Lindblad Expeditions Holdings, Inc. — Q3 2023 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2023. The company operates expedition cruises and land-based travel through its Lindblad and Land Experiences segments. Financial statements are unaudited; amounts below are in U.S. dollars unless stated otherwise.
Financial performance and position
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Tour revenue | $176.0m | $144.8m | $444.2m | $303.5m |
| Operating income (loss) | $20.5m | $5.8m | $24.4m | $(47.8)m |
| Net income (loss) | $8.5m | $(5.5)m | $(14.5)m | $(76.2)m |
| Adjusted EBITDA, non-GAAP | $34.0m | $18.6m | $67.4m | $(8.8)m |
| EPS available to stockholders | $0.08 | $(0.18) | $(0.40) | $(1.60) |
- Q3 operating margin was approximately 11.6%, compared with 4.0% a year earlier; nine-month operating margin was approximately 5.5%, versus a loss margin of 15.7% in 2022.
- Q3 net income attributable to Lindblad was $5.6m; after preferred dividends, $4.5m was available to stockholders. For the nine months, the corresponding figures were a net loss attributable to Lindblad of $18.2m and a $21.5m loss available to stockholders.
- Cash flow, nine months: Operating activities provided $35.3m, versus $0.8m in 2022; investing used $7.6m, versus $29.6m; financing provided $61.0m, versus $2.1m. Cash, cash equivalents and restricted cash increased by $88.8m to $204.8m.
- Liquidity at September 30: Unrestricted cash was $168.0m and restricted cash was $36.8m. Working capital deficit was $59.9m, improved from $157.8m at December 31, 2022; unearned passenger revenue was $250.6m.
- Debt: Principal outstanding was $635.1m (carrying amount, net of financing costs, $620.9m), compared with $565.8m principal at year-end 2022. Debt included $360m of 6.75% notes due 2027 and $275m of 9.00% notes due 2028. The $45m revolving facility had no borrowings. Management reported covenant compliance.
Material changes versus the prior comparable period
- Revenue rose 22% in Q3 and 46% for the nine months, reflecting additional trips and voyages and higher pricing. Lindblad segment revenue grew 30% in Q3 and 57% year to date; Land Experiences grew 10% and 26%, respectively.
- Lindblad Q3 occupancy was 81%, unchanged year over year; year-to-date occupancy increased to 79% from 75%. Q3 available guest nights grew 21% and net yield per available guest night increased 9% to $1,110.
- Operating results improved substantially, particularly in the Lindblad segment, as greater capacity and pricing lifted revenue. Higher operating, personnel, commission and marketing expenses partly offset the improvement. Land Experiences Q3 operating income was essentially flat at $13.0m.
- Interest expense rose to $11.5m in Q3 from $8.4m and to $33.6m for nine months from $26.5m, primarily due to higher rates and increased borrowings.
Outlook, risks and unusual items
- The filing gives no specific earnings or revenue guidance. Management said cash on hand and expected operating cash inflows should fund operations, debt service and necessary capital expenditures for at least the next 12 months.
- Management reported full-year 2023 bookings 42% ahead of bookings for 2019 at the comparable point. Results are seasonal and are not necessarily indicative of full-year performance.
- In May 2023, the company issued $275m of 9.00% notes, using proceeds primarily to repay prior export-credit agreements. The refinancing generated a $3.9m write-off of deferred financing costs and other expenses during the nine-month period.
- Preferred stock carries cumulative 6% dividends, paid in kind during 2023. The outstanding preferred shares and accumulated dividends were convertible into approximately 7.8m common shares at September 30, creating potential dilution.
- Risks cited include geopolitical conflict, inflation, fuel and labor costs, travel demand, disease outbreaks, political unrest, weather and climate impacts, vessel maintenance disruptions, competition, partner relationships, regulation and debt-covenant compliance. The company reported ordinary-course claims and legal proceedings and said insurance would be expected to cover damages.
- Natural Habitat renewed its WWF partnership through December 31, 2028. The company reported effective disclosure controls as of September 30, 2023 and no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether booking momentum and advance reservations convert into completed travel and operating cash flow, given the seasonal business and $250.6m of unearned passenger revenue.
- Debt servicing capacity and refinancing economics, particularly the 9.00% notes, rising interest expense and covenant requirements.
- Whether higher revenue and occupancy can sustain margins as operating, personnel, commission and marketing costs increase.
- Potential dilution and cash-versus-in-kind dividend implications of the preferred stock, including its conversion and repurchase terms.
- Capital expenditure and vessel maintenance needs, and exposure to fuel costs, disruptions, weather and geopolitical conditions.