Carnival (CCL) Q1 2018 Earnings Conference Call Transcript

Carnival (CCL 3.57%)
Q1 2018 Earnings Conference Call
March 22, 2018 10:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Arnold Donald -- President and Chief Executive Officer

Good morning, everyone, and welcome to our First-Quarter 2018 Earnings Conference Call. I'm Arnold Donald, president and CEO of Carnival Corporation & plc. Today I'm joined by our chairman, Micky Arison; David Bernstein, our chief financial officer; and Beth Roberts, senior vice president, investor relations, here with me in Miami. Thank you all for joining us this morning.

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. We are happy to report that our company is off to another strong start to the year, achieving record earnings on record revenues in our first quarter. Adjusted earnings of $0.52 per share were 36% higher than last year and $0.13 higher than the midpoint of our guidance, which was all due to strong operational execution by our team members worldwide to exceed our guests' expectations and by our travel agent partners who support us around the globe.

Our strong first-quarter results, combined with favorable net movements in fuel and currency of $0.10 per share, enabled us to increase the midpoint of our previous full-year guidance range by $0.15. It was reinforcing to see constant-currency revenue-yield growth this quarter of roughly 4%. Now, that's on top of 4% improvement achieved in the first quarter last year. We continue to drive revenue-yield growth by increasing demand in excess of our measured-capacity growth through our ongoing guest experience and public relations efforts.

These efforts produced another very strong wave season and that's on top of last year's record levels on both price and volume. That said, our booking trends are affected by items that make some clarification necessary when comparing to the prior year. We have been changing our distribution methods in China to move from a high concentration of full-ship charters last year to an increased number of group sales this year. This change resulted in a much closer end-booking curve, which affects comparisons to the prior year, but we believe it reduces risk and optimizes yields.

In fact, our first quarter, we had positive yields in China and that's on top of 20% industrywide capacity increases and in comparison to fourth quarter last year that was pre-Korea impact. So after the shift in China from full-ship charters to more group sales, our global cumulative advanced booking are a hit at higher prices for the remainder of 2018. Our booking trends demonstrate our business fundamentals are strong and we are sustaining momentum as we continue to generate demand for cruise. Of course, we're working hard and had many efforts on the way already this year to increase demand and expand the market for cruising.

Here in the U.S., our Ocean Originals travel series continue to attract record viewership, remaining the most popular travel shows on TV. Our newest series, "La Gran Sorpresa" on Univision, which provides programming in Spanish featuring a Hispanic community, performed above expectations. In its first six episodes, the hourlong prime-time Sunday night program reached nearly 7 million viewers. Now, that's a nice complement to our existing lineup featuring "The Voyager with Josh Garcia" on NBC, which recently achieved its highest-rated episode ever, drawing an audience of nearly 2.5 million viewers, while "Ocean Treks with Jeff Corwin" on ABC consistently attracts 2 million viewers each week, and "Vacation Creation" with Tommy Davidson and Andrea Feczko, also on ABC, reached an audience of more than 1 million each week.

In our second season, our major network viewership has increased 25% year over year and in just two short years has reached a cumulative audience of over 300 million viewers. This past wave season, we also launched multiple new marketing programs around the globe, which have been generating buzz for our brands. Here in North America, our highly successful Olympics campaign featuring Carnival Cruise Line, Holland America, and Princess achieved nearly 400 million media impressions. Of course, you may have heard we appointed a new CFO, chief fun officer that is.

Shaquille O'Neal joins Carnival Cruise Lines inspiring others to choose fun. The Shaq campaign generated 2.7 billion impressions so far. In the U.K., our P&O brand launched its fourth marketing campaign with well-known British comedic actor Rob Brydon, which generated 200 million views during an important wave season; while in Italy, France, and Spain, Costa launched its third marketing campaign featuring Shakira on TV and social media, reaching 3.2 billion views with 13 million viewers on Facebook alone. We also furthered our guest experience efforts during the quarter.

Progress continued on our Ocean experience platform. Regal Princess is about to begin her European itineraries and will continue her ramp-up with Ocean abroad and we are now introducing our Ocean platform on Caribbean Princess as she begins her summer Caribbean season sailing out of Port Everglades. On February 26, a new precedent was set, where we achieved a bandwidth of 2.25 gigabytes per second on Regal Princess, which represents 40 times the connectivity capability of a typical ship and 400% of the maximum capability ever reported in the cruise industry. In fact, this was recognized as the most bandwidth capacity ever delivered to any mobile platform.

MedallionNet is our on-ship connectivity for our Ocean platform. It is a major breakthrough for guest connectivity experience at sea and is an outcome of our Ocean experience platform. There were a number of other technology-driven milestones achieved this quarter in keeping with the ongoing efforts to further enhance the guest experience. Carnival Cruise Line completed the fleetwide roll-out of its new application, Hub App, which is among the highest-rated apps for cruise.

Hub App achieved so many downloads, it actually trended and has crossed 3 million downloads and counting given its consistently high takeup rate on board. More importantly, Hub App facilitates on-board revenue purchases like shore excursions and communications. This, combined with Carnival Cruise Line's newly launched CRM technology, which enables targeted marketing for on-board purchases, has driven a notable uptick in on-board revenues across multiple categories for the brand. Similarly, this past quarter, Costa rolled out its app, MyCosta, for its first ship, Costa Diadema, enabling our European guests to book shore excursions, dining, and chat with others on board.

MyCosta will be rolled out fleetwide by the end of 2018. And at Aida in Germany, we recently completed the fleetwide roll-out of seamless check-in, enabling an embarkation process of just 30 seconds per guest and driving Net Promoter Scores even higher. Aida will complete the roll-out of its on-board app, MyAida, this coming quarter with additional functionality to be rolled out throughout 2018. These innovations are not only driving guest satisfaction scores higher, they are leading to a measurable increase in on-board spending for the organization overall.

As you know, we also have a nice tailwind in ticket prices over the next few years with the roll-out of our new state-of-the-art revenue-management system, Yoda, which is progressing as planned. As previously indicated, the revenue-management system will be deployed across six of our brands to approximately 90% of those brands' inventory in the next few months to further facilitate yield uplift. We also remain on track to deliver $80 million of cost savings in 2018 as we continue efforts to leverage our industry-leading scale for containing costs. With $6 billion of cash from operations expected in 2018, we remain committed to distributing cash to shareholders as evidenced by recent share repurchases exceeding $250 million year to date, bringing the total to over $3.4 billion in just 2.5 years, as well as our growing dividend of $1.3 billion per annum.

