Ladies and gentlemen, thank you for standing by and welcome to the Royal Caribbean Cruises Limited 2015 Third Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I will now turn the call over to Jason Liberty, Chief Financial Officer. Please go ahead, sir.

Good morning and thank you for joining us today for our third quarter earnings call. Joining me here in Miami are Richard Fain, our Chairman and Chief Executive Officer; Adam Goldstein, President and Chief Operating Officer; Michael Bayley, President and CEO of Royal Caribbean International; and, Carol Cabezas, our new 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. Also, we will be discussing certain non-GAAP financial measures which are adjusted as defined, and a reconciliation of these items can be found on our website. Richard will begin by providing an overview of the business. I will follow with a recap of our third quarter results, provide an update on the current booking environment and provide our early thoughts on 2016. I will close with guidance for the full year and fourth quarter. We will then open the call for your questions. Richard?

Thank you, Jason, and good morning everybody. What Jason didn’t mention was that Laura Hodges is also in the room. And most of you know Laura is the outgoing Head of Investor Relations and I think we should thank her for what she has done over this period and wish her well as she takes Royal Caribbean to new heights. I think Carol should also know that we are expecting the share price to move as much during her tenure as it has during Laura’s. So no pressure, but we are looking for good things. Turning back to the substance here. It’s only appropriate that I begin with talking about the Double-Double. As I assume you all know and I hope you will know that’s the name we gave to our program designed to achieve double-digit ROIC and the doubling of our 2014 earnings by 2017. That program continues in earnest and our performance this year allows us to move into 2016 confidently on track to the Double-Double. In fact, it looks like we are hitting one interesting milestone this year which none of us paid any attention to before. When we set out on this path, our focus was on 2017, but I was very pleased when somebody pointed out to me that our new forecast for 2015 means we will be exactly twice our 2013 profit at the end of this year. It’s exciting to see that we are about to double our profitability in just two years from $2.40 to $4.80. I like a good omen, and this one suits me just fine. It’s remarkable to me that on each of our three key metrics we are now back to at a minimum our best guidance of the year. On the yield front, we are back to…

Thank you, Richard. I will begin by taking you through our results for the third quarter. Unless I state otherwise, all metrics are on a constant currency basis. We have summarized our third quarter results on slide two. For the quarter, we generated adjusted net income of $2.84 per share which was $0.14 above our guidance. Third quarter net revenue yields were up 5.1% year-over-year which was approximately 130 basis points better than the midpoint of our previous guidance. The out performance was driven by strong close-in pricing for the Caribbean and Europe as well as strong on-board revenue on our Asia itineraries. Yields were up year-over-year on all key products except for Latin America where we saw a weak demand at low price points. On board revenues did not disappoint. We achieved 10% growth year-over-year driven by improvements in beverage, retail sales and demand for Boom, the fastest internet at sea. Costs were better than expected for the quarter with net cruise cost excluding fuel down 1.8% versus guidance of down 1.5% to 1%. The $0.02 beat and cost is mainly due to timing. Also in the third quarter we recorded non-cash impairment charge of $399 million associated with Pullmantur’s goodwill, trade mark and trade names and a reduction in the fair value of select vessels in the Pullmantur fleet. Given the further deterioration of the economies and currencies in Latin America, management has shifted strategy and will be rightsizing the Pullmantur brand to better align supply with demand and to refocus on their core market of Spain. To that end, the Pullmantur Empress will transition back to the Royal Caribbean International fleet in early 2016 and after an extensive dry dock will begin sailing as the Empress of the Seas in the spring of 2016. As the Pullmantur…

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

Hey, good morning, guys. So, I guess in the past you talk little bit about 2016 in terms of what you're seeing there, and I guess some times in the past around the third quarter earnings release you guys have essentially given somewhat soft guidance for the next year. I know in 2015 you guys kind of called out that you felt comfortable with where consensus was for the next year. This year you guys did not do that. I was wondering why the decision not to do that?

