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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 11/02/22 Lindblad Expeditions Holdings Inc 10-Q 9/30/22 70:6.4M RDG Filings/FA |
Document/Exhibit Description Pages Size
1: 10-Q Quarterly Report HTML 1.44M
2: EX-10.1 Material Contract HTML 30K
3: EX-10.2 Material Contract HTML 30K
4: EX-31.1 Certification -- §302 - SOA'02 HTML 27K
5: EX-31.2 Certification -- §302 - SOA'02 HTML 26K
6: EX-32.1 Certification -- §906 - SOA'02 HTML 22K
7: EX-32.2 Certification -- §906 - SOA'02 HTML 22K
13: R1 Document And Entity Information HTML 73K
14: R2 Condensed Consolidated Balance Sheets (Current HTML 141K
Period Unaudited)
15: R3 Condensed Consolidated Balance Sheets (Current HTML 48K
Period Unaudited) (Parentheticals)
16: R4 Condensed Consolidated Statements of Operations HTML 121K
(Unaudited)
17: R5 Condensed Consolidated Statements of Comprehensive HTML 55K
Loss (Unaudited)
18: R6 Condensed Consolidated Statements of Stockholders' HTML 83K
Deficit (Unaudited)
19: R7 Condensed Consolidated Statements of Cash Flows HTML 112K
(Unaudited)
20: R8 Note 1 - Business and Basis of Presentation HTML 44K
21: R9 Note 2 - Earnings Per Share HTML 47K
22: R10 Note 3 - Revenues HTML 48K
23: R11 Note 4 - Financial Statement Details HTML 45K
24: R12 Note 5 - Long-term Debt HTML 75K
25: R13 Note 6 - Financial Instruments and Fair Value HTML 70K
Measurements
26: R14 Note 7 - Stockholders' Equity HTML 32K
27: R15 Note 8 - Stock Based Compensation HTML 29K
28: R16 Note 9 - Related Party Transactions HTML 24K
29: R17 Note 10 - Income Taxes HTML 25K
30: R18 Note 11 - Acquisitions HTML 25K
31: R19 Note 12 - Commitments and Contingencies HTML 48K
32: R20 Note 13 - Segment Information HTML 100K
33: R21 Note 14 - Subsequent Events HTML 24K
34: R22 Significant Accounting Policies (Policies) HTML 33K
35: R23 Note 2 - Earnings Per Share (Tables) HTML 43K
36: R24 Note 3 - Revenues (Tables) HTML 45K
37: R25 Note 4 - Financial Statement Details (Tables) HTML 44K
38: R26 Note 5 - Long-term Debt (Tables) HTML 59K
39: R27 Note 6 - Financial Instruments and Fair Value HTML 68K
Measurements (Tables)
40: R28 Note 12 - Commitments and Contingencies (Tables) HTML 41K
41: R29 Note 13 - Segment Information (Tables) HTML 93K
42: R30 Note 1 - Business and Basis of Presentation HTML 46K
(Details Textual)
43: R31 Note 2 - Earnings Per Share (Details Textual) HTML 32K
44: R32 Note 2 - Earnings Per Share - Schedule of Earnings HTML 58K
Per Share (Details)
45: R33 Note 3 - Revenues - Change in Contract Liabilities HTML 25K
(Details)
46: R34 Note 3 - Revenues - Disaggregation of Revenues by HTML 32K
Type (Details)
47: R35 Note 4 - Financial Statement Details (Details HTML 32K
Textual)
48: R36 Note 4 - Financial Statement Details - HTML 29K
Reconciliation of Cash, Cash Equivalents, and
Restricted Cash (Details)
49: R37 Note 4 - Financial Statement Details - Restricted HTML 28K
Cash and Marketable Securities (Details)
50: R38 Note 4 - Financial Statement Details - Loan HTML 25K
Receivable (Details)
51: R39 Note 5 - Long-term Debt (Details Textual) HTML 94K
52: R40 Note 5 - Long-term Debt - Long-term Debt (Details) HTML 57K
53: R41 Note 6 - Financial Instruments and Fair Value HTML 54K
Measurements (Details Textual)
54: R42 Note 6 - Financial Instruments and Fair Value HTML 24K
Measurements - Derivative Instruments Notional
Values (Details)
55: R43 Note 6 - Financial Instruments and Fair Value HTML 36K
Measurements - Estimated Fair Values of Derivative
Instruments (Details)
56: R44 Note 6 - Financial Instruments and Fair Value HTML 34K
Measurements - Derivatives Recognized in Condensed
Consolidation Financial Statements (Details)
57: R45 Note 7 - Stockholders' Equity (Details Textual) HTML 73K
58: R46 Note 8 - Stock Based Compensation (Details HTML 59K
Textual)
59: R47 Note 10 - Income Taxes (Details Textual) HTML 23K
60: R48 Note 11 - Acquisitions (Details Textual) HTML 50K
61: R49 Note 12 - Commitments and Contingencies (Details HTML 26K
Textual)
62: R50 Note 12 - Commitments and Contingencies - HTML 32K
Redeemable Non-controlling Interest (Details)
63: R51 Note 12 - Commitments and Contingencies - Charter HTML 24K
Commitments (Details)
64: R52 Note 13 - Segment Information (Details Textual) HTML 29K
65: R53 Note 13 - Segment Information - Segment HTML 71K
Information (Details)
68: XML IDEA XML File -- Filing Summary XML 125K
66: XML XBRL Instance -- lindb20220930b_10q_htm XML 1.46M
67: EXCEL IDEA Workbook of Financial Reports XLSX 102K
9: EX-101.CAL XBRL Calculations -- lind-20220930_cal XML 120K
10: EX-101.DEF XBRL Definitions -- lind-20220930_def XML 1.08M
11: EX-101.LAB XBRL Labels -- lind-20220930_lab XML 849K
12: EX-101.PRE XBRL Presentations -- lind-20220930_pre XML 1.10M
8: EX-101.SCH XBRL Schema -- lind-20220930 XSD 162K
69: JSON XBRL Instance as JSON Data -- MetaLinks 340± 546K
70: ZIP XBRL Zipped Folder -- 0001437749-22-025552-xbrl Zip 249K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM i 10-Q
i ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended i September 30, 2022
i ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number i 001-35898
LINDBLAD EXPEDITIONS HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
| i Delaware | i 27-4749725 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
i 96 Morton Street, 9th Floor, i New York, i New York, i 10014
(Address of principal executive offices) (Zip Code)
( i 212) i 261-9000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| i Common Stock, par value $0.0001 per share | i LIND | The i NASDAQ Stock Market LLC |
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ i Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ i Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | i Accelerated filer | ☒ |
| Non-accelerated filer | ☐ | Smaller reporting company | i ☐ |
| Emerging growth company | i ☐ | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). i ☐ Yes ☒ No
As of October 31, 2022, i 53,141,196 shares of common stock, par value $0.0001 per share, were outstanding.
