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  • Service margins increased to 110bps QoQ, attributable to the inclusion of the laser hair removal division and improved service margins in their maritime business, partially offset by lower starts in populations in their post-secondary schools segment.
  • Product margins rose 180bps QoQ, driven by mix of products sold onboard the ships
  • Q2 had a negative FX charge of $412k; unscheduled dry docks caused STNR to lose an additional 299 revenue days or $775k in Q2; YTD, they have lost 549 revenue days or $2MM.
  • Onboard spa division outperformed expectations
  • Yield management initiatives are still needed in certain geographies i.e. Europe, to drive demand and improve revenue cruise to cruise 


  • Customers are spending less in Europe than the Caribbean
  • Q2 softness in schools was the primary reason for lower outlook on 3Q
  • 31-32% product margin run rate is reasonable; better mix of NA passengers supported stronger margins in Q2
  • Tougher regulatory environment for everyone; no one is immune from this
  • School division counter-cyclical to poor economy?
    • It's possible.  Schools (9-11) have behaved in-line during bad economic times.
  • Non-spa ship productivity
    • Because of adding some new European lines, they had more non-spa ships in the mix
    • Non-spa ships tend to fall into luxury category; no material changes there
  • Q3 ship counts:  114 spa; 42 non-spa
  • Q4 ship counts:  113 spa, 40 non-spa
  • Why did land-based average weekly revenues fall in Q2?
    • some bigger properties in Caribbean and St. Regis underperformed--poor yield management along with slower consumer spend
  • FY 2012 Guidance: general economic conditions have worsened; Europe continues to pressure results