Regent Seven Seas Expects Lower Second Quarter Earnings
By Theresa Norton Masek
July 31, 2012 3:19 PM
Regent Seven Seas Cruises released preliminary second-quarter results showing record revenue of $130.3 million to $132.3 million, compared to $122.8 million in the second quarter of 2011. But adjusted EBITDA is expected to be between $19 million and $20 million for the second quarter 2012, compared to $24.6 million for the same period last year.
Regent Seven Seas attributed the decline to additional inclusive product offerings made to encourage bookings in the soft market in Europe. That soft market hit some major cruise lines hard in the second quarter, with such companies as Royal Caribbean Cruises Ltd. reporting a loss during the quarter due to weakness in Europe. In other news, Regent Seven Seas also announced its intention to hold a bank meeting on Aug. 1 to refinance its existing credit facility with a new $340 million senior secured credit facility.
“We are pleased with our expected second quarter revenue and net yield increases over the prior year considering the backdrop of a challenging European environment,” said Frank Del Rio, Regent Seven Seas’ chairman. “In order to drive demand for our softer European sailings, we chose to include additional value in our already industry leading all-inclusive product offerings rather than discount cruise fares. This non-discounting strategy is consistent with our longstanding go-to-market philosophy and reinforces our brand’s high value proposition, but it increased product offering costs for the quarter. We believe that our steadfast refusal to discount our luxury product has positioned the brand well for the upcoming year. This can be seen in our booking patterns for 2013 sailings as occupancy build is stable while pricing is up in the high single digits compared to same time last year for 2012.”
Net yield for the second quarter is expected to be up between 2 and 3 percent driven by an 8.5 percentage point increase in the occupancy rate. Capacity during the second quarter of 2012 decreased to 163,170 available passenger cruise days, approximately 1.1 percent versus the second quarter of 2011, due to the scheduled dry-dock of the Seven Seas Navigator.
These second-quarter preliminary results are based on management’s initial analysis of the results of operations for the quarter ended June 30, 2012, and are subject to change based on the completion of the company’s normal quarter-end review process. The company plans to report final results for the quarter on or about Aug. 9.