All told, the strong execution in the quarter, the fundamental strength in demand captured during wave season, combined with many achievements realized already this year to continue the momentum, all bolster our conviction in delivering double-digit return on invested capital in 2018 and beyond. Going forward, we remain focused on creating demand in excess of measured-capacity growth and returning cash to shareholders. With that, I'll turn the call over to David.

David Bernstein -- Chief Financial Officer and Chief Accounting Officer

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 an explanation of our change in reporting segments, then I'll provide a summary of our 2018 first-quarter results, followed by an update on current booking trends for 2018 and finish up with some additional color on our 2018 March guidance. This quarter, we changed our operating segments to align with our new internal reporting.

We still have four reportable segments and this change does not affect our consolidated results. We simply realigned two of our reporting segments. Our North America cruise segment is now North America and Australia, or more commonly known as our NAA segment. And our Europe, Australia, and Asia cruise segment is now just Europe and Asia, or more commonly known as our EA segment.

While seven of our nine cruise brands have ships deployed in Australia, substantially all of our capacity in Australia is from our North American brands and P&O Cruises Australia. As a result, we realigned our internal reporting to consolidate substantially all of the Australian deployment into one cruise segment. In order to provide comparative historical information, this morning, shortly after our earnings release was distributed, we issued an 8-K with recasted financial information for the segments for the last three years. Now, let's turn to our financial results.

As Arnold indicated, our adjusted EPS for the first quarter was $0.52. This was $0.13 above the midpoint of our December guidance. The improvement was driven by three things: $0.06 was from increased net ticket yields which benefited from stronger pricing on closed-in booking on both sides of the Atlantic; $0.02 was from improved on-board and other yields, which continued to benefit from a variety of ongoing efforts as Arnold highlighted in his comments; and $0.05 was from lower net cruise costs, excluding fuel, simply due to the seasonalization of costs between the quarters. Now, let's look at our first-quarter operating results versus the prior year.

Our capacity increased 2.2%. The NAA brands were up 1.4%, while the EA brands were up 3.5%. Our total net revenue yields were up 3.9%. Now, let's break apart the two components of net revenue yield.

Net ticket yields were up 4%. This increase was driven by our NAA brands' deployment in the Caribbean and Australia as well as our EA brands' deployment in Europe and various other programs, including World Cruises. Net on-board and other yields increased 3.9%, with increases on both sides of the Atlantic. In summary, our first-quarter adjusted EPS is $0.14 higher than last year with strong 3.9% revenue yield improvement or $0.17 being slightly offset by 1% higher net cruise costs, excluding fuel, costing $0.03.

Turning to 2018 booking trends. This year's wave season was strong and that's on top of the record wave season we had last year. Booking volumes for all future periods have been running ahead of last year at higher prices. At this point in time, cumulative booking for the remaining three quarters of 2018 are in line with the prior year at higher prices.

Now, let's drill down into the cumulative booking position. First, for our NAA brands. The Caribbean program is slightly behind the prior year on occupancy at lower prices. This is driven by the Eastern Caribbean itineraries and San Juan.

The Western Caribbean itineraries are ahead of the prior year on occupancy at slightly higher prices. For the Eastern Caribbean and San Juan itineraries, we expect to optimize our revenue yields by holding price and being patient. While the current perception of these regions are still somewhat impacted from last year's hurricanes, our guests are having a great time and coming home very happy, so it's just a matter of time before we are successful in getting the word out and improving things even further. The seasonal European program is well ahead of the prior year on occupancy at significantly higher prices.

Alaska is ahead of the prior year on occupancy, albeit at lower prices. However, as I indicated on the last conference call, Alaska yields are impacted by mix. In the end, we expect individual ticket pricing in Alaska to exceed last year's record levels. Second, for our EA brands.

For their European deployment, occupancy is ahead at nicely higher prices. Finally, I want to provide you with some color on our 2018 March guidance. As Arnold said, our first-quarter results, combined with the favorable net impact of fuel prices and currency, enabled us to raise our full-year earnings guidance. The increase was driven by three things compared to our December guidance.

First, we benefit by $0.07 from the favorable impact of currency. Second, we benefit by $0.03 from the change in fuel prices, including the impact of fuel derivatives. And third, we flow-through $0.05 of the first-quarter benefit from higher revenues. Putting all of these factors together, our adjusted EPS for 2018 is $4.20 to $4.40 versus $3.82 for 2017.

And now, I'll turn the call back over to Arnold.

Arnold Donald -- President and Chief Executive Officer

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

Questions and Answers:

Operator

Certainly. [Operator instructions] Our first question comes from the line of Steve Wieczynski with Stifel. Your line is now open. Please go ahead.

Steve Wieczynski -- Stifel Financial Corp. -- Managing Director

Yeah. Hi, guys, good morning. So, I guess, the question is around your yield outlook for the remainder of 2018. And you basically maintained that at 2.5%.

I guess, given the healthy beat in the first quarter and what seemed to be very strong second-quarter guidance, what held you guys back -- or what's holding you guys back from maybe raising that at this point? I know you guys have typically not done that after the first quarter, but I think as we kind of look out to the rest of 2018, given your commentary, it seems like if we kind of stay in the same environment, there should be upside to that yield outlook. Am I thinking about that the right way?

Arnold Donald -- President and Chief Executive Officer

Good morning, Steve. Yes. So as David pointed out, the $0.13 beat in Quarter 1, $0.05, was just the timing of expenses between the quarters. The $0.05 was the revenue improvement in the first quarter, which should pass through to the year, and then the balance in the -- for us is kind of just rounding.

So we always give you our best guidance. We simply rolled up the guidance around it to the nearest $0.05. In terms of the environment, we're always anticipating that there -- it's a volatile world. There are things that can go on.

We maintain our balance -- our guidance around yield for the balance of the year and so that's how it came out.

David Bernstein -- Chief Financial Officer and Chief Accounting Officer

Yes. Steve, the $0.05 we wrote through is 0.25. It takes $0.20 to increase our yield guidance by a full point. So 0.25 is just rounding.

I mean, in fact, our yield guidance did go up, but it's still rounded to the same 2.5, but embedded was an increase.

Steve Wieczynski -- Stifel Financial Corp. -- Managing Director

OK. Got you. And then, second question, I guess, would be going to the Caribbean. And David, in your comments, you talked about how the Eastern Caribbean is a little bit softer, while the Western Caribbean is -- it seems like it's pretty strong.

