Lindblad Expeditions Holdings, Inc. — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021. Dollar amounts below are in millions unless stated otherwise. The company operates expedition cruises and land-based adventure travel businesses.
Financial performance and liquidity
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Tour revenue | $15.3 | $(0.3) | $17.0 | $81.0 |
| Operating loss | $(32.6) | $(34.7) | $(63.7) | $(32.5) |
| Net loss | $(35.7) | $(39.9) | $(69.6) | $(42.4) |
| Adjusted EBITDA, non-GAAP | $(23.0) | $(25.5) | $(43.8) | $(14.9) |
| Operating cash flow | Not separately stated | $21.8 | $(36.8) |
- Q2 revenue recovered from a negative prior-year figure, reflecting resumed trips; the six-month comparison remained sharply lower because of pandemic-related cancellations, disruptions and rescheduling. The prior-year quarter’s negative revenue reflects net adjustments/refunds; the filing does not give a simple positive comparable revenue base.
- Q2 operating loss narrowed by $2.2 million year over year, but the first-half operating loss nearly doubled. First-half net loss included $11.4 million of net interest expense; interest expense rose from $7.2 million in the prior-year half.
- Margins remained negative: operating loss was $32.6 million on $15.3 million Q2 revenue. A meaningful year-over-year margin comparison is limited by negative Q2 2020 revenue and the exceptionally low operating activity.
- First-half operating cash flow improved by $58.6 million, primarily because of guest deposits for future travel, not a return to profitability. Investing cash outflow was $32.4 million, including $25.2 million of property and equipment purchases and $7.2 million net acquisition spending. Financing cash inflow was $9.6 million.
- At June 30, cash and equivalents were $160.1 million and restricted cash was $43.5 million. Total debt principal was $514.7 million ($499.2 million carrying value after financing costs); current debt was $9.4 million. Working capital was a $2.5 million deficit, versus $73.4 million positive at year-end 2020. Unearned passenger revenue was $203.5 million, up from $120.7 million at year-end.
- Stockholders’ equity was negative $32.9 million. Series A redeemable convertible preferred stock had a $86.4 million balance and a 6% cumulative dividend; $2.6 million was accrued in the first half.
Material changes and operating developments
- Ship operations restarted in June: three vessels began Alaska voyages and one began Galápagos voyages. By July 31, eight of nine owned vessels were operating, with additional destinations and vessels restarting after quarter-end.
- First-half Lindblad segment revenue fell to $7.2 million from $69.5 million, and its operating loss widened to $58.3 million from $29.5 million. Land Experiences revenue was $9.9 million versus $11.5 million, with operating loss widening to $5.3 million from $3.0 million.
- The company acquired 90.1% of Off the Beaten Path and 70% of DuVine in Q1 for aggregate consideration of $10.6 million, including $1.8 million in stock. Preliminary acquisition accounting included $11.5 million of goodwill and $6.5 million of intangible assets; valuations were not final.
- Capital spending and debt also reflect construction of the National Geographic Resolution, scheduled for delivery in Q4 2021. The company drew $15.5 million under its second export credit agreement during April.
Outlook, risks and other notable items
- Management reported 2022 bookings 36% ahead of 2021 bookings at the comparable date and 37% ahead of 2020; new bookings since the start of 2021 exceeded $174 million. As of August 3, most guests affected by 2021 cancellations had chosen future travel credits.
- Management expects operating cash use to rise as voyages resume, ships are prepared, marketing increases and staffing returns. It said it believes available resources and its current forecast can meet obligations for the 12 months from August 4, 2021, but emphasized that COVID-19 restrictions, cancellations and travel demand remain uncertain and could materially affect results and liquidity.
- Credit amendments extended the total net leverage covenant waiver through March 2022, deferred $15.7 million of scheduled export-facility amortization through December 2021, and raised certain interest-rate spreads. The company reported covenant compliance at June 30, 2021. Variable-rate debt exposes it to interest-rate risk; a hypothetical 100-basis-point LIBOR increase was estimated to raise annual interest expense by about $3.8 million.
- No impairment was identified in the June 2021 long-lived-asset review. Legal matters arise in the ordinary course; the filing describes no specific material loss estimate. Management said disclosure controls were effective and that it had remediated the material weakness identified at year-end 2020 concerning documentation of reviews of journal entries and reconciliations.
Important facts for investors to verify
- Whether vessel operations and guest demand continued to recover after the July 2021 operating update, and how bookings converted into completed travel and recognized revenue.
- How much of reported operating cash flow came from advance guest deposits, and the timing and potential refund or credit obligations tied to those deposits.
- Liquidity available after separating restricted cash, and the company’s ability to service $514.7 million of debt as expenses ramp up.
- Final purchase accounting for Off the Beaten Path and DuVine, and delivery timing, total cost and financing of the National Geographic Resolution.
- Terms and potential dilution or redemption implications of the preferred stock, which was convertible into approximately 9.4 million common shares at June 30, 2021.