LINDBLAD EXPEDITIONS HOLDINGS, INC. The following discussion and analysis addresses material changes in the
financial condition and results of operations of the Company for the periods
presented. This discussion and analysis should be read in conjunction with the
unaudited condensed consolidated financial statements and related notes included
in this Quarterly Report on Form 10-Q ("Form 10-Q"), as well as the audited
consolidated financial statements and related notes included in the Company's
Annual Report on Form 10-K filed with the
Cautionary Note Regarding Forward-Looking Statements
Any statements in this Form 10-Q about our expectations, beliefs, plans, objectives, prospects, financial condition, assumptions or future events or performance are not historical facts and are "forward-looking statements" as that term is defined under the federal securities laws. These statements are often, but not always, made through the use of words or phrases such as "believe," "anticipate," "should," "intend," "plan," "will," "expects," "estimates," "projects," "positioned," "strategy," "outlook" and similar words. You should read the statements that contain these types of words carefully. Such forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause actual results to differ materially from what is expressed or implied in such forward-looking statements. There may be events in the future that we are not able to predict accurately or over which we have no control. Potential risks and uncertainties include, but are not limited to:
? suspended operations, cancelling
or rescheduling of voyages and
other potential disruptions to our
business and operations related to
the COVID-19 virus and the
Russia -Ukraine conflict;
? the impacts of the COVID-19 virus
and/or the Russia -Ukraine conflict
on our financial condition,
liquidity, results of operations,
cash flows, employees, plans and
growth, fuel prices, changes in
fuels consumed and availability of
fuel supply in the geographies in
which we operate or in general;
? adverse worldwide economic,
geopolitical or other conditions
could reduce the demand for
expedition travel;
? adverse publicity regarding the
cruise industry in general;
? unscheduled disruptions in our
business due to travel
restrictions, weather events,
mechanical failures, pandemics or
other events;
? changes adversely affecting the
business in which we are engaged;
? management of our growth and our
ability to execute on our planned
growth, including our ability to
successfully integrate
acquisitions;
? our business strategy and plans;
? our ability to maintain our
relationship with National
Geographic ;
? compliance with the financial
and/or operating covenants in our
debt arrangements;
? the impact of severe or unusual
weather conditions, including
climate change, on our business;
? loss of business due to
competition;
? the result of future financing
efforts;
? compliance with new and existing
laws and regulations, including
environmental regulations and
travel advisories and
restrictions;
? the loss of key employees, our
inability to recruit or retain
qualified shoreside and shipboard
employees and increased labor
costs;
? the inability to meet or achieve
our sustainability related goals,
aspirations, initiatives, and our
public statements and disclosures
regarding them;
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? our common stock ranks junior to
our Series A Preferred Stock with
respect to dividends and amounts
payable in the event of our
liquidation, dissolution or
winding up our affairs; and
? those risks discussed herein and
in Item 1A. Risk Factors in our
Annual Report on Form 10-K for the
year ended December 31, 2021 , as
filed with the SEC on February 28,
2022 (the "2021 Annual Report").
We urge you not to place undue reliance on these forward-looking statements, which speak only as of the date of this Form 10-Q. We do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or uncertainties after the date hereof or to reflect the occurrence of unanticipated events.
Unless the context otherwise requires, in this Form 10-Q, "Company," "Lindblad,"
"we," "us," "our," and "ours" refer to
Business Overview
We provide expedition cruising and land-based adventure travel fostering a spirit of exploration and discovery, using itineraries featuring up-close encounters with wildlife and nature, history and culture and promote guest empowerment, human connections and interactivity. Our mission is to offer life-changing adventures around the world and pioneering innovative ways to allow our guests to connect with exotic and remote places.
We currently operate a fleet of ten owned expedition ships and operate five
seasonal charter vessels under the
We operate land-based nature adventure travel expeditions around the globe, with unique itineraries designed to offer intimate encounters with nature and the planet's wild destinations and the animals and people who live there.
Off the
We operate two segments including the Lindblad segment, which consists of the operations of our Lindblad brand, and the Land Experiences segment, consisting of our Natural Habitat, DuVine, Off the Beaten Path and Classic Journeys brands.
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Table of Contents 2022 First Quarter Highlights
During the first quarter of 2022 the Company continued to ramp its operations,
providing expeditions to guests on nine of its ten owned vessels including trips
to
On
On
Ramp of Fleet Operations and COVID-19 Business Update
During the first quarter of 2022, we continued to ramp up our operations,
providing expeditions to guests on nine of our ten owned vessels including trips
to
We believe there are a variety of strategic advantages that enable us to deploy our ships safely and quickly, while mitigating the risk of COVID-19 as travel restrictions are lifted. The most notable is the size of our owned and operated vessels which range from 48 to 148 passengers, allowing for a highly controlled environment that includes stringent cleaning protocols. The small nature of our ships also allows us to efficiently and effectively test our guests and crew prior to boarding, or as otherwise needed. Additionally, all guests age five and older, crew and staff are required to be fully vaccinated and the majority of expeditions take place in remote locations where human interactions are limited, so there is less opportunity for external influence.
