LINDBLAD EXPEDITIONS HOLDINGS, INC. The information contained in this section should be read in conjunction with our consolidated financial statements and related notes and the information contained elsewhere in this Form 10-K under the headings "Risk Factors," "Selected Financial Data," and "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, having taken possession of our new polar ice class vessel, theNational Geographic Resolution, inSeptember 2021 , and operate five seasonal charter vessels under theLindblad Expeditions Holdings, Inc. ("Lindblad") brand. Each expedition ship is fully equipped with state-of-the-art tools for in-depth exploration and the majority of our expeditions involve travel to remote places, such as voyages tothe Arctic , Antarctic, the Galápagos Islands,Alaska ,Baja's Sea of Cortez, theSouth Pacific ,Costa Rica andPanama . We have a longstanding relationship with theNational Geographic Society dating back to 2004, which is based on a shared interest in exploration, research, technology and conservation. This relationship includes a co-selling, co-marketing and branding arrangement whereby our owned vessels carry theNational Geographic name andNational Geographic sells our expeditions through its internal travel division. We collaborate withNational Geographic on voyage planning to enhance the guest experience by havingNational Geographic experts, including photographers, writers, marine biologists, naturalists, field researchers and film crews, join our expeditions. Guests have the ability to interface with these experts through lectures, excursions, dining and other experiences throughout their voyage. We operate land-based adventure travel experiences around the globe, with unique itineraries designed to offer intimate encounters with nature and the planet's remarkable destinations including the animals and people who live there.Natural Habitat, Inc. ("Natural Habitat") provides eco-conscious expeditions and nature-focused, small-group experiences that include polar bear tours in Churchill,Canada , Alaskan grizzly bear adventures, small-group Galápagos Islands tours and African safaris. Natural Habitat has partnered withWorld Wildlife Fund ("WWF") to offer conservation travel, which is sustainable travel that contributes to the protection of nature and wildlife.DuVine Cycling + Adventure Company ("DuVine") provides intimate cycling adventures and travel experiences, led by expert guides, with a focus on connecting with local character and culture, including high-quality local cuisine and accommodations. International cycling tours include the exoticCosta Rican rainforests, the rocky coasts ofIreland and the vineyards ofSpain , while cycling adventures inthe United States include cycling beneath theCalifornia redwoods, pedaling throughVermont farmland and wine tastings in the world-class vineyards ofNapa andSonoma . Off theBeaten Path, LLC ("Off the Beaten Path") provides small group travel, led by local, experienced guides, with distinct focus on wildlife, hiking national parks and culture. Off the Beaten Path offerings include insider national park experiences in theRocky Mountains , Desert Southwest, andAlaska , as well as unique trips acrossEurope ,Africa ,Australia , Central andSouth America and theSouth Pacific .Classic Journeys, LLC ("Classic Journeys") offers highly curated active small-group and private custom journeys centered around cinematic walks led by expert local guides in over 50 countries around the world. These walking tours are highlighted by luxury boutique accommodations, and handcrafted itineraries that immerse guests into the history and culture of the places they are exploring and the people who live there. 2021 Highlights We resumed ship operations inJune 2021 and, as ofJanuary 31, 2022 , had nine of our ten available vessels providing expeditions to guests. Due to the spread of the COVID-19 virus and the effects of travel restrictions around the world, we had previously suspended or rescheduled the majority of our expeditions departing betweenMarch 16, 2020 throughMay 31, 2021 . Expedition cruise operations restarted inJune 2021 , with three ships inAlaska and another in the Galápagos Islands, and subsequently, we resumed operations on the majority of our remaining vessels with additional ships operating inAlaska , the Galápagos Islands,Iceland , thePacific Northwest ,Baja California's Sea of CortezandAntarctica . We continue to work with local authorities on plans to operate itineraries in additional geographies during 2022. As the COVID-19 virus effects travel restrictions in various locations around the world, we also continue to work with our guests to reschedule travel plans and refund payments or issue future travel certificates, as applicable, for those expeditions and trips that we are not able to operate due to local restrictions. 37
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During 2021, we drew down$61.7 million under our second export credit agreement in conjunction with our fourth installment and final payments for the National Geographic Resolution and took delivery of the vessel duringSeptember 2021 . DuringSeptember 2021 , we acquired the Crystal Esprit yacht for$13.3 million . It was rebranded the National Geographic Islander II, and after undergoing modifications to expand its expedition capabilities, including adjusting the capacity to 48 guests, it will replace theNational Geographic Islander in the Galápagos Islands during 2022. During 2021, we completed the acquisitions of Off the Beaten Path, a land-based travel operator specializing in authentic national park experiences, DuVine, an international luxury cycling and adventure company focused on exceptional food and wine experiences and Classic Journeys, a leading luxury walking tour company that offers highly curated active small-group and private custom journeys. During 2021, we received$27.0 million under theU.S. Department of theTreasury Coronavirus Economic Relief for Transportation Services Program ("CERTS"), which provided grants to eligible motorcoach, school bus, passenger vessel, and pilotage companies that have experienced annual revenue losses of 25 percent or more as result of COVID-19.