Yes. Steve, I'll address that. It's Richard. I guess that's an instance of no good deed goes unpunished. We did do that last year and I think we actually did the opposed well. And the reason was most of those cases we were sort of – there were lot of uncertainties about some of the structural elements that we were trying to make sure everybody understood what that is. But most people don't provide that kind of guidance and we don't really want to do so on a regular basis. And this year I think -- we think that the structural issues are clear. We have comparable situation going forward. People understand the way the fleet works and the numbers work. And so we didn't – and it's clear from the guidance that's out there – not the guidance, but the estimates that are out there that people understand the way these things are going. But we get our best information about the year when we go through the wave period and we really feel that it's more appropriate on an ongoing basis to be doing what the rest of our industry does and provide our guidance when we've had that early insight. So I think I would suggest that last year or two have been anomalies, but this is and should the norm.

Okay. Got you. And then, I guess as we look to 2016, your outlook there looks – it's pretty for most of markets you're operating in. But I guess the question is going to go to Pullmantur, even though it’s a very, very small percentage of your capacity. I guess at this point you guys have had issues with this as brand. The Latin American market does seem to be unstable at this point. And if you look at those five ships and the brand, I mean, the average ages, I mean, almost 25 years old. So I guess the question is at this point why not shut that down and essentially relocate those ships or essentially scrap up?

Hey, Steve. I think that when we look Latin America as a key market as you brought up, I mean, there has been some real challenge there. But when we look at the market of Spain and Pullmantur position in Spain, we do think that there is opportunity with those assets and with the positioning of the brand to do well. And that's why this is a combination of somewhat rightsizing, right, so we are taking Empress of the Seas as I noted in my remarks and moving her into the Royal Caribbean fleet. And then, really kind of trying to match up appropriately supply and demand in the Spanish market and I think that we see those plans as paying off nice for us in the future.

Great. Thanks guys.

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

Hi. Thanks. Good morning. So, Jason, exciting news regarding the share repurchase program and the ASR. That just came out about a year earlier than I was expecting. So, I was just wondering if you could talk about the decision to do it now and any impact that might with the rating agencies regarding obtaining your investment grade rating?

Sure. it is a little bit early relative to when positive free cash flow generation comes in and as it evolve in modeling in our discussion most people see that towards the back half of next year. I think what we talked about was that as we starting to get more comfortable about the forward looking picture and as Richard mentioned in his comment the forward looking free cash flow generation that management and the board would be considering when that share buyback would be. I think this is kind of more of a timing thing as it relates to the rating agencies as this is –you probably are little bit earlier, but not a lot earlier than our dialogues with them in terms of share buyback program. So, I think the combination of you are confidence in future cash flows, while also trying to manage those three core financial objectives of improving shareholder returns being an investment grade credit and growing our business by maintaining that balances, this has kind of been our prospective for it.

And then you gave us some color on China. As you know we just did some analysis on this supply that's coming into the market over the next two years, and by account the market is going from about 10 ships today to 18 in 2017. So, I just wondering in context of all the strength that you stuffed on your prepared remarks can you just share your thoughts on the impact of that supply in the market in general and particular 2017. And then also how Royal Caribbean expectations for pricing fall into that scenario? Thanks.

Hi, Felicia, it's Michael. I'll answer that question. I think as you point out there's more supply coming into market in 2016 and 2017. We obviously feel quite comfortable with the market opportunity. We believe that it's literally untapped and as we see what's occurring in the Shanghai and Tianjin-Beijing region. We think that there's a lot of opportunity ahead of us. For Royal Caribbean, I think we feel confident. We've now been I the market for eight years. We've been building our brand for that period of time and we're being investing solidly in the market for that period, so, the aggregate marketing investments had been quite significant. We have good consumer confidence. We're in a good position as a brand in the marketplace. In fact yesterday we just receive news that we were the recipients of the best cruise line in China for the eighth year running. We have been working on expanding the distribution channels and building our trade relationships and over this period of time I think we've also been able to introduce more sophisticated promotional ideas with our various trade partners. So, our feelings are good about how we see China. We think the opportunity is still very, very strong. So that's kind of our perspective on China.