And, I guess, there seems to be this panic right now kind of out there in the investment community that the summer Caribbean pricing is deteriorating. And, I guess, can you guys give us some additional color on what you talked about, David, in terms of what you're seeing there? And are there any competitors out there right now that are somewhat overly promotional and maybe how you guys are countering that?

Arnold Donald -- President and Chief Executive Officer

Well, I'll start first and I'll let David add on. Globally, we're ahead on price and occupancy and, in fact, as David mentioned in the Western Caribbean, we're actually ahead on price and occupancy even with double-digit capacity increase. There was concern last year around the Caribbean and, again, we had strong yield improvement with double-digit capacity increases in the third quarter last year, but Eastern Caribbean is heavily influenced by San Juan and we're very confident that it's related to some hurricane malaise hangover. We're being patient and our guests, as David mentioned, are having a tremendous experience.

In fact, I would tell them by at least waiting to see better pricing before they book deposits, they're probably going to miss out. The guests are having a great experience and we're on the job of making sure people know that and understand that. David?

David Bernstein -- Chief Financial Officer and Chief Accounting Officer

Yes. This is just one of many -- over time, each year, we seem to face an issue. One year, it's Turkey. Another year, it's [Inaudible].

There's always something, but these are small issues in the grand scheme of a global company. And despite the hurricane hangover that we're experiencing a little bit in the Eastern Caribbean, the overall business is doing great. And as Arnold said, the Western Caribbean, which is seeing double-digit capacity increases in the back of the year -- half of the year, we are seeing higher prices and we are ahead on occupancy. So we're very confident that the Caribbean will do very well and that's on top of a record year in the Caribbean last year.

So we feel very good about the overall state of the business.

Arnold Donald -- President and Chief Executive Officer

Yes. The Caribbean is strong.

Steve Wieczynski -- Stifel Financial Corp. -- Managing Director

That's perfect. Thanks for summing it up that way. And real quick, can I get a housekeeping question with Beth? Can I -- can we grab your updated 2Q through 4Q capacity increase expectations?

Beth Roberts -- Senior Vice President, Investor Relations

Yes. Let me -- why not you --

David Bernstein -- Chief Financial Officer and Chief Accounting Officer

Why don't we go on to the next question? When Beth gets the quarterly numbers, we'll give it out.

Steve Wieczynski -- Stifel Financial Corp. -- Managing Director

OK. Thanks, guys.

Operator

Our next question comes from the line of Greg Badishkanian with Citi. Your line is open, please go ahead.

Greg Badishkanian -- Citi -- Analyst

Great. Yeah. So first question, just in the fourth quarter, you mentioned that bookings for the full year 2018 were ahead of the prior year at higher prices. So with cumulative bookings now in line for 2018, pricing is much higher.

Could you talk about why that -- well, it sounds like the environment has been very healthy in terms of bookings since January. Is it -- is there some sort of mix issue? Or what's leading to the -- to that change?

David Bernstein -- Chief Financial Officer and Chief Accounting Officer

So you're comparing two different periods. First of all, at the end of the year, what we were talking about was the full year 2018. Now, we're talking about the balance of 2018 on a cumulative basis. But if you actually included 2019, we would be ahead at higher prices overall.

So we were just trying to get the cumulative book position as it related to 2017. The other thing that you also have to keep in mind is the goal isn't about being ahead. The goal is about optimizing revenue yield. So we're constantly taking action to do that.

And I think I've said this before. If the booking curve keeps moving ahead, then at some point, we'll be sold out for the rest of the year and you guys would be -- would say to us, "Guys, you sold too quickly and you didn't optimize revenue yields." So we're making those decisions every day and we feel very good about our position at the moment.

Beth Roberts -- Senior Vice President, Investor Relations

Quarterly --

Greg Badishkanian -- Citi -- Analyst

And -- yes, go ahead.

Beth Roberts -- Senior Vice President, Investor Relations

Go ahead, Greg. I'll finish when you're done.

Greg Badishkanian -- Citi -- Analyst

OK. All right. Yes. Just the closed-in bookings, a little bit more color.

I mean, it was just a lot stronger in terms of the net yield. And when you think about what drove that, if you could just give us a little bit more detail on why you think it -- you did so much better from a net yield perspective?

David Bernstein -- Chief Financial Officer and Chief Accounting Officer

Are you talking about the first quarter?

Greg Badishkanian -- Citi -- Analyst

Yes. Yes.

David Bernstein -- Chief Financial Officer and Chief Accounting Officer

Yes. I mean, listen, we always give you our best guess. I mean, we saw some strength in the Caribbean. We saw some strength in Australia.

There were a number of markets where we did better than we had anticipated and onboard, too. I mean, it was both ticket and on-board, we're up. So it was across the board in every category. Sometimes you'll have a few things go one way and a few things go the other way and they may net out.

In this particular case, just about everything went in a favorable direction for us.

Greg Badishkanian -- Citi -- Analyst

Perfect. Thanks.

Beth Roberts -- Senior Vice President, Investor Relations

OK. For the quarterly capacity, the first quarter closed at 2.2; the second quarter will be up 1.5; third quarter, 1.7; fourth quarter, up 2.6; for a total of 2% on the year.

Operator

Our next question comes from the line of David Beckel with Bernstein Research. Your line is open, please go ahead.

David Beckel -- Sanford C. Bernstein -- Vice President

Hi, thanks for the question. Just had a follow-up on the Eastern Caribbean comments. You mentioned that the San Juan is sort of the hub of perceived weakness or maybe the hurricane overhang. Are you also seeing weakness in Eastern Caribbean itineraries that don't directly touch on Puerto Rico? Or is Puerto Rico so pervasive that it pretty much touches everything?

Arnold Donald -- President and Chief Executive Officer

That was a -- there's a general -- now, you've got to call it in context, right, because we had a really strong year last year. And so this is all on top of that and we're also trying to optimize revenue and yield as David mentioned. But generally speaking, San Juan is much more of a drag than the rest of the Eastern Caribbean in terms of where we are, but overall, I have to emphasize to you that things are strong and we feel really good about it. So it is a little bit of a hurricane malaise overhang.

We had most of the first part of '18 booked already, although we did account last year for -- in the fourth quarter of last year when we had the call, we accounted for the impact from the hurricane on future bookings. But the first quarter was pretty much booked, so we're starting to experience some of that now. But frankly, we're doing really well. We see a lot of strength there.

The guests are having a great time. And there is a lot of media noise around San Juan in particular as people continue to focus on the infrastructure of a wall in Puerto Rico, which I think is a bit of an overhang for us.