LINDBLAD EXPEDITIONS HOLDINGS, INC.
Quarterly Report On Form 10-Q
For The Quarter Ended September 30, 2022
| Page(s) |
||
| PART I. FINANCIAL INFORMATION |
||
| ITEM 1. |
Financial Statements (Unaudited) |
|
| Condensed Consolidated Balance Sheets as of September 30, 2022 (Unaudited) and December 31, 2021 |
||
| Notes to the Condensed Consolidated Financial Statements (Unaudited) |
||
| ITEM 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
20 |
| ITEM 3. |
34 | |
| ITEM 4. |
34 | |
| PART II. OTHER INFORMATION |
||
| ITEM 1. |
34 | |
| ITEM 1A. |
34 | |
| ITEM 2. |
35 | |
| ITEM 3. |
35 | |
| ITEM 4. |
35 | |
| ITEM 5. |
35 | |
| ITEM 6. |
36 | |
| 37 | ||
| PART 1. |
FINANCIAL INFORMATION |
| ITEM 1. |
FINANCIAL STATEMENTS |
LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | i 116,446 | $ | i 150,753 | ||||
| Restricted cash | i 29,524 | i 21,940 | ||||||
| Marine operating supplies | i 9,608 | i 8,275 | ||||||
| Inventories | i 2,140 | i 2,278 | ||||||
| Prepaid expenses and other current assets | i 45,252 | i 27,094 | ||||||
| Total current assets | i 202,970 | i 210,340 | ||||||
| Property and equipment, net | i 540,385 | i 542,418 | ||||||
| Goodwill | i 42,017 | i 42,017 | ||||||
| Intangibles, net | i 11,671 | i 13,235 | ||||||
| Deferred tax asset | i 6,849 | i 7,609 | ||||||
| Right-to-use lease assets | i 3,439 | i 4,402 | ||||||
| Other long-term assets | i 4,199 | i 7,470 | ||||||
| Total assets | $ | i 811,530 | $ | i 827,491 | ||||
| LIABILITIES | ||||||||
| Current Liabilities: | ||||||||
| Unearned passenger revenues | $ | i 247,005 | $ | i 212,598 | ||||
| Accounts payable and accrued expenses | i 56,774 | i 49,252 | ||||||
| Lease liabilities - current | i 1,524 | i 1,553 | ||||||
| Long-term debt - current | i 24,086 | i 26,061 | ||||||
| Total current liabilities | i 329,389 | i 289,464 | ||||||
| Long-term debt, less current portion | i 534,677 | i 518,658 | ||||||
| Lease liabilities | i 2,212 | i 3,178 | ||||||
| Other long-term liabilities | i 359 | i 247 | ||||||
| Total liabilities | i 866,637 | i 811,547 | ||||||
| Commitments and contingencies | - | - | ||||||
| Series A redeemable convertible preferred stock, 165,000 shares authorized; 62,000 and 80,000 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively | i 68,090 | i 83,901 | ||||||
| Redeemable noncontrolling interests | i 31,583 | i 10,626 | ||||||
| i 99,673 | i 94,527 | |||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Preferred stock, $0.0001 par value, 1,000,000 shares authorized; 62,000 and 80,000 Series A shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively | i - | i - | ||||||
| Common stock, $0.0001 par value, 200,000,000 shares authorized; 53,132,670 and 50,800,786 issued, 53,065,365 and 50,755,546 outstanding as of September 30, 2022 and December 31, 2021, respectively | i 5 | i 5 | ||||||
| Additional paid-in capital | i 82,432 | i 58,485 | ||||||
| Accumulated deficit | ( i 237,217 | ) | ( i 136,439 | ) | ||||
| Accumulated other comprehensive loss | i - | ( i 634 | ) | |||||
| Total stockholders' deficit | ( i 154,780 | ) | ( i 78,583 | ) | ||||
| Total liabilities, mezzanine equity and stockholders' deficit | $ | i 811,530 | $ | i 827,491 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)
(unaudited)
| For the three months ended September 30, |
For the nine months ended September 30, |
|||||||||||||||
| 2021 |
2022 |
2021 |
||||||||||||||
| Tour revenues |
$ | i 144,783 | $ | i 64,507 | $ | i 303,540 | $ | i 81,555 | ||||||||
| Operating expenses: |
||||||||||||||||
| Cost of tours |
i 87,576 | i 45,600 | i 208,023 | i 73,270 | ||||||||||||
| General and administrative |
i 24,535 | i 17,023 | i 68,882 | i 46,123 | ||||||||||||
| Selling and marketing |
i 16,025 | i 10,213 | i 41,193 | i 17,680 | ||||||||||||
| Depreciation and amortization |
i 10,839 | i 9,323 | i 33,193 | i 25,785 | ||||||||||||
| Total operating expenses |
i 138,975 | i 82,159 | i 351,291 | i 162,858 | ||||||||||||
| Operating income (loss) |
i 5,808 | ( i 17,652 | ) | ( i 47,751 | ) | ( i 81,303 | ) | |||||||||
| Other (expense) income: |
||||||||||||||||
| Interest expense, net |
( i 8,369 | ) | ( i 6,063 | ) | ( i 26,500 | ) | ( i 17,436 | ) | ||||||||