Return to Fleet operations and COVID-19 Business Update
As ofJanuary 31, 2022 , we had nine of our ten available vessels providing expeditions to guests. We believe there are a variety of strategic advantages that enable us to deploy our ships safely and mitigate the risk of COVID-19 transmission. 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. All guests, crew and staff are required to be fully vaccinated and the relatively small size of our ships allows us to efficiently and effectively test our guests and crew prior to boarding. Additionally, the majority of expeditions take place in remote locations where human interactions with persons not on the expedition are limited, so there is less opportunity for external influence. We also have the ability to be flexible with regards to existing itineraries and are continually investigating additional itinerary opportunities both internationally and domestically. While our ships were not in operations, the majority of the fleet was being maintained with minimally required crew on-board to ensure they complied with all necessary regulations and could be fully put back into service quickly as needed. Ahead of launching each ship, crew levels were increased as necessary to prepare each vessel for operations as well as for crew training and vaccinations. Prior to resuming operations, we significantly reduced ship and land-based expedition costs such as capital expenditures, crew payroll, land costs, fuel and food, and meaningfully reduced general and administrative expenses through reduced payroll and the elimination of all non-essential travel, office expenses and discretionary spending. We also accessed available capital under existing debt facilities and through the issuance of preferred stock. With the majority of operations resuming, operating costs are ramping back up, but given the continued uncertainty around COVID-19 and given that guest counts have not yet returned to traditional levels, we continue to minimize expenditures as appropriate. Bookings Trends We have experienced a substantial negative impact from the COVID-19 pandemic including elevated cancellations and softness in near-term demand. Despite the COVID-19 impact, we continue to see significant new bookings across the fleet and have substantial advanced reservations for future travel. Bookings for the second half of 2022 are nearly 20% ahead of the bookings for 2020 as of the same date two years ago and bookings for 2023 are 54% ahead of the bookings for 2021 as of the same date two years ago. Balance Sheet and Liquidity
We have taken a variety of steps to strengthen our balance sheet and increase our financial flexibility including:
OnFebruary 4, 2022 , we issued$360.0 million of 6.75% senior secured notes due 2027. We used the proceeds from the notes to prepay in full all outstanding borrowings under our existing term loan, including the Main Street Loan, and revolving credit facility, and paid all related premiums, terminating in full our existing credit agreement and the commitments thereunder. We also entered into a new$45.0 million revolving credit facility, which remains undrawn and maturesFebruary 2027 . As ofDecember 31, 2021 , we had$150.8 million in unrestricted cash and$21.9 million in restricted cash primarily related to deposits on future travel originating fromU.S. ports. As ofDecember 31, 2021 , we had a total debt position of$558.5 million and were in compliance with all of our debt covenants currently in effect.
During
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the effective suspension of the total net leverage ratio covenant throughMarch 2022 , increase the interest rate for the export credit facilities by 50 basis points and annualize EBITDA used in the covenant calculation throughDecember 31, 2022 . The deferred principal payments will amortize quarterly over three years starting inMarch 2022 . Certain other covenants continue to be more restrictive during the extended covenant waiver period. DuringApril 2021 , we further amended our term loan and revolving credit agreement to, among other things, extend the waiver of its total net leverage ratio covenant throughMarch 31, 2022 , annualized EBITDA used in our covenant calculation throughDecember 31, 2022 and increase the interest rate spreads of the Term Facility, excluding the Main Street Loan, and the Revolving Facility by 50 basis points, such additional interest to be paid in cash. Certain other covenants continue to be more restrictive during the extended covenant waiver period. As we continue to ramp up operations, our monthly cash usage will increase as we incur costs in operating expeditions, prepare additional ships for return to service and spending to market and advertise upcoming expeditions and trips. We also anticipate a continued 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. Financial Presentation
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;
? a comparable discussion of our consolidated and segment results of
operations for the years ended December 31, 2021 , 2020 and 2019;
? a discussion of our liquidity and capital resources, including futurecapital and contractual commitments and potential funding sources; and
? a review of our critical accounting policies.
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 and land-based expeditions; air transportation to and
from the ships, 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-basedexpeditions, 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 andmaintenance, equipment expense, drydock, ship insurance and charter hire
costs.
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Table of Contents 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 andNet Cruise Cost , to enable us to analyze the performance and financial condition of our ship operations. 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, our non-GAAP financial measures 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 results of operations and financial condition together with the consolidated financial statements and the related notes thereto also included in Item 8 of this Annual Report on Form 10-K. 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, theNational Geographic fee amortization, debt refinancing costs, acquisition-related expenses and other non-recurring charges. We believe Adjusted EBITDA, when considered along with other performance measures, is a useful measure as it reflects certain operating drivers of the business, such as sales growth, operating costs, selling and administrative expense, and other operating income and expense. We believe Adjusted EBITDA helps provide a more complete understanding of the underlying operating results and trends and an enhanced overall understanding of our financial performance and prospects for the future. Adjusted EBITDA is not intended to be a measure of liquidity or cash flows from operations or a measure comparable to net income as it does not take into account certain requirements, such as unearned passenger revenues, capital expenditures and related depreciation, principal and interest payments, and tax payments. Our use of Adjusted EBITDA may not be comparable to other companies within the industry.
The following metrics apply to our Lindblad segment:
Adjusted
Available Guest Nights is a measurement of capacity available for sale 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 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).
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Net Cruise Cost Excluding Fuel represents
Net Yield represents tour revenues less 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
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.
Results of Operations - Consolidated
We reported consolidated tour revenues, cost of tours, operating expenses,
operating income and net income for the years ended
For the years ended December 31,
(In thousands) 2021 2020 Change % 2019 Change %
Tour revenues $ 147,107 $ 82,356 $ 64,751 79 % $ 343,091 $ (260,735 ) (76 %)
Cost of tours 124,484 72,931 51,553 71 % 166,608 (93,677 ) (56 %)
General and
administrative 65,445 45,508 19,937 44 % 62,744 (17,236 ) (27 %)
Selling and marketing 28,484 20,231 8,253 41 % 54,772 (34,541 ) (63 %)
Depreciation and
amortization 39,525 32,084 7,441 23 % 25,769 6,315 25 %
Operating (loss) income $ (110,831 ) $ (88,398 ) $ (22,433 ) 25 % $ 33,198 $ (121,596 ) NM
Net (loss) income $ (119,168 ) $ (100,140 ) $ (19,028 ) 19 % $ 18,748 $ (118,888 ) NM
Undistributed (loss)
income per share
available to
stockholders:
Basic $ (2.41 ) $ (2.01 ) $ (0.40 ) $ 0.29 $ (2.30 )
Diluted $ (2.41 ) $ (2.01 ) $ (0.40 ) $ 0.28 $ (2.29 ) Comparison of Years Ended
Tour Revenues Tour revenues for the year endedDecember 31, 2021 increased$64.8 million , or 79%, to$147.1 million compared to$82.4 million for the year endedDecember 31, 2020 . At the Lindblad segment, tour revenues increased by$13.2 million , primarily due to the ramp up of operations beginningJune 2021 following the cancellation, disruption and rescheduling of expeditions due to COVID-19 sinceMarch 2020 . At the Land Experiences segment, tour revenues increased$51.5 million over the prior year period, 41
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primarily related to the ramp up of operations during 2021 and from the inclusion of the results of Off the Beaten Path, DuVine and Classic Journeys, which were acquired during 2021.
