Q2 2023 Lindblad Expeditions Holdings Inc Earnings Call
With broader use of our fleet and additional departures across our growing land businesses.
As we deliver sustained year on year growth, we are taking the operational and strategic steps necessary to take full advantage of the expanded earnings potential of the company.
The significant investments we've made in additional capacity diverse product offerings technological capabilities and our overall infrastructure has uniquely positioned us to significantly capitalize on the growing demand for high quality experiential travel.
Turning to the quarter, specifically second quarter total company revenue of $125 million increased $34 million or 37% versus the second quarter a year ago. As we continued to ramp operations with strong growth across both of our operating segments.
The Lindblad segment revenue of $87 million increased $23 million or 36% versus the second quarter a year ago.
The year on year growth was driven by a 34% expansion in available guest nights from broader utilization of the fleet and by increased pricing, which contributed to a 5% increase in net yield to 1034 per available guest night.
Occupancy of 74% was slightly below a year ago due primarily to significant additional shoulder season inventory as we broaden the use of the fleet and the Peru cancellations early in the quarter, which we mentioned on the last call.
The land experiences segment revenue of $37 million increased $11 million or 39% versus the second quarter of 2022 led by additional departures and guests across our land companies, including natural habitat trips to Africa in the Galapagos Islands off the beaten path trips to Alaska and U S National Park.
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Strong revenue performance across both segments generated significant operating leverage with total company adjusted EBITDA of $6 million in the second quarter, an increase of $12 million versus the second quarter a year ago. The year on year growth was driven by a $10 million increase at the Lindblad segment and a $2 million increase at the land experienced segment what is <unk>.
Traditionally is low season.
Looking a little closer at the cost side of the business operating expenses before depreciation and amortization stock based compensation interest and taxes increased $21 million or 22% versus the second quarter of 2022.
Led by a 24% increase in cost of tours, primarily related to the ramp in ship utilization as well as expenses related to operating additional land based trips.
Fuel costs in the quarter were 5% of revenue as compared to 7% of revenue in the second quarter of 2022, reflecting slightly lower fuel prices and the increased revenue profile.
Sales and marketing costs increased 18% versus a year ago, primarily due to higher commissions and royalties related to the increase in revenue.
The quarter also included some additional costs associated with our digital initiatives, most notably associated with the implementation and integration of our new reservation system, which as Sven mentioned launched during the quarter.
G&A G&A expense during the quarter increased 18% versus a year ago, excluding stock based comp and onetime items, primarily due to higher personnel and sales tax costs as we ramp operations and increased credit card commissions related to final payments for upcoming itineraries and for higher deposits on new reservations for future travel.
Total company net loss available to stockholders of $25 6 million or <unk> 48 per diluted share improved $4 $5 million versus net loss available to common stockholders of $30 million or <unk> 59 per diluted share reported in the second quarter a year ago.
The improvement reflects the significant ramp in operations, partially offset by the write off of $3 9 million in deferred financing costs related to our export credit agreements and additional interest expense of $2 2 million net associated with higher rates and increased borrowings related to our debt refinancing in may.
Turning to the balance sheet, we ended the quarter with $197 million in cash and short term investments of $77 million increase from the end of the first quarter led by $68 million in cash provided by financing activities as we further solidified our balance sheet by refinancing our export credit agreement with notes that mature in 2028.
The 9% fixed rate notes replace variable rate debt that had an interest rate of approximately eight 5% in the first quarter and also eliminates principal payments of over $20 million annually.
In addition to the cash provided by the refinancing the company generated positive operating cash flow of $17 million during the quarter, which was partially offset by capex of $8 million, including primarily maintenance capex and spending on our digital initiatives.
Turning to the full year 2023, we are excited by the sustained operating momentum across our portfolio and continue to anticipate significant growth as we ramp operations and capitalize on our expanded platform.
The Lindblad segment has already booked nearly 100% of its full year projected ticket revenues for the year and we continue to expect total company tour revenues in 2023 between 550 and $575 million and adjusted EBITDA between 70 and $80 million.
These projections reflect the impact of the elevated cancellations on occupancy during the first half of the year, but as Sven mentioned and as anticipated we have seen a slowdown in cancellation rates with regards to bookings for the back half of the year and well into 2024.
Please note that quarterly results for the remainder of the year will reflect the seasonality of our business with the third quarter benefiting from more complete fleet usage and peak seasons across both our fleet and land companies.
Firstly, the fourth quarter will be impacted by less available guest nights due to the heavy drydock in transit time across our fleet more shoulder shoulder season inventory and the seasonality for heartland businesses.
Overall, we are pleased with the operating momentum across our businesses and while there will be quarterly fluctuations, we are well positioned for sustained growth as we take full advantage of the expanded earnings potential of the company and the growing demand for authentic and immersive experiences. Thanks for your time this morning, and I'll spend and I would be happy to answer any questions you may have.
Yeah.
Thank you.
Ladies and gentlemen, if you'd like to ask a question. Please press star followed by one on tantalum keypad now.