| Loss on foreign currency |
( i 872 | ) | ( i 1,434 | ) | ( i 1,417 | ) | ( i 1,165 | ) | ||||||||
| Other (expense) income |
( i 333 | ) | i 4,357 | i 84 | i 4,362 | |||||||||||
| Total other expense |
( i 9,574 | ) | ( i 3,140 | ) | ( i 27,833 | ) | ( i 14,239 | ) | ||||||||
| Loss before income taxes |
( i 3,766 | ) | ( i 20,792 | ) | ( i 75,584 | ) | ( i 95,542 | ) | ||||||||
| Income tax expense (benefit) |
i 1,732 | i 2,507 | i 619 | ( i 2,648 | ) | |||||||||||
| Net loss |
( i 5,498 | ) | ( i 23,299 | ) | ( i 76,203 | ) | ( i 92,894 | ) | ||||||||
| Net income (loss) attributable to noncontrolling interest |
i 3,228 | i 1,039 | i 3,000 | ( i 17 | ) | |||||||||||
| Net loss attributable to Lindblad Expeditions Holdings, Inc. |
( i 8,726 | ) | ( i 24,338 | ) | ( i 79,203 | ) | ( i 92,877 | ) | ||||||||
| Series A redeemable convertible preferred stock dividend |
i 1,036 | i 1,340 | i 3,618 | i 3,962 | ||||||||||||
| Net loss available to stockholders |
$ | ( i 9,762 | ) | $ | ( i 25,678 | ) | $ | ( i 82,821 | ) | $ | ( i 96,839 | ) | ||||
| Weighted average shares outstanding |
||||||||||||||||
| Basic |
i 53,045,329 | i 50,110,188 | i 51,665,912 | i 50,013,191 | ||||||||||||
| Diluted |
i 53,045,329 | i 50,110,188 | i 51,665,912 | i 50,013,191 | ||||||||||||
| Undistributed loss per share available to stockholders: |
||||||||||||||||
| Basic |
$ | ( i 0.18 | ) | $ | ( i 0.50 | ) | $ | ( i 1.60 | ) | $ | ( i 1.87 | ) | ||||
| Diluted |
$ | ( i 0.18 | ) | $ | ( i 0.50 | ) | $ | ( i 1.60 | ) | $ | ( i 1.87 | ) | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Loss
(In thousands)
(unaudited)
| For the three months ended September 30, |
For the nine months ended September 30, |
|||||||||||||||
| 2021 |
2022 |
2021 |
||||||||||||||
| Net loss |
$ | ( i 5,498 | ) | $ | ( i 23,299 | ) | $ | ( i 76,203 | ) | $ | ( i 92,894 | ) | ||||
| Other comprehensive income: |
||||||||||||||||
| Cash flow hedges: |
||||||||||||||||
| Net unrealized income |
i - | ( i 2,333 | ) | i - | ( i 1,789 | ) | ||||||||||
| Reclassification adjustment, net of tax |
i - | i 2,535 | i 634 | i 2,650 | ||||||||||||
| Total other comprehensive income |
i - | i 202 | i 634 | i 861 | ||||||||||||
| Total comprehensive loss |
( i 5,498 | ) | ( i 23,097 | ) | ( i 75,569 | ) | ( i 92,033 | ) | ||||||||
| Less: comprehensive income (loss) attributive to non-controlling interest |
i 3,228 | i 1,039 | i 3,000 | ( i 17 | ) | |||||||||||
| Comprehensive loss attributable to stockholders |
$ | ( i 8,726 | ) | $ | ( i 24,136 | ) | $ | ( i 78,569 | ) | $ | ( i 92,016 | ) | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders’ Deficit
(In thousands, except share data)
(unaudited)
| Common Stock |
Additional Paid-In |
Accumulated |
Accumulated Other Comprehensive |
Total Stockholders' |
||||||||||||||||||||
| Shares |
Amount |
Capital |
Deficit |
Loss |
Deficit |
|||||||||||||||||||
| Balance as of June 30, 2022 |
i 53,064,077 | $ | i 5 | $ | i 80,812 | $ | ( i 218,695 | ) | $ | i - | $ | ( i 137,878 | ) | |||||||||||
| Stock-based compensation |
- | i - | i 1,632 | i - | i - | i 1,632 | ||||||||||||||||||
| Net activity related to equity compensation plans |
i 68,593 | i - | ( i 12 | ) | i - | i - | ( i 12 | ) | ||||||||||||||||
| Redeemable noncontrolling interest |
- | i - | i - | ( i 8,760 | ) | i - | ( i 8,760 | ) | ||||||||||||||||
| Series A preferred stock dividend |
- | - | - | ( i 1,036 | ) | - | ( i 1,036 | ) | ||||||||||||||||
| Net loss attributable to Lindblad Expeditions Holdings, Inc |
- | i - | i - | ( i 8,726 | ) | i - | ( i 8,726 | ) | ||||||||||||||||
| Balance as of September 30, 2022 |
i 53,132,670 | $ | i 5 | $ | i 82,432 | $ | ( i 237,217 | ) | $ | i - | $ | ( i 154,780 | ) | |||||||||||
| Common Stock | Additional Paid-In | Accumulated | Accumulated Other Comprehensive | Total Stockholders' | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Loss | Deficit | |||||||||||||||||||
| Balance as of December 31, 2021 |
i 50,800,786 | $ | i 5 | $ | i 58,485 | $ | ( i 136,439 | ) | $ | ( i 634 | ) | $ | ( i 78,583 | ) | ||||||||||
| Stock-based compensation |
- | i - | i 5,283 | i - | i - | i 5,283 | ||||||||||||||||||