Bookings Trends
We have substantial advanced reservations for future travel despite some
continued impact from the COVID-19 virus, including elevated cancellations and
softness in near-term demand, as well as some impact related to itinerary
changes due to the
Balance Sheet and Liquidity
As of
As we continue to ramp operations, our monthly cash usage will increase as we incur costs in operating expeditions, preparing additional ships for return to service, spending to market and advertise upcoming expeditions and trips. We also anticipate a significant increase in guest payments as we receive final payments for upcoming expeditions as well as deposits for new reservations for future travel. However, there can be no assurance that cash flows from operations will be available to fund future obligations or that we will not experience delays or cancellations with respect to the resumption of our operations.
The discussion and analysis of our results of operations and financial condition are organized as follows:
? a description of certain line
items and operational and
financial metrics we utilize to
assist us in managing our
business;
? results and a comparable
discussion of our consolidated and
segment results of operations for
the three months ended March 31,
2022 and 2021;
? a discussion of our liquidity and
capital resources, including
future capital and contractual
commitments and potential funding
sources; and
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Table of Contents ? a review of our critical accounting policies. Financial Presentation
Description of Certain Line Items
Tour revenues
Tour revenues consist of the following:
? Guest ticket revenues recognized
from the sale of guest tickets;
and
? Other tour revenues from the sale
of pre- or post-expedition
excursions, hotel accommodations,
air transportation to and from the
ships and excursions, goods and
services rendered onboard that are
not included in guest ticket
prices, trip insurance, and
cancellation fees.
Cost of tours
Cost of tours includes the following:
? Direct costs associated with
revenues, including cost of pre-
or post-expedition excursions,
hotel accommodations, and
land-based expeditions, air and
other transportation expenses, and
cost of goods and services
rendered onboard;
? Payroll costs and related expenses
for shipboard and expedition
personnel;
? Food costs for guests and crew,
including complimentary food and
beverage amenities for guests;
? Fuel costs and related costs of
delivery, storage and safe
disposal of waste; and
? Other tour expenses, such as land
costs, port costs, repairs and
maintenance, equipment expense,
drydock, ship insurance, and
charter hire costs.
Selling and marketing
Selling and marketing expenses include commissions, royalties and a broad range of advertising and promotional expenses.
General and administrative
General and administrative expenses include the cost of shoreside vessel support, reservations and other administrative functions, including salaries and related benefits, credit card commissions, professional fees and rent.
Operational and Financial Metrics
We use a variety of operational and financial metrics, including non-GAAP financial measures, such as Adjusted EBITDA, Net Yields, Occupancy and Net Cruise Costs, to enable us to analyze our performance and financial condition. We utilize these financial measures to manage our business on a day-to-day basis and believe that they are the most relevant measures of performance. Some of these measures are commonly used in the cruise and tourism industry to evaluate performance. We believe these non-GAAP measures provide expanded insight to assess revenue and cost performance, in addition to the standard GAAP-based financial measures. There are no specific rules or regulations for determining non-GAAP measures, and as such, they may not be comparable to measures used by other companies within the industry.
The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. You should read this discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and the related notes thereto also included within.
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Adjusted EBITDA is net income (loss) excluding depreciation and amortization,
net interest expense, other income (expense), income tax (expense) benefit,
(gain) loss on foreign currency, (gain) loss on transfer of assets,
reorganization costs, and other supplemental adjustments. Other supplemental
adjustments include certain non-operating items such as stock-based
compensation, executive severance costs, the
The following metrics apply to our Lindblad segment:
Adjusted
Available Guest Nights is a measurement of capacity and represents double occupancy per cabin (except single occupancy for a single capacity cabin) multiplied by the number of cruise days for the period. We also record the number of guest nights available on our limited land programs in this definition.
Gross Cruise Cost represents the sum of cost of tours plus, selling and marketing expenses, and general and administrative expenses.
Gross Yield per Available Guest Night represents tour revenues less insurance proceeds divided by Available Guest Nights.
Guest Nights Sold represents the number of guests carried for the period multiplied by the number of nights sailed within the period.
Maximum Guests is a measure of capacity and represents the maximum number of guests in a period and is based on double occupancy per cabin (except single occupancy for a single capacity cabin).
Net Cruise Cost Excluding Fuel represents
Net Yield represents tour revenues less insurance proceeds, commissions and direct costs of other tour revenues.
Net Yield per Available Guest Night represents Net Yield divided by Available Guest Nights.
Number of Guests represents the number of guests that travel with us in a period.
Occupancy is calculated by dividing Guest Nights Sold by Available Guest Nights.
Voyages represent the number of ship expeditions completed during the period.
Foreign Currency Translation
The
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Table of Contents Seasonality
Traditionally, our Lindblad brand tour revenues are mildly seasonal, historically larger in the first and third quarters. The seasonality of our operating results fluctuates due to our vessels being taken out of service for scheduled maintenance or drydocking, which is typically during nonpeak demand periods, in the second and fourth quarters. Our drydock schedules are subject to cost and timing differences from year-to-year due to the availability of shipyards for certain work, drydock locations based on ship itineraries, operating conditions experienced especially in the polar regions and the applicable regulations of class societies in the maritime industry, which require more extensive reviews periodically. Drydocking impacts operating results by reducing tour revenues and increasing cost of tours. Our Natural Habitat, DuVine, Off the Beaten Path and Classic Journeys brands are seasonal businesses, with the majority of Natural Habitat's tour revenue recorded in the third and fourth quarters from its summer season departures and polar bear tours, while the majority of Off the Beaten Path, DuVine and Classic Journeys' revenues are recorded during the second and third quarters from their spring and summer season departures.
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