Well it'd be paint to ask your question. Please ensure your mute locally.
We have our first question comes from Stephen Winston Ski Stifle Steven Your line is now open.
Yeah, Hey, guys good morning.
So so great.
We did this last quarter, but need to do.
Some simple math here again.
Okay. So you did $33 million in EBITDA in the first half of the year.
Based on your unchanged guidance for selling that business will do.
What let's call it $42 million for the last two quarters of the year at the midpoint and that's with a pretty nice book position at this point.
Yes.
Fully understand the seasonality of the business, but I don't.
Really no idea how this business willing to 42 million of EBITDA over the last two quarters, especially with where the land based business is at this point so.
Can you.
Help me here a little bit are you being Super Conservative are you seeing something we aren't seeing just really just trying to square away.
For the full year guidance here wasn't touched.
Sure. Thanks, Thanks, Steve So when you look at the full year, there's a number of variables that obviously play into things that when you look at the next six months certainly cancellations are trending in the right direction.
However, they do still remain elevated from where they were back in 2019.
I'll have a better feel for how that's going to impact really the fourth quarter, which will drive significant.
Significant variability right now obviously for the third quarter, we feel pretty baked but for the fourth quarter that variability will be when those cancellation rates.
Change based off of the timeline of when people are allowed to cancel heading into the fourth quarter. So I would say the first thing. The second thing is obviously the last what I'd call. The last mile of bookings so the bookings that come in.
For that fourth quarter for the end of the third quarter now.
But in the short term will obviously don't have a whole lot of cost associated with them given the fixed cost nature of our platform. So those last minute bookings will either drive outperformance or they'll end up where we pretty much expected.
And that remains to be seen what we have seen with regards to booking windows is people are booking.
Overall, a shorter timeline than they had historically the traditional booking window for the company had been somewhere around nine months is trending shorter than that right now.
It would lead to some additional short term bookings, but interestingly, we're not seeing so much in the next three months right now we're seeing more bookings for the first quarter of 2024 in the second quarter of 2024. So it's really those two things that will play what I would say is most with regards to the rest of the year and then certainly on the cost side, how fuel prices ebb up or down.
Certainly have an impact.
And then the last thing I'll say is we will have some decisions to make on the marketing side of the house right.
Right now the marketing spend that we're putting out there is having a really nice returns. If that continues we may look to spend a little more in marketing in the back half of the year to help drive bookings in the back half of 2024 and 2025.
But given some of the new tools and some of the new.
Digital initiatives that we put out there we'll be able to make those decisions I would say in a more timely fashion. So those are some of the variables that will impact the back half of the year.
Okay Gotcha.
And then you just touched on this a little bit, but I wasn't sure.
Right I understand that you know again bookings for 'twenty.
23 look you're in a very good book position for this year, but could you give us any color on how maybe early 'twenty four looks at this point relative to where you would be historically.
Sure when you look at where we are for overall 24, I'm going to put a number out there yet we will provide that later in the year, but when you look at where we are from a percentage of sale for example, what percentage of our inventory is sold.
I would say a little bit behind where we were in 2000 22019 for 2020.
Four years ago.
But we obviously have a significant amount more inventory. So I think we're in pretty good shape from that perspective, we don't have the advantage of all the bookings that were carried over for 2023 due to the pandemic.
But we're seeing really nice gains when you look at the gross bookings that took place for 2024 throughout the second quarter. They were up dramatically versus bookings that were done for 2020 back in 2019. So the trends are all heading in the right direction. The one thing.
And maybe I'll provide the opportunity for spend to talk a little bit about this right now we're seeing really really strong bookings with regards to what I would say are the tried and true geographies. If the shoulder geographies, which are relying on past guests, which are I would say lagging a little bit spending.
<unk> been able to provide a little color on that.
Yes.
When you when you think about it.
So.
Past guests make up about let's say on average about 30%, 35% of our overall business, but on certain geos in certain geographies on our blue water ships in particular, the more esoteric geographies.
Awesome.
We call them shoulder season, but they are really better defined as more esoteric they're more reliable more reliant on past guests.
And so in 2020 in 2021, we obviously did.
Yes people pass guests with recency almost.
Reliable source of new business right. So we lost basically.
30.
234000 people in those two years to draw from.
On future itineraries.
We're making up for that and that is now getting back into a normal pace, but that loss has made.
Yes.
Produced a bit of a shortfall on some of these guidance ranges for a short period of time.
Simply because the basis market based recency it Bob.
To the same degree.
That will be an historic situation and it'll be over pretty soon while because obviously starting again in 'twenty two 'twenty a little bit in 'twenty, two and more and more robust me in 'twenty three.
<unk> is being built up again.
Okay.
Can I ask one more I apologize, but.
The spend while youre, while you're there I think one of the questions. We get from from the investment community is maybe if you could give a little color in terms of why.
Why you came back.
To to run the company again, obviously, you're the founder Youre very involved but.
Maybe maybe where you are today in terms of where your head is and maybe how long.