David Bernstein -- Chief Financial Officer and Chief Accounting Officer

And the only reason we really called San Juan out individually was because we do have -- San Juan is [Inaudible] for us. And also, it is a source market for that home port and that did have the -- hurricane did have an impact on that source market, albeit small, but it did have an impact.

Arnold Donald -- President and Chief Executive Officer

But our revenue management's signed. We're well-positioned to finish strong overall in the Caribbean and in the Eastern Caribbean.

Beth Roberts -- Senior Vice President, Investor Relations

Just to mention, the booking volumes during wave period has been strong. The issue dates back to the multiweek period when the hurricane occurred itself and the recovery period in the back half of last year. As Arnold indicated, we were further losses in the first quarter when that occurred and that's why we're seeing the experience in the later part of the year.

David Beckel -- Sanford C. Bernstein -- Vice President

Great. That's helpful. Thanks. And as a follow-up question, I want to ask a little bit about Ocean Medallion, the platform, the technology behind that.

It seems like things are taking a little bit longer than you would have thought for the Princess roll-out, but it sounds like you're also well along on apps for other brands. Are these apps based on some of the learnings from the Ocean Medallion? Or are they in any way connected? Or are they completely separate?

Arnold Donald -- President and Chief Executive Officer

No. They would be separate, but they're all around the same principle, which is to enhance the guest experience. Ocean Medallion is a holistic change. It's not an app, right? It changes every system on the ship.

It redefines the roles of the crew, etc. We have it on Regal, it's installed. Caribbean Princess is coming next. We have eight ships in total now in the Princess fleet that are Ocean-ready.

But we're doing a slow ramp-up on purpose. We want to make this whole -- it's a holistic change. We want to make sure that the platform is stable, that we repeat it a lot, and we scale so we can discover whatever it is [Inaudible]. And we're having a lot of fun watching guests' reactions as we introduce it.

We're not in any pressure or rush. We're not fixing a problem that existed before. Our guests are very happy with the Princess experience. And this is all guest-centric stuff.

So we've had some tremendous gains from it already in terms of the experience with MedallionNet, as I articulated in the opening comments. So we feel very good about it. We are going to ramp it up slowly. We're excited to get it on another ship and give guests the experience and have the Regal continue its ramp-up as she goes over her European itineraries.

So that's where we are on that. The other apps -- we have nine brands. They're all innovative. We've got a number of different things, different demands around the world.

Each brand has a different psychographic segment it's catering to. And so a lot of the apps in the tube are all on the same principle, how do we enhance the guest experience so we consistently exceed our guest expectations? And it's becoming a positive tailwind. We've got nice lift in -- overall from a number of these things in areas like communications and other onboard areas as we do more targeted marketing, etc., which is driven by some of the capability that technologies give the crew.

Greg Badishkanian -- Citi -- Analyst

Great. Thank you.

Arnold Donald -- President and Chief Executive Officer

Thank you.

Operator

Our next question comes from the line of Felicia Hendrix with Barclays. Your line is open, please go ahead.

Felicia Hendrix -- Barclays -- Managing Director

Hi, good morning, thank you. So -- we'll just keep drilling down on the Caribbean, but you guys have made it pretty clear that it seems like just San Juan and the home-ported ships there that's been the main issue. So just wondering, if you could help us understand, you said it was a small, but exactly how much of your deployment is -- are these home-ported San Juan ships? And perhaps, can you quantify how much of a headwind San Juan is to your yield outlook?

David Bernstein -- Chief Financial Officer and Chief Accounting Officer

OK. Well, I can't quantify that, the headwind. But San Juan is just one Carnival ship that's home-ported there, but the whole Eastern Caribbean -- like, I was looking at the back half of the year, the Eastern -- the whole Caribbean was 28% and I think the Eastern Caribbean represented 11% of the company's capacity for the back half.

Arnold Donald -- President and Chief Executive Officer

I'd say Eastern San Juan is 16%. It's where we are versus 13% for West Caribbean.

Felicia Hendrix -- Barclays -- Managing Director

OK. So, I guess, I'm just trying to figure out what the Eastern Caribbean would have looked like without this San Juan issue.

David Bernstein -- Chief Financial Officer and Chief Accounting Officer

The way I look --

Arnold Donald -- President and Chief Executive Officer

[Inaudible]

David Bernstein -- Chief Financial Officer and Chief Accounting Officer

Yes. It would have been better, but other than that, it's really hard to say what the impact is. Remember, it's one out of 100 ships and it's one 2,000-passenger ship. It's very tiny.

Arnold Donald -- President and Chief Executive Officer

Yes. I think the most important part, Felicia, is that we're doing really well in the Caribbean and we're coming off a record year. We are doing, overall, very well. We are very confident about where we're sitting, even with the Eastern Caribbean, but on balance in the Caribbean alone.

And occasionally, you're going to have an area or a few itineraries -- I mean, that happens every year, as David already mentioned, somewhere in the world and those are just things we normally manage through, but the underlying fundamental is very strong. And it's clear. In this case, it's not at all capacity-driven. It's other issues and we have successfully increased yields.

Last year, we've spent capacity increase in Caribbean and we're doing it again this year.

Felicia Hendrix -- Barclays -- Managing Director

And with the perception issue, like, on a scale from 1 to 10, I'm sure it's improved because we keep getting further and further away. I mean, it -- where would you say we are?

David Bernstein -- Chief Financial Officer and Chief Accounting Officer

It's really hard to say exactly where we are. It continues to improve everyday. We've got the Caribbean -- it's open program going. It's industrywide.

And overall, this is just an ongoing change that hopefully, like everything else is temporary.

Felicia Hendrix -- Barclays -- Managing Director

OK, batting a thousand with those, so I'm going to move on to something else. You guys had talked about, briefly before 2019, and we've all heard about the elongated booking curve. So I was just wondering, when you think about 2019, what are your booking -- how do your booking volumes for '19 compare, say like to this time last year for 2018, both in terms of booking and pricing?

David Bernstein -- Chief Financial Officer and Chief Accounting Officer

Yes, we, we've had -- the first half of 2019, we already headed higher prices, and so we're very encouraged by the overall future booking trends. But keep in mind, it is very early.

Felicia Hendrix -- Barclays -- Managing Director

Yes, OK. And then, that's just housekeeping -- if you could just give us your interest expense and D&A guidance for the second quarter and for the full year, that would be great.

