Regent Seven Seas Cruises today announced its intention to hold a bank meeting on Wednesday, August 1st, 2012 to refinance its existing credit facility with a new $340 Million senior secured credit facility. The meeting is preliminary in nature, and at this time we have not committed to complete a refinancing, nor can we state the terms on which any such refinancing would be achieved. The Company is also releasing preliminary financial results for the second quarter ended June 30, 2012.
• Revenue for the second quarter of 2012 is expected to be a record amount between $130.3 million and $132.3 million compared to $122.8 million in the second quarter of 2011.
• Net Yield for the second quarter of 2012 is expected to be up between 2 percent and 3 percent driven by an 8.5 percentage point increase in the occupancy rate. This increase is expected to be 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 preliminary financial results, the Company’s Chairman and CEO, Frank Del Rio, stated, “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. 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.”
Other preliminary 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, is expected to be between $46.6 million and $47.6 million compared to $44.5 million for the second quarter of 2011. The change is expected to be primarily due to increased hotel services costs driven by an increase in occupancy of 8.5 percentage points as well as an expected increase in Deck and Engine expenses associated with a new five year partnership with Wartsila to maintain the engines throughout the fleet.
• Fuel expense, net of the impact of settled fuel hedges, is expected to be between $10.1 million and $10.6 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 is expected to be between $5.4 million and $6.2 million compared to $5.3 million for the second quarter of 2011. The expected 2012 increase is due to expenses associated with the Seven Seas Navigator dry-docking.
• Adjusted EBITDA is expected to be between $19 million and $20 million for the second quarter of 2012, compared to $24.6 million for the second quarter of 2011. Excluding Fuel, net of the impact of settled fuel hedges, and Other expense(1), Adjusted EBITDA for the second quarter of 2012 is expected to decline between $2.4 million and $3.4 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.
• Capital expenditures for the second quarter of 2012 are expected to be between $8 million and $10 million compared with $7.8 million in the second quarter of 2011.
• Cash balances are expected to be between $106 million and $107 million at the end of the second quarter of 2012 compared with $97.3 million at the end of the second quarter of 2011.
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 ended June 30, 2012 on or about August 9, 2012.