Our move is this something that's temporary or is this.
You see you're staying in disposition and <unk>.
It ended period.
Yes, well first of all when.
<unk>.
Elected to move to another opportunity in the in the two years since I left.
When he elected to leave I was still very much involved with the company.
Paul regularly in the management meetings.
The strategic decisions et cetera, et cetera, so even though it wasn't even the role of CEO .
As co chair.
And day to day activities actually so when doleful lucky to leave it just seemed like okay.
Right.
It seems like a rational idea of the board and I spoke about it and we decided this was the best path forward because at the end of the day.
There is.
There is a deep obviously, a deep understanding of the business having both.
Being built up overall those decades.
When we.
When we eventually decide and theres not going to be it's not going to be very soon but.
At some point in the future and I don't know exactly when that is we'll say, okay. It's time to get another CEO .
And.
I think.
The loss from the past experience here in terms of how the helping individuals really come up to speed with the business broadly.
Even more so than <unk>.
Gulf did and did a great job.
But I would like to help that.
Digital even more in terms of understanding the complexities.
And we're going to carry on from there.
So this is not an interim position, but it so it's one that Louis SaaS South Korea.
Each year, we'll assess.
How is this going how.
How do we feel about it.
I'd like feel about how does the board feel about it how does the management feel about it.
Move forward from there right now.
Extremely.
I am extremely happy to be back doing this.
<unk>.
The timing is such that it will be very helpful to the business for a period of time.
Okay, great. Thanks, guys appreciate it.
Thanks, Steve.
Thank you Steven.
As a reminder, ladies and gentlemen, if you would like to ask any further question. Please press star followed by one on tax.
We have our next question comes from Alex Fuhrman from Craig Hallum Capital Group, Alex Your line is now open.
Hey, guys. Thanks for taking my question.
The results in Q2, we are definitely stronger than we were looking for here nice profitability and revenue the occupancy with a pretty meaningful step down from Q1 I noticed that you mentioned I talked about some of the headwind.
To ramping up the shoulder season or more esoteric itinerary is that the primary driver of the.
The sequential step down in occupancy and then as we think about the second half of the year should we expect a similar dynamic where occupancy is stronger in the third quarter. When when you run more of your peak season.
Okay.
Yes.
Yes definitely.
So if you if you look at our business broadly there there are some key geographies that we call I don't really like the term, but it certainly expresses well rinse and repeat that you've developed and then you <unk>.
These programs can you repeat them a new feature for several months in certain instances for the entire year likely Galapagos. Obviously is an example of an all year round program, Alaska is four months a year with four ships.
<unk>, three and half months season with three ships.
Et cetera et cetera.
And at the end of the day those are the vehicles.
Those are the products that bring in new audiences, but you can't do them. All the time if you. If you if you could you probably would.
But you'd also you want a certain amount of diversity and so the balancing of inventory is a key key component.
For me, it's like deepen my blood.
Ocean of balanced inventory because I've spent my entire career.
Based on the premise that you have to fill the ships all year round, otherwise youre going to get in trouble at some point.
So.
This.
Trying to understand why we're a little off on occupancy is directly correlated to.
Goodness.
Basically two year loss of building.
Guests that pass guests community so inventory when it was developed.
Does not develop because you develop the inventory yes.
It was not developed with that loss of mine.
And so it's been it's been an adjustment and we will get back to those.
90, plus minus <unk>.
<unk> Occupancies.
Which is what we're what we're geared for what were our entire way of being drives us to accomplishing that particular goal.
Does that answer your question.
It does yes. Thank you. Thank you very much.
Thank you Alex.
Alex One thing I would just add on top of what's been said and you've kind of touched upon this which is one of the things that we intend to do as we tend to focus on certain metrics here. When we have these calls but the reality is the drivers of the business are pretty easy to understand here that is occupancy is a driver as is price.
Is the amount of nights and when you look at what happened in the second quarter Youre going to continue to see that in the third quarter, which is we're going to have more available guest nights available guest nights will be up dramatically from where we were in 2022.
Dramatically from where we were in 2019 and Youre pricing will continue to be up from where we were last year and be up from where we were in 2019. So with two of those drivers doing really really well even as you add additional.
<unk> it.
Spend we call them more esoteric geographies.
Profitability of these shifts.
Even the ones that are.
Occupancies are a little lower right now is still significant we expect to see continued growth across the company. When you look at both the third and fourth quarter.
Great. That's really helpful. Thank you both.
Thanks Connie.
As a reminder, ladies and gentlemen, if you would like to ask any further question. Please press star followed by one of the telephone keypad now.
Yeah.
Okay, great well, thank you everybody.
Yeah.
I got it operated well thanks, everybody for joining us today. We appreciate your time this morning.
We are here to answer any additional questions you have to just reach out and let us know thanks again.
Thank you.
Okay.
Thank you ladies and gentlemen. This concludes today's call. Thank you for joining you may now disconnect your lines.
[music].
Uh huh.