Q1 2025 Lindblad Expeditions Holdings Inc Earnings Call
["At an FIRST Glimpse Of Life"]
Jay: [music].
Speaker Change: Hello, and thank you for standing by at this time I'd like to welcome you to the Lindblad expeditions Holdings, Inc.
Speaker Change: Ports 2025 first quarter financial results all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
Speaker Change: If you would like to withdraw your question Press Star one again.
Speaker Change: I would now like to turn the conference over to Rick Culbert, Chief Financial Officer. Please go ahead.
Rick Culbert: Thank you operator, good morning, everyone and thank you for joining us for Lindblad is 2025 first quarter earnings call.
Rick Culbert: With me on today's call is Natalia Li our Chief Executive Officer, and telling you will begin with some opening comments and I'll follow with details on our financial results in 2025 expectations before we open the call for Q&A as always you can find our latest earnings release in the Investor Relations section of our website.
Rick Culbert: But before we get to all of that I'd like to 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.
Rick Culbert: Estimates and we undertake 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.
Rick Culbert: GAAP financial measures and other associated disclosures are contained in the company's earnings release that out of the way I'll turn the call over to Natalia.
Natalia Li: Good morning to everyone and thank you for joining us on this earnings call today I'm pleased to share what I believe are excellent quarter one results.
Rick Culbert: I could not be prouder of our.
Rick Culbert: <unk>, because our efforts focused on revenue management and operational excellence.
Rick Culbert: Felt it in continued momentum in our business.
Rick Culbert: For the quarter revenues increased 17% this lindblad expeditions segment generating 11% growth.
Rick Culbert: Revenues in our land segment increased 48%.
Rick Culbert: Adjusted EBITA increased 39% with margins improving 260 basis points.
Rick Culbert: I'm very happy to report that occupancy increased 14 points to 18, 9% compared to 76% in the prior.
Rick Culbert: Yeah, the efforts and initiatives that we have put in place to drive occupancy perform in line with our expectations and I am confident that we are once the path to return to pre pandemic occupancy labels in the range of 26.
Rick Culbert: We completed the 'twenty to 'twenty five wave season on a high note with record bookings and bookings for 'twenty to 'twenty five and 'twenty 'twenty six are tracking ahead of prior year in both segments.
<unk> yield increased 25% to $1521.
Rick Culbert: The highest quarterly net yield in the company's history.
Rick Culbert: Growth was driven by increases in occupancy and pricing due to dynamic revenue management and demand generation then you should get there.
Rick Culbert: This historical yields results are particularly impressive given that link what increased capacity in the expedition segment by 49%. Since 2019. This resolved we've had sat that powerful tone for the year.
Rick Culbert: As we navigate the complex Margaret economic environment, we remain optimistic that our guests will continue to prioritize meaningful experiences while we're not immune to economic volatility. We believe our company is well positioned they go through it all sort of experiential travel.
Rick Culbert: That appeals to a demographic with high disposable income.
Rick Culbert: Our focus will stay on the elements within our control.
Rick Culbert: Delivering exceptional adventure experiences.
Rick Culbert: Optimizing revenue and in the way you think around cost efficiencies.
Rick Culbert: While investing in long term growth.
Talking about long term growth.
Speaker Change: In our last earnings call I shared with you three strategic pillars that will drive value creation for our shareholders number one amongst eliza revenue generation through higher occupancy pricing and deployment Brooks to be with you both in the link blocked and land segments.
Speaker Change: Number two optimizing financial performance through smart cost innovation and better fixed asset utilization number three exploring capitalizing on accretive growth opportunities, including fleet expansion charters as well as potentially a decent still our branch first of all with.
Speaker Change: I'm encouraged by our progress across all of these areas, let me share more detail on how we're continuing to execute against the strategic pillars.
Speaker Change: First as a continued focus on optimizing occupancy we successfully piloted in onboard cruise sales program.
Speaker Change: While our guests are onboard to our expectations and I think a wonderful experience our dedicated onboard the expedition experts helps them to explore our various destinations and plan and book their next adventure. During this pilot we were able to drive early.
Speaker Change: Bookings increased occupancy and improved repeat rates and Lloyd to generating a high return on investments for US. This program will be fully rolled out by the end of this year.
Speaker Change: Moving on to our <unk> partnership we continue to build on the momentum of our Disney Activations.
