research Patrick Scholes - SunTrust Vince Ciepiel - Cleveland Research Company.

Good morning, everyone and welcome to our Fourth Quarter 2017 Earnings Conference Call. I am Arnold Donald, President and CEO of Carnival Corporation & Plc. Today, I am joined by our Chairman, Micky Arison, by David Bernstein, our Chief Financial Officer and by Beth Roberts, Senior Vice President, Investor Relations.

Thank you all for joining us this morning. And we sincerely wish each of you and those who love a faith and joyful holiday season. Now, before I begin, please note that some of our remarks on this call will be forward-looking. Therefore, I must refer you to the cautionary statement in today’s press release.

While fourth quarter adjusted earnings were $0.04 per share below the prior year’s record levels, we experienced another quarter of strong revenue yield and excluding $0.11 per share drag due to the hurricane disruptions, a quarter of earnings improvement.

In fact, we finished the year strong with adjusted earnings that exceeded the midpoint of guidance. This quarter, we exceeded guidance by $0.16 per share helping to produce the highest full year adjusted earnings in our company’s history.

We achieved full year 2017 adjusted earnings of nearly $2.8 billion or $3.82 per share, that’s $0.37 higher than last year’s record results and well above the high-end of our original December guidance range of $3.30 to $3.60 and that’s despite a $0.32 drag from fueling currency moving against the aforementioned hurricane disruptions; challenges in the China market, including itinerary disruptions involving Korea and elsewhere ongoing geopolitical concerns preventing port calls to popular higher yielding destinations like Turkey; strong operational improvement contributed $0.58 per share for the bottom line year-over-year, which when combined with the level of business accretion from our share repurchase program overcame the variety of significant headwinds this year to deliver another full year earnings record.

More importantly, we achieved return on invested capital of 9.4% keeping us on track to achieve double-digit return on invested capital in 2018 and beyond.

These strong results affirm the efforts of our 120,000 team members whose commitment and passion enable us to exceed the expectations of nearly 12 million guests annually and also accredited to our tens of thousands of valued travel agent partners who support all our brands.

It is true their collective efforts that we deliver such strong earnings and we embark upon 2018 with booking volumes and pricing both ahead of prior year. It was reinforcing to see another year of constant currency revenue yield growth finishing the year up 4.5% demonstrating a consistent pattern of healthy revenue yield improvement.

We drag revenue yield growth by creating relative scarcity through each of our brands to assess an increasing demand in excess of measured capacity growth via ongoing guest experience efforts coupled with our multiple brand marketing efforts and continuing public relations programs.

In fact, this quarter we launched meaningful efforts on multiple fronts, which we expect will pay dividends in 2018 and beyond. On the guest experience side, last month, we debut the ocean experience platform featuring Ocean Medallion on Regal Princess.

The ocean experience platform maybe the most ambitious and expensive IoT based innovation on the planet. We are having fun seeing the guest reactions.

Our crew is ecstatic and we are experiencing net promoter scores among the highest in our fleet, but it is still early days and only a limited number of guests have experienced elements of Ocean Medallion so far.

We are fine-tuning and enhancing the platform based on real-time learning as we prepare for full rollout of our Regal Princess in the first calendar quarter 2018. This past quarter we also introduced PlayOcean, our proprietary mobile gaming portfolio.

PlayOcean taps into the growing interest in mobile gaming by offering a collection of original games that can be played at home and onboard select chips. We have not just extended gaming authorship but we are making gaming more immersive on board and on the Public Relations front.

Just yesterday, we announced a new partnership with Univision the first Ocean primetime series, La Gran Sorpresa, [indiscernible]. La Gran Sorpresa will be aired in early January well time to coincide the beginning of wave booking season.

Univision is the country’s most large Spanish-language TV network catering to the more than 54 million Americans who identify as Hispanic. The crew’s collective vacation experience is La Gran Sorpresa aligned wonderfully with the core value for the Univision audience focusing on multigenerational family togetherness fun and passion for life.

Now, this announcement comes on the heels of our launch of OceanView, our own proprietary digital streaming network featuring compelling experiential content 24/7 and currently available on major digital platforms, including Apple TV, Amazon Fire, Roku as well as onboard our ships.

OceanView launched simultaneously with our two new proprietary original content digital productions, GO and Local Eyes and they build upon our three award winning television shows, The Voyager with Josh Garcia on NBC, Ocean Treks with Jeff Corwin on ABC and Vacation Creation with Tommy Davidson and Andrea Feczko also on ABC, all in their second season.

Our network series are the most positive travel related shows on TV. Today, this increasingly popular roster of U.S. original content television programs has garnered over 100 hours of cumulative airtime and reached an audience of over 200 million viewers.

Going forward, our portfolio of 7 OCEAN original series distributed across major networks, major digital streaming platforms, and on our ships ensures that over 4 million potential guests per week see that cruising is the best way to access the people, to access the places and to access the cultures of the world.