And then to just reiterate something that Jason said about pricing in China. Did I hear that right that for 2016 so far what you see is it up year-over-year, Jason?

Just in terms of the visibility that we have into China and lot of that is going into the spring. We feel about load factor and the APDs we're getting there, and obviously Quantum will be there for the first time in the first quarter. And as Michael mentioned, the reception to that product has been – and that asset has been fantastic.

Yes. Just to add, I mean, we not only have we being extremely please with the performance of Quantum, but we have Ovation coming into the market in June into Tianjin. So with the two Quantum Class ships in China in 2016, we're feeling pretty good about how that looks?

But you know Felicia, it also worth emphasizing that the – there's a structural change because we really now going into the market and doing it on the year round basis. And so you have to add in the mix that we have now have winter sailings. Actually significant part of the increase and the capacity in China is not so much new ships, but it's actually just that we broadening when during the year that we're there. So, we're quite encouraged by it. We're already there. The Quantum has done very well. The Quantum has clearly – the Quantum Class is clearly distinguishing themselves as an outstanding vessel. But there's also a lot of uncertainty about China in everybody's mind. And we feel good that we're going at in the right way. And I just want you to forget structural change.

Yes. Thanks for that. Thanks a lot.

Your next question comes from the line of Tim Conder of Wells Fargo Securities.

Thank you. And first of all congrats to everyone on continued great execution. Couple of things, Richard, just to continue on to that and whether you or Michael or Jason want to take this, but regarding China, so it sounds like we may see a little bit more seasonality, obviously, and somewhat similar to what we see in North America, where we have a shoulder period in Q1 and Q4. Can you sort of talk about the cadence there of pricing, and obviously it would appear that you would get your highest yields in the summer. So, that's question one related to China. Question two would be, Jason, you mentioned I think that the pricing as it stands right now is up on a very early basis looking for China for next year, but if you could maybe, if you can or if you want to, break it down into your existing markets and then as you expand here into some of these periphery markets, somewhat your top cities versus your new cities, if you could give any color from that perspective?

Hi, Tim, it's Michael. Yes. I think as Richard point it out and as your question asks, there is seasonality and so the cadence is very similar to the kind of cadence that we see in other markets. There's a peak summer when the demand is high, particular around Golden Week, when the demand is extraordinary. And then as we move into the more of the shoulder seasons than we typically have slightly softer pricing that we do in the peak, so that's very typical. And I think that we expect the behavior to be similar, although I think for us, it’s the fact that we're broadening the seasons. It's also a new experience for us as well. So we're going to have to see how it really does play out. We're fairly confident in terms of demand in the marketplace. So I think – but the seasonality is we believe quite similarly.

Okay.

And then, Tim, in terms of your commentary on the market and secondary markets, I think in Richard's comment he talked about that these secondary markets have a lower cost base to them and do get slightly lower yields than what you would get in these primary large metropolitan areas like Shanghai and Beijing area. And so, I think again it's still very early on in that booking process, but that will play into the mix of yields for China, but again, we all thing that that contributes positively to the overall yield of the region, as well as it corporation the full year.

And Tim, I just add one more new ones. We talk about the complexity of our business, one of things you also are very well aware, I know you're well aware of, but it gives me an opportunity to mention it for everybody is the issues that it's not just China. We really look at this pattern as in some cases it's year round China, but in some cases its summer in China and our winter Northern winter in Southeast Asia and then Australia and New Zealand and you were also commenting on what's happening particularly in Australian market, New Zealand market which have also had very large increases in capacity. So you have to balance all of those as we're going through.

