Lindblad Expeditions Holdings, Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022; comparisons are with the corresponding 2021 periods. Amounts are in U.S. dollars. The company operates expedition cruises and land-based adventure travel through its Lindblad and Land Experiences segments.
Financial performance and position
- Q2 revenue: $90.9 million, up from $15.3 million. Lindblad contributed $64.0 million and Land Experiences $26.9 million.
- Q2 operating results: Operating loss was $19.3 million, improved from $32.6 million. Cost of tours was $62.5 million; operating expenses also reflected higher personnel, marketing, commission and depreciation costs.
- Q2 net loss: $28.6 million, versus $35.7 million. Net loss available to common stockholders was $30.0 million, or $0.59 per share, compared with $36.6 million, or $0.71 per share.
- First-half results: Revenue was $158.8 million versus $17.0 million; operating loss was $53.6 million versus $63.7 million; net loss was $70.7 million versus $69.6 million. Loss per share was $1.43 versus $1.38.
- Adjusted EBITDA (non-GAAP): Q2 loss of $6.2 million versus $23.0 million; first-half loss of $27.4 million versus $43.8 million.
- Cash flow: First-half operating cash flow was $18.6 million, compared with $21.8 million. Investing used $23.6 million and financing provided $8.0 million. Cash, cash equivalents and restricted cash totaled $175.7 million at June 30.
- Liquidity and debt: Unrestricted cash was $126.9 million and restricted cash $48.8 million. Debt principal totaled $578.2 million. The company reported a $123.5 million working-capital deficit. Its new $45 million revolving facility was undrawn.
- Operating metrics: Lindblad Q2 occupancy was 75%, versus 78% in Q2 2021; available guest nights rose to 55,413 from 6,270 as operations resumed.
Material changes and notable items
- All ten owned vessels operated during Q2 as the company continued its recovery from pandemic-related suspensions. Revenue growth largely reflected the return of trips; 2022 comparisons also include acquired land-travel businesses, including Classic Journeys.
- In February, the company issued $360 million of 6.75% senior secured notes due 2027 and refinanced its prior credit facilities. First-half results included a $9.0 million write-off of deferred financing costs and $1.9 million of related fees and other expenses.
- First-half results included $11.6 million of income recognized from the remaining CERTS grant for eligible expenses. Preferred-stock conversions added approximately 2.1 million common shares during the first half; remaining preferred shares could convert into approximately 7.3 million shares.
- Unearned passenger revenue rose to $271.0 million from $212.6 million at year-end 2021, reflecting advance customer payments. These amounts are liabilities for future travel, not recognized revenue.
Outlook, risks and contingencies
- No specific full-year revenue or earnings guidance is provided. Management said 2023 bookings were 26% ahead of bookings for full-year 2020 at the same point in 2019, while also citing elevated cancellations and softer near-term demand.
- Management expects cash on hand and future operating inflows to fund operations, debt service and necessary capital spending if the operational ramp proceeds as expected. It cautioned that cash use will rise with trip operations, marketing, fuel costs and inflation, and that future operating cash flow is not assured.
- COVID-19 restrictions had diminished, but some itineraries remained affected by restrictions and the Russia-Ukraine conflict. Weather, mechanical failures, demand, fuel prices, labor costs and the ability to maintain National Geographic arrangements are among the identified risks.
- The company said it was in compliance with covenants then in effect and expected compliance over the next 12 months. Net-leverage covenant waivers on the export credit agreements were extended through December 31, 2022. Management’s outlook is conditional on continued recovery.
- Management reported effective disclosure controls and no material change in internal control over financial reporting. Ordinary-course legal claims and regulatory matters are disclosed; the company expects insurance to cover damages.
Important facts for investors to verify
- Whether advance bookings convert into completed travel and cash receipts, given cancellations, refunds and itinerary changes.
- How much reported cash is available for general use versus restricted, and how the working-capital deficit and advance passenger liabilities evolve.
- Progress toward covenant compliance after the December 31, 2022 waiver period, including debt service and interest-rate exposure.
- Effects of fuel, inflation, labor and operating costs on margins as the fleet and land businesses ramp up.
- Potential dilution and preferred-stock obligations, including the 6% cumulative dividend and conversion rights.