Lindblad Expeditions Holdings, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023. Unaudited results; comparisons are with Q1 2022 unless otherwise stated. Lindblad operates expedition ships and land-based travel brands through its Lindblad and Land Experiences segments.
Financial results and key metrics
| Metric | Q1 2023 | Q1 2022 | Change |
|---|---|---|---|
| Tour revenue | $143.4 million | $67.8 million | +111% |
| Operating income (loss) | $12.5 million | $(34.2) million | Improved $46.7 million |
| Net income (loss) | $0.8 million | $(42.1) million | Improved $42.9 million |
| Net loss available to common stockholders | $(0.4) million; $(0.01) per share | $(43.0) million; $(0.85) per share | Loss narrowed |
| Adjusted EBITDA (non-GAAP) | $27.2 million | $(21.2) million | Improved $48.4 million |
| Net cash from operating activities | $2.1 million | $5.2 million | Down $3.1 million |
Operating margin was approximately 8.7% of revenue, versus a negative 50.5% in Q1 2022; consolidated net margin was approximately 0.5%. The common-stockholder loss reflects the $1.1 million preferred-stock dividend despite consolidated net income.
- Segments: Lindblad revenue was $115.5 million, up 130%, with $12.1 million operating income versus a $33.6 million loss. Land Experiences revenue was $27.9 million, up 59%, with $0.3 million operating income versus a $0.7 million loss.
- Lindblad operating indicators: Occupancy increased to 81% from 66%; available guest nights rose to 83,184 from 48,546. Net yield per available guest night was $1,205 versus $739.
- Cash and liquidity: March 31 cash and cash equivalents were $84.0 million and restricted cash was $36.7 million. Current assets were $175.9 million versus current liabilities of $328.0 million, a $152.1 million working-capital deficit, primarily reflecting advance passenger receipts.
- Debt: Debt principal was approximately $560.0 million, with a reported carrying balance of $547.6 million after deferred financing costs. The company had $360 million of 6.75% senior secured notes due 2027 and export-credit debt bearing variable rates of 8.65% and 8.46% at quarter-end. Interest expense was $10.5 million, up $1.8 million; management cited higher rates.
- Cash flows and investment: Investing activities provided $8.7 million, including $15.2 million from securities sales, offset partly by $6.4 million of property and equipment purchases. Financing activities used $6.1 million, mainly for export-credit repayments. Cash, cash equivalents and restricted cash totaled $120.7 million at quarter-end.
Material changes and management commentary
Revenue recovery reflected more voyages and trips, higher pricing, and stronger occupancy compared with the pandemic-affected prior-year quarter. Operating costs also rose as operations expanded: cost of tours increased 24%, general and administrative expense 28%, and selling and marketing expense 68%. Management attributed the expense increases to additional operations, personnel, commissions, credit-card costs, and marketing to support future bookings.
Management reported full-year 2023 bookings 45% ahead of bookings for 2019 at the same point in that year. It stated that cash on hand and expected operating cash inflows should be sufficient for operations, debt service, and necessary capital expenditures. The filing provides no specific full-year revenue or earnings guidance. Results are seasonal and the company cautions that quarterly results may not indicate full-year performance.
Financing, risks, and contingencies
- Subsequent financing: In May 2023, the company issued $275 million of 9.00% senior secured notes due 2028, primarily to repay outstanding export-credit facilities. This increases the importance of monitoring interest expense and the effect of the refinancing on debt costs and maturities.
- Covenants: The company said it was in compliance with covenants at March 31, 2023. Export-credit covenant calculations were amended to use annualized EBITDA for specified periods through September 30, 2023. The revolving facility provides $45 million of commitments; the filing does not state that it was drawn.
- Interest-rate sensitivity: Management estimated that a 100-basis-point increase in rates on variable-rate debt would increase annual interest expense by approximately $2.0 million, based on quarter-end balances.
- Preferred stock: Outstanding Series A preferred stock carries cumulative 6% dividends. At March 31, 2023, it and accumulated dividends were convertible at holders’ option into approximately 7.6 million common shares.
- Other commitments: Minimum vessel charter payments were $23.8 million for 2023 and 2024 combined. The company also disclosed ordinary-course legal claims and regulatory proceedings, with protection and indemnity insurance expected to cover damages.
- Key business risks identified: Travel demand and economic conditions, inflation, fuel and interest costs, geopolitical events, weather and operational disruptions, labor and maintenance costs, competition, regulatory requirements, debt covenant compliance, and maintaining National Geographic and WWF relationships.
Important facts for investors to verify
- Whether booking strength translates into completed trips, revenue, and cash generation across the full year, accounting for seasonality.
- The effect of the May 2023 refinancing: export-credit debt repaid, total debt and maturities, collateral, and the higher 9.00% coupon.
- Liquidity available for use: distinguish unrestricted cash from restricted cash and assess reliance on advance passenger deposits against the working-capital deficit.
- Performance excluding non-GAAP adjustments: compare Adjusted EBITDA with GAAP operating income, net income, and operating cash flow.
- Exposure to variable rates, covenant requirements, preferred-stock dividends and potential dilution, and vessel charter and capital spending commitments.