Okay. Understood. That's helps. I guess just one more piece there on the China. If you looked at your comparable cities in the comparable period, how is pricing trending at this point from that perspective?

Hi, Tim. On a comparable basis and again in terms of the visibility there we see. And as I commented we – our load factors are on a good position year-over-year as well as our rate based on the level of visibility that we have which is really through the spring at this point.

Okay. Gentlemen, thank you.

Thanks, Tim.

Your next question comes from the line of Joel Simkins of Credit Suisse.

Yes. Hey, good morning, and thanks for the update on trends here. I guess you mentioned the window now for discounts sort of being out as far as 40 days. Is there any thought to sort of extending that a little further? Do you feel like you could push it at this point given that the consumer seems to be getting used to it and obviously the competitive environment seems to be rational?

Yes. I think we take these things as they come and we're learning from it. This is a new program and we need to be a little bit cautious as we roll it out. The rollout has been very encouraging, you've seen that. We have extended it. We actually look at these and don't make those decisions in advance. So I wouldn't speculate this to what might be the case in the future. All I can say is that we have felt good about what we've done so far and that's caused us to extend it both in terms of time and also in the areas where we're putting this in place. And I'm quite comfortable that that is working and we will continue that. I have no comfort as to what we will do in the future, and I think we would simply look at that as that comes to play.

Sure. And one follow-up on onboard obviously the trends continue to be very, very strong there. I guess as you think about onboard and what's driving and I guess how much the overall health of the consumer, how much has been priced and how much has been sort of product and innovation particularly as you renovated some the legacy capacity?

Hi. Joel, its Michael. I think its really all three. I think with certainly in the summer during Q3 both in Europe and Caribbean actually and nearly all of our products, we've seen more spend coming from the consumers. We've been more I think aggressive with our dynamic pricing model as it relates to pricing onboard which allowed us to take opportunity of some of those moments where people seem to be more willing to spend. I think product mix has been a really major contributor. The investment over time in terms of building out and changing out different retail options and what not has certainly beginning to help us. So I think really it’s a combination of all three. It was certainly for the Q3 it was just a really good quarter. And of course China played a big part of that as well. And we've been very pleased with them. One of the big contributors has been the VOOM, the fastest internet of sea, and we've seen significant increase in our revenues in that area.

Thank you.

Our next question comes from the line of Steven Kent of Goldman Sachs.

Hi. Good morning. On the pricing integrity program, its not clear to me, is that just for the Royal brand or all of your brands, and when you said, you're rolling it out into Europe and other markets, is that for all of the brands. And that's my first question. And then on the buyback, can you just talk about how the board looks toward that versus dividends and the discussion there. And then one final thing, just on – can you talk about the earnings potential of your JVs and how that factors in to achieving your Double-Double goals?

Steve, its Richard, and I'll start on the price integrity program and then I'll ask Jason to answer the other two questions. The price integrity program is for all of our brands across the broad. It's only in the U.K. and Ireland that we've added it, we haven't added it elsewhere in the world. But it is in the U.K. and Ireland. It is for all of our brands.

Steven, in terms of on the share buyback versus the dividend, I think that obviously historically we've look at the dividend as kind of the core mechanism to return in capital of the shareholders. And I think there's a recognition that they needed to be a mix of those two things. And I think that's how we and the board will be considering those mechanisms going forward.

Just to stay on this for a second, why not be more opportunistic, Jason, versus this accelerated share repurchase, I mean you can't help but see today you're -- I think you're at an all-time high, which is terrific, but why not just wait for the occasional downdraft that seems to happen in this industry?