| Net activity related to equity compensation plans |
i 222,323 | i - | ( i 766 | ) | i - | i - | ( i 766 | ) | ||||||||||||||||
| Issuance of stock for conversion of preferred stock |
i 2,109,561 | i - | i 19,430 | i - | i - | i 19,430 | ||||||||||||||||||
| Other comprehensive income, net |
- | i - | i - | i - | i 634 | i 634 | ||||||||||||||||||
| Redeemable noncontrolling interest |
- | i - | i - | ( i 17,957 | ) | i - | ( i 17,957 | ) | ||||||||||||||||
| Series A preferred stock dividend |
- | i - | i - | ( i 3,618 | ) | i - | ( i 3,618 | ) | ||||||||||||||||
| Net loss attributable to Lindblad Expeditions Holdings, Inc. |
- | i - | i - | ( i 79,203 | ) | i - | ( i 79,203 | ) | ||||||||||||||||
| Balance as of September 30, 2022 |
i 53,132,670 | $ | i 5 | $ | i 82,432 | $ | ( i 237,217 | ) | $ | i - | $ | ( i 154,780 | ) | |||||||||||
LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders’ (Deficit) Equity (continued)
(In thousands, except share data)
(unaudited)
| Common Stock |
Additional Paid-In |
Accumulated |
Accumulated Other |
Total Stockholders' |
||||||||||||||||||||
| Shares |
Amount |
Capital |
Deficit |
Comprehensive Loss |
Equity (Deficit) |
|||||||||||||||||||
| Balance as of June 30, 2021 |
i 50,139,831 | $ | i 5 | $ | i 50,777 | $ | ( i 82,733 | ) | $ | ( i 943 | ) | $ | ( i 32,894 | ) | ||||||||||
| Stock-based compensation |
- | i - | i 1,406 | i - | i - | i 1,406 | ||||||||||||||||||
| Net activity related to equity compensation plans |
i 51,816 | i - | ( i 37 | ) | i - | i - | ( i 37 | ) | ||||||||||||||||
| Other comprehensive income, net |
- | i - | i - | i - | i 202 | i 202 | ||||||||||||||||||
| Series A preferred shares dividend |
- | ( i 1,340 | ) | - | ( i 1,340 | ) | ||||||||||||||||||
| Net loss attributable to Lindblad Expeditions Holdings, Inc. |
- | i - | i - | ( i 24,338 | ) | i - | ( i 24,338 | ) | ||||||||||||||||
| Balance as of September 30, 2021 |
i 50,191,647 | $ | i 5 | $ | i 52,146 | $ | ( i 108,411 | ) | $ | ( i 741 | ) | $ | ( i 57,001 | ) | ||||||||||
| Common Stock | Additional Paid-In | Accumulated | Accumulated Other | Total Stockholders' | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Comprehensive Loss | Equity (Deficit) | |||||||||||||||||||
| Balance as of December 31, 2020 |
i 49,905,512 | $ | i 5 | $ | i 48,127 | $ | ( i 11,572 | ) | ( i 1,602 | ) | $ | i 34,958 | ||||||||||||
| Stock-based compensation |
- | i - | i 4,012 | i - | i - | i 4,012 | ||||||||||||||||||
| Net activity related to equity compensation plans |
i 203,833 | i - | ( i 1,763 | ) | i - | i - | ( i 1,763 | ) | ||||||||||||||||
| Issuance of stock for acquisition |
i 82,302 | i - | i 1,770 | i - | i - | i 1,770 | ||||||||||||||||||
| Other comprehensive income, net |
- | i - | i - | i - | i 861 | i 861 | ||||||||||||||||||
| Series A preferred shares dividend |
- | i - | i | ( i 3,962 | ) | i - | ( i 3,962 | ) | ||||||||||||||||
| Net loss attributable to Lindblad Expeditions Holdings, Inc. |
- | i - | i - | ( i 92,877 | ) | i - | ( i 92,877 | ) | ||||||||||||||||
| Balance as of September 30, 2021 |
i 50,191,647 | $ | i 5 | $ | i 52,146 | $ | ( i 108,411 | ) | $ | ( i 741 | ) | $ | ( i 57,001 | ) | ||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
| For the nine months ended September 30, |
||||||||
| 2021 |
||||||||
| Cash Flows From Operating Activities |
||||||||
| Net loss |
$ | ( i 76,203 | ) | $ | ( i 92,894 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
||||||||
| Depreciation and amortization |
i 33,193 | i 25,785 | ||||||
| Amortization of deferred financing costs and other, net |
i 1,988 | i 2,364 | ||||||
| Right-of-use lease asset |
i 626 | i 4 | ||||||
| Stock-based compensation |
i 5,283 | i 4,146 | ||||||
| Deferred income taxes |
i 759 | ( i 2,648 | ) | |||||
| Change in fair value of contingent acquisition consideration |
i 111 | i - | ||||||
| Loss on foreign currency |
i 1,417 | i 1,165 | ||||||
| Write-off of unamortized issuance costs related to debt refinancing |
i 9,004 | i - | ||||||
| Changes in operating assets and liabilities |
||||||||
| Marine operating supplies and inventories |
( i 1,195 | ) | ( i 375 | ) | ||||