Speaker Change: We're driving targeted direct mail and marketing campaigns recent.
Speaker Change: Recently I along with our sales team spent a day with the 50 largest travel partners for Disney to discuss our brand and our strategic initiatives.
Speaker Change: If this travel partners or need to have previously walked through that creating a significant opportunity to expand our reach with these highly productive producers were only beginning to capitalize on the many opportunities that we have in front of us with this partnership with.
Speaker Change: We'll increase our exposure to a new Orleans.
Speaker Change: International expansion continues to be a focus for us and I just returned from the U K, where we hosted the Brent introduction. It went on board the National Geographic enduring one.
Speaker Change: One of the most advanced and luxurious purpose built expedition ships in the world.
Speaker Change: The UK represents a very attractive market for us given its fast growing adventure travel segment and large addressable market.
Speaker Change: Over 50, prominent travel and media partners, including Representatives from the Daily Mail Sunday Times, the Telegraph and the others joined OE ramp, where we gave a comprehensive overview of our brands and the commercial strategy.
Speaker Change: <unk> also had the chance to get experience and taste of our onboard culture and shipper manages.
Speaker Change: The ramp was very well received and we are confident that combined with our focused efforts and discipline blend investments will ignite growth in this market.
Speaker Change: Moving on to productivity improvements, we continue to make progress on cost innovation and fixed asset utilization initiatives, which drove operating expense leverage in the quarter. Additionally by optimizing our Drydock planning cycle. We are pleased to announce the addition of three.
Speaker Change: New voyages and $3 26.
Speaker Change: Next we continue to focus on accretive Cross initiative.
Speaker Change: I am delighted that we just announced the national geographic expeditions will introduce European rebar experience through a long term partnership with trust sent cruises.
Speaker Change: We'll provide a brand new shape flour debuted in Europe being the reverse in April of 'twenty to 'twenty six.
Speaker Change: This experience is something that our guests have long desired and will deeply enjoyed by exploring euro storage reverse in a truly meaningful way.
Speaker Change: We know that how you seed matters and that is why we have curated this riva voyage. There's the same depth of care and expertise that defines all our expeditions we will have national geographic historians naturally coupled with exclusive.
Speaker Change: Ramps that will go into each journey.
Speaker Change: We continued to build progress around our strategic pillars. We are also enhancing our financial transparency practices for our investors, we're introducing net yield expectations for 'twenty to 'twenty five.
Speaker Change: We expect net yield growth of 7% to 10% for the full year and the <unk> will be providing more details on our yield expectations in his comments.
Speaker Change: Before I conclude I wanted to reiterate our long standing commitment to sustainability, which is the heart of our leading blood nation I will continue to share updates in this area because it showcases not only our commitment to responsible exploration, but also highlights our <unk>.
Speaker Change: Unique experiential proposition.
Speaker Change: This commitment often translates into and then created both special and differentiated link block experience for our guests. Let me share just a couple of many amazing Ganesh bridges with.
Speaker Change: We recently completed our latest artisan training program collaborating with Indian Wildlife artist Mihai Rica, Reg food, who is also a national geographic explorer.
Speaker Change: He hosted the week long our Skus on the workshop in the Galapagos community to produce wildlife inspired art from recycled material.
Speaker Change: Our designs.
Speaker Change: We've supported so meinie, yes, new skills and techniques. We are proud that our program positively impacts communities by supporting local artisans and is funded through contributions from our onboard to retail sales.
Speaker Change: We also welcomed our 17th cohort of girl winner teacher Fellows were $35 <unk> caters, we'll embark on expeditions to some of the most unique places in the world.
Speaker Change: Whereas they will launch from our immersive field based experiences.
Speaker Change: And then share that knowledge back with our students in schools.
Speaker Change: In conclusion, we are pleased with our quarterly performance and the progress we are making against our strategic priorities to create value for shareholders.
Speaker Change: I repeat we will remain focused on what we can control.
Speaker Change: Delivering exceptional adventure experiences optimizing revenue innovating around cost efficiency and investing in long term growth.
Speaker Change: With this approach.
Speaker Change: We are confident that we will delight, our guests and shareholders alike.
Speaker Change: Thank you for your time today, and I will hand, it over to Rick to provide details on our first quarter financial performance.
Rick Culbert: Thank you Natalia.