Beth Roberts -- Senior Vice President, Investor Relations

Sure. Second quarter, interest expense is $50 million, roughly $190 million to $200 million for the year. D&A is $515 million for the 2Q, two 60 -- sorry, $2.60 billion to $2.70 billion for the year.

Felicia Hendrix -- Barclays -- Managing Director

Thank you.

Arnold Donald -- President and Chief Executive Officer

Thanks, Felicia.

Operator

Our next question comes from the line of Robin Farley with UBS. Your line is open, please go ahead.

Robin Farley -- UBS -- Managing Director

Great. Thanks and I know you addressed earlier the idea that you -- your guidance actually does have a yields guidance raise in there, but it was only 0.25 so kind of rounded, to be unchanged. I actually calculate slightly more than that, but maybe you're rounding conservatively, and that's fine. But I guess, I just -- you've -- you talked a little about the East -- the San Juan cruises.

I mean, is it fair to say that you could meet or exceed your yield guidance even if pricing didn't grow in San Juan year over year, I mean, given that you have strength in markets like European itineraries and Alaskan itineraries, but have a much higher average price point that growth there would more than offset? In other words -- and so, on a combined basis, you could still meet or exceed your existing guidance just from what you have on the books today elsewhere, is that a reasonable --

Arnold Donald -- President and Chief Executive Officer

Yes, we always work hard to beat our guidance. And absolutely on -- even within the Caribbean, we can, we've got ways to go here, and so we can perform -- outperform there, even more than we already are. But certainly, with everything else in the world, we are ahead overall, globally, so.

David Bernstein -- Chief Financial Officer and Chief Accounting Officer

And keep in mind, when we put our guidance together, we always provide for the unknown and that, of course, is included in the remainder of the year.

Robin Farley -- UBS -- Managing Director

OK, great. So it's a --

Arnold Donald -- President and Chief Executive Officer

We have another hurricane season coming, so maybe it'll be quiet, maybe it won't, but we always have to factor in -- that things can go upside down.

Robin Farley -- UBS -- Managing Director

OK, great. No, that's helpful. Thanks. And then just -- you've talked about -- you're ahead in volume and price at record levels and that maybe that optimizing means that you actually don't want to continue to sort of always be ahead, right, but that's not the end goal.

So just interesting that you mentioned for 2019 that you're ahead overall. And yet your booking volume, your booking volumes have still been up year over year on top of last year's record wave season. I guess, when would we see the point where you're putting more into price? And so we would see a period where maybe your volumes are not higher year over year? Like what, is that something that you think we'll see in 2018 or maybe more when you get to next year booking for the year ahead?

Arnold Donald -- President and Chief Executive Officer

We don't know. We got a lot of itineraries, a lot of brands and a lot of world markets, and things change every year, right? So I wouldn't try to predict when we would see that. What I would tell you this year, as I said on the opening of the call, if you exclude China, overall, we are ahead on both. And the China mix shift between full-ship charters and group sales is the only reason why we're not reporting overall, being ahead on both.

So that's for this year. And we're ahead, as David mentions really early, as he said for '19. But so far, we're ahead on both, for the first half of '19 as well. But we're not giving guidance on '19 yet, obviously.

But -- so things are strong. Our job is to just create the demand in excess of the measured-capacity growth to make certain our brands are consistently exceeding guest expectations. We -- our markets everywhere in the world that are under-penetrated, everywhere in the world, including here in North America, still including in the Caribbean. And so we have great fundamentals as long as we continue to drive demand, debunk the myths about cruising, and make it easier for people to book a cruise and then make sure, certain they have a fantastic time once they're on board.

We're going to continue to do well.

David Bernstein -- Chief Financial Officer and Chief Accounting Officer

And we're always chasing that optimal place. And the reason we don't know is, the world around us continues to change, and so we'll continue to adapt to that and chase the optimal.

Arnold Donald -- President and Chief Executive Officer

And practically speaking, what -- we'll never truly get to the optimal. I mean, it's always a moving target and what is optimal patterns this year wouldn't necessarily be the same one for the next year, so we'll always be chasing it. But as long as we're continuously getting better, then we're moving in the right direction.

Robin Farley -- UBS -- Managing Director

OK, great. Thank you very much.

Arnold Donald -- President and Chief Executive Officer

Thank you.

Operator

Our next question comes from the line of Harry Curtis with Nomura Instinet. Your line is open. Go ahead.

Harry Curtis -- Nomura Instinet -- Analyst

Good morning, everyone. My question is related to the incremental capacity growth globally coming next year. And I think you've done a pretty good job getting in front of that with your perception and marketing spend. To what degree do you think you can go back to markets you used to cruise to either in the Eastern Med or the Holy Land, that might absorb some of -- some of that incremental capacity coming next year?

Arnold Donald -- President and Chief Executive Officer

Again, we -- it's tough to predict those things. It's easy to say at some point, it's almost certain that we will be cruising back with a large -- some of our itineraries in places that previously were very high-yielding itineraries, and that includes the Black Sea, as well as what you're referencing now. But when that's going to happen exactly, the world is a strange and mysterious place, and we'll have to see. But we're prepared to take guests where they want to go, which is usually, they only want to go places that it's safe to go and it's comfortable to go.

But we'll take guests where they want to go, as long we're allowed to do that. But to predict when that would happen, the reality is there's always going to be -- there has always been, can't say what always will be. There have always been pockets where you -- it was great, then you couldn't go, then you went back and that's just [Inaudible]. Notwithstanding that, we are under-penetrated in every market in the world, not just us, but the industry is.

Just keep in mind, we only represent -- all the cabins represent up to 2% of the hotel rooms. And the vast majority of travelers are not cruising every year by a long shot, meaning they have never cruised. So we have a great opportunity. For us, our planning, as you know, we are very comfortable with our capacity growth in the coming years.

We've been consistent with our execution around measured-capacity growth. And we're spreading that growth over a number of brands an increasing number of geographic regions, and we're very careful where and when we add capacity. We're going to strive to drive yield increases at rates that we recently achieved, or even higher. In the end, that may or may not happen, but we do have a bit of a cushion in the future, and future is of capacity itself is the driver for earnings growth and for cost containment.

So we can achieve similar earnings growth rates at lower rates of increases in yields, but of course, we're going to strive to even greater earnings growth by driving both the occupancy and the yields.

Harry Curtis -- Nomura Instinet -- Analyst

And specifically, have you been inching back into any of the markets where you had a higher presence, three or four years ago? Or are you preparing to?