| Prepaid expenses and other current assets |
( i 19,575 | ) | ( i 8,902 | ) | ||||
| Unearned passenger revenues |
i 34,407 | i 62,922 | ||||||
| Other long-term assets |
i 3,242 | i 658 | ||||||
| Other long-term liabilities |
i 844 | i 4,857 | ||||||
| Accounts payable and accrued expenses |
i 7,526 | i 24,438 | ||||||
| Operating lease liabilities |
( i 658 | ) | i - | |||||
| Net cash provided by operating activities |
i 769 | i 21,520 | ||||||
| Cash Flows From Investing Activities |
||||||||
| Purchases of property and equipment |
( i 29,566 | ) | ( i 89,114 | ) | ||||
| Acquisition (net of cash acquired) |
i - | ( i 7,177 | ) | |||||
| Net cash used in investing activities |
( i 29,566 | ) | ( i 96,291 | ) | ||||
| Cash Flows From Financing Activities |
||||||||
| Proceeds from long-term debt |
i 360,000 | i 61,720 | ||||||
| Repayments of long-term debt |
( i 346,301 | ) | ( i 1,530 | ) | ||||
| Payment of deferred financing costs |
( i 10,859 | ) | ( i 3,135 | ) | ||||
| Repurchase under stock-based compensation plans and related tax impacts |
( i 766 | ) | ( i 1,763 | ) | ||||
| Net cash provided by financing activities |
i 2,074 | i 55,292 | ||||||
| Net decrease in cash, cash equivalents and restricted cash |
( i 26,723 | ) | ( i 19,479 | ) | ||||
| Cash, cash equivalents and restricted cash at beginning of period |
i 172,693 | i 204,515 | ||||||
| Cash, cash equivalents and restricted cash at end of period |
$ | i 145,970 | $ | i 185,036 | ||||
| Supplemental disclosures of cash flow information: |
||||||||
| Cash paid during the period: |
||||||||
| Interest |
$ | i 22,159 | $ | i 13,300 | ||||
| Income taxes |
i 226 | i 54 | ||||||
| Non-cash investing and financing activities: |
||||||||
| Non-cash preferred stock dividend |
$ | i 3,618 | $ | i 3,962 | ||||
| Value of shares issued for acquisition |
i - | i 1,770 | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
Lindblad Expeditions Holdings, Inc.
Notes to the Unaudited Condensed Consolidated Financial Statements
(Unaudited)
NOTE 1—BUSINESS AND BASIS OF PRESENTATION
Business
Lindblad Expeditions Holdings, Inc.’s and its consolidated subsidiaries’ (the “Company” or “Lindblad”) mission is offering life-changing adventures around the world and pioneering innovative ways to allow its guests to connect with exotic and remote places. The Company currently operates a fleet of ten owned expedition ships and five seasonal charter vessels under the Lindblad brand, operates land-based, eco-conscious expeditions and active nature focused tours under the Natural Habitat, Inc. (“Natural Habitat”) and Off the Beaten Path, LLC (“Off the Beaten Path”) brands, designs handcrafted walking tours under the Classic Journeys, LLC (“Classic Journeys”) brand and operates luxury cycling and adventure tours under the DuVine Cycling + Adventure Company (“DuVine”) brand.
The Company’s common stock is listed on the NASDAQ Capital Market under the symbol “LIND”.
The Company operates the following two reportable business segments:
Lindblad Segment. The Lindblad segment primarily provides ship-based expeditions aboard customized, nimble and intimately-scaled vessels that are able to venture where larger cruise ships cannot, thus allowing Lindblad to offer up-close experiences in the planet’s wild and remote places and capitals of culture. Each expedition ship is fully equipped with state-of-the-art tools for in-depth exploration, and the majority of expeditions involve travel to remote places with limited infrastructure and ports, such as Antarctica and the Arctic, or places that are best accessed by a ship, such as the Galápagos Islands, Alaska, Baja California’s Sea of Cortez and Panama, and foster active engagement by guests. The Company has an alliance with National Geographic Partners, LLC (“National Geographic”), which provides for lecturers and National Geographic experts, including photographers, writers, marine biologists, naturalists, field researchers and film crews, to join many of the Company’s expeditions.
Land Experiences Segment. The Land Experiences segment includes our four primarily land-based brands, Natural Habitat, DuVine, Off the Beaten Path and Classic Journeys.