Other successful PR efforts include the premier earlier this month of the major motion picture, The Greatest Showman of Cunard’s Queen Mary 2; Holland America’s featured cruises in partnership with O Magazine, including Oprah’s on-voyage on Eurodam in Alaska earlier this year and in Italy, another commercial for our Costa brand featuring Shakira will launch on Christmas Day continue at a highly successful marketing campaign and that’s just to name a few.

All of these efforts resulted in positive media coverage of 2017, for example, to U.S. that was 10% above 2016’s record levels and our highest share of voice to-date with Carnival Corporation brands carrying three quarters of the industry’s positive coverage.

Again, these efforts are all engineered to reach audiences multiple times in multiple ways to help drive demand by our brands ultimately leading to higher yields.

There have also been a number of significant developments in our strategic fleet enhancement plan, which is an important part of our measured capacity growth strategy and includes replacing less efficient ships with new more efficient vessels.

During the year, we introduced 3 state-of-the-art new ships signed agreements with Fincantieri to build 3 additional new ships. And as previously announced, our joint venture for the Chinese market with CSSC, the China State Shipbuilding Corporation ordered for delivery in 2023 the first ever cruise ship to be built in China.

So, we remain on track with our strategic fleet enhancement program and look forward to the delivery of Carnival Horizon in March, Seabourn Ovation in April as well as AIDAnova and Nieuw Statendam both in November.

At the same time, we signed agreements to sell 2 ships expected to leave the fleet next spring keeping us on pace with our historical average of removing 1 to 2 ships per year.

Also we expect net capacity growth to be 1.9% in 2018 and in keeping within our philosophy of measured capacity growth around 5% compound annually through 2022 as new chips replace some existing capacity.

We also realized a number of other accomplishments that position us further along the path to sustain double-digit return on invested capital, including two of our brands operating cruises to Cuba, our contemporary Carnival Cruise Line sailing from Tampa and our premium Holland America brand sailing from Fort Lauderdale, the continued rollout of our new state-of-the-art revenue management system across 6 of our brands to approximately 90% of those brands’ inventory by spring of 2018 to further facilitate yield uplift.

We also accelerated progress on our cost containment efforts delivering more than $100 million of cost savings in 2017 and more than $75 million including our original 2017 guidance, which brings the cumulative savings to-date to approximately $300 million. We are planning another $80 million of savings in 2018.

Importantly, we continue to make meaningful progress on our 2020 sustainability goals focusing our environmental safety, labor and social performance.

We have already reduced our unit fuel consumption by 29% since initiating the effort, we remain committed to ongoing reduction in air emissions with, during 2017, the delivery of AIDAperla, our second cruise ship to be powered in-port by environmentally friendly liquefied natural gas and the keeling of AIDAnova, the first of 7 all L&G ships on order.

And in 2017, we joined pledges to support the advancement of women’s leadership and diversity in the workplace drafted by Catalyst, the leading global nonprofit focused on expanding opportunities for women and to support and encourage diversity in the workplace drafted by the Executive Leadership Council, the leading global organization working to empower African-American corporate leaders.

We also launched our first dedicated sustainability report website to expand our sustainability reporting.

Our commitment to continuous improvement in health environment, safety and security result in our being ranked in the top quartile of the 100 best corporate citizens by Corporate Responsibility Magazine as well as recognition for our sustainability report, which was ranked number one globally by Corporate Register.

We delivered in 2017 over $5.3 billion of cash from operations, returned a significant portion to shareholders and an increase of quarterly dividend twice in the past year, we distributed a total of $1.1 billion through our annual dividend and invested another nearly $600 million in our ongoing buyback program bringing our cumulative repurchases to-date to $3.2 billion in just over 2 years.

Of course, we were able to accomplish this while maintaining our high investment grade credit rating. So in summary, in addition to our record results, we have many other great accomplishments this year to reinforce our journey to sustain double-digit return on invested capital. Looking forward, our book position is strong heading into 2018.

Despite the disruption in bookings, the fundamental strength in demand enabled us to withstand the hurricane malaise, leaving us well positioned for continued revenue yield improvement in 2018 with both occupancy and price still ahead of the prior year.

On our last quarterly call, we indicated we could be patient as we waited for the recovery in bookings post hurricane and I believe this approach enabled us to maintain pricing integrity while at the same time aggressively stimulating demand through, among other efforts, our industry-wide campaign, the Caribbean is open, which created 5 billion positive media impressions.

We are projecting revenue yields to be another 2.5% in 2018 on top of the tougher comparisons with this year’s success based on our proven demand creation and yield management efforts. At the same time, we continue to contain costs.

In 2018 at the midpoint of our guidance, despite an $0.08 per share negative drag from a combination of fuel and currency, we expect to deliver an improvement in earnings of $0.33 per share.

We remain committed through achieving increased consideration for cruise vacations and continued investments in our guest experience to create additional consumer demand in excess of measured capacity growth, while at the same time continuing to return cash to shareholders.