Rick Culbert: First quarter performance has the company well positioned to deliver another year of record financial results as we continue to expand our fleet to drive occupancy and net yield growth and grow our portfolio of land experienced businesses in January we closed our previously announced purchase of two expedition.
Rick Culbert: Esol.
Rick Culbert: National Geographic Gemini and the National Geographic Delfina, which are both now sailing in the Galapagos.
Rick Culbert: Now I would like to review our first quarter results total company revenue for Q1, 2025 was $180 million, an increase of $26 million or 17% versus Q1 2024.
Rick Culbert: Lindblad segment revenues were $131 million, an increase of $13 million or 11% compared to prior year.
Rick Culbert: As mentioned during our last call available guest nights were down 12% driven by the timing of dry docks and repositioning however, occupancy increased 13 percentage points from 76% to 89%.
Rick Culbert: And net yield per available guest night increased 25% to 1521, the highest in company history.
Rick Culbert: Land experiences revenues were $49 million, an increase of $13 million or 38% compared to Q1 2024, driven by increased trips higher revenue per guest and the inclusion of Wineland Thompson Adventures and adventure travel group that primarily operates African safaris, which was acquired in.
Rick Culbert: In July 2024.
Rick Culbert: Q1, 2025, adjusted EBITDA was $30 million, an increase of $8 4 million or 39% versus the prior year. This was driven by a $5 8 million or 29% increase at the Lindblad segment, and a $2 5 million or 223% increase at the land experienced in this segment.
Rick Culbert: Looking closer at the cost side of our business I am pleased to report that we delivered margin improvement this quarter.
Rick Culbert: Operating expenses before depreciation and amortization interest and taxes increased $17 7 million or 13, 4% versus Q1 2024.
Rick Culbert: Cost of tours increased $8 4 million or nine 9% driven by operating additional land trips and the inclusion of Thompson group.
Rick Culbert: Fuel costs were five 6% of Lindblad segment revenue, which is down 180 basis points versus a year ago.
Rick Culbert: Sales and marketing cost increased $5 5 million or 24, 1%, primarily due to investments in demand generation efforts, including building, our sales team and expanding into key international markets as well as higher royalties associated with our new agreement with National geographic.
Rick Culbert: General and administrative costs, excluding stock based compensation transaction related expenses and legal settlements increased $3 8 million or 15, 5% versus a year ago, driven by higher personnel costs.
Rick Culbert: One of our key strategic pillars as cost innovation.
Rick Culbert: Our goal is to expand margins, while maintaining the guest experience and our commitment to safety.
Rick Culbert: We have recently kicked off a number of efforts, including supply chain and procurement crew planning and travel and dry dock optimization designed to increase margins over the long term.
Rick Culbert: While early we are realizing some benefits from our efforts already.
Rick Culbert: You noted, we're adding three additional voyages in 2026 due to our dry dock optimization efforts.
Rick Culbert: Total company net income improved $5 2 million to $1 million.
Rick Culbert: And income available to stockholders was roughly breakeven or zero cents per diluted share. This reflects the significant improvement in operations.
Rick Culbert: As part of our efforts to better align our financial reporting with the underlying economics of the business. We have reclassified credit card processing fees from general and administrative expenses to cost of tours.
Rick Culbert: Fees are directly tied to just bookings we believe this change more accurately reflects the true cost of delivering our services and improves the comparability of our gross margin to industry peers. This reclassification has no impact on operating income EBITDA or net income, but it will result in slightly higher reported <unk>.
Rick Culbert: Cost of tours, and lower general and administrative expenses going forward for comparability. We have also adjusted prior periods to reflect this change.
Rick Culbert: Turning to the balance sheet, we ended the quarter with total cash of $235 2 million, an increase of $19 $1 million versus the end of 2020 for the.
Rick Culbert: The increase reflects $48 4 million in cash from operations due primarily to the results of the business and increased bookings for future travel.
Rick Culbert: We used $29 million of cash for investing activities, which reflects $15 6 million using the addition of the new Galapagos vessels and the increase in dry dock days, despite an increase in capex in the quarter, we generated healthy free cash flow.
Natalia Li: Natalia shared earlier the company will continue to explore accretive growth opportunities, including expanding our fleet and further diversifying our portfolio of land experienced brands to capitalize on continued growth in the demand for adventure travel.