Yes, great question. I think it’s a point to point out. Two things, one which is the ASR -- the ASR is really for 200 of the 500, and the other 300 we haven't announce how we would go about on doing that. But that's not as definitely something we very much keep in line. And I think that the share repurchase I think should be an indictor of – again our confidence, the board's confidence and now we see things going forward. As it relates to the joint ventures, you're certainly – we have two key joint ventures, one is TUI AG, our TUI Cruises venture which does and continues to do very, very well. That is obviously a key contributor to our Double-Double program and our outlook going forward as that brand continues to successfully operate as well as grow. SkySea is really in its infancy. It just launched this past May. I think – how we contributes to Double-Double, we'll probably be something more on modest basis as we look to grow that – the positioning of that brand in the Chinese market with our partner Ctrip as well as grow that brand over time.

Thanks.

Your next question comes from the line of Kevin Minolta of JPMorgan.

Hey, good morning. Appreciate the time here. As we look at capacity growth in 2016 picking up a touch here for the fleet. Could you give us a sense for how we should be thinking about net cruise costs on a go-forward basis both with fuel and without? Thank you.

Hey, Kevin. I think we're obviously – we're still in our planning process on both the revenue and cost standpoint. We will give guidance on cost next year. But I think that you should just generally expect that our focus and rigor on cost has really exceeded well into the culture of the company and you should expect us to behave similarly going forward.

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

Hi. Thanks for taking my call. Two questions from me. First, maybe just little bit of clarification. Was the repo factored into your original Double-Double plan? I guess another way of asking that, do you think that net income will double 2017 over 2014?

When we gave the Double-Double and I would remind you that it is both net income and ROIC, we didn't caveat that with what actions we would take over the market takes. We're not adjusting it for fuel, foreign exchange, share repurchases or anything we might be doing, we've really just said, it's the target. And the one, the earnings per share would be impacted by share repurchases, but the ROIC, I would point out is not impacted by share repurchases as well.

But just to clarify, I think you just said that the expectation was that net income would double, not just EPS?

No, no, we try to be explicit. We have two targets and they are exactly what we've said, which is adjusted earnings per share would double that is it would get to $6.78 by – for the year 2014. And ROIC would reach double-digits, i.e. that it would be 10.00 [ph] or 1% or better by 2017. And those are two targets that we're using internally, essential we will take what actions we should operationally and the world will give us what it would give us, whether that's foreign exchange gains or losses, it's been bad, but whatever it is fuel or whatever it is et cetera.

Got it. Very helpful. And then my second question was on the price integrity program. You said in the prepared remarks that it's cost you a bit in 2015 and will cost a bit more in 2016. Are you saying obviously the program is going to help with pricing and hurt on the occupancy front? Do you saying that the net effect of those two has been a negative and will continue to be a negative in 2016 or is just that its cost you a bit on the occupancy side. And I guess related question, occupancy step down a bit in the second quarter and was down again in the third quarter. I'm assuming that's a function of the price integrity program are safe today, safe to say that's going to be continue to down until you lap that maybe second quarter next year and then resume growth or how should you be thinking about that?

Yes. I think your description was accurate that we think that the price integrity program probably helps us on the rate, but hurts us on the volume. And so the net effect of that in 2015 and 2016 would be negative on our total revenue. So, I think your articulation was exactly correct. In terms of the actual occupancy that you are experiencing especially by quarter, I think there are so many other factors that the price integrity program would not be a significant part of that. And so, to the extent that its down or up in any quarter, that will be really driven by our yield managers and our yield management system. The price integrity program would be a de minimis part of that.

Make sense. And maybe just a follow-up there then, so as we think about the net being negative into 2016, should we sort of think about that as a negative most significantly in the first quarter and then once we lap that maybe it becomes a positive beyond that or how should we think about that?

Hey, James, it's Jason. I think the way that you need to look at is first off, we're talking about very, very small numbers here in terms of what we believe the impact is on this program on a negative basis and we expect to see that continue, because these programs are continuing to rollout to more product, into more markets. And as we said previously we expect that to kind of lap in and move into a positive direction in 2017. And when we talk about the effect, we really do talk about on an occupancy because as Richard mentioned in his remarks, its what we can measure, but we do think that this is really changing the conversation with the guest who have booked and behave in the way that we wanting them and also helping us expand out the booking window to position us for stronger pricing.