I am very proud of all the progress our teams have made in 2017 and I am genuinely excited by our prospects as we embarked on 2018. We are working very hard and we remain on track to deliver double-digit return on invested capital to shareholders in 2018. With that, I will turn the call to David..

Thank you, Arnold. Before I begin please note all of my references to revenue ticket prices and cost metrics will be in constant currency unless otherwise stated.

I’ll start today with the summary of our 2017 fourth quarter results, then I’ll provide an update on current booking trends for 2018 and finish up with some color on our 2018 December guidance. Our adjusted EPS for the fourth quarter was $0.63, as Arnold indicated, this was $0.16 above the midpoint of our September guidance.

The improvement was primarily revenue driven, $0.11 favorable and increase in net ticket yields benefited from stronger pricing on close in bookings on both sides of the Atlantic, while on-board and other yields continue to benefit from a variety of our ongoing initiatives, $0.04 was due to a combination of lower net cruise costs without fuel, fuel consumption and depreciation expense.

We also benefited by attendees from the net impact of fuel price and currency. Now let’s turn to the fourth quarter operating results versus the prior year. Our capacity increased 1.5%. The North American brands were essentially flat, while the European Australia and Asian brands also known as our EAA brands were up over 3.5%.

Our total net revenue yields were up 4.2%. Now let’s break apart the 2 components of net revenue yields. Net ticket yields were also up 4.2%. This increase was driven by our North American brands deployment in the Caribbean, late season Alaska, and Europe, as well as our EAA brands deployment in Europe, the Caribbean and Australia.

These increases were partially offset by decreases in our China deployment as previously indicated. Net on-board and other yields increased 4.1% with increases on both sides of the Atlantic.

Net cruise costs per ALBD excluding fuel were up 6.1%, which was in line with our September guidance driven by higher dry dock days hurricane impact and the seasonlization of other expenses between the quarters.

In summary, our fourth quarter adjusted EPS was slightly less than last year’s record fourth quarter with the strong 4.2% revenue yield improvement was $0.19 the more than offset by $0.20 of higher costs during the seasonalization of costs and the net unfavorable impact of fuel price and currency costing us $0.03.

Now let’s turn to 2018 booking trends. Since November, booking volumes for 2018 have been running well ahead of last year at higher prices. At this point in time the cumulative booking positioned for 2018 we are ahead of the prior year on both occupancy and press. Let’s drill down into the cumulative book position.

First, for North American brands the Caribbean program is behind the prior year and occupancy as a result of the disruption we saw in booking patterns for a number of weeks after the hurricane. However, these bookings are at higher prices. As expected, since November we have seen normalization in the Caribbean booking patterns.

The seasonal European program is considerably ahead of the prior year on both occupancy and price Alaska is ahead of the prior year and occupancy albeit at lower prices primarily due to net.

Second for our EAA brands, for European deployment, occupancy is nicely ahead at higher prices, but the Caribbean occupancy is in line with the prior year at slightly higher prices. Finally, I want to provide you with some color on 2018. We are forecasting a capacity increase of 1.9%.

As Arnold indicated, our book position is strong heading into 2018 despite hurricane disruptions which positions us well for continued growth in revenue yields. For 2018, we are projecting net revenue yields to be up approximately 2.5% on top of the tougher comparisons with our prior year success.

Now, turning to costs, net cruise costs without fuel per ALBD is expected to be up approximately 1% for 2018. Broadly speaking, there are three main drivers of the cost change. First, our forecast is for an average 2 points of inflation across all our cost categories globally.

Second, we are planning for a slight increase in drydock days from 470 days in 2017 to 505 days in 2018 impacting cost metrics by two-tenths of a point. Partially offsetting these two items is about a point of cost saving benefit from further leveraging our scale.

Fuel prices and FX rates are a different picture from what we saw just 3 months ago when the 2018 year-over-year net impact of fueling currency was a favorable $0.14. Given current fuel prices and FX rates, the 2018 year-over-year net impact of fueling currency is now an unfavorable $0.08. This is a $0.22 swing in just 3 months.

In the end on a year-over-year basis, fuel prices moved against of $0.16 including the impact of fuel derivatives. This was partially offset by favorable impact of currency were $0.08.

Putting all of these factors together, our adjusted EPS guidance for 2018 is $4 to $4.30 versus $3.82 for 2017 and we will finish up by sharing with you our current rules of thumb about the impact of currency and fuel prices on our 2018 results. To start with, a 10% change in all relevant currencies relative to the U.S.

dollar would impact our P&L by approximately $0.46 for the full year and $0.02 for the first quarter. For fuel price changes, a 10% change in the current stock price represents a $0.20 impact for the full year and $0.05 for the first quarter. Fuel expense in our guidance is $1.5 billion for the full year.

The third rule of thumb relates to our fuel derivative portfolio, a 10% change in Brent would result in a $0.05 change in realized losses on fuel derivatives for the full year and just a $0.01 for the first quarter. And now, I will turn the call back over to Arnold..

Thank you, David. Operator, please open the line for questions..