Rick Culbert: Turning to full year guidance.
Rick Culbert: Fight the recent macroeconomic turbulence, we remain cautiously optimistic as booking curves remain ahead of prior year for 2025, and 2026 for both our lindblad and land experienced segments. Therefore, we are reaffirming total company tour revenue between $700 million and 700.
Rick Culbert: $50 million and adjusted EBITDA between $100 million and $112 million, we are introducing net yield expectations for the first time this quarter by offering this guidance, we aimed to help investors better understand how we are managing occupancy pricing and onboard revenue growth for 2025.
Rick Culbert: We expect net yield per available guest night increased 7% to 10% versus the prior year to.
Rick Culbert: To provide further context at the midpoint of that range estimated 2025 net yields are expected to increase 21% compared to 2019 levels. Despite a 49% increase in capacity, which is one of the highest capacity growth rates among cruise lines over this period.
Rick Culbert: This combination of yield improvement with significant capacity growth demonstrates the strength of our business model and the robust demand for our offerings.
Natalia Li: We thank you for your interest in Lindblad expeditions, Natalia and I will be happy to answer any questions you may have.
Natalia Li: Thank you we will now begin the question and answer session.
Speaker Change: And I would like to ask a question. Please press star one on your itself will keep back to raise your hand and joined the queue.
Speaker Change: I would like to withdraw your question simply press Star one again.
Steve: Our first question comes from Steve <unk>.
Steve Shinskie: Shinskie from us.
Speaker Change: Stifel. Please go ahead.
Steve: Okay.
Steve: Hey, guys good morning.
Steve: So to tell you or.
Steve: Rick I guess I'm surprised to see how.
Steve: How strong occupancy was in the quarter.
Speaker Change: You gave some commentary in her prepared remarks in terms of what what drove that but we thought the occupancy lift would be more of a 2026 story and so I guess im little bit surprised it moved so quickly and it doesn't seem like there was discounting going on to drive occupancy given how strong yields were so.
Speaker Change: Was that was the move there is somewhat related to the Disney partnership.
Speaker Change: Or is it just something else that we're not really thinking about and then maybe how.
Speaker Change: How we should think about occupancy for the.
Speaker Change: The remainder of the year.
Steve Shinskie: Hey, Steve good.
Steve Shinskie: Good to hear from Neil Thanks, Paul lining up to answer your questions.
Speaker Change: Ask your question first I think Thats a combination of multiple factors. One is our expanded audience and that is directly related to Disney relationships, but as well as related to the fact that we're driving call. It charter businesses group businesses.
Speaker Change: And the stronger revenue management strategy in a dynamic pricing that all will remain so for the rest of the year and we'll continue to invest in those areas as we build towards 2026.
Speaker Change: So we did see the fluctuation in.
Speaker Change: Our dry docks as you've seen our quarter one.
Speaker Change: A little bit less capacity than year ago was that.
Speaker Change: Contributors to the occupancy factor inventory in Q1.
Speaker Change: Okay got you.
Speaker Change: And then wanted to ask you about the current booking environment given all the macro noise that's out in the marketplace at this point.
Speaker Change: I'm wondering what your maybe give us a little bit more color in terms of what your bookings have looked like over the whether its the last month over the last couple of weeks, if theres been any softness any change in demand patterns.
Speaker Change: And then maybe also kind of help us understand where you are.
Speaker Change: Where you're booked for 2026 versus the same point.
In time last year and then.
Speaker Change: Rick I don't know if you can help us think about cadence for the rest of the year.
Speaker Change: In terms of yields because your implied yield growth after the first quarter does show a little bit of deceleration.
Speaker Change: Over the last three quarters, so just trying to get a little bit more color there as well thanks.
Speaker Change: Thank you stay well, let me start then the week will add a little more color on kind of yield between the quarters. So.
Speaker Change: First of all.
Speaker Change: Stressed in my remarks, and I'll, just repeat our 25 and 26 bookings remain a bright year across both segments and I am pleased to see that we built quite a bit of a buffer in both years.
Speaker Change: Based on our efforts, we are like everyone else very much watching and navigating through this complex microeconomic environment.
Speaker Change: April bookings have been less.
Speaker Change: Last consistent.
Speaker Change: Sam.
Speaker Change: Bookings prior to that and so we're watching that also we are seeing positive momentum in the last couple of weeks.