| ● | Natural Habitat specializes in conservation-oriented adventures, providing life-enhancing forays into the natural world that feature wild habitats and the animals and people who live there. Natural Habitat’s travel adventures provide unparalleled access to the planet's most extraordinary wildlife, landscapes and cultures. Natural Habitat’s unique itineraries include access to private wildlife reserves, remote corners of national parks and distinctive, secluded, and remote lodges and camps situated where wildlife viewing is best, such as polar bear tours in Churchill, Canada, Alaskan grizzly bear adventures, small-group Galápagos Islands tours and African safaris. Natural Habitat has partnered with World Wildlife Fund (“WWF”) to offer conservation travel, which is sustainable travel that contributes to the protection of nature and wildlife. | |
| ● | DuVine specializes in luxury cycling and adventure tours around the world, providing immersive cultural and culinary experiences through thoughtfully designed itineraries led by expert local guides. Offerings primarily include tours throughout Europe, the United States and South America. Examples of DuVine’s tours include cycling and culinary tours throughout the Bordeaux and Burgundy wine making regions, Tuscan truffle, porcini and chestnut harvest regions, Napa and Sonoma wine making regions and lakes and volcanos throughout Patagonia. DuVine’s trips include top-quality gear and support and are tailored to riders of all abilities with an emphasis on exceptional food and wine experiences, along with boutique accommodations. | |
| ● | Off the Beaten Path provides active small-group and private custom journeys around the world with a long-standing focus on offering unique adventures and experiences throughout United States (“U.S.”) National Parks. In addition to other U.S.-based adventures such as ranch vacations and fly-fishing expeditions, Off the Beaten Path’s small-group product offerings include international expeditions across Europe, Africa, Australia, Central and South America and the South Pacific, such as hiking through the Dolomites, family adventures in Patagonia’s Lake District and experiencing the culture of Morocco. All Off the Beaten Path expeditions are defined by a focus on outdoor activity led by experienced, friendly guides. | |
| ● | Classic Journeys offers highly curated active small-group and private custom journeys centered around cinematic walks focused on engaging experiences that immerse guests into the history and culture of the places they are exploring and the people who live there, led by expert local guides in over 50 countries around the world. Classic Journeys’ tours are highlighted by luxury boutique accommodations and handcrafted itineraries curated through years of local connections such as experiencing Tuscan farmhouse kitchens, exploring Minoan ruins in Crete, or eating and dancing around a Berber encampment campfire. |
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements and footnotes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding unaudited interim financial information and include the accounts and transactions of the Company. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial statements for the periods presented. Operating results for the periods presented are not necessarily indicative of the results of operations to be expected for the full year due to seasonality and other factors. Certain information and footnote disclosures normally included in the consolidated financial statements in accordance with GAAP have been omitted in accordance with the rules and regulations of the SEC for interim reporting. All intercompany balances and transactions have been eliminated in these unaudited condensed consolidated financial statements. These unaudited condensed consolidated financial statements and footnotes should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto for the year ended December 31, 2021 contained in the Company’s Annual Report on Form 10-K filed with the SEC on February 28, 2022 (the “2021 Annual Report”).
There have been no significant changes to the Company’s accounting policies from those disclosed in the 2021 Annual Report.
i
Ramp of Fleet Operations
The Company resumed operation in June 2021 and, since then, has continually ramped its operations, providing immersive expeditions in 2022 across all ten of its owned vessels. During the third quarter of 2022, operations included trips to Alaska, the Arctic, the Pacific Northwest, British Columbia, Canada's Northwest Passage, the Galápagos Islands, Greenland, Iceland, Norway and South America. Travel restrictions related to COVID-19 have diminished dramatically, and the Company will resume operations in additional geographies in the remainder of 2022 and throughout 2023. Where travel restrictions remain, which primarily includes a limited number of itineraries impacted by the Russia-Ukraine conflict, the Company is adjusting itineraries where possible, and working with guests to reschedule travel plans and refund payments or issue future travel certificates, as applicable. Previously, due to the spread of the COVID-19 virus and the effects of travel restrictions around the world, the Company had suspended or rescheduled the majority of its expeditions departing between March 16, 2020 through May 31, 2021.
The Company believes there are a variety of strategic advantages that enabled it to deploy its ships safely and quickly as travel restrictions were lifted. Most notably, the size of its owned and operated vessels, which range from 48 to 148 passengers, allows for a highly controlled environment that includes stringent cleaning protocols. The small nature of the Company’s ships also allowed it to efficiently and effectively test its guests and crew prior to boarding, or as otherwise needed. Additionally, the majority of expeditions take place in remote locations where human interactions are limited, so there is less opportunity for external influence.
i
Balance Sheet and Liquidity
As of September 30, 2022, the Company had $ i 116.4 million in unrestricted cash and $ i 29.5 million in restricted cash primarily related to deposits on future travel originating from U.S. ports and credit card reserves.
As of September 30, 2022, the Company had a total debt position of $ i 572.4 million and was in compliance with all of its debt covenants in effect. The Company believes that it will be in compliance with all applicable covenants over the next 12 months.
During May 2022, the Company further amended its senior secured export credit agreements to extend the waiver of its net leverage coverage ratio from March 2022 through December 31, 2022.
On February 4, 2022, the Company issued $ i 360.0 million of i 6.75% senior secured notes, maturing 2027, and entered into a new $ i 45.0 million revolving credit facility. Proceeds from the senior secured note issuance were used primarily to pay the outstanding borrowings under the Company's prior credit agreement, including the term facility, Main Street Loan and the revolving credit facility.
/ /
NOTE 2—EARNINGS PER SHARE
Earnings per Common Share
Earnings (loss) per common share is computed using the two-class method related to its Series A Redeemable Convertible Preferred Stock, par value of $ i 0.0001 (“Preferred Stock”). Under the two-class method, undistributed earnings available to stockholders for the period are allocated on a pro rata basis to the common stockholders and to the holders of the Preferred Stock based on the weighted average number of common shares outstanding and number of shares that could be issued upon conversion of the Preferred Stock.
Diluted earnings per share is computed using the weighted average number of common shares outstanding and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the dilutive incremental common shares associated with restricted stock awards and shares issuable upon the exercise of stock options, using the treasury stock method, and the potential common shares that could be issued from conversion of the Preferred Stock, using the if-converted method. When a net loss occurs, potential common shares have an anti-dilutive effect on earnings per share and such shares are excluded from the diluted earnings per share calculation.