Thank you. [Operator Instructions] Our first question comes from the line of Robin Farley with UBS. Please proceed..

Great. Thanks very much. Obviously a great quarter. I wonder if you could give us a little bit more color around what drove that close in upside in Q4 just as we think about your guidance for 2018, because when you last guided you are kind of well into the quarter.

So, it seems like a lot of price uptick in that last kind of 10% to 20% of bookings, especially since it was at a period when we would have maybe expected Caribbean bookings to be disrupted.

So I wonder if you could give us a little color on how much of it based your new reservation system, how much of it is maybe the FEMA charter that took supply out at the last minute or just kind of any color around what drove that? Thanks..

Good morning, Robin. Thank you. First of all, the FEMA charter is immaterial to yields. The ship was basically fully sold and we did it to support the recovery efforts and there is no big benefit on that one too as financially from where we would have been otherwise.

But overall, we just had strong demand in all the markets including in the Caribbean outside of the direct hurricane impacted areas. So, we had strong pickup there.

The revenue management system would evolve preceded all of that, but of course the fact that we were holding on prices and we are so well booked certainly contributed, but we just saw strength in a lot of markets..

Yes, the only thing I will add to that is we also saw strength in the onboard. I indicated the onboard yields were up 4.1%, which was considerably more than we had guided to..

Okay, great. Thank you very much..

Thank you, Robin..

Our next question comes from the line of Steve Wieczynski with Stifel. Please proceed..

Yes, hi, guys. Good morning and happy holidays to you all. So, I guess the first question is around your 2.5% yield outlook for 2018. It’s the same exact guidance you started 2017 with and you finished the year kind of north of 4%, which was a nice split of ticket and onboard.

So, I guess as we look to 2018 given how solid trends seem to be right now, is it fair to say that if the booking environment and the economy kind of stay in the same ballpark there should be upside to your yield assumption and maybe a better way of kind of asking that is if you look back to 2017 in your initial yield guidance, what was the biggest surprise to you guys in terms of how that 2.5% got to north of 4%?.

Thanks, Steve. Happy holidays to you too. Look, we always give our best guidance as you know and we are projecting another year of strong yield on top of what is now a lot tougher comparisons, because as we had in 2017. It’s really early in the booking process. Wave season hasn’t even started yet.

And like every year, we do try to factor in that there will be unforeseen future events, but overall, we standby the guidance, it is on top of tougher comparisons.

I wouldn’t say there were big surprises in 2017 it’s just the way things flow we had a lot of headwinds in 2017 as you know and we were able to overcome them by increasing demand for the cruises and by having factored in anticipating there will be some unforeseen events..

Okay, got it. And then second question around supply growth and that really seems to be the biggest overhang out there right now with investors.

I guess, how do you guys counter that concern and I know Arnold you said you think you are going to grow your capacity around 5% a year, which I would assume is on a gross basis, but that doesn’t include things like possible retirements, which I think you said will be 1 to 2 per year and also the fact that a lot of certain parts of your capacity growth are really dedicated to a very specific audience or demographic like AIDA.

So, I guess what I am getting here is if you kind of start stripping out all that stuff how do you actually view your core capacity growth going forward?.

We are very comfortable with our capacity growth in the coming years. We have been consistent with our execution around measured capacity growth and we are going to stick with that. We are spreading that growth over a number of brands, increasing number of geographic regions and we are very careful where we add capacity.

Of course we are going to try to drive yield increases at rates that we have recently achieved or even higher. In the end, that may or may not happen. We have a bit of a cushion as capacity itself is the driver for earnings growth and it’s a driver for cost containment.

So, we can achieve similar earnings growth rates at lower rates of increases in yields. Of course, our objective though is to get even greater earnings growth by driving both capacity and yields..

Okay, great.

And then simple housekeeping question for Beth or David, can we just get your capacity by quarter for this year and also what – how you guys are thinking about ‘19 and ‘20 and then CapEx as well?.

Q1 is up 2.2, Q2 is 1.3, Q3 is 1.7, Q4 is 2.6 that’s a total year of 1.9 CapEx for 2018 it’s 4.4 billion, 2019 it’s 5.1 billion, 2020 it’s 4.8 billion and 2021 it’s 3.9 billion and I think I missed one of your questions..

‘19 and ‘20 capacity outlook?.

‘19 is 5.5 for us and 7.4 for ‘20..

Anecdotally, the industry managed to 13% industry-wide growth and 11% growth plus in the Caribbean in quarter three of 2017 and we still drove strong yield improvement. Yes, I just want to reinforce that we are totally focused on measured capacity growth and we are totally focused on achieving and sustaining double-digit return on invested capital.

So for some reason, we fail in creating the demand then we are fully prepared to accelerate retirements and with our scale that matters and so we are focused on growing earnings and not just the number of ships..

Great. Thanks guys. Happy holidays..

Thank you..

Our next question comes from the line of Harry Curtis with Nomura/Instinet. Please proceed..