Rick Culbert: But our guidance doesn't incorporate changes in our dry docks and occupancy as well as anticipation of microeconomic challenges, but I'll, let Rick comment a little bit more of that.
Rick Culbert: Yes in terms of the net yield guidance, we feel really good about 7% to 10% growth for the year.
Rick Culbert: Looking at that Thats, a combination of the success of our demand generation activities, along with our capacity growth as we guided to one 5% growth in our available guest nights for the year and Thats Natalia mentioned earlier, we were down 12% in terms of capacity in Q1, which helped it.
Rick Culbert: He was one of the factors that helped drive the net yield growth in the occupancy growth in the quarter.
Rick Culbert: Yeah.
Rick Culbert: Okay.
Rick Culbert: Our next question comes from David Hargreaves from Barclays.
Rick Culbert: Go ahead.
David Hargreaves: First of all great quarter.
David Hargreaves: Following up on that question how did the.
David Hargreaves: How does the adjustments in capacity impact the yields was it was it that you had.
David Hargreaves: Lower.
David Hargreaves: Capacity out of commission or I'm, just trying to think of in terms of mix what was the impact there.
David Hargreaves: Yeah. So in quarter, one just given the fluctuations in the timing of dry docks and repositioning we had a little bit lower <unk>.
David Hargreaves: Capacity for the quarter versus for the full year, where we are going to have an increase in capacity year over year of one 5%.
David Hargreaves: And as.
David Hargreaves: As we had fewer available guest nights that was one of the factors that allowed us to drive the occupancy growth although.
David Hargreaves: Our demand generation activities and our partnership with National Geographic and Disney was another strong factor.
David Hargreaves: That helped us drive that occupancy growth inside of the quarter.
David Hargreaves: So where are you right now in terms of what inning are you at in and implementing dynamic pricing and continuing to integrate the land segment.
David Hargreaves: Business. Thanks, Yes.
David Hargreaves: That's great question, So we have Oh.
David Hargreaves: We have started.
David Hargreaves: Our dynamic pricing strategy, which also was enabled I talked about it in the last quarter by implementation of our <unk>.
David Hargreaves: New system bookings management that allows us significantly more flexibility to fluctuate pricing based on demand.
David Hargreaves: I think there is a lot more to come but I'm pleased to see what we're doing you have seen our promotional cycle. We have developed new programs for onboard sales fall group incentive programs with charters and we've made significant progress on that so I'm very encouraged.
David Hargreaves: By the brokers in those areas and then of course, we are working with new channels and audiences like Disney Channel. Let me with just the launch of our brands in the UK. So we are counting on significant growth in that market, particularly as we are coming towards 2026.
David Hargreaves: Yeah.
David Hargreaves: Okay, and you had given us some updates on the <unk>.
David Hargreaves: Flight stent Arctic I guess this is we're going into the off season, though.
David Hargreaves: I haven't I haven't been yet, but could you give us any updates on <unk>.
David Hargreaves: No.
David Hargreaves: If you're going to continue to increase that program and where you stand in terms of sales.
Speaker Change: Well, if you want to go or you should be in our booking for 2021 because we have practically sold out for 2026 as well as the program is going extremely well we finished Antarctica season for those a few core.
Speaker Change: Im not aware of.
Speaker Change: Seasonality of that trade, we finished Antarctica season.
Speaker Change: We've had a huge cross Boston now yields in fly program, which we launched last December and it continues to be.
Speaker Change: In very very high demand as well as our regular Antarctica product that is operated by two of one of the most advanced ships.
Speaker Change: In in the industry frankly for polar environment. So we're doing really really well for both.
Speaker Change: And we are practically sold out for 2026 on both trends.
Speaker Change: We are seeing.
Speaker Change: Man's on fly cruise increases we have increased capacity both in 'twenty six and then subsequently in 2007 full flight cruises as well recognizing high demand.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Again, if you would like to ask a question. Please press star one.
Speaker Change: Yeah.
Speaker Change: There are no further questions at this time.
Speaker Change: Let's turn the call back over to you.
Speaker Change: I just want to thank everyone for your interest in Lindblad expeditions and hope you enjoy the rest of your day. Thank you so much.
Speaker Change: This concludes today's meeting you may now disconnect.
Speaker Change: [music].