Arnold Donald -- President and Chief Executive Officer

In terms of inching back, no, the brands plan our itineraries two years out, in some cases, even more. And so again as we read the tea leaves, we will go where guests want to go. I'm cautiously optimistic, some of those high-yield itineraries will be coming back in the next three to five years. Of course, there's markets like Cuba.

And Cuba is still small, relatively, but it is expanding now. We were the first, as you know, very proud and happy about that. But the industry is going there and we're expanding our itineraries in Cuba. And that's a growth area.

And then, of course, over the near term, there is still China.

Harry Curtis -- Nomura Instinet -- Analyst

And just shifting hears from my last question. Going to capital returns, it would appear that given your capital commitments for new ships, in combination with your dividend, that most of your free cash is spoken for. But to the extent that your EBITDA goes up, do you -- and you've got an underlevered balance sheet, do you use your balance sheet or the capacity that you have to repurchase stock more aggressively?

Arnold Donald -- President and Chief Executive Officer

Again, we'll continue to repurchase. We have an authorization from the board now, and we'll continue to repurchase shares on an opportunistic basis as we have in the past. We continue to grow our dividend, as you know. Our debt/equity ratio is very strong.

There's no reason for us to make it a lot stronger. So yes, we can look at leveraging up while maintaining a very healthy debt/equity ratio to look for ways to return cash to shareholders even through increasing dividends and or -- through share repurchase.

David Bernstein -- Chief Financial Officer and Chief Accounting Officer

So and -- we take our March guidance. If we don't buy back shares for the rest of the year, we'd wind up with a debt-to-EBITDA ratio of less than two times. So we will see an increasing absolute level of debt as we repurchase shares throughout the year and maintain at least the two-times ratio. I mean, it's a target.

It's not an exact number. We'll never be at exactly two times. Our overall goal is to be somewhere between two times and 2.5 times, and to maintain the current leverage that we have from that perspective.

Harry Curtis -- Nomura Instinet -- Analyst

OK. Thanks, guys.

David Bernstein -- Chief Financial Officer and Chief Accounting Officer

Thank you.

Operator

Our next question comes from the line of James Hardiman with Wedbush Securities. Your line is open, please go ahead.

James Hardiman -- Wedbush Securities -- Managing Director

Hi, good morning. Thanks for taking my call. So I wanted to clarify a couple of points, it's probably going to be nitpicking here a bit, but I guess that's what we do. So the first-quarter yield will be -- was about $0.08 between ticket and on-board, and you're flowing through $0.05 to the rest of the year.

Is that just conservatism, or are you actually bringing down something during the balance of the year? And I guess -- maybe related question, I mean, as we talk about the Eastern Caribbean, I think the point that Beth made is it seems like the majority of the weakness there was -- stems from the immediate aftermath of the hurricanes. Is that actually any worse than you thought it would be three months ago, or is it just similarly challenged?

David Bernstein -- Chief Financial Officer and Chief Accounting Officer

Yes, so when we looked at our guidance, we got our forecast, we rolled it up. In our mind, nothing changed in the remaining part of the year, from what we were thinking in December. So in the end, the difference between -- it's $0.03. I mean, $0.03 is 0.15% of our overall yield guidance.

And so I would just not that good to call it that close. And so we rolled it up. We gave you our best guess, and that's where we're at. Then like I said, we raised the guidance by 0.25 then rolled the $0.05 through.

It was as simple as that.

Arnold Donald -- President and Chief Executive Officer

Yes. And starting the second part of your question -- was it worse than we anticipated or anything like that? Absolutely not. Again, I don't even want to leave a color on the Eastern Caribbean like it's bad. It's really not the point.

We had great growth last year. We are still booking, and so on and so forth, and we'll see it through to the end. But it's a strong market on top of a record year. And the Western Caribbean is even stronger, and so the Caribbean overall is very strong.

The guests are having a fantastic time. We got a couple of little pockets that we have to address, in terms of perceptions and stuff, but we're doing that, and I wouldn't want you guys walking away from this call thinking there's weakness in the Caribbean, because that's just not true.

James Hardiman -- Wedbush Securities -- Managing Director

OK, I thought so, but I figured it's worth asking. And then in terms of China -- I wanted to revisit the change in distribution. Help me understand that a little bit better -- it sounds like it's just a timing thing, is that right? Close-in versus further out bookings, and I guess, is the point there that you're just diversifying your distribution, I mean, generally, I would think, further out bookings are a good thing but is the idea that you're looking for diversification there? And then, maybe just speak to the health of the Chinese market exclusive of some of these changes in distribution methods?

Arnold Donald -- President and Chief Executive Officer

Sure. China, as you know, is a B2B market, much more than a true consumer market. And so the full-ship charters, the way it's going to work to what I imagine it is, January full-ship charter would get booked at 100%, even though the cruise wouldn't happen until June. Now when they book that full-ship charter with us, there may have been no guest booked at all.

And so you're recording 100% in January for June sailing. With group sales -- so you're buffing that up now, with group sales, you may have 10% of people that have actually booked, OK? So you could be actually ahead on bookings. But instead of recording 100%, you're only recording 10% at that point in time, because the rest is going to come when the group sales are actually activated. And so that's the dynamic that causes the shift.

In terms of why do that, we're doing two things. We're expanding distribution. And in doing so, we're also, as part of that, trying to go more to the group sales. We think overall it gives us greater clarity, it lowers the risk, the concentration of risk.

And that full-ship charter may have booked at 100%, but then later in the year, they may have come back and said, "Hey, we were only able to book it full because we had to drop the price, which was different than the price we agreed to you with. We'd like a credit, can you help us out?" So on and so forth, so. Even though you recorded it, then there's claims and credits on the back end. So with the group sales and the distribution across more distributors, where is cost is optimistic, that will be reduced, and will end up in better shape.

And so far, for the first quarter -- keep in mind, as I said, the first quarter this year compared to last year's first quarter in China, that was pre-Korea impact last year, and capacity is actually up significantly in the first quarter this year in China versus last year's first quarter, and we've done well. So we're cautiously optimistic. China is still China. We're going to let it play out.

But again, we're well-prepared with our guidance to handle whatever we need to handle.

James Hardiman -- Wedbush Securities -- Managing Director

And just so I understand, when you say you've done well, is that sort of, done well despite all the challenges, so down less than you maybe anticipated, or actually up in China?

David Bernstein -- Chief Financial Officer and Chief Accounting Officer

Right. In his comments, he indicated that we were up in China in the first quarter, so.

Arnold Donald -- President and Chief Executive Officer

Yes, we're up.