Hi, good morning everyone. I wanted to just follow-up on the last question particularly as we look into the somewhat higher growth in supply growth in 2019 and 2020.

Are there segments that you have identified kind of demographic segments that are driving the new cruisers, because Arnold you had spent a decent amount of time discussing your global marketing campaigns and I am just wondering if there are some new segments that you are actually targeting?.

We are under-penetrated in the industry as in every market in the world including the U.S., I will repeat something I have told you guys many times, if you add up all the cabins in the world, they add up less than the hotel rooms in the world. And so we are still very small.

Cumulatively, the cruise industry sales over 25 million people a year, but dentists attracts 24 million towards the year. So, I mean, we are just small. And so yes, we are tapping every market segment and we sell in every generation, whether it’s millennials, seniors, it doesn’t matter, children. So, all of those are potential markets for us.

We have 9 whirling and cruise line brands. They are all catered to a different psychographic mark. You asked about demographics. We are distributed around the world. We even distributed here in the United States with the Carnival brand, we see a lot of different markets around the U.S.

And so we subgroup the markets demographically that way location wise, but primarily we are focused on the guest experience and the psychographic placement.

So, we think there is opportunity and we have demonstrated so far to continue to grow demand for cruise at a faster rate than we can grow capacity and we do have constraints on capacity growth, a limited number of shipyards, which is a good thing in the end. And we take advantage of that to outpace demand with the capacity that’s available..

And keep in mind that the backdrop is that travel and tourism has been growing about 4% a year and is expected to continue to grow at that rate. So, we are in a very good position in a growing industry. And as Arnold said, we expect to do very well with and very comfortable with our capacity growth..

That’s terrific.

And just a quick follow-up turning to China, Arnold, do you see the market evolving into a growth market at some point in the next year or two as opposed to sort of being a shoppers’ commuter market?.

In China, the industry had a tough year in China this year, but I think the long-term prospects are outstanding. In 2018, there is going to be limited capacity growth in fact I think the industry is flat. We are expanding our distribution. I know others in the industry are doing the same.

We are working very closely with our existing distributors there to connect that latent demand note with the few ships that are there. We are still very return focused. We have no hesitation to relocate a ship if necessary for it to overall have more accretive return for our business and just keep in mind it’s still so small.

Today, it represents only 5% of our capacity, maybe 1 million cruise tours out of 130 million outbound tours in China. So, everything is really tiny.

To predict that although obviously everybody is more optimistic, I think we seem to be selling down a bit with expanded distribution, we factored in some improvement in our guidance, but we will just have to wait and see..

I guess what I am after is do you see a demand in the say next several years where the market evolves more towards tourism and less towards shopping?.

I think absolutely the market is already there for tourism, you go anywhere in the world, you will find mainland Chinese, behaving like tourists from any other place in the world.

So, yes the cruise business started out early with a few local destinations there, close in destinations which were very shopping oriented, but there’s no question that mainland Chinese are showing up on ships all over the world now not just ships imported in China and the ships imported in China will see over time itineraries expanded to go to more distant places some for the purpose of tourism versus a good deal on merchandise item..

Very good. Thank you..

Thank you..

Our next question comes from Felicia Hendrix with Barclays. Please proceed..

Hi, good morning and thank you. I’m going to go at this maybe from a different angle, because people want to understand this. So you faced incredible challenges in the fourth quarter, you posted better-than-expected results.

So a lot of people are just wondering why we might be seeing a large deceleration in net yield growth in the first quarter? Are you assuming any kind of hurricane impact in there, David you kind of talk about a bit about the Caribbean is behind in occupancy, but at higher prices and I’m assuming that occupancy isn’t super significant, but is the wondering if it’s just being conservative or is there fundamental reason, why the first quarter should see that kind of deceleration?.

Well, again, we got tougher comparisons year-to-year now and we’re giving out our best guidance.

In terms of the hurricane impact, clearly there has been some kind of impact, but frankly the markets have recovered, it’s hard for us to really identify what impact, I’m sure there is some individuals that are shying away from the Caribbean still despite.

The industry efforts and our efforts and each the other cruise lines efforts to that people know the Caribbean is open and the Caribbean is for everyone. And but haven’t said that we – we see continued strong bookings in the Caribbean.

And we give you our best guidance and you guys those conservative, but again there – we always try to factoring things that can go wrong and obviously a lot of things happened this year, a lot of things happened every year and so we try to account for that..

Okay, that’s helpful. And then David, can you help us understand the quarterly cadence’s net cruise cost ex-fuel for 18, we know 2.3%, I’m sorry 2% to 3% for the first quarter and 1% for the full year fourth quarter I’m assuming easier comps perhaps that could be negative growth rate.

So just wondering if you could help us understand the cadence for yields quarterly beyond the first quarter?.

Sure. The increase in dry dock days is really driven in the second quarter. So it wouldn’t surprise me if the second quarter was up probably double the first quarter on a per ALBD basis, but you will see a significant decline in net cruise costs in the back half of the year as a result of the lower dry dock days particularly in the fourth quarter..

