Lindblad Expeditions Holdings, Inc. — 2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020. The filing was signed March 12, 2021. Lindblad operates small-ship expedition cruises and land-based adventure travel through its Lindblad and Natural Habitat segments.
Financial performance and condition
| Metric | 2020 | 2019 |
|---|---|---|
| Tour revenue | $82.4 million | $343.1 million |
| Operating income (loss) | $(88.4) million | $33.2 million |
| Net income (loss) | $(100.1) million | $18.7 million |
| Adjusted EBITDA, non-GAAP | $(52.2) million | $66.6 million |
| Net cash from (used in) operations | $(92.3) million | $62.6 million |
| Capital expenditures | $155.5 million | $96.0 million |
| Cash and cash equivalents, excluding restricted cash | $187.5 million | $101.6 million |
| Total debt principal | $496.5 million | $230.0 million |
Revenue fell 76%, primarily because COVID-19 caused cancellations, disruptions and rescheduling. Lindblad segment revenue declined 74% to $69.6 million; Natural Habitat revenue declined 82% to $12.7 million. Both segments reported operating losses. The 2020 net loss included $16.7 million of net interest expense and a $4.8 million foreign-currency loss. Basic and diluted loss per share were both $2.01.
Unaudited fourth-quarter 2020 tour revenue was $0.4 million and net loss was $30.2 million, compared with $75.8 million of revenue and $0.1 million of net income in fourth-quarter 2019.
Operating cash flow swung from $62.6 million provided in 2019 to $92.3 million used in 2020. Investing activities used $155.5 million, mainly for the two polar-vessel builds; financing activities provided $343.0 million. At year-end, current assets were $229.2 million and current liabilities were $155.8 million, for reported working capital of $73.4 million. Restricted cash was an additional $17.0 million. Balance-sheet long-term debt, net of deferred financing costs and including current maturities, was $482.6 million.
Material changes and financing
- Expeditions departing March 16, 2020 through May 31, 2021 were suspended or rescheduled for the majority of the program. Lindblad reduced operating expenses, furloughed staff, cut planned maintenance capital expenditures by more than $15 million, and curtailed marketing.
- The company drew $45.0 million on its revolving facility, borrowed $107.7 million under an export-credit agreement for the National Geographic Endurance, and drew $30.6 million toward construction of the National Geographic Resolution.
- It raised $85.0 million gross through Series A redeemable convertible preferred stock, with a 6% cumulative annual dividend, convertible at $9.50 per common share and holder redemption rights at year six. The preferred stock is senior to common stock.
- In December, it borrowed an additional $85.0 million under the Main Street Expanded Loan Facility. Debt covenants were amended or waived through June 2021; the term-loan rate was increased by 125 basis points and certain covenants tightened. The company reported compliance with covenants in effect at year-end and no material debt maturities before 2023.
- Property and equipment rose to $482.7 million, largely reflecting vessel construction and delivery. The National Geographic Endurance entered service in March 2020; the National Geographic Resolution was scheduled for delivery in Q4 2021.
Outlook, risks and unusual items
Management’s liquidity forecast assumed operations would resume and ramp up during 2021, with rescheduled operations starting in June. Management said available liquidity should cover obligations for the 12 months from March 12, 2021, but estimated cash use while vessels were inactive at approximately $10–15 million per month, excluding future-travel receipts and requested refunds. The filing provides no formal earnings or revenue guidance and emphasizes that timing of reopening, demand recovery and cash refunds cannot be predicted reliably.
Bookings for second-half 2021 were 1% ahead of the comparable 2020 booking position despite fewer available guest nights, and 33% ahead of the comparable 2019 position. Full-year 2022 bookings were 32% ahead of the comparable 2021 booking position. The company reported more than $110 million of new bookings since March 1, 2020; as of February 25, 2021, most guests affected by cancellations had chosen future-travel credits.
- COVID-19 and travel recovery: Continued restrictions, weak demand, refunds, added health protocols and the possibility of further suspensions could pressure liquidity and results.
- Debt and financing: High debt, variable rates, covenant requirements and future refinancing or capital needs could constrain operations. A hypothetical 1% change in unhedged variable rates was estimated to affect annual interest expense by about $1.0 million.
- Control weakness: Management concluded internal control over financial reporting and disclosure controls were ineffective at year-end because review documentation for certain journal entries and account reconciliations was inadequate. The auditor issued an adverse opinion on internal control. The auditor separately gave an unqualified opinion on the financial statements.
- Impairment and estimates: Despite the pandemic, management recorded no goodwill or long-lived-asset impairment after its year-end analyses. Those assessments rely on forecasts and significant assumptions.
- Other exposures: Risks include construction delays or overruns, competition and pricing, the National Geographic alliance, destination access and permits, weather, regulatory requirements, foreign exchange, and health and safety incidents.
- Subsequent acquisitions: In February and March 2021, subsidiaries acquired majority interests in Off the Beaten Path and DuVine Cycling & Adventure for $8.7 million cash and $1.8 million in company shares in aggregate; the filing described them as immaterial individually and together.
Key facts for investors to verify
- Whether expedition operations restarted as assumed and whether bookings converted into departures, revenue and cash collections.
- Actual monthly cash burn, refund requests, use of future-travel credits, and liquidity after the reporting date.
- Debt balances, covenant status after the June 2021 waivers, interest costs and funding for the National Geographic Resolution.
- Progress and evidence supporting remediation of the material weakness in financial reporting controls.
- Whether management’s no-impairment assumptions remain supportable as operating forecasts and vessel utilization evolve.
- Preferred-stock dividend accruals, conversion or redemption exposure, and dilution to common shareholders.