For the three and nine months ended September 30, 2022 and 2021, the Company incurred net losses from operations, therefore basic and diluted net loss per share are the same for each period. For the three and nine months ended September 30, 2022, approximately i 0.8 million restricted shares, i 1.4 million shares issuable upon exercise of options and i 7.4 million common shares issuable upon the conversion of the Preferred Stock were excluded from dilutive potential common shares for the periods as they were anti-dilutive. For the three and nine months ended September 30, 2021, i 0.8 million restricted shares, i 1.5 million shares issuable upon exercise of options and i 9.5 million common shares issuable upon conversion of the Preferred Stock were excluded from dilutive potential common shares for the periods as they were anti-dilutive.
Loss per share was calculated as follows:
i
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| 2021 | 2022 | 2021 | ||||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
| (In thousands, except share and per share data) | ||||||||||||||||
| Net loss attributable to Lindblad Expeditions Holdings, Inc. | $ | ( i 8,726 | ) | $ | ( i 24,338 | ) | $ | ( i 79,203 | ) | $ | ( i 92,877 | ) | ||||
| Series A redeemable convertible preferred stock dividend | i 1,036 | i 1,340 | i 3,618 | i 3,962 | ||||||||||||
| Undistributed loss available to stockholders | $ | ( i 9,762 | ) | $ | ( i 25,678 | ) | $ | ( i 82,821 | ) | $ | ( i 96,839 | ) | ||||
| Weighted average shares outstanding: | ||||||||||||||||
| Total weighted average shares outstanding, basic | i 53,045,329 | i 50,110,188 | i 51,665,912 | i 50,013,191 | ||||||||||||
| Total weighted average shares outstanding, diluted | i 53,045,329 | i 50,110,188 | i 51,665,912 | i 50,013,191 | ||||||||||||
| Undistributed loss per share available to stockholders: | ||||||||||||||||
| Basic | $ | ( i 0.18 | ) | $ | ( i 0.50 | ) | $ | ( i 1.60 | ) | $ | ( i 1.87 | ) | ||||
| Diluted | $ | ( i 0.18 | ) | $ | ( i 0.50 | ) | $ | ( i 1.60 | ) | $ | ( i 1.87 | ) | ||||
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NOTE 3—REVENUES
Customer Deposits and Contract Liabilities
The Company’s guests remit deposits in advance of tour embarkation. Guest deposits consist of guest ticket revenues as well as revenues from the sale of pre- and post-expedition excursions, hotel accommodations, land-based expeditions, and air transportation to and from the ships. Guest deposits represent unearned revenues and are reported as unearned passenger revenues in the condensed consolidated balance sheets when received and are subsequently recognized as tour revenue over the duration of the trip. Accounting Standards Codification, Revenue from Contracts with Customers (Topic 606) defines a “contract liability” as an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration from the customer. The Company does not consider guest deposits to be a contract liability until the guest no longer has the right, resulting from the passage of time, to cancel their reservation and receive a full refund. In conjunction with the suspension or rescheduling of expeditions, the Company provided guests an option of either a refund or future travel certificates, which in some instances exceeded the original cash deposit. The Company has recorded liabilities up to the amount of cash deposits. The additional value of any future travel certificates is being recognized as a discount when applied to future expeditions. The change in contract liabilities within unearned passenger revenues presented in our condensed consolidated balance sheets are as follows:
i
| Contract Liabilities | ||||
| (In thousands) | (unaudited) | |||
| Balance as of December 31, 2021 | $ | i 147,783 | ||
| Recognized in tour revenues during the period | ( i 295,824 | ) | ||
| Additional contract liabilities in period | i 296,296 | |||
| Balance as of September 30, 2022 | $ | i 148,255 | ||
The following table disaggregates our tour revenues by the sales channel it was derived from:
i
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| 2021 | 2022 | 2021 | ||||||||||||||
| Guest ticket revenue: | (unaudited) | (unaudited) | ||||||||||||||
| Direct | i 56 | % | i 60 | % | i 51 | % | i 60 | % | ||||||||
| National Geographic | i 12 | % | i 13 | % | i 15 | % | i 12 | % | ||||||||
| Agencies | i 19 | % | i 17 | % | i 19 | % | i 17 | % | ||||||||
| Affinity | i 4 | % | i 7 | % | i 5 | % | i 6 | % | ||||||||
| Guest ticket revenue | i 91 | % | i 97 | % | i 90 | % | i 95 | % | ||||||||
| Other tour revenue | i 9 | % | i 3 | % | i 10 | % | i 5 | % | ||||||||
| Tour revenues | i 100 | % | i 100 | % | i 100 | % | i 100 | % | ||||||||
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NOTE 4—FINANCIAL STATEMENT DETAILS
The following is a reconciliation of cash, cash equivalents and restricted cash to the statement of cash flows:
i
| For the nine months ended September 30, | ||||||||
| 2021 | ||||||||
| (In thousands) | (unaudited) | |||||||
| Cash and cash equivalents | $ | i 116,446 | $ | i 155,562 | ||||
| Restricted cash | i 29,524 | i 29,474 | ||||||
| Total cash, cash equivalents and restricted cash as presented in the statement of cash flows | $ | i 145,970 | $ | i 185,036 | ||||
Restricted cash consists of the following:
i
| As of September 30, 2022 | As of December 31, 2021 | |||||||
| (In thousands) | (unaudited) | |||||||
| Credit card processor reserves | $ | i 21,000 | $ | i 10,536 | ||||
| Federal Maritime Commission and other escrow | i 7,084 | i 9,814 | ||||||
| Certificates of deposit and other restricted securities | i 1,440 | i 1,590 | ||||||
| Total restricted cash | $ | i 29,524 | $ | i 21,940 | ||||
Amounts within prepaid expenses and other current assets in excess of 5% of current assets as of September 30, 2022 were prepaid tour expenses of $ i 20.7 million and prepaid marketing, commission and other expenses of $ i 12.9 million, and as of December 31, 2021, were prepaid tour expenses of $ i 10.3 million.
