Regent Seven Seas Cruises reported financial results today for the second quarter ended June 30, 2012.
• Revenue for the second quarter of 2012 was a record amount of $131.5 million compared to $122.8 million in the second quarter of 2011.
• Net Yield for the second quarter of 2012 was up 2.8 percent driven by an 8.5 percentage point increase in the occupancy rate. This increase was partially offset by additional product costs associated with the increased inclusive product offerings we added to our European cruise packages in light of the softer European market.
• 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.
Commenting on the second quarter financial results, the Company's Chairman and CEO, Frank Del Rio, stated, "We are pleased with our second quarter revenue and Net Yield increases over the prior year considering the backdrop of a challenging European environment. 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 did increase 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."
Other key operating metrics for the second quarter of 2012 compared to the prior year are as follows:
• Net Cruise Cost, excluding Fuel and Other expense, was $47.1 million compared to $44.5 million for the second quarter of 2011. The change is primarily due to increased hotel services costs driven by an increase in occupancy of 8.5 percentage points as well as increased Deck and Engine expenses primarily associated with a new five year partnership with Wartsila to maintain the engines throughout the fleet.
• Fuel expense, net of settled fuel hedges, was $10.4 million compared to $8.6 million for the second quarter of 2011. As of June 30, 2012, the company has hedged approximately 80% of the remaining expected fuel consumption for 2012, 52% of expected fuel consumption for 2013 and 28% of expected fuel consumption for 2014.
• Other expense was $5.8 million compared to $5.3 million for the second quarter of 2011. The 2012 increase is due to expenses associated with the Seven Seas Navigator dry-dock.
• Adjusted EBITDA was $19.4 million for the second quarter of 2012, compared to $24.6 million for the second quarter of 2011. Excluding Fuel, net of settled fuel hedges, and Other expense, Adjusted EBITDA for the second quarter of 2012 declined $2.9 million versus the second quarter of 2011 primarily due to the additional product costs associated with the increased inclusive product offerings due to the soft market in Europe and the reduction in capacity associated with the Seven Seas Navigator dry-dock.