Cost of Tours Total cost of tours for the year endedDecember 31, 2021 increased$51.6 million , or 71%, to$124.5 million compared to$72.9 million for the year endedDecember 31, 2020 . At the Lindblad segment, cost of tours increased$22.7 million , primarily related to the ramp up of expeditions beginningJune 2021 following the cancellation, disruption and rescheduling of expeditions due to COVID-19 sinceMarch 2020 and from the addition to our fleet of the National Geographic Endurance inMarch 2020 and the National Geographic Resolution inSeptember 2021 . At Land Experiences segment, cost of tours increased$28.9 million , primarily due to the ramp up of operations during 2021 and from the inclusion of the results of Off the Beaten Path, DuVine and Classic Journeys, which were acquired during 2021.
General and Administrative Expenses
General and administrative expenses for the year endedDecember 31, 2021 increased$19.9 million , or 44%, to$65.4 million compared to$45.5 million for the year endedDecember 31, 2020 . At the Lindblad segment, general and administrative expenses increased$11.8 million from the prior year primarily due to increased personnel costs and credit card commissions related to restarting operations during 2021, and higher stock-based compensation expense as compared to the 2020. At the Land Experiences segment, general and administrative expenses increased$8.1 million primarily due to an increase in personnel costs and credit card commissions related to the ramp up of operations during 2021 and the impact of the acquisitions of Off the Beaten Path, DuVine and Classic Journeys, which were acquired during 2021.
Selling and Marketing Expenses
Selling and marketing expenses increased$8.3 million , or 41%, to$28.5 million for the year endedDecember 31, 2021 compared to$20.2 million for the year endedDecember 31, 2020 . At the Lindblad segment, selling and marketing expenses increased$4.1 million , primarily due to increased marketing spend related to the restart of operations. At the Land Experiences segment, selling and marketing expenses increased$4.2 million , primarily due to increased marketing spend associated with the ramp up in operations and from the impact of the acquisitions of Off the Beaten Path, DuVine and Classic Journeys, which were acquired during 2021.
Depreciation and Amortization Expenses
Depreciation and amortization expenses increased$7.4 million , or 23%, to$39.5 million for the year endedDecember 31, 2021 compared to$32.1 million for the year endedDecember 31, 2020 , primarily due to the addition of the National Geographic Resolution to the fleet inSeptember 2021 and a full year of deprecation on the National Geographic Endurance, which was added to the fleet inMarch 2020 . Other Expense Other expenses were$10.4 million for the year endedDecember 31, 2021 , compared to other expenses of$21.5 million for the year endedDecember 31, 2020 . The$11.2 million decrease was primarily due to the recognition of$15.4 million in other income related to expenses covered under the CERTS grant received during 2021 partially offset by a$7.9 million increase in interest expense, net to$24.6 million during 2021, primarily due to increased borrowings related to our new vessel builds and higher rates under our debt facilities. 2021 also included a$1.3 million loss in foreign currency translation, due primarily to the maturity of foreign currency hedges related to the installment payment for the National Geographic Resolution in 2021 compared to a$4.8 million loss primarily due to maturity of a foreign currency hedges for the ship in 2020.
Comparison of Years Ended
Tour Revenues Tour revenues for the year endedDecember 31, 2020 decreased$260.7 million , or 76%, to$82.4 million compared to$343.1 million for the year endedDecember 31, 2019 . At the Lindblad segment, tour revenues decreased by$202.8 million , primarily related to cancelled, disrupted and rescheduled expeditions scheduled to depart afterMarch 16, 2020 due to COVID-19. At the Land Experiences segment, tour revenues decreased$57.9 million over the prior year period, primarily related to cancelled, disrupted and rescheduled trips due to COVID-19. 42
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Table of Contents Cost of Tours Total cost of tours for the year endedDecember 31, 2020 decreased$93.7 million , or 56%, to$72.9 million compared to$166.6 million for the year endedDecember 31, 2019 . At the Lindblad segment, cost of tours decreased$62.4 , primarily related to rescheduled expeditions due to COVID-19, partially offset by costs incurred while ships are laid up and from the addition of the National Geographic Endurance to our fleet inMarch 2020 . At the Land Experiences segment, cost of tours decreased$31.2 , primarily due to cancelled, disrupted and rescheduled trips directly related to COVID-19.
General and Administrative Expenses
General and administrative expenses for the year endedDecember 31, 2020 decreased$17.2 million to$45.5 million compared to$62.7 million for the year endedDecember 31, 2019 . At the Lindblad segment, general and administrative expenses decreased$10.6 million from the prior year primarily due to reduced personnel costs and credit card commissions related to the disruption of operations due to COVID-19. At the Land Experiences segment, general and administrative expenses decreased$6.6 million primarily due to a decrease in personnel costs related to the disruption of operations due to COVID-19.
Selling and Marketing Expenses
Selling and marketing expenses decreased$34.6 million , or 63%, to$20.2 million for the year endedDecember 31, 2020 compared to$54.8 million for the year endedDecember 31, 2019 . At the Lindblad segment, selling and marketing expenses decreased$30.9 million , primarily due to lower commission expenses related to the impact of COVID-19 on revenue and decreased advertising expenditures. At the Land Experiences segment, selling and marketing expenses decreased$3.7 million , primarily driven by a decrease in advertising expenditures.
Depreciation and Amortization Expenses
Depreciation and amortization expenses increased$6.3 million , or 25%, to$32.1 million for the year endedDecember 31, 2020 compared to$25.8 million for the year endedDecember 31, 2019 , primarily due to the addition of the National Geographic Endurance to the fleet inMarch 2020 . Other Expense Other expenses were$21.5 million for the year endedDecember 31, 2020 , compared to other expenses of$12.3 million for the year endedDecember 31, 2019 . The$9.2 million increase was primarily due to a$4.8 million loss in foreign currency translation in 2020 due primarily to a loss of$5.3 million on the maturity of a foreign currency hedge related to the installment payment for the National Geographic Resolution, compared to a$0.1 million gain in 2019. 2020 also included a$4.4 million increase in interest expense, net to$16.7 million in 2020, primarily due to increased borrowings related to our new vessel builds, the draw down under the revolving credit facility during the first quarter and an increase in rates under the term loan.
