Lindblad Expeditions Holdings, Inc. — Q1 2021 Form 10-Q
Business context and reporting period
Unaudited results cover the three months ended March 31, 2021, compared with the same period in 2020. Lindblad operates expedition cruises and land-based travel businesses. Due to COVID-19 and travel restrictions, the company suspended or rescheduled most trips departing March 16, 2020 through May 31, 2021.
Key financial metrics
| Metric | Q1 2021 | Q1 2020 |
|---|---|---|
| Tour revenue | $1.8 million | $81.2 million |
| Operating income (loss) | $(31.1) million | $2.3 million |
| Net income (loss) | $(33.9) million | $(2.5) million |
| Net loss available to stockholders | $(34.5) million | $(1.9) million |
| Loss per share, basic and diluted | $(0.66) | $(0.04) |
| Adjusted EBITDA, non-GAAP | $(20.8) million | $10.6 million |
| Net cash from (used in) operating activities | $(6.9) million | $15.4 million |
| Net cash used in investing activities | $(10.7) million | $(116.7) million |
At March 31, 2021, cash and cash equivalents were $163.9 million and restricted cash was $22.4 million. Total debt principal was $498.4 million; the balance-sheet carrying amount was $485.2 million after deferred financing costs. Working capital was $30.2 million, down from $73.4 million at December 31, 2020. Unearned passenger revenue was $149.3 million. The company reported stockholders’ equity of $4.1 million, alongside $95.6 million of mezzanine equity for preferred stock and redeemable noncontrolling interests.
Material changes versus the prior comparable period
- Revenue fell 98% year over year as nearly all expeditions and trips were cancelled or rescheduled. Lindblad segment revenue declined 99% to $0.5 million; Land Experiences revenue declined 89% to $1.3 million.
- The operating result swung from $2.3 million income to a $31.1 million loss. Lower tour, marketing, and administrative costs only partly offset the collapse in revenue; depreciation and amortization increased 23% to $8.2 million.
- Interest expense increased to $5.7 million from $3.1 million, reflecting higher borrowings and interest rates. The prior-year period included a $3.4 million foreign-currency loss; Q1 2021 recorded a $0.1 million gain.
- Operating cash flow moved from $15.4 million provided to $6.9 million used. Cash, cash equivalents, and restricted cash decreased by $18.1 million during the quarter.
- The company acquired 90.1% of Off the Beaten Path and 70% of DuVine for an aggregate purchase price of $10.6 million, including $1.8 million in company stock. Their Q1 contribution was immaterial; purchase accounting valuations remained in progress.
Outlook, management commentary, risks, and unusual items
- Management planned to resume ship operations with vaccinated guests in Alaska and the Galápagos beginning June 2021, subject to health authorities, and was working toward additional destinations in the second half of 2021. The filing provides no quantified revenue or earnings guidance.
- Management estimated current monthly cash use at approximately $10–15 million, excluding guest payments for future travel and requested refunds. Cash use was expected to rise during preparations to restart operations. Management believed available resources and planned actions could meet obligations for 12 months from April 30, 2021, but emphasized uncertainty around travel restrictions, demand, and the restart timeline.
- Bookings for full-year 2022 were reported 39% ahead of bookings for 2021 at the comparable date a year earlier and 32% ahead of 2020 at the comparable date two years earlier. The company reported more than $92 million in new bookings since the start of 2021; most guests affected by 2021 cancellations had selected future travel credits as of April 24.
- At March 31, the company said it was compliant with covenants then in effect; the total net leverage ratio covenant waiver was due to expire in June 2021. On April 26, it extended the waiver through March 31, 2022, adjusted covenant EBITDA calculations through year-end 2022, and increased interest spreads on certain debt, with additional interest payable in cash. Other covenants remained more restrictive.
- On April 1, the company drew an additional $15.5 million under its second export credit agreement for the National Geographic Resolution, scheduled for delivery in Q4 2021.
- The company disclosed a material weakness in internal control over financial reporting: inadequate documentation evidencing review of certain journal entries and account reconciliations. Management said it was enhancing training, review documentation, and oversight; it nevertheless believed the financial statements fairly presented the periods reported.
- COVID-19 remains the central operating and liquidity risk. Other disclosed risks include debt covenant compliance, future financing needs, vessel construction delays or cost overruns, travel and regulatory restrictions, and interest-rate and foreign-exchange exposure. Management reported no impairment of goodwill or long-lived assets in its March 31 assessments.
Most important facts for investors to verify
- Whether the planned June 2021 restart and subsequent expansion proceeded, and the resulting pace of bookings, guest payments, refunds, and cash usage.
- Cash availability and debt service capacity, including the effects of the April credit amendment, higher cash interest, covenant terms, and remaining vessel payments.
- Progress in remediating the material weakness and whether management later determined the controls were effective.
- Final purchase accounting and subsequent performance for Off the Beaten Path and DuVine, including potential costs from redeemable minority interests.
- Delivery timing and remaining funding requirements for the National Geographic Resolution.