Okay, that’s very helpful.

And then Beth just can you give us the D&A and interest expense guidance for the first quarter and the full year 2018?.

D&A is 460 to 470 for the first quarter and 2.02 billion for the year, interest it’s 40 to 50 for the quarter and 180 to 190 for the year..

Thank you..

Thank you..

Our next question comes from the line of David Beckel with Bernstein Research. Please proceed..

Hi, thanks a lot. I think I’ll actually take a stab at Q1 for the third time here, just a slightly different way, but my question is an amalgamation of a couple of comments you made about bookings since November being quite a bit faster than last year and occupancy and the Caribbean being behind.

I’m wondering if the current pace does continue say indefinitely through Q1 at what point would you be caught up on occupancy in the Caribbean?.

As Felicia had dictated, I mean we are not talking about a significant difference in occupancy, we did say it was behind. We are getting good booking trends. They have returned to normal. And so we are just in very small range of differences here. And as I had indicated the prices are up.

So, we feel very comfortable with our guidance for the first quarter. And as we have told everybody, it is our best guess and we will continue to work hard to do better..

We don’t have any concerns at this point about the momentum or the bookings in the Caribbean. We are doing very well there and we are pacing things the way we want pacing then and we feel really good about it..

That’s great. Thanks. And second question about the revenue management system, I can imagine it’s probably impossible to try to quantify exactly the extent to which I hope your yields this year, but it does seem to be a nice source of potential upside that investors can think about for next year.

Is there anyway you can try to dimensionalize the impact for us either on basis points or just conceptually how it will help you significant – the extent to which it will help you in 2018 versus 2017 outside of it just being rolled out on more quickly?.

Well, I am sorry I don’t mean to cut you off, finish what you are asking I am sorry..

No, I was done. Thanks..

Yes. Conceptually, we can answer we won’t dimensionalize it with percentages anything, but conceptually we are going to go to 90% of the inventory for those 6 brands going through the process of utilizing it too in the spring.

So, we are going to have a lot more inventory going forward being impacted in 2018 with the whole system, which includes the two, the new revenue management tool. So, we are expecting obviously that to be a positive contributor.

And given the guidance for the years, but the bottom line is we are 4 to 5 in our beliefs of achieving what we have said because of the incremental amount of inventory that’s now be moving through the system that includes that two..

I would like to add that in spite of the spring when it’s rolled out a lot of 2018 will be behind us. So, to the extent that we have a bigger benefit in 2019 from the tool itself keep that in mind..

Thank you, Beth..

Got it. Thank you..

Our next question comes from the line of James Hardiman with Wedbush Securities. Please proceed..

Good morning. Thanks for taking my call. I am not sure if you have any more insight than we do in terms of South Korea maybe get an update there.

And I guess what does it look like if South Korea opens up over the course of the year, are there going to be other cost associated with switching back over to some of those destinations if it assume that you would more than offset that with any yield benefit and I guess what if anything – how do you factor that into guidance if at all?.

Yes, I think anything that allows more destinations and encourages travel is a positive clearly. Itinerary planning has been set. That doesn’t mean that things wouldn’t change if there were opportunities to do so.

So, opening it up would only be a positive, how much of a positive, it’s hard to say at this point, it will depend on a number of factors, but I’d say about what I said before keep in mind overall 5% of our capacity we are planning.

We accommodate a lot in the guidance and so something like that would just be a small incremental positive, probably wouldn’t be able to measure it..

And in the end I mean it’s a forecast that we always get a bunch of small positives and a bunch of small negatives. We are not all knowing and we give you the best guidance we can. So, hopefully, it does open up and that materialized its course..

But generally unlike taking South Korea offline which presumably was a hit to yield by changing existing itineraries, you are not going to take a yield hit if anything you should get a yield benefit, correct?.

I don’t think we change anything to take a yield hit that’s not normally in our modus operandi. So, we would definitely expect an improvement..

And we could do that relatively quickly as well change your itineraries and over time..

Got it. And then as I look to the rest of the world, this is the first year in a while that established markets are getting all of the capacity.

Is there anything that you’re seeing that suggested any of these established markets are choking on the capacity that the guide looks pretty encouraging, but obviously that capacity doesn’t, doesn’t all come on at the same time.

So as you look to maybe portions of the year, where new ships are coming online in the Caribbean or in Europe are we seeing any weakness in pricing trends as that happened?.

We control our capacity increases as we mentioned we’ve got 1.9% in 2018 and we, as you know, booked well out and well ahead.

So, the quick answer to your question is no, we don’t see any weakness or anything, but of course, we monitor very closely that’s our mobile and we will do what we need to do, but at this point in time, absolutely, things are as we have indicated..

Got it. Thanks guys and happy holidays..

Okay. Happy holidays. Thanks..

Our next question comes from the line of Greg Badishkanian with Citi. Please proceed..