Results of Operations - Segments
Selected information for our segments is below. 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.
For the years ended December 31,
(In thousands) 2021 2020 Change % 2019 Change %
Tour revenues:
Lindblad $ 82,842 $ 69,620 $ 13,222 19 % $ 272,410 $ (202,790 ) (74 %)
Land Experiences 64,265 12,736 51,529 405 % $ 70,681 (57,945 ) (82 %)
Total tour revenues $ 147,107 $ 82,356 $ 64,751 79 %
$ (111,477 ) $ (78,573 ) $ (32,904 ) (42 )%$ 26,203 $ (104,776 ) NM Land Experiences 646 (9,825 ) 10,471 107 %$ 6,995 (16,820 ) NM Total operating (loss) income$ (110,831 ) $ (88,398 ) $ (22,433 ) (25 )%$ 33,198 $ (121,596 ) NM Adjusted EBITDA: Lindblad$ (67,242 ) $ (44,398 ) $ (22,844 ) 51 %$ 57,971 $ (102,369 ) NM Land Experiences 3,199 (7,774 ) 10,973 141 %$ 8,648 (16,422 ) NM Total adjusted EBITDA$ (64,043 ) $ (52,172 ) $ (11,871 ) (23 )%$ 66,619 $ (118,791 ) NM 43
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Results of Operations - Lindblad Segment
Comparison of Years Ended
Tour Revenues Tour revenues for the year endedDecember 31, 2021 increased$13.2 million , or 19%, to$82.8 million compared to$69.6 million for the year endedDecember 31, 2020 . The increase was primarily driven by the ramp up of operations beginning inJune 2021 following the cancellation, disruption and rescheduling of expeditions due to COVID-19 sinceMarch 2020 . Operating Income Operating loss increased$32.9 million to a loss of$111.5 million for the year endedDecember 31, 2021 compared to a loss of$78.6 for the year endedDecember 31, 2020 . The increase was primarily driven by higher costs associated with the resumption of expeditions duringJune 2021 , costs related to adding the National Geographic Resolution to the fleet during 2021 and a full year of expenses associated with operating the National Geographic Endurance, which was added to the fleet in 2020.
Comparison of Years Ended
Tour Revenues Tour revenues for the year endedDecember 31, 2020 decreased$202.8 million , or 74%, to$69.6 million compared to$272.4 million for the year endedDecember 31, 2019 . The decrease was primarily driven by cancelled, disrupted and rescheduled expeditions due to COVID-19. Operating Income Operating income decreased$104.8 million to a loss of$78.6 million for the year endedDecember 31, 2020 compared to income of$26.2 million for the year endedDecember 31, 2019 . The decrease was primarily driven by lower revenue from cancelled, disrupted and rescheduled voyages due to COVID-19 and costs associated with adding the National Geographic Endurance to the fleet inMarch 2020 .
Results of Operations - Land Experiences Segment
Comparison of Years Ended
Tour Revenues Tour revenues increased$51.5 million , or 405%, to$64.3 million compared to$12.7 million in 2020, primarily due to the ramp up of operations during 2021 and the inclusion of the results of Off the Beaten Path, DuVine and Classic Journeys, which were acquired during 2021. Operating Income Operating income increased$10.5 million to$0.6 million in 2021 compared to a loss of$9.8 million in 2020. The increase was primarily a result of higher revenues from the ramp up of operations during 2021 and the inclusion of the results of Off the Beaten Path, DuVine and Classic Journeys, which were acquired during 2021.
Comparison of Years Ended
Tour Revenues
Tour revenues decreased
Operating Income
Operating income decreased
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Adjusted EBITDA - Consolidated
The following table outlines the reconciliation to net income and calculation of consolidated Adjusted EBITDA. The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
Reconciliation of Net Income to Adjusted EBITDA
Consolidated For the years ended December 31, (In thousands) 2021 2020 2019 Net (loss) income$ (119,168 ) $ (100,140 ) $ 18,748 Interest expense, net 24,578 16,692 12,288 Income tax (benefit) expense (2,019 ) (9,805 ) 2,190 Depreciation and amortization 39,525 32,084 25,769 Loss (gain) on foreign currency 1,265 4,772 (94 ) Other (income) expense (15,487 ) 83 66 Stock-based compensation 5,563 2,388 3,573 National Geographic fee amortization - 727 2,907 Other 1,700 1,027 1,172 Adjusted EBITDA$ (64,043 ) $ (52,172 ) $ 66,619
The following tables outline the reconciliation for each segment from operating income to Adjusted EBITDA:
Reconciliation of Operating Income to Adjusted EBITDA
Lindblad Segment For the years ended December 31, (In thousands) 2021 2020 2019 Operating (loss) income$ (111,477 ) $ (78,573 ) $ 26,203 Depreciation and amortization 37,516 30,033 24,116 Stock-based compensation 5,429 2,388 3,573 National Geographic fee amortization - 727 2,907 Other 1,290 1,027 1,172 Adjusted EBITDA$ (67,242 ) $ (44,398 ) $ 57,971 Land Experiences Segment For the years ended December 31, (In thousands) 2021 2020 2019 Operating income (loss)$ 646 $ (9,825 ) $ 6,995 Depreciation and amortization 2,009 2,051 1,653 Stock-based compensation 134 - - Other 410 - - Adjusted EBITDA$ 3,199 $ (7,774 ) $ 8,648
Guest Metrics - Lindblad Segment
The following tables set forth our Guest Metrics for the Lindblad segment.
Please refer to our Description of Certain Line Items above for the specific
definition by line item and segment. 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.