Excellent. Thanks guys.

Thanks, James.

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

Great. Thanks. A couple of questions. First is I wonder what the Pullmantur write-down if you could quantify, it looks like their write-down will end up adding to EPS in future years, because you're eliminating some things that would have run through the depreciation and amortization line. So could you just help guide us little bit what that will add EPS each year having taken the write-down? And then, a question on China, this is a topic, not totally exhausted yet. We had a recent analysis out and in our channel checks we had heard some of the distributors there maybe not getting as large of markup, but that is, in our view is not a negative for Royal or for pricing since its not really a commission model, it was the charter model there. So is it fair to say that that's going to be the same. it's still primarily going to be charter model for next year, so the width of the travel sellers markup is not really something that's a negative for you guys? And then I may have one more question after that, thanks.

Hey, Robin, it's Jason. I'll take the Pullmantur question. Really the majority of the other write-off were again it was a non-cash write off and it was relating to intangibles that were not amortizing or depreciating in any way. There is a portion of that that it relates to some of the ships. It would probably help us by couple of cents going forward, because it's not just about write-down, it also some adjustments in the residuals as we look at those assets going forward. But it’s a couple of cents. It's not material.

Hi, Robin, it's Michael. I'll answer the question on the China and the distribution markup, Yes, I think there was a period when we had the MERS outbreak in Korea and then we have the triple typhoon impact, and then of course we have the explosion in Tianjin, so we had a period of about – I'm going to guess, its about three months or so where it was a little wobbly because of all of these events. And then of course we had many of the distributors have this charter or group resell relationship with us and I think many of our competitors. So during that period I think some of them incurred losses, that didn't flow through to us, but of course it impacts us because they are long term partners. And so we worked on strategies to help them through that and to ensure we're in a good place for 2016, but it didn't really have a financial impact to us. And of course the model is really quite different in China in relation to the distribution. But one of the things that we've been actively working on is expanding the distribution and opening up that channel through various strategies which of course it’s a long term play but we feel like we're on a good track to broaden that channel.

Great. That's very helpful. Thanks and maybe just a last question. Just looking at the full-year EPS and on the full-year EPS went up by $0.10 and the beat in Q3 was $0.14. I think you mentioned kind of $0.02 was maybe borrowed from expenses shifting. If there another $0.02 of -- because I think FX and fuel kind of net out. There are another $0.02 of your yield outlook in Q4 that maybe that would Pullmantur Latin America that was just that hair lower than previous just to clarify? Thanks.

Hi, Robin -- so just to clarify it’s really a combination of Latin America and a little bit later on the Australia, New Zealand product just due to the level of capacity that’s in there that’s driving the differential.

That’s great. Thank you very much.

Thanks, Robin.

Your next question comes from the line of Jamie Katz of Morningstar.

Good morning, thanks for taking my questions. With moving from capacity back to Spain and launching Harmony in the market next year, I'm curious what you guys are seeing in that local market, and then generally how you're feeling about European demand for next summer.

Sure, hey Jamie, it’s Jason. As it relates to you know the capacity going in to the Barcelona market, first off for Harmony, it’s a really global sourced product while and it doesn’t really compete directly with Pullmantur and that’s putting some more capacity into Spain. And by the way when we say for more capacity it focuses on Spain, it doesn’t necessarily mean it’s sailing out of the Western Mediterranean could be sailing out of different places sourcing guests from Spain. And then when you look at the European customer, we’ve actually seen very good signs and trends that were still early for the European products coming from Europe as well as that continued strength we’ve seen over the past couple of years from the North American consumer who has been highly attracted to European sailings?

And then I'm curious, you guys hire a few months ago. Have there been any thoughts on changes to the marketing strategy and how to attract consumers going forward, or has it been pretty static?