Great. Thanks. When you reported third quarter results back in September you noted that cumulative bookings were well ahead year-over-year on price and occupancy for the first half of 2018. So, in this quarter, you mentioned that the full year 2018 was ahead of prior year at higher prices.

So I am just wondering the different phrasing, is that just because of the different time periods that you are comparing or just not comparable? And also just how do you feel now about 2018 versus back in September, I am much more confident are you achieving or beating that 2.5 net yield?.

Yes. Keep in mind, we use additives to try to just give a relative sense of the things, but we have to have a point in which we cut the additive lost. So you can, you’re talking about very small nuances and small changes from one period to the other.

The difference being in September, I quoted the first half of the year this year I quoted the full year, but we’re really dealing with very small changes in terms of our confidence in 2018 we were confident in 2018 back in September, we’re even more confident now it’s a quarter later, we’ve got a lot more bookings on the books for 2018, prices are higher the booking momentum particularly in the Caribbean has normalized itself.

So we feel very good about 2018. The only big difference between September and today was the – but I talked about fueling currency, there was a big swing in my comments, I indicated that between fueling currency from 3 months ago to today..

Okay..

Just follow-on a little bit we are in a better book position year-over-year and feel really good about that.

When you have the additives and stuff relative rates of growth and all that come into play, but overall we are in a better book position, we definitely as David said, feel even better about the guidance now then we would have a quarter ago and looking forward to a great 2018..

Alright. Very helpful. Thanks, guys..

Our next question comes from the line of Tim Conder with Wells Fargo Securities. Please proceed..

Thank you. Congrats on the year and Merry Christmas, happy holidays. A couple more and I think looking more to ‘19 because obviously lot of the itineraries are set for ‘18 barring any emergency need of change, but looking to ‘19 you started to rollout a few of these.

What are your thoughts? We are seeing a little bit of hints, but what are your thoughts on returning portions to the Eastern med, which historically in the Eastern med has provided higher yield than the Western med? And then I guess just in general also what you are seeing for ‘18 on Southern European sourcing, how has that trended over the last year, because that had been one of the weakest areas from a source market perspective for the industry over the last couple of years?.

Yes. Concerning the 2019 and returning to the Eastern med, you are right, I mean those are some of the higher yielding itineraries. We would love to have them back.

At this point in time, we just have to monitor and see what happens the world is volatile and ever-changing place and in the end we take yes, where they are willing to go and they want to go and so we are cautiously optimistic, but don’t feel comfortable predicting at this point..

And as far as your second question is concerned in Southern Europe, remember that our Costa brand, their focus is on Southern Europe, Italy, France and Spain.

We have talked about – we don’t go into details by brands, but a number of times we have talked about seeing an improving economy in the southern part of Europe for a long time, we had talked about it bouncing along the bottom, but we have started to seeing some improvement and we have seen confidence Costa has done very well in 2017 and we expect it to do well in 2018 in addition.

So, we are comfortable and very confident and happy to see the improvement in that part of the world..

Okay. And along that line, David or Arnold whoever wants to take this, the booking curve, how was the booking curve on a year-over-year basis it sounds like given you booked at higher levels of occupancy globally.

It sounds like its still stretching out, but just any color as to where that is? And then on fuel, it looks like your fuel collars that you have had in place for a few years or finding it to roll-off post ‘18 any update of internal thoughts as it relates to hedging, collaring, anything going forward with fuel that you can share?.

Okay, thank you. Yes, concerning hedge and a collar, we have never hedged. We have done the collars, where as you point out we have through 2018. We will monitor it closely. We do it to protect against spikes and rises in fuel costs primarily from a cash management standpoint and what have you.

So, we will look at our overall situation and make a determination about beyond 2018 and we look at it constantly. So, we will stay on that, but right now, we are covered through 2018 as you pointed out, but we have never hedged and at this point in time we have no intention to..

So – and as far as the booking curve is concerned, I mean, we did say we were further ahead than last year, but again we keep on evaluating our book position.

We are always looking for the optimal point in the booking curve and changes over time and so we will continue to push out the booking curve as long as it makes economic sense and we will continue to look at how to maximize revenue by balancing price versus occupancy at all points in the booking curve..

Would you say it’s optimized at this point, does it makes sense to push it out further?.

I will take that one. It’s never optimized. We are always trying to get through that. Hopefully asymptotically, we are approaching optimization, but we are not ahead yet, so we are not chasing it..

We are in complete agreement on that. We will never get to an optimal point..

I am glad I took an advanced math in school. Thank you, gentlemen..

Thank you..

Our next question comes from the line of Jared Shojaian with Wolfe Research. Please proceed..

Hi, good morning everyone. Merry Christmas and happy holidays to you. So, what EPS level do you need for double-digit ROIC is it the midpoint of your guidance, because I am kind of struggling to get there if the invested capital denominator is going up, which I would think it would be with over $4 billion in CapEx next year.

So, can you help me think about that a little bit?.

Yes. You are right the midpoint of the guidance will have a double-digit yield, the high end of the range was comfortably above and the low end of the range would cause us to scramble to get to the actual goal of double-digits..