For the years ended December 31,
2021 2020 2019
Available Guest Nights 75,389 51,624 221,516
Guest Nights Sold 60,997 46,050 201,600
Occupancy 81 % 89 % 91 %
Maximum Guests 10,596 6,512 27,831
Number of Guests 8,436 5,564 25,326
Voyages 143 85 351
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Calculation of Gross and Net Yield per Available Guest Night For the years ended December 31, (In thousands, except for Available Guest Nights, Gross and Net Yield per Available Guest Night) 2021 2020 2019 Guest ticket revenues$ 76,158 $ 60,351 $ 244,207 Other tour revenue 6,684 9,269 28,203 Tour Revenues 82,842 69,620 272,410 Less: Commissions (6,474 ) (8,146 ) (20,770 ) Less: Other tour expenses (10,076 ) (7,373 ) (18,813 ) Net Yield$ 66,292 $ 54,101 $ 232,827 Available Guest Nights 75,389 51,624 221,516 Gross Yield per Available Guest Night$ 1,099 $ 1,349 $ 1,230 Net Yield per Available Guest Night 879 1,048 1,051 The following table reconciles operating income to our Net Yield Guest Metric for the Lindblad Segment. For the years ended December 31, (In thousands) 2021 2020 2019 Operating (loss) income$ (111,477 ) $ (78,573 ) $ 26,203 Cost of tours 85,588 62,905 125,343 General and administrative 49,028 37,177 47,793 Selling and marketing 22,187 18,078 48,955 Depreciation and amortization 37,516 30,033 24,116 Less: Commissions (6,474 ) (8,146 ) (20,770 ) Less: Other tour expenses (10,076 ) (7,373 ) (18,813 ) Net Yield$ 66,292 $ 54,101 $ 232,827 Calculation of Gross and Net Cruise Cost For the years ended December 31, (In thousands, except for Available Guest Nights, Gross andNet Cruise Cost per Avail. Guest Night) 2021 2020 2019 Cost of tours$ 85,588 $ 62,905 $ 125,343 Plus: Selling and marketing 22,187 18,078 48,955 Plus: General and administrative 49,028 37,177 47,793 Gross Cruise Cost 156,803 118,160 222,091 Less: Commissions (6,474 ) (8,146 ) (20,770 ) Less: Other tour expenses (10,076 ) (7,373 ) (18,813 ) Net Cruise Cost 140,253 102,641 182,508 Less: Fuel Expense (8,027 ) (4,694 ) (10,227 ) Net Cruise Cost Excluding Fuel 132,226 97,947 172,281 Non-GAAP Adjustments: Stock-based compensation (5,429 ) (2,388 ) (3,573 ) National Geographic fee amortization - (727 ) (2,907 ) Other (1,700 ) (1,027 ) (1,172 ) Adjusted Net Cruise Cost Excluding Fuel$ 125,097 $ 93,805 $ 164,629 Adjusted Net Cruise Cost$ 133,124 $ 98,499 $ 174,856 Available Guest Nights 75,389 51,624 221,516 Gross Cruise Cost per Available Guest Night$ 2,080 $ 2,289 $ 1,003 Net Cruise Cost per Available Guest Night 1,860 1,988 824 Net Cruise Cost Excluding Fuel per Available Guest Night 1,754 1,897 778 Adjusted Net Cruise Cost Excluding Fuel per Available Guest Night 1,659 1,817 743 AdjustedNet Cruise Cost per Available Guest Night 1,766 1,908 789
Liquidity and Capital Resources
The COVID-19 pandemic has had a material negative impact on our operations and
financial results and while we have substantially resumed operations, given the
dynamic nature of this situation, we cannot reasonably estimate the impacts of
the COVID-19 pandemic on our financial condition, results of operations, cash
flows, plans and growth for the foreseeable future. It
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is unknown when travel restrictions and various border closures will be completely lifted and what the demand for expedition travel will be once these restrictions are no longer in place.
During the year endedDecember 31, 2021 , we received$27.0 million under the CERTS Act, which provided grants to eligible motorcoach, school bus, passenger vessel, and pilotage companies, see the notes to the consolidated financial statements for more information. As ofDecember 31, 2021 , we had approximately$558.5 million in long-term debt obligations, including the current portion of long-term debt. We believe that our cash on hand and expected future operating cash inflows will be sufficient to fund operations, debt service requirements and necessary capital expenditures, assuming that our operations continue to proceed as we currently expect. OnFebruary 4, 2022 , we issued$360.0 million aggregate principal amount of 6.750% Senior Secured Notes due 2027 (the "Notes"). We used the net proceeds from the Notes to repay in full all outstanding borrowings under our existing term loan, including the Main Street Loan, and Revolving Facility, to pay any related premiums and to terminate in full our existing credit agreement and the commitments thereunder. We also entered into a new$45.0 million revolving credit facility, which remains undrawn and maturesFebruary 2027 . As we resume full operations and expand the number of expedition and tour itineraries and departures, our monthly cash usage will increase as we incur costs in operating expeditions and tours and spend 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 further impact of the COVID-19 pandemic on our operations.
Sources and Uses of Cash for the Years Ended
Net cash provided by operating activities was$32.5 million in 2021 compared to$92.3 million used in operations in 2020. The$124.7 million increase was primarily due to cash received from guests for current and future expeditions and receipt of the CERTS grant, partially offset by additional costs as we resumed operations during 2021. Net cash used by operating activities was$92.3 million in 2020 compared to$62.6 million provided by operations in 2019. The$154.8 million decrease was primarily due to the rescheduling of expeditions in 2020 due to the COVID-19 pandemic. Net cash used in investing activities was$114.7 million in 2021 compared to$155.5 million in 2020. The$40.8 million decrease was mainly due to a$58.8 million decrease in purchases of property and equipment in 2021, partially offset by$18.0 million in net cash used for the acquisitions of Off the Beaten Path, DuVine and Classic Journeys. Net cash used in investing activities was$155.5 million in 2020 compared to$100.1 million in 2019. The$55.4 million increase was mainly due to the$59.4 million increase in purchases of property and equipment in 2020, primarily related to spend on the two new polar ice-class vessels. Net cash provided by financing activities was$50.4 million in 2021 compared to$343.0 million in 2020. The$292.6 million decrease in cash provided by financing activities was primarily due to 2020 financing activities including borrowing$107.7 million for the final contracted payment of the National Geographic Endurance,$85.0 million of borrowing through theMain Street Expanded Loan Facility program, a$45.0 million drawdown of our revolving credit facility,$30.6 million borrowed for a contracted installment payment on the National Geographic Resolution and$85.0 million generated from the issuance of Preferred Stock partially offset by borrowing$61.7 million during 2021 for contracted payments on the National Geographic Resolution. Cash provided by financing activities was$343.0 million in 2020 compared to$24.6 million in 2019. The$318.4 million increase in cash provided was primarily due to borrowing$107.7 million for the final contracted payment of the National Geographic Endurance,$85.0 million of borrowing through theMain Street Expanded Loan Facility program, a$45.0 million drawdown of our revolving credit facility,$30.6 million borrowed for a contracted installment payment on the National Geographic Resolution and$85.0 million generated from the issuance of Preferred Stock, partially offset by the 2019 borrowing of$30.5 million for a contracted installment payment on the National Geographic Resolution. Contractual Obligations As ofDecember 31, 2021 , we had$15.9 million in charter commitments with$13.8 million due in 2022 and$2.1 million due in 2023, and$5.2 million in operating lease obligations with$1.6 million due in 2022,$1.4 million due in 2023,$1.5 million due in 2024 and$0.7 million due in 2025. We had approximately$558.5 million in long-term debt obligations as ofDecember 31, 2021 . Subsequent to the issuance of our$360.0 million of 6.75% senior secured notes due 2027 and the repayment of the existing term loan, including the Main Street Loan, and revolving credit facility, our future debt obligations were as follows,$24.1 million due in 2022,$23.3 million due in each of 2023 and 2024,$40.6 million due in 2025,$37.2 million due in 2026 and$441.3 million due thereafter. Future interest payments on our$360.0 million of 6.75% senior secured notes due 2027 and senior secured credit 47
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agreements will be approximately
Funding Sources and Needs
Debt Facilities
6.75% Senior Secured Notes due 2027
OnFebruary 4, 2022 , we issued$360.0 million aggregate principal amount of 6.75% senior secured notes. We used the proceeds from the notes to prepay in full all outstanding borrowings under our existing term loan, including the Main Street Loan, and revolving credit facility, and paid all related premiums, terminating in full our existing credit agreement and the commitments thereunder. Interest on the notes is payable semiannually in arrears onFebruary 15 andAugust 15 of each year, beginning onAugust 15, 2022 . The notes will mature onFebruary 15, 2027 , subject to earlier repurchase or redemption in accordance with the terms of the Indenture. New Revolving Credit Facility OnFebruary 4, 2022 , we entered into a new revolving credit facility, which includes an aggregate principal amount of$45.0 million maturingFebruary 2027 , including a letter of credit sub-facility in an aggregate principal amount of up to$5.0 million (the "Revolving Credit Agreement"). Borrowings under the facility will bear interest at a rate per annum equal to, at our option, an adjusted SOFR rate plus a spread or a base rate plus a spread. The Revolving Credit Agreement contains customary events of default provisions, affirmative and negative covenants as well as financial covenants. Previous Credit Facility OnMarch 27, 2018 , we entered into the Third Amended and Restated Credit Agreement (the "Amended Credit Agreement") providing for a refinancing and amendment of the terms of our prior secured credit facility. The Amended Credit Agreement provided for a$200.0 million senior secured term facility (the "Term Facility"), maturingMarch 27, 2025 , and a$45.0 million senior secured incremental revolving credit facility (the "Revolving Facility"), which included a$5.0 million letter of credit sub-facility. In connection with the Amended Credit Agreement, we capitalized$4.2 million related to lender and third-party fees. DuringMarch 2020 , we drew down the entire Revolving Facility which matures inMarch 2023 and$44.5 million of the Revolving Facility was outstanding as ofDecember 31, 2021 . OnAugust 7, 2020 , we amended our Term Facility and Revolving Facility to waive the application of the total net leverage ratio covenant throughJune 2021 . In connection with the amendment, the interest rate of the term loan was increased 125 basis points, to be paid-in-kind at maturity, a LIBOR minimum of 0.75% was added to the term loan and revolving credit facilities and certain covenants were amended to be more restrictive. OnDecember 10, 2020 , we amended our Term Facility and Revolving Facility to provide for the borrowing of a new tranche of incremental term loans under the Amended Credit Agreement in an amount of$85.0 million , maturing onDecember 11, 2025 , made under the Main Street Expanded Loan Facility (the "Main Street Loan"). Interest on the Main Street Loan was paid-in-kind for the first year and the principal was scheduled to amortize at a rate of 15% in each of the third and fourth years, with the remaining amounts to be paid at maturity. Voluntarily prepayment of the Main Street Loan was permitted without premium or penalty, other than customary "breakage costs" and fees for LIBOR-based loans. The Main Street Loan shall bore interest at a rate per annum of LIBOR for an interest period of 3-months plus 3.00%, for an aggregated rate of 3.21% as ofDecember 31, 2021 . DuringApril 2021 , we further amended our Amended Credit Agreement to, among other things, extend the waiver of the total leverage ratio covenant throughMarch 2022 , annualize EBITDA used in the covenant calculation throughDecember 31, 2022 and increase the interest rate spreads of the Term Facility, excluding the Main Street Loan Facility, and the Revolving Facility by 50 basis points. Certain other covenants under the Amended Credit Agreement continued to be more restrictive during the covenant waiver period. Borrowings under the Term Facility, as amended, bore interest at an adjusted Intercontinental Exchange ("ICE") Benchmark administration LIBOR, with a minimum of 0.75%, plus a spread of 5.25%, for an aggregated rate of 6.00% as ofDecember 31, 2021 . The Revolving Facility bore interest at an adjusted ICE Benchmark administration LIBOR plus a spread of 3.50%, for an aggregated rate of 3.60% as ofDecember 31, 2021 . In 2018, we entered into interest rate cap agreements to hedge a portion of our exposure to interest rate movements and manage our interest rate expense related to the Term Facility. The Amended Credit Agreement contained financial covenants that, among other things, (i) required us to maintain a total net leverage ratio defined as on any date of determination, the ratio of total debt on such date less up to$50.0 million of the unrestricted cash and cash equivalents to Adjusted EBITDA, as defined in the Amended Credit Agreement, for the trailing 12- 48
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month period of 5.0 to 1.00 untilJune 30, 2022 when the total net leverage ratio would be 4.75 to 1.00 thereafter; (ii) limit the amount of indebtedness we could incur generally and specifically for intercompany debt, debt incurred to finance acquisitions and improvements, for capital and synthetic lease obligations, for standby letters of credit, and in connection with refinancing; (iii) limit the amount we could spend in connection with certain types of investments; and (iv) require the delivery of certain periodic financial statements and an operating budget. The net leverage ratios covenant of Amended Credit Agreement were waived throughJune 2021 . As ofDecember 31, 2021 , we were in compliance with the covenants currently in effect. OnFebruary 4, 2022 , we used the net proceeds from the Notes to repay in full all outstanding borrowings under the Third Amended and Restated Credit Agreement, including the Main Street Loan, and Revolving Facility, to pay any related premiums and to terminate in full the agreement and the commitments thereunder.
Senior Secured Credit Agreements
OnJanuary 8, 2018 , we entered into a senior secured credit agreement (the "First Export Credit Agreement") withCitibank, N.A .,London Branch ("Citi") and Eksportkreditt Norge AS, (together with Garantiinstituttet, now known as Eksfin, Export Finance Norway), (together with Citi, the "Lenders"). Pursuant to the First Export Credit Agreement, inMarch 2020 we borrowed$107.7 million for the purpose of providing financing for up to 80% of the purchase price of our new polar ice-class vessel, the National Geographic Endurance. 70% of the loan is guaranteed by Eksfin, the official export credit agency ofNorway . The loan amortizes quarterly based on a twelve-year profile, with 70% maturing over twelve years from drawdown, and 30% maturing over five years from drawdown. InJune 2020 , we amended our First Export Credit Agreement to defer approximately$9.0 million in aggregate scheduled amortization payments originally due inJune 2020 throughMarch 2021 and to suspend the total net leverage ratio covenant fromJune 2020 throughJune 2021 . DuringJune 2021 , we further amended our First Export Credit Agreement to, among other things, extend the deferral of scheduled amortization payments throughDecember 2021 in the aggregate amount of$15.7 million , extend the waiver of its total net leverage ratio covenants throughMarch 31, 2022 , increase the interest rate spread by 50 basis points and annualize EBITDA used in its covenant calculation throughDecember 31, 2022 . The First Export Credit Agreement, as amended, bears interest at a floating interest rate equal to three-month LIBOR plus a margin of 3.50% per annum, for an aggregated rate of 3.70% over the borrowing period coveringDecember 31, 2021 . OnApril 8, 2019 , we entered into a senior secured credit agreement (the "Second Export Credit Agreement") with the Lenders. Pursuant to the Second Export Credit Agreement, the Lenders made available to us, at our option and subject to certain conditions, a loan in an aggregate principal amount of$122.8 million for the purpose of providing pre- and post- delivery financing for up to 80% of the purchase price of our new expedition ice-class cruise vessel, the National Geographic Resolution. Additionally, 70% percent of the loan is guaranteed by Eksfin. DuringSeptember 2021 the National Geographic Resolution was delivered and we have borrowed the$122.8 million under the agreement including drawing approximately$30.5 million in 2019,$30.6 million in 2020 and$61.7 million in 2021. The loan amortizes quarterly based on a twelve-year profile, with 70% maturing over twelve years from final drawdown, and 30% maturing over five years from final drawdown. InJune 2020 , we amended our Second Export Credit Agreement to suspend the total net leverage ratio covenant fromJune 2020 throughJune 2021 . DuringJune 2021 , we further amended our Second Export Credit Agreement to, among other things, extend the waiver of the total net leverage ratio covenants throughMarch 31, 2022 , increase the interest rate spread by 50 basis points and annualize EBITDA used in the covenant calculation throughDecember 31, 2022 . Certain other covenants continue to be more restrictive during the extended covenant waiver period. The Second Export Credit Agreement, as amended, bears a variable interest rate equal to three-month LIBOR plus a margin of 3.50% per annum, or 3.71% over the borrowing period coveringDecember 31, 2021 . The First Export Credit Agreement and Second Export Credit Agreement, as amended, contain financial covenants that, among other things, require us to maintain a total net leverage ratio defined as on any date of determination, the ratio of total debt on such date, less up to$50.0 million of the unrestricted cash and cash equivalents to Adjusted EBITDA, as defined in the Export Credit Agreement, for the trailing 12-month period of 4.75 to 1.00. The net leverage ratio covenants of our export credit agreements have been suspended throughMarch 2022 . As ofDecember 31, 2021 , we were in compliance with the covenants currently in effect. Other Our Off the Beaten Path subsidiary has a loan maturingJune 2023 for the purchase of guest transportation vehicles. The loan's original principal was$0.3 million , is collateralized by the vehicles and bears interest of 4.77% as ofDecember 31, 2021 . Off the Beaten Path also has an$0.8 million loan under a Main Street Expanded Loan Facility, originated onDecember 11, 2020 . For the first 12 months, interest is not payable and accrued to the principal balance, thereafter, monthly interest payments are required. 15% of the outstanding balance is due on bothDecember 2023 andDecember 2024 , with the remaining balance dueDecember 2025 . The loan bears a variable interest rate equal to one-month LIBOR plus a spread of 3.00%, or 3.21% as ofDecember 31, 2021 . This loan may be voluntarily prepaid at any time and from time to time, without premium or penalty, other than customary "breakage costs" and fees for LIBOR-based loans. 49
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Our DuVine subsidiary has aEUR 0.1 million State Assistance Loan related to the financial consequences of the COVID-19 pandemic, for the purpose of employment preservation. This loan maturesAugust 2025 , with monthly payments, and bears interest rate of 0.53%. Equity Preferred Stock OnAugust 31, 2020 , we issued and sold 85,000 shares of Series A Redeemable Convertible Preferred Stock, par value of$0.0001 , ("Preferred Stock") for$1,000 per share for gross proceeds of$85.0 million . The Preferred Stock has senior and preferential ranking to our common stock. The Preferred Stock is entitled to cumulative dividends of 6.00% per annum, and for the first two years, the dividends will be paid-in-kind. After the second anniversary of the issuance date, the dividends may be paid-in-kind or be paid in cash at our option. The Preferred Stock is convertible at any time, at the holder's election, into a number of shares of our common stock equal to the quotient obtained by dividing the then-current accrued value by the conversion price of$9.50 . At any time after the third anniversary of the issuance, we may, at our option, convert all, but not less than all, of the Preferred Stock into common stock if the closing price of shares of common stock is at least 150% of the conversion price for 20 out of 30 consecutive trading days. The number of shares of common stock received in such conversion shall be equal to the quotient obtained by dividing the then-current accrued value by the conversion price. At the six-year anniversary of the closing date, each investor has the right to request that we repurchase their Preferred Stock and any Preferred Stock not requested to be repurchased shall be converted into our common shares equal to the quotient obtained by dividing the then-current accrued value by the conversion price. During the year endedDecember 31, 2021 , 5,000 shares of Preferred Stock and related accrued dividends were converted by the holder into 566,364 shares of our common stock. As ofDecember 31, 2021 , the Preferred Stock could be converted, at the option of the holder, into approximately 9.1 million shares of our common stock. Funding Needs We generally rely on a combination of cash flows provided by operations and the incurrence of additional debt to fund obligations. A vast majority of guest ticket receipts are collected in advance of the applicable expedition date. These advance passenger receipts remain a current liability until the expedition date and the cash generated from these advance receipts is used interchangeably with cash on hand from other cash from operations. The cash received as advanced receipts can be used to fund operating expenses for the applicable future expeditions or otherwise, pay down credit facilities, make long-term investments or any other use of cash. We traditionally run a working capital deficit due primarily to a large balance of unearned passenger revenues and as ofDecember 31, 2021 we had working capital deficit of$79.1 million . As ofDecember 31, 2020 we had positive working capital of$73.4 million as a result of lower unearned passenger revenues while we were not operating, and higher cash balances driven by the debt borrowings and our Preferred Stock offering during the year. As ofDecember 31, 2021 and 2020, we had cash and cash equivalents, excluding restricted cash, of$150.8 million and$187.5 million , respectively. Our Board of Directors approved a stock and warrant repurchase plan ("Repurchase Plan") inNovember 2015 and increased the repurchase plan to$35.0 million inNovember 2016 . The Repurchase Plan authorizes us to purchase from time to time our outstanding common stock. Any shares purchased will be retired. The Repurchase Plan has no time deadline and will continue until otherwise modified or terminated at the sole discretion of our Board of Directors at any time. These repurchases exclude shares repurchased to settle statutory employee tax withholding related to the exercise of stock options and vesting of stock awards. DuringMarch 2020 , the Repurchase Plan was suspended due to the uncertain impact of the COVID-19 virus and our borrowings through the now-terminated Main Street Expanded Loan Facility program previously placed restrictions on stock repurchases. We have cumulatively repurchased 875,218 shares of common stock for$8.3 million and 6,011,926 warrants for$14.7 million , since plan inception. All repurchases were made using cash resources. The balance for the Repurchase Plan was$12.0 million as ofDecember 31, 2021 .
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with accounting principles generally accepted inthe United States of America , which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, the reported amounts of revenues and expenses during the reporting periods and the related disclosures in the consolidated financial statements and accompanying footnotes. Out of our significant accounting policies, which are described in Note 2-Summary of Significant Accounting Policies of our consolidated financial statements included elsewhere in this Form 10-K, certain accounting policies are deemed "critical," as they require management's highest degree of judgment, estimates and assumptions. While management believes its judgments, estimates and assumptions are reasonable, they are based on information presently available and actual results may differ significantly from those estimates under different assumptions and conditions. 50
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Table of Contents Ship Accounting Ships, including ship improvements and ships under construction, are our most significant assets, comprising over 80% of our non-current assets atDecember 31, 2021 . We make several critical accounting estimates with respect to our ship accounting. Given the very large and complex nature of our ships, our accounting estimates related to ships and determinations of ship improvement costs to be capitalized require considerable judgment and are inherently uncertain. We have to estimate the useful life of each of our ships as well as their residual values. We account for ship improvement costs by capitalizing those costs we believe add value to our ships and have a useful life greater than one year and depreciate those improvements over its estimated remaining useful life. The costs of repairs and maintenance, including minor improvement costs and drydock expenses, are charged to expense as incurred. If materially different conditions existed, or if we materially changed our assumptions of ship useful lives and residual values, our depreciation expense, loss on retirement of ship components and net book value of our ships would be materially different. In addition, if we change our assumptions in making our determinations as to whether improvements to a ship add value, the amounts we expense each year as repair and maintenance expense could increase, which would be partially offset by a decrease in depreciation expense, resulting from a reduction in capitalized costs. We believe we have made reasonable estimates for ship accounting purposes. Stock-Based Compensation We account for stock-based compensation issued to employees, non-employee directors or other service providers in accordance with Accounting Standards Codification 718, Compensation - Stock Compensation, that requires awards to be recorded at their fair value on the date of grant and amortized over the service period of the award. Stock-based compensation costs are recognized on a straight-line basis over the requisite service period of the award, which is generally the vesting term of the equity instrument issued. Income Taxes To measure deferred tax assets and liabilities, we provide a valuation allowance against deferred tax assets if, based upon the weight of available evidence, we do not believe it is "more-likely-than-not" that some or all of the deferred tax assets will be realized. We will continue to evaluate the deferred tax asset valuation allowance balances in all of our foreign andU.S. companies to determine the appropriate level of valuation allowances. While we believe that the amount of the recorded financial statement benefits and tax reserves reflect the more-likely-than-not criteria, it is possible that the ultimate outcome of current or future examinations may result in a reduction to the tax benefits previously recorded on our consolidated financial statements or may exceed the current income tax reserves in amounts that could be material.
Valuation of Long-Lived Assets
We review our long-lived assets, principally our vessels and operating rights, for impairment whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable. Upon the occurrence of a triggering event, the assessment of possible impairment is based on our ability to recover the carrying value of our asset, which is determined by using the asset's estimated undiscounted future cash flows. If these estimated undiscounted future cash flows are less than the carrying value of the asset, an impairment charge is recognized for the excess, if any, of the asset's carrying value over its estimated fair value. A significant amount of judgment is required in estimating the future cash flows and fair values of our vessels and operating rights.
Future Application of Accounting Standards
Refer to Item 8 of this Annual Report Note 2-Summary of Significant Accounting Policies for further information on Recent Accounting Pronouncements.
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