Oh hi, Jamie it’s Michael. Yes, we are very pleased to welcome Jim to Royal Caribbean International a few months ago and he’s been very busy. You may have seen, we just launched our new campaign “Come Seek” for Royal Caribbean International that’s come literally into market this week. And hopefully you’ll see us go a slightly different twist towards it, and the way we are approaching the market with this idea of come seek and the imagery and the kind of TV commercials, radio and digital that we are putting into the market has tested exceptionally well, not only with existing cruises but probably more importantly with new to cruise. So part of our focus is on the new to cruise markets and I think you’ll start to see that in the marketing that comes from Royal Caribbean International over the coming period and that really is being led and directed by our new CMO.

And then lastly, can you guys add any color on Celebrity, I know you usually don’t break it up but I’m curious if those consumers are performing disparately or incrementally better than the Royal Caribbean passengers and the willingness to spend is a little bit higher?

I’m quite happy to actually -- I think one of the things that has us feeling pretty good is just how well our brands are being received in the market place and Celebrity is a good example of that. Michael is here himself has [Indiscernible] is how his brand is doing, but atleast if we are here, she would say exactly the same. It’s really, and Michael mentioned that he has a new ad campaign coming out so has Lisa and she’s -- here’s is actually been out for the longer and its being received quite well. So I think we are really seeing except for geographic issues like Latin America we are really seeing our brands doing quite nicely in their respective markets, and the Celebrity brand has been holding its own and I think -- now it’s also been affected by the geographies because it for example has had more volume in particularly in the Eastern Mediterranean this year. So you will see changes, we see changes between brands. We see a lot of changes between brands and between different geographies which is just a normal fact of doing business, and I think we sometimes read too much into it particularly because we’ve historically been so surprisingly accurate. I mean, I think for us to come in looking like and the year is so close to being over. We’re pretty confident about looking to be in the range of 3.5% yield improvement that is essentially exactly where we predicted it at the beginning of the year. And I wish I could say that we were that accurate. Its’ simply the margin of error in these things is a little bigger than that and we have been fortunate that the plusses have offset the minuses, but overall I think that’s not unusual for us and I would expect that to continue.

Thank you.

All right we have time for one more question.

And your final question will come from the line of Ian Rennardson of Jefferies

Thank you. Good afternoon from England. My question is regarding the share buyback. I’m assuming that the 500 million isn’t a one-off and I wondered how you calculated what ratios you’ve used to calculate that 500 and what sort of ratios you will be thinking about as being applicable for the medium term? Thank you.

Ian, could you clarify what you mean by ratios?

Well net debt-to-EBITDA or…

Oh, I’m sorry. Okay, great. Yeah, so we still are very much focussed on getting to your 3.75 times net debt-to-EBITDA and we see ourselves progressing towards that, towards the end of next year as we consider these buybacks. So we see this buyback a little bit of as a timing opportunity in terms of buying back shares.

Okay, thank you.

And I will just add, I think as Jason said earlier we would reiterate our objective is to get to that investment grade. And obviously almost anything that we do that involves capital including ordering ships or buying back shares makes it a little more difficult but we think that the move towards investment grade is so inexorable that we can balance those things.

Okay. Thank you and I think we’ll just finish off on that. I think in 2007 seen you only have $500 million of CapEx projected which is significantly lower than the other year, does that have any thinking on your medium to longer term thinking on share buybacks?

No you know it’s interesting because one of the interesting because one of the interesting features of our business is CapEx tends to come in big bunches and whether a ship delivers in January or December makes a huge difference on the numbers you just quoted. We don’t tend to look at it that way, I think it’s we made a decision '17 was a year that had no ship deliveries, but then we start having deliveries again in '18. And so I think that’s simply a coincidence '17 worked out that way.

Okay. Thank you. Great.

All right. Thank you for your assistance Lawry [ph] with the call today. And we thank all of you for your participation and interest in the company. Carol and Laura will be with her. We’ll be available for any follow ups you might have during the day, and I wish you all a great day.