James Hardiman -- Wedbush Securities -- Managing Director

OK. That's helpful. I didn't know if that was a comment for last year, talking about the cruise [Inaudible].

David Bernstein -- Chief Financial Officer and Chief Accounting Officer

No, it that was not.

Arnold Donald -- President and Chief Executive Officer

That's for this quarter, yes.

James Hardiman -- Wedbush Securities -- Managing Director

OK. That's really helpful. Thanks, guys.

Arnold Donald -- President and Chief Executive Officer

Thank you.

David Bernstein -- Chief Financial Officer and Chief Accounting Officer

Thank you.

Operator

Our next question comes from the line of Assia Georgieva with Infinity Research. Your line is open, please go ahead.

Assia Georgieva -- Infinity Research -- Analyst

Good morning, guys. Congratulations on a great quarter. I thought I was going to be the only one to ask a China question, because usually I'm the only one that doesn't ask a China question. But James here beat me to it.

So given that one of your competitors has unwound their JV, how does that affect you?

Arnold Donald -- President and Chief Executive Officer

Frankly, not at all. I think -- I'm not fully up to speed to understand that the JV was unwound, that can be for a lot of different reasons. There's demand for ships all over right now, the world. But anyway, having said that, it doesn't affect us at all.

I think it's just -- China is just an embryonic market. We have such a small relative amount of capacity against the latent pent-up demand that's there. It was most important, is getting on a distribution system that was just going to connect with that demand. And then long term, we remain very optimistic.

We're very excited about the progress we made with our joint venture with CSSC, the shipbuilding entity. And we feel good about the performance of Majestic Princess, that first purpose-built ship for China in our Princess brand, and the ongoing performance of the Costa Group, which was of course the first international brand to be in China.

Assia Georgieva -- Infinity Research -- Analyst

Yes. Arnold, thank you for that. And switching gears a little bit. In Alaska, again, we're having a competitor with a ship built specifically for that market, because you mentioned Majestic Princess for China and Norwegian Bliss for Alaska.

Does that affect Princess in Holland America?

Arnold Donald -- President and Chief Executive Officer

Not at all. I think -- I'm sorry, it's just the concept of a ship purposely built for Alaska. We have a lot of ships that are purposely built for Alaska and many other places, but in any event, no. Alaska's a very strong market, we're enjoying continued success there.

Obviously, we're far and away the largest -- especially with all the land properties we have in Alaska as well, which also adds to our ability to drive yield in our businesses. And so, but there are always people coming and going and it doesn't really affect us.

Assia Georgieva -- Infinity Research -- Analyst

No, I understand, and I appreciate your chuckle, in terms of purpose build, but it is a new build. It's a new ship, which we haven't seen in Alaska.

Arnold Donald -- President and Chief Executive Officer

Yes, yes. Good ship. Well, it won't be sailing year-round in Alaska, that's for sure.

Assia Georgieva -- Infinity Research -- Analyst

Well, that would be difficult to do. All right, well -- well thank you very much and again, congratulations, you did great, really happy to see those [Inaudible] on top of you, guys. Great job.

Arnold Donald -- President and Chief Executive Officer

Thank you.

Operator

Our next question comes from the line of Jared Shojaian with Wolfe Research. Your line is open, please go ahead.

Jared Shojaian -- Wolfe Research -- Director

Hey, everybody. Thanks for taking my question. Can you just tell me, did you guys get any benefit from the new RM system in the first quarter? And have you baked any improvement in 2Q or the full year in the guidance from the RM system?

Arnold Donald -- President and Chief Executive Officer

Yes, Yoda, our revenue-management system, has been a -- definitely a boom to us. As I've mentioned, several times in previous calls, one of the biggest advantages, just -- of all of our revenue-science folks to work together, because when you have that, different perspectives and that much talent, and you get them to work together, they ideate and generate things that they would never do on their own. And so the whole process of developing that to -- has been beneficial, and then the tool itself has been, and as I said -- there will be six brands that will have about 90% of our inventory going through it, that, some of that inventory, of course, is for 2019, so you won't see all the benefit in 2018. But it's definitely been a lift, has added discipline, has added creativity and has added yield.

Jared Shojaian -- Wolfe Research -- Director

Can you tell us how much of the 3.9% growth in the first quarter was because of the RM system?

Arnold Donald -- President and Chief Executive Officer

I'm sure our revenue-science folks would love to give you a number, but the reality is, there are so many variables, there is no way to do that. It's clear that the cumulative effect of everything we've done has contributed to the positive result. There's no question, I could give you a lot of [Inaudible] examples of where we had specific yield lift from actions driven by Yoda and the teams. But to quantify it proportionately is a task that they like to try to do but there's way too many variables

Jared Shojaian -- Wolfe Research -- Director

Got it, OK. And just to confirm, to clarify on China, when you say yields were up in the first quarter, are you saying, constant currency yields were up? Or is that a function of just the RM being a lot stronger year over year?

Arnold Donald -- President and Chief Executive Officer

No. Constant-currency yields are up for the first quarter.

Jared Shojaian -- Wolfe Research -- Director

OK. So maybe -- if yields are up in the first quarter, I guess, we're going to see supply drop off pretty considerably, you're going to start to lap the Korea impact. Is there any reason why China yield shouldn't start to materially improve from the first quarter?

Arnold Donald -- President and Chief Executive Officer

And you would say that -- I mean, your thought process is obviously clouded. We would expect that, but, again, China's China, so we'll just have to wait and see. What we've done is given you our best expectations in the guidance we've given, which is obviously an increase overall in guidance.

Jared Shojaian -- Wolfe Research -- Director

Got it. OK. Thanks very much.

Arnold Donald -- President and Chief Executive Officer

Thank you. Thank you.

Operator

Our next question comes from the line of Tim Conder with Wells Fargo Securities. Your line is open, please go ahead.

Tim Conder -- Wells Fargo Securities -- Managing Director

Thank you. Congratulations also. I wanted to mainly circle back to the broader capacity question. And it seems like yourselves and your other two -- No.

2 and No. 3 players have been very disciplined in how you've applied many different disciplines to achieve the overall objectives here. How do you view, maybe another player who's growing capacity very rapidly over the next several years? And their applications of disciplines, given the past history, and how do you view that going forward and thinking about managing the capacity and yields and everything?

Arnold Donald -- President and Chief Executive Officer

Yes. I think the first comment I'd like to make is, a cruise is not a cruise is not a cruise. I mean, the brands are all very differentiated, and they offer very distinct experiences. So we've learned, given the fact that there's large addressable markets everywhere that are seriously under-penetrated, that we have to focus on measured-capacity growth.