Given the $34 billion, $35 billion investment base we have, it takes about $350 million to add a point of ROIC or a 10th of the point is $35 million which is roughly $0.05 give or take so that’s just some rules of thumb that you can go by, but I will caution you because our balance sheet does move with currency so all adjust as our P&L does.

So, all of these numbers move over time and these calculations we made or the currency levels that we have included in our guidance in the press release..

Okay, thank you.

And can you – can you just confirm are you ahead on rate and occupancy for each quarter of 2018 and then can you just help us think about the yield cadence by quarter for next year?.

Yes, we are ahead for each quarter but at this point it is a little early to give guidance for each of the quarters, the guidance for the first quarter – the midpoint was 2% in comparison to the 2.5% for the full year.

So, we are looking to do – our guidance includes better yields in the first quarter in the second, third and fourth, but it’s a little early for us to try to break that down by quarter. Wave season hasn’t even started yet and there is a lot left to go. So I am hesitant to give that kind of detailed guidance..

Okay. And if I could just sneak one quick one in here, your 2018 guidance, the gap between the as reported and the constant cruise cost is larger than the gap between as reported in constant yield that’s normally very unusual.

So, can you just explain what’s going on there?.

The one thing you will see differences there over time and a lot of it has to do with how much is on the books and what currency, because when we get the payments, the currency gets locked in. So, there are some differences there that can be reflected over time..

Got it. Thank you very much..

Our next question comes from the line of Patrick Scholes with SunTrust. Please proceed..

Hi, good morning. I am wondering if you can provide a little bit more on the recent trends in booking and pricing for China. I am wondering how that has – what the trajectory has been how that has been for you over the last 3 months as it relates to cruises in 2018? Thank you..

So, we have been making lots of changes in China as Arnold discussed, we’re talking about increasing the number of distributors. We’ve moved away from charters and more towards group business.

And so overall as Arnold had indicated with the lower capacity next year, we were looking to see improvements in China, we’re seeing them in booking patterns and we expect to see hopefully that in the actual results as the year progresses..

Okay. Second question here you talked on the prepared remarks about strength in onboard spending over the past quarter.

Were there any particular promotions or programs that that drove it any new ones that we can see continuing over the next year?.

There were a variety of things in all areas, I mean beverage, casino shore excursions, I mean, lots of different things, retail shops where we’ve done throughout the year and the way we’re not stopping, I mean we’ve got a lot of efforts going on, I don’t if you saw the recent press release and Carnival Cruise Lines all the different things they’re doing on the retail side.

So our teams continue to focus on that and we believe there is a lot of opportunity in 2018 and beyond..

The 45 plus year history of the company, it’s only been one year, where onboard revenues didn’t increased year-over-year and I’d say we’ve number of initiatives on the way now should keep that trend going in the positive direction. Rate of increase has helped us that bounces around little bit, but will be growing onboard revenues..

Okay. Thank you for that. That’s all..

One more question please..

Our final question will come from the line of Vince Ciepiel with Cleveland Research Company. Please proceed..

Hi, you mentioned a return to normal in terms of booking demand.

Can you help us better understand what the trajectory of that has been? Was it a bounce back in October or has it been a more linear build each month?.

Yes, it was – the hurricanes hit in early to mid September and we saw the disruptions and so basically the disruptions occurred in late September and October and it bounced back and by the time what we were indicating is by the time we got that to early November, we had seen a return to a normalized pattern..

I think the critical thing was being patient, obviously, with the hurricanes there was a disruption. We lost several weeks of what would have otherwise have been bookings and the trick was to stay patient and not overreact to it. And our teams did that and we are seeing the benefit of that now. So, I really appreciate any follow-up question on that.

are you okay?.

Yes, I do have.

Just thinking longer term into ‘19 and ‘20 when capacity becomes a larger portion of the mix, can you remind us how to think about any potential yield benefit from new premium yielding hardware?.

Yes, well, there is a lift for sure with because of the economies of scale and cabin mix and so on and so forth especially as we also retire out some of the less efficient vessels.

So, there is absolutely a contribution to yield that, but obviously the bigger contribution is going to be creating the demand in excess to the supply and clearly you can hear from the comments in the call earlier we are very much focused on that and you can see it out in the marketplace everywhere.

So, our goal is to keep cruise out in a positive way, touch people multiple times, multiple ways at least a week hopefully a day so that when it comes time for them to think about a holiday or a vacation that they consider cruise.

We know we are helping the industry overall to do that, but because of opposition in the industry, we know we benefit disproportionately when we do that. And so that is focused along with cost containment and a smart capital management..

Okay. I want to thank you all for being with us. Sincere happy holidays to everyone. Thank you for your interest in the Carnival Corporation. We are focused on delivering double-digit return on invested capital in 2018 achieving or beating the guidance and we look forward to talking to you guys in between in the next quarter earning call. Thank you..

Ladies and gentlemen that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines..