Q2 2021 Lindblad Expeditions Holdings Inc Earnings Call
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Good morning, and welcome to the Lindblad expeditions, Inc. Second quarter 2021 financial results conference call.
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Thank you Chris Good morning, everyone and thank you for joining us for Lindblad is 2021 second quarter earnings call with me on the call today is Dulce Burley Lindblad, Chief Executive Officer, and Sven Lindblad, but founder and co chair of Lindblad expeditions doubts will begin with some opening comments and then I will follow with some details on our Fi.
Results and liquidity before we open the call for Q&A you can find our latest earnings release in the Investor Relations section of our website.
Before we get started let me remind everyone that the company's comments today may include forward looking statements those expectations are subject to risks and uncertainties that may cause actual results and performance to be materially different from these expectations. The company cannot guarantee the accuracy of any forecast or estimates and we.
<unk> no obligation to update any such forward looking statements.
If you would like more information on the risks involved in forward looking statements. Please see the company's SEC filings. In addition, our comments may reference non-GAAP financial measures a reconciliation of the most directly comparable GAAP financial measures and other associated disclosures are contained in the company's earnings release.
That out of the way, let me turn the call over to Doug.
Thanks, Craig and thank you all for joining US. This morning as most of you know this is my first earnings call since joining lindblad in May and I'm excited to begin establishing a dialogue with the investment community, while providing an update on our business. It's a great privilege to succeed our founder and now co chair of Lindblad expeditions.
Spend lindblad in the CEO role I would like to publicly thank spend for his partnership thus far and for his very generous efforts in helping me on board as leader of this remarkable company over.
Over the past 40 years spend has built the preeminent expedition travel business that is the gold standard for providing high quality and immersive experiences and the world's most extraordinary destinations.
I look forward to partnering with spin his co chair Mark on the Lindblad expeditions team and our board of directors as we continue to build the company and explore the wonderful potential. We all believe is ahead of us.
My professional background has been focused on growing companies that I described as being in the joy business and being able to serve as CEO for the company that pioneered expedition travel fits well with my experience.
The opportunity to lead Lindblad also embodies 2 important themes in my life first I have a deep personal connection with lindblad its mission to help preserve our planet and educate people across the world about the natural wonders that we must protect in my youth. My father served at the Environmental Commissioner for the state of New York and then.
As the president of the National Audubon Society. So I grew up in an environmentalist family.
Lee I have devoted the majority of my professional career to creating memorable guest experiences lindblad does this on a grand scale, creating true life experiences for our guests and I consider it a great honor to build upon what spend and the team have delivered for so many years.
In my first 10 weeks with the company I have been focused on learning about our team our product our guests the work processes inside the company our partners the industry in which we operate and our competitive positioning.
As you can imagine I have also been very focused on supporting our team as we ensure a strong return to operations. During the COVID-19 pandemic. This is actually the second time I have done. This says my previous company top golf Digest that throughout 2020.
Before I discuss where we are today I do think it is important to highlight that the thorough plan. The company has been executing during the pandemic, which included swiftly reducing costs across all aspects of the business and Opportunistically raising capital is enabling us to return to operations as a vibrant company poised to regain.
The momentum lindblad was delivering prior to them pandemic and with ample liquidity in support of long term growth initiatives.
Craig will walk you through our financial position in a moment, but while COVID-19 is not yet in our rearview mirror, we have returned to sailing with over $200 million in cash on our balance sheet.
We are tremendously excited to once again be taking guests to the world's most remarkable destinations. We began in early June with 2 ships in Alaska and 1 in the Galapagos and given the significant demand for our Alaska Itineraries, we were able to quickly launch our 2 remaining U S ships shortly thereafter.
And that momentum has continued throughout July.
Happy to say that today, we have 8 out of our 9 ships operating across Alaska.
Apple gross and Iceland, our ability to return to operations. So quickly once the opportunity presented itself is a testament to the hard work and denim education of our employees. The relationships we have cultivated globally over the last 4 decades. The robust protocols, we have continually developed over the past 16 months.
The flexibility we have as a company given the size of our ships and the destinations we visit and the desire of our loyal guests to return to exploring the world's most amazing geographies.
A great example of our nimbleness is the launch of our newest expedition ship the National Geographic endurance. She was delivered last March and we have been eagerly waiting to have guests experience. All she has to offer her original post COVID-19 voyage was scheduled to be the northeast passage followed by the exploration of the Arctic.
But due to restrictions in Norway, and Russia, we had to quickly come up with new options. The expedition team works diligently to develop unique itineraries in a geography, we have been traveling to 4 years, Iceland and then we reached out to guests scheduled on the original departure to see if they would be interested in.
Joining us on the amended voyage.
This could have been particularly challenging as many of the guests on these voyages had already been to Iceland and many multiple times, but the response was overwhelmingly positive and the endurance is now poised to enjoy its new summer season.
Before moving on I would like to mention that the feedback we are receiving regarding the endurance and what she has to offer has been phenomenal the endurance along with her soon to be delivered sister ship the national geographic resolution represent a new standard in polar class vessels and expedition ships in general.
She is technically innovative including her unique X bow design, which allows us to reach even more remarkable destinations deep in the polar ice and the guest amenities and accommodations set a new standard for our industry. She has a marvel in every way and we are excited to finally have guests on board.
On the endurance and across every geography and ship we operate the protocols, we have put in place to mitigate the risks for our guests and crew, while enabling the immersive experiences of our guests are accustomed to have held up very well.
On the other stringent protocols, we are requiring 100% of our guests 12 and over and all of our crew to be vaccinated, while also requiring negative PCR tests 3 to 5 days ahead of embarkation and negative antigen tests immediately prior to boarding our ships.
These company mandates are in addition to local state National and international standards that may apply.
We are also well prepared to handle any COVID-19 circumstances that arise and we have had to do so on a couple of occasions, the health and safety of our guests crew and staff is certainly our first priority, but delivering amazing experiences that foster conservation and awareness is a close second and it is so rewarding to hear all the <unk>.
Positive feedback we have gotten from guests across all our geographies as they return to the wild.
While the momentum is generally positive in terms of various geographies reopening there are still challenges, which prevent us from running at historic business volumes, we have temporarily reduced the number of cabins for sale out of an abundance of caution and as I mentioned earlier not all destinations are receiving visitors just yet we are working diligently.
To reactivate additional itineraries with a significant focus on Antarctica, where the season for Lindblad sailing is scheduled to begin in November.
Another challenge is that there is also some hesitancy amongst some americans to travel outside the country today. The good news is that these guests remain booked with us. They are just pushing their trips to later dates when they feel they will be more comfortable to travel globally.
From a booking standpoint, we have seen sustained strong production over the last few months bookings for 'twenty 'twenty 2 are at historic levels with more revenue booked at this point for travel in the upcoming year than ever before we are keeping a close eye on the potential Covid Delta variant impact.
But as of today reservations continue to pace strongly ahead of the same 0.2 years ago prior to Covid.
This booking strength is not limited to our ship based businesses.
[laughter] excuse me to our ship based business.
We are seeing significant demand at natural habitat, which is particularly pleased that the Canadian government has allowed a return of tourism, which means we will be able to begin running our polar bear trips. Later. This year. We are also seeing strength at our 2 recent acquisitions off the beaten path is especially strong given their focus.
On U S National Park destinations and Devine is seeing strong bookings for future travel globally, while also expanding their U S trips in the short term.
Both of these acquisitions have also already begun to benefit from cross marketing synergies and each are well positioned to grow as we leverage the scale of our business with their wide addressable markets I've spent time with each of the dynamic and entrepreneurial leaders of these businesses and look forward to working with each of them to maximize these unique.
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As we look towards the future I'm very optimistic in the short term, we will continue to main austerity on costs to ensure that our liquid liquidity position remains healthy. We certainly believe the demand for experiential travel will only grow moving forward and Linda Plaid is poised to once again capitalize on this opportunity.
Aside from a proven track record of delivering amazing experiences for the past 4 decades, we emerge with 2 new state of the art chips, which will increase our available guest nights by well over 30% from 2019 levels. Once they are being fully utilized plus we have an expanded product portfolio with amazing.
Experiences across ships land bikes and U S National parks.
I also look forward to dedicating time with our team to further codify and enhance our growth strategy in the coming months on.
Although I think it would be premature for me to provide any great detail on my initial strategic thoughts you can expect that we will be evaluating a number of growth dimensions that build upon our history of adding ships and acquiring synergistic companies in the adventure travel marketplace.
My first lens is to think deeply about our guests and what would enhance their life experiences and I believe theres significant opportunity to build upon our existing businesses and expand our addressable market of guests across the world.
Lastly, I'm optimistic about how our investments in technology will enhance future guest experiences and help us grow as a company as has been discussed previously we are in the process of driving a digital transformation within the company focused on upgrading our website evolving our reservation system advancing.
Our CRM capabilities and creating the architecture of linking each of the companies under the Lindblad banner and.
In closing I'm honored to be a member of this very fine team here at Lindblad expeditions, we have a great deal of work to do as we recover from the pandemic impact, but I am really optimistic about the future. The foundations of the company are strong from both a financial and operational standpoint, and we see many opportunities to grow and innovate.
On years, I look forward to sharing our plans and our progress at regular intervals with all of you as time goes by.
Thanks for your time this morning, and now let me turn the call over to Craig.
Before I dive in let me once again, thank our dedicated crew across the world as well as our diligent office personnel for their sustained resiliency and for their commitment and preparing us to return to operations, while preserving capital whenever possible.
Extremely exciting terrorism and operations and we do so as a strong and vibrant company due in large part to the comprehensive plan. We put in place back in March of 2020 to reduce cost and further fortify our liquidity position, while it will take some time to fully regain the momentum we regenerating let me caused operations. The investments we have made during the pandemic.
To expand our fleet capacity and diversify our product offerings positions us to drive significant growth over the next few years as we capitalize on the growing demand for authentic adventure travel.
And in the short term, we have ample liquidity to ramp up operations and whether any immediate uncertainties, while still having the flexibility to explore additional growth opportunities.
We ended the second quarter with $160 million in unrestricted cash and $43 million in restricted cash primarily related to deposits on voyages that originate in the United States. The $203 million of total cash is a $17 million increase over where we ended Q1.2021 and was <unk>.
Driven in large part by final guest payments for upcoming voyages and guest deposits for future travel as well as from the Companys continued focus on cash preservation measures as expected operating cash usage increased during the quarter as we launched itineraries prepared additional shifts per sailing and increased marketing spend to <unk>.
Drive future bookings in.
In addition to cash used directly in operations spending during the quarter included Capex of $6 million net of export credit funding, primarily due to build costs associated with the resolution and dry dock spending for the U S fleet.
And $8 million in principal interest and financing payments.
Moving forward, our monthly operating cash usage will increase as we returned additional shifts to surface market upcoming expeditions spend on our digital transformation project and increase office staff as needed at the same time, we anticipate a continued ramp and cash inflows from final payments for upcoming voyages and deposits related to new.
Patients for future travel, we will continue to monitor our spend in correlation to our operational status and will adjust spending as necessary moving forward.
Turning to the P&L Lindblad delivered second quarter revenue of $15.3 million, which included $6.7 million at the Lindblad segment from operating ships in Alaska and a lot of those during the month of June at $8.6 million at our land experiences segment, including trips during the second quarter to Africa in Costa Rica, and natural habitat yeah.
Low stone in Yosemite National parks, it off the beaten path and bike trips in California, Maine and parts of Europe at Dubai.
Revenues are expected to ramp further during the third quarter with additional ships operating itineraries and a wider array of landscapes.
EBITDA loss of $23 million during the second quarter improved $2.5 million versus the second quarter a year ago as the revenue generated was partially offset by a 53 per cent increase in operating expenses for depreciation and amortization interest and taxes.
Higher cost base was led by a 52% increase in cost of tours, primarily related to restarting ship expeditions and operating additional land based trips the increase in cost of tours also included increased dry dock and crew costs as we prepared additional shifts for operations as well as operating costs for off the beaten path in Dubai, which were acquired.
During the first quarter of 2021.
Sales and marketing costs increased 46% versus the second quarter, a year ago, as we increased spending to drive future bookings focusing on digital targeting and social opportunities as well as increased outreach through trade advertising and travel advisors. We have also further ramped up spending on our digital transformation initiatives, including the launch of our new website in April.
And further development of our CRM capabilities.
G&A spending increased 56%, excluding stock based compensation versus the second quarter, a year ago, primarily due to higher credit card commissions related to final payments for upcoming itineraries and increased deposits on new reservations for future travel. We are also incurring higher personnel cost as we returned office personnel from furlough along.
With the ramp in operations.
Turning to current booking trends demand for travel continues to accelerate and we are seeing sustained momentum across the fleet bookings for 2022 are currently 36% ahead of where we were for 2021 at the same time, a year ago and 36% ahead of 2020 at the same 0.2 years ago. The.
The strong year on year trends include guests on canceled voyages that have opted to reschedule, but they only make up about 20% of our bookings for 2022.
No question that there is significant pent up demand to get out and explore the worlds amazing geographies and as for destinations open to travel we expect to secure additional bookings for both 2021 and 2022.
Looking at our debt obligations, we ended the second quarter with $515 million in principal outstanding an increase of $17 million from the end of Q1, primarily reflecting $15.5 million in borrowings under our export credit agreement.
During April 2021 for the fourth installment payment on the National Geographic resolution.
Our final payment under the shipbuilding contract of approximately $47 million will be drawn upon delivery, which is still anticipated to be during the fourth quarter of this year and will be covered under our export credit facility.
With regards to our leverage covenants. The company has continued to work with its lenders and during the quarter further amended its existing term revolver on export credit facilities to suspend leverage ratio covenants through March 31, 2022. Additionally, we deferred all principal payments on our export credit facilities through the end of the year.
With the resumption of marine expeditions now a reality the steps we have taken over the past year to increase our liquidity runway and enhance our existing operations.
Many of our product platform has enabled us to emerge from the pandemic as a strong company and while it will take some time to return to full operations. We are poised to regain the momentum we were generating prior to the pandemic and excited to take further advantage of the growing demand for experiential travel to deliver strong returns and build additional shareholder value in the years to come.
Thank you very much for your time, this morning, and our golf Sven and I would be happy to answer any questions you may have.
Thank you very much Sir ladies.
Ladies and gentlemen, we will now begin the question there on distinction.
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Also squeeze shouldn't be from Stephens, Inc of Stifel. Please go ahead.
Thanks, guys, Hey, good morning.
So so Craig. This is this will probably be for you but is there any way you can.
Kind of help us think about how that 23 million EBITDA loss in the quarter looked on a you know.
On a monthly basis, and you can probably see where I'm going with this question, but I'm trying to figure out if June was clear.
Closer to a breakeven point from an EBITDA perspective, or maybe you can even help us think about what what July looked like and then based on what Youre seeing today, if things stay status quo would you imagine net.
You guys would be cash flow or EBITDA positive sometime in the near future.
Sure. Thanks for the thanks for the question, Steve. So obviously, we're not going to break out by months, but certainly June was the lowest.
Last month on the corner that we had given the revenues that we generated during the quarter..1 of the things that you have to be cognizant up right. Now is that there are some costs that we incurred ahead of sales. So throughout June and frankly throughout a big portion of July we're still prepping ships to begin launch and that includes doing obviously on it.
Dry docks that are necessary on those ships, but also bringing crew back making sure. They're all vaccinated, bringing office personnel back making sure that theyre, all vaccinated and ready to go as well. So there is a fair amount of cost take place ahead of operations, while I would love to sit here and tell you when we're going to reach EBITDA positive or cash flow positivity on.
On operations basis, there's still so many question marks on it's really hard to answer. So for example, certain geographies, which arent open we don't know specifically when we'll be able to go to certain those.
Geographies.
Certainly guest demand when we look out to the rest of the year has still got some uncertainty to it specifically more for 2021 and for 2022, but all in all the obviously the company is heading in the right direction and as long as the geographies that we plan on operating in a open up over the next several months, we do feel we'll be able to reach.
Cash flow breakeven and EBITDA positivity within a short period of time.
Okay. Thanks for that second question, you talked you actually hit it a little bit but the excess costs that are that are embedded right now given the restart phase in I guess.
I would I would think that we have to assume over the next 6 months over the next 6 months, so you're going to see all kinds of shifts probably on your itineraries and whatnot and so.
Is the right way, we should be thinking about kind of the current expense run rate is kind of take what we witnessed or what you guys witnessed in the second quarter and kind of pushed that into our models for the foreseeable future.
No I think our cost base will frankly, ratchet it up right because when you look at what's happened in the June quarter. For example, we only had 4 ships really operating in June and 2 of those didn't really start till the end of June sorry, 1 of those didn't really start till the end of June. So we only add 3 shifts really operating fully for the month of June.
Now to <unk> point, we have 8 of 9 ships really operational by the end of July. So so the cost to get those ships ready for July will be significant and then hopefully when youre looking at August youre going to have a full month of operating a bunch of ships.
And that comes along with the cost base as well at the same time, we are continuing to ratchet up spending on marketing as we look to drive the coffers further in 2022 and that has a cost that goes along with it and then lastly, when you look at all of these payments that are coming in for future travel and all these deposits that are coming in.
For future travel even further out those come with credit card commissions, we have to pay those commissions and it's a good cost to have going out the door because youre spending money on future revenue. So you will see a ratchet up in cost base and I do think that when you look out towards the end of the second quarter I'm sorry, the end of the third quarter youre going to be reaching levels that you were similar to.
Back in 2019, when you're operating the fleet.
And on top of that to keep providing some more color. We have an additional shift and the index, which obviously has additional costs. So when you think about our fleet and you can think about the third quarter Youre looking at higher cost just because of the nature of restarting.
Operations and additional additional shifts in operations.
Okay. That's great color great. Thanks, and then maybe if I can ask 1 more quick 1 so when you look at the bookings that you guys did you guys have taken over the past couple of months is there any way to help us think about.
Who are booking these you know these.
I'm just curious it so to speak and just trying to get at is it pretty much all repeat customers or have you seen new to brand.
Yeah, it's been it's been fairly interesting. So obviously throughout 2022, such a such a weird year. So it was hard to take too much away from the booking patterns, but what you've seen once the once the page turn to 2021 is that first timers or new to book has really ratcheted up starting in January and it has continued to grow really through the.
I would say the end of June.
And even into July so we are seeing some really nice strength on what I would call first timers, but at the same time, our loyal guests remained very very loyal and we're seeing especially those folks who had voyages that were canceled.
On how to reschedule those folks upstate and drove so the mix is actually really strong right now between new and old and we hope to see that continue as move forward.
Okay, great. Thanks, guys perfect.
Yes.
Thank you the next.
Question is from time of day to day of Janney. Please go ahead.
Hi, Good morning. This is Jonathan on for Tyler, Thanks for taking our questions and congrats on the return of the family.
First 1 from me Craig you highlighted in the prepared remarks, the booking demand and pent up leisure demand that you're seeing out there I'm just curious how you see the pricing environment evolving over the next couple of years with that and I know people sign up with some lead time.
Given that the demand is so strong right now and maybe you could provide some color on on how aggressive you want to be pushing yields in 'twenty, 2 and 'twenty 3.
Sure so.
The way I always look at the business and maybe the often provide a little bit of color is we look at it from the perspective of there's multiple drivers here right you have the.
Driver of additional price you are a driver of additional occupancy and you are a driver of additional nights overall and right now when you think about our fleet. We added from 2019. So ultimately when we add the resolution at the end of this year, we'll have added over 60% more inventory to our fleet than we had previously.
That is a pretty massive jump and we're focused on actually getting that inventory out there and still get at current prices.
If we can do that the company will have significant growth. When you think about 2019 to where we are today.
Furthermore, we'll continue to look to drive further occupancy within those existing inventory. So I think price. When you think about it today is already on a very high price point with regards to the industry. So while we will take a look at price opportunities, where we can the reality is today, we are focused on adding additional inventory in filling net inventory.
Thanks, Craig I don't have anything to add on that.
Yeah.
Okay. Thank you that's very helpful. And then on both of you highlighted in your prepared remarks, some of the guest feedback I believe it was related to the endurance I'm curious.
Guys are hearing from the rest of it should but unfortunately that had sales that were.
We're selling in June and early July.
Yes, I'm happy to do that and I'd love for spend to share a little bit also on his specific experience on the endurance, but.
Over the years the company has I think done a nice job of getting of guest feedback.
Which are surveys that each of the guests fill out prior to leaving the ship and we are seeing.
At or higher than then.
And then previous levels in terms of the feedback and I think that's for a couple of reasons I do think that guests are excited to be back and some of the pent up demand that we anticipated has come true and some of that is an emotional.
Pent up.
Excitement to get back out into the wild and experience things that are so remarkable and so we've had really strong guest feedback.
And I think by way of background of the company did a very nice job of ensuring that we had a proof of concept practice runs with the ships prior to going live and so the standard for the guest experience was 1 that was as high as ever and so that was a strong.
A strong return.
And because we have the benefit of spend here and spend actually has been a little bit of time on the endurance I think it would be good for him to share a little bit about that experience and and it was actually many of our legacy get to some of whom had 20 plus voyage is behind them, who joined him on on that voyage suspend perhaps a few.
Words on the endurance, yes, well.
So in June because I think this is an important point to make in June.
I went on the first voyage of the sea bird, our smallest simpler ship and now in July.
On the National geographic endurance, our most sophisticated ship and there were 2 guests that had been on both of those voyages.
And what I thought was interesting and palpable was.
That these people and many others I've met over the years.
On both of these extremes.
Equally interesting from the perspective of each is pertinent where it operates so if youre in southeast Alaska.
A small ship like the sea bird is way more suitable but on the national geographic endurance, if youre in the North Sea and Greenland, a nationally geographic endurance is way more suitable than the siebert so on.
I'm really delighted that our fleet is quite diverse.
While we are raising the standard on these newer ships it does not value the older ships, where they are used.
And I think that's a really interesting.
Interesting circumstance the endurance. However, I have to say is the most extraordinary share Viper is set foot on.
On any possible level from the perspective of expedition excellence.
We launched 15 Zodiac start 10 zodiac from 15 minutes.
Now that may not mean, a lot to you folks on the phone offhand, but.
That is extraordinary in terms of being able to deliver to be able to get somewhere launch the boats get people out.
And the ship is so quiet you don't even know you're moving.
Its fast it can maneuver on a dime and it is the most comfortable ship you could possibly imagine with lots and lots of diverse spaces aboard so.
This is definitely from the perspective of Bluewater shifts, creating a totally new standard there is no ship out there in my view in the expeditions space that comes close to being as extraordinary as this vessel from the perspective of expedition excellence slash elegance.
Okay.
Thanks, I think we're very very helpful.
Go ahead.
Okay. Thank you for all the color that's all from me.
Thanks, Jonathan.
Thank you ladies and maintained from the gain if you do wish to ask a question. Please press star 1.
The next question is from Chris we're on kind of what was going to book. Please go ahead.
Hey, good morning, guys. Thanks for all the.
Detailed so far I was hoping you could talk a little bit about some of the markets, where you haven't been able to get back to yet with restrictions on them.
Much lead time do you get in terms of those restrictions being implemented I mean, I'm just trying to get a sense for how much visibility you have into whether it's later this year early next year how quickly some of these restrictions change and how that impacts your ability to kind of plan. These these itineraries, where you have to make modifications.
Sure spend here so.
It's very dynamic and it's changing.
On a daily basis, all over the world.
And so we are having to pivot really fast on many occasions, but what we're finding is is that there are people out there that are so anxious to travel and they will make decisions that shuts such short notice.
We pivoted from the northeast passage to Iceland and Greenland.
People came immediately I mean, not only the people that were on our first trip, but we got very good occupancies on all our Icelandic program.
With a month or 2 notice, which is unheard of in normal conditions.
This degree right, so, but we know very specifically what countries matter to us and right now going into the winter, we're going into the fourth quarter.
A lot of the countries don't matter so much to us like Norway, Russia doesn't matter. These are critical countries in the second or more importantly in the third quarters.
Sure.
So we're focused really on a couple of geographies that sort of Madden.
At this point, we feel optimistic about those.
And then what's really important is that by next year.
Q2, Q3, the countries like Norway Britain, Russia, Greenland, Iceland are open for business and we believe they will be right and this is off and we're in regular contact with all of these.
Authorities across the world.
And what that allows us to do is get a sense of directionally, what's happening I think that the.
Quicker pivots that we've seen that Sven mentioned really relates to activities surrounding COVID-19 and so if there is a surge of cases or an outbreak related to the delta variant in a certain geography and the government therefore take Swift action.
<unk> by that and that goes both ways for us that can be something that might cause us to amend and itinerary and and make a change or perhaps opens up a new area and so the key for us is being very close to what's happening on the ground in these geographies and then its been said we have.
These priorities, which relate to.
The the established routes that we have in the non geographies and the ones that our guests are most.
Fond of and we focus on those primarily and so as you said Antarctica is really it's really the focus today.
Okay great.
That's helpful and then question probably for Craig.
Craig is there any way too low.
When we think about the EBITDA and you have these incremental expenses.
They are happening now is there a way to triangulate at what point, we get back to breakeven whether it's the number of ships or percentage of inventory you have or if it just number of months of the year operational on a certain percentage and then second to that is.
If we assume that we're basically back to fully normal next year with all your capacity is there any reason to think margins would be higher than they were in 2019 with all the inventory out there.
Sure. Let me start the first question, it's really a difficult question to answer because there is so much variability with regards to what each of these ships.
From these requires to get started again and also how the operational realities are in each geography, let me give you. An example, right now if we are able to operate our antartica season. There is a high likelihood that we will be using charter aircraft to fly folks down to Antarctica that changes the cost structure certainly moving.
<unk>.
Changes the cost structure of the overall organization certainly still profitable for us, but it's certainly not profitable at the same level that it would have been previously.
So theres a variety of factors that go into this so it's really hard for me to say that X percent of occupancy will be profitable as a company because.
There is not a new normal right now.
And certainly when you think about it on a ship level, but I will say on an overall shift basis, each shift can be profitable at anywhere from 40% plus occupancy.
In most geographies, so we feel that getting the shifts back on the water will certainly allow us to be profitable from a ship level perspective, but certainly having enough scale to have all these shifts in on what it will allow us to get there from a company perspective in terms of 2022 and margins looking forward.
It's hard to say for 2022, because again 2022 still will have some of the challenges with regards to Antarctica potentially from a charter perspective, and certain geographies still may not be open.
That said I would fully expect that when we get all the way back to having all our ships in the water. The way they are supposed to be in the water and we have occupancies at the levels that they're supposed to be yet that we will continue to see margin expansion at the company moving forward as we expand our fleet because we are expanding our fleet, we get certain economies of scale that obviously don't sit there when youre at only 6 or 7.
And shifts so when we have 10 ships in the water 4 of which are our blue water ships, we fully expect.
The realities of our margins to increase over time.
Yes.
Okay very helpful. Thanks, guys.
Thank you.
<unk>.
Thank you the next.
Christian just from an experiment of Craig Hallum. Please go ahead.
Great. Thanks, very much for taking my question can you talk a little bit more about who's been booking.
On your upcoming voyages and looking into 2022 does your mix of new versus returning customers look similar today as it did before the pandemic.
Yeah, I would say today, it's still skewed a little bit more towards returning guests not surprising obviously, because those folks certainly understand.
What it is we do on how we operate.
Because they've done it many of them many many times, but.
But we have been very very pleased with the ramp up in first time guests and part of that also will be you know as people get more and more comfortable traveling internationally.
First timers tend to be less comfortable with that whereas returning guests feel very comfortable they've been on our ships. They know how easy it is for us to.
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What I would say its operate.
By safely as safely as possible.
Whereas if you haven't been on 1 of our ships, it's hard to really understand how they work and how they operate so I think youll continue to see the first timers ratchet up but in the short term I certainly expect.
Repeat guests to still be the lion's share of what we're doing here.
Okay. That's really helpful. And then I know, it's obviously really early but.
It sounds like a lot of people are interested in in itineraries that are even further out or are you starting to get a lot of bookings for 2023, and and anything anything there that you can share with us.
Yes, we have started to see a fair amount of bookings for 2023, but frankly, it's not that dissimilar than what it would've been 2 years ago, we tend to get a significant amount of bookings for several years out as people plan. These these significant.
The experiences and the significant expeditions so the levels that we're seeing today for 2023 are not that dissimilar, they're higher because we had more inventory so that as expected.
But overall the demand for 2023 very similar to whats been interesting right. Now is the significant demand that we're seeing for 2022 and that continues to ratchet up very very quickly.
Great that's really helpful. Thank you.
Thank you very much.
This concludes our question and answer session and I would now like to turn the conference over to Craig.
For some closing remarks.
Thank you everybody for joining us. This morning, we appreciate your time and if you have any follow up questions. Please reach out and we'll be happy to set up time to day.
Thank you.
Thank you very much Sir ladies.
Ladies and gentlemen that concludes this evening.
Turning to today's presentation and you may now disconnect your lines.