And we're totally focused on achieving double digits in our invested capital in 2018 and sustaining that. And if for some reason we -- the demand isn't there, we are fully prepared to accelerate retirements and with our scale, that matters, as we're focused on growing earnings and not the number of ships. And so the fact other people do different things, or do whatever they're doing, obviously can impact us, but that's just part of the overall business condition we have to manage. The advantages we have is that the brands are highly differentiated, and if we're doing our job of creating the excess demand, then we should be able to continue to not only grow earnings through capacity addition, but also through yield improvement.

And to the extent were falling short in any way, then we would manage our capacity, which is going to have way more impact on what we can do with yield and earnings, and so on, than what somebody else is doing.

Tim Conder -- Wells Fargo Securities -- Managing Director

OK. All of them are very helpful. Along that line, have you seen any evidence of those trying to build their brands and markets move more aggressive here so far, are you going to date or not?

Arnold Donald -- President and Chief Executive Officer

In terms of -- probably, you should talk to them, but you hear anecdotal stuff, but at the same time, you never know how much volume is tied into that. You also hear positive comments that some that we're discounting more severely in previous years or discounting less. So there's noise out there, but the reality is, where we see it, whether it's the Mediterranean, whether it's the Baltics, Alaska, the Caribbean -- we're seeing strength, and we feel good, and we continue to try to generate demand.

Tim Conder -- Wells Fargo Securities -- Managing Director

Great. Congratulations and thank you for the color.

Arnold Donald -- President and Chief Executive Officer

Thank you. Thank you.

Operator

Our next question comes from the line of Angus Tweedie with Bank of America Merrill Lynch. Your line is open, please go ahead.

Angus Tweedie -- Bank of America Merrill Lynch -- Analyst

Sorry. [Inaudible] taking my question. I just wanted to ask on IMA regulation, on exhaust gas cleaning systems. Could you give us an update, one, on your position in terms of the fleet? And then secondly, given the move we've seen in fuel oil in the last couple of weeks and the futures on that, has your approach to how you're implementing this technology changed at all? Thanks.

Arnold Donald -- President and Chief Executive Officer

Yes, hey, thank you. We've installed the exhaust gas cleaning systems on the majority of our ships. In addition, as you know, we've ordered nine LNG ships. We think that these and other mitigating actions will allow us to be prepared for the pending requirements to the 2020 ECA, on the low-sulfur regulations.

So we feel we're well-positioned. The investment's already included in our CAPEX guidance, so we're covered there as well. In terms of future fuel prices and stuff, we continue to look. We've never hedged and won't.

We used the collars in the past. We still have them in place through '18, and we'll continue to revisit. But we always did them to protect against a sudden spike that could cause a cash crunch in the business, with ship orders and other things that we have on the books. And right now, with our position being so strong in terms of our cash position, the cash we have in our debt ratio, that will factor into any decisions around whether we would do collars in the future or not.

Angus Tweedie -- Bank of America Merrill Lynch -- Analyst

Thank you very much.

Arnold Donald -- President and Chief Executive Officer

Thank you. Operator, it's past 11 so we'll take one more question.

Operator

Certainly. The next question comes from the line of Tim Ramskill with Credit Suisse. Your line is open, please go ahead.

Tim Ramskill -- Credit Suisse -- Analyst

Thanks. Good afternoon and good morning to you. Just two for me, please. The first is, at the Q1 stage, also your guidance for Q1 was for sort of 1.5% to 2.5% on yield, and your guidance now for Q2 is, is that a little bit more positive? So just wondering, if you could sort of tell us what's changed sort of now versus three months ago, thinking about the sort of most approximate course that you're about to move into.

And then, my second question was just sort of, on the yield, the new yield-management system, obviously, you were asked about it a moment ago. Just some sense as to sort of how far through the full process of roll-out you are, I guess, it learns from itself over time, my understanding is, you're going to roll out across the entirety of the business as well. So how much do the sort of benefits of that do you feel you are?

David Bernstein -- Chief Financial Officer and Chief Accounting Officer

OK. So let me go through the quarters. Each quarter, we give you our best guess. I mean, we've got 80% to 90% of the inventory booked, on the books.

But keep in mind, there's also the on-board revenue, which is a little bit less predictable, because you don't have 80% to 90% of the on-board on the books. We're looking at the second quarter, we see what we have. And it -- and we give you our best guess. In addition, the prior-year comparables are also very different.

But we are in a -- as we said before, we're in a good, strong position, looking out for the second quarter and the remainder of the year. And we feel pretty good about the guidance we've given for the second quarter. As far as the revenue-management system is concerned, I think Arnold commented in his notes that over the next couple of months, we're going to roll it out to 90-plus percent of the inventory for the six brands that it's going on, which represent, I think it's about 45% of our business overall. So we are seeing, as we said before, it's good improvement from the system.

It's adding positively to our revenue -- to our yields. And we're very excited and expected to continue to add to yields over the next few quarters and few years as well.

Tim Ramskill -- Credit Suisse -- Analyst

OK. So would you be as bold as to sort of put a time frame as to how far through that whole process you are?

David Bernstein -- Chief Financial Officer and Chief Accounting Officer

Yes. We've got a long way to go, because even once we implement the system, we're going to continue to improve it, and we're going to continue to learn from it. So this will be a number of years, so we're still in the early innings, and we expect to see multiple year-over-year improvements.

Arnold Donald -- President and Chief Executive Officer

OK. Thank you, everyone. We really appreciate your interest and engagement. Hope you all have a fantastic day.

Thank you.

Duration: 68 minutes

Call Participants:

Arnold Donald -- President and Chief Executive Officer

David Bernstein -- Chief Financial Officer and Chief Accounting Officer

Steve Wieczynski -- Stifel Financial Corp. -- Managing Director

Beth Roberts -- Senior Vice President, Investor Relations

Greg Badishkanian -- Citi -- Analyst

David Beckel -- Sanford C. Bernstein -- Vice President

Felicia Hendrix -- Barclays -- Managing Director

Robin Farley -- UBS -- Managing Director

Harry Curtis -- Nomura Instinet -- Analyst

James Hardiman -- Wedbush Securities -- Managing Director

Assia Georgieva -- Infinity Research -- Analyst

Jared Shojaian -- Wolfe Research -- Director

Tim Conder -- Wells Fargo Securities -- Managing Director

Angus Tweedie -- Bank of America Merrill Lynch -- Analyst

Tim Ramskill -- Credit Suisse -- Analyst

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