As of September 30, 2022 and December 31, 2021, no individual amounts within accounts payable and accrued expenses were in excess of 5% of current liabilities.
In 2021, the Company received a $ i 27.0 million grant under the Coronavirus Economic Relief for Transportation Services (“CERTS”) Act, which provided grants to eligible motorcoach, school bus, passenger vessel, and pilotage companies that have experienced annual revenue losses of 25 percent or more as result of COVID-19. The priority use of grant funds was required to be for payroll costs, though grants could be used for operating expenses and the repayment of debt accrued to maintain payroll. The Company had accounted for the grant as a current liability on its balance sheet, as any amounts not appropriately used within one year of the grant date would have to be returned to the U.S. Treasury. As expenses for the grant were incurred, the corresponding amounts were recognized in other income on the income statement. During the three months ended March 31, 2022, the Company recognized the remaining $ i 11.6 million of the CERTS grant in other income for permitted payroll costs and ship operating expenses and, as of September 30, 2022, has no further liability recorded for the grant.
Loan Receivable
The Company’s loan receivable is recorded at amortized cost within other current assets. The Company reviewed its loan receivable for credit losses in connection with the preparation of its condensed consolidated financial statements for the period ended September 30, 2022. In evaluating the allowance for loan losses, the Company considered factors such as historical loss experience, the type and amount of loan, adverse situations that may affect the borrower’s ability to repay and prevailing economic conditions. Based on these credit loss estimation and experience factors, the Company realized i no allowance for loan loss for the nine months ended September 30, 2022. The following is a rollforward of the loan receivable balance:
i
| Loan Receivable | ||||
| (In thousands) | (unaudited) | |||
| Balance as of December 31, 2021 | $ | i 3,964 | ||
| Accrued interest | i 108 | |||
| Amortization of deferred costs | ( i 28 | ) | ||
| Balance as of September 30, 2022 | $ | i 4,044 | ||
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NOTE 5—LONG-TERM DEBT
i
| As of September 30, 2022 | As of December 31, 2021 | |||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||
| (In thousands) | Principal | Deferred Financing Costs, net | Balance | Principal | Deferred Financing Costs, net | Balance | ||||||||||||||||||
| 6.75% Notes | $ | i 360,000 | ( i 9,501 | ) | $ | i 350,499 | $ | i - | $ | i - | $ | i - | ||||||||||||
| First Export Credit Agreement | i 98,019 | ( i 1,896 | ) | i 96,123 | i 107,695 | ( i 2,090 | ) | i 105,605 | ||||||||||||||||
| Second Export Credit Agreement | i 112,603 | ( i 2,273 | ) | i 110,330 | i 120,281 | ( i 2,473 | ) | i 117,808 | ||||||||||||||||
| Note payable | i 842 | i - | i 842 | i 842 | i - | i 842 | ||||||||||||||||||
| Other | i 969 | i - | i 969 | i 1,034 | i - | i 1,034 | ||||||||||||||||||
| Credit Facility | i - | i - | i - | i 284,170 | ( i 9,050 | ) | i 275,120 | |||||||||||||||||
| Revolving Facility | i - | i - | i - | i 44,500 | ( i 190 | ) | i 44,310 | |||||||||||||||||
| Total long-term debt | i 572,433 | ( i 13,670 | ) | i 558,763 | i 558,522 | ( i 13,803 | ) | i 544,719 | ||||||||||||||||
| Less current portion | ( i 24,086 | ) | i - | ( i 24,086 | ) | ( i 26,061 | ) | i - | ( i 26,061 | ) | ||||||||||||||
| Total long-term debt, non-current | $ | i 548,347 | $ | ( i 13,670 | ) | $ | i 534,677 | $ | i 532,461 | $ | ( i 13,803 | ) | $ | i 518,658 | ||||||||||
For the three and nine months ended September 30, 2022, deferred financing costs charged to interest expense was $ i 0.7 million and $ i 2.1 million, respectively. For the three and nine months ended September 30, 2021, deferred financing costs charged to interest expense was $ i 0.8 million and $ i 2.3 million, respectively. During the three months ended March 31, 2022, $ i 9.0 million of deferred financing costs related to the repayment of the Company’s prior credit agreement, including the term facility, Main Street Loan and revolving credit facility were written-off to other expense.
6.75% Notes
On February 4, 2022, the Company issued $ i 360.0 million aggregate principal amount of i 6.75% senior secured notes due 2027 (the “Notes”) in a private offering. The Notes bear interest at a rate of 6.75% per year, accruing from February 4, 2022, and interest on the Notes is payable semiannually in arrears on February 15 and August 15 of each year. The Notes will mature on February 15, 2027, subject to earlier repurchase or redemption. The Company used the net proceeds from the offering to prepay in full all outstanding borrowings under its prior credit agreement, including the term facility, Main Street Loan, and revolving credit facility, to pay any related premiums and to terminate in full its prior credit agreement and the commitments thereunder. The Notes are senior secured obligations of the Company and are guaranteed on a senior secured basis by the Company and certain of the Company’s subsidiaries (collectively, the “Guarantors”) and secured by first-priority pari passu liens, subject to permitted liens and certain exceptions, on substantially all the assets of the Company and the Guarantors. The Notes may be redeemed by the Company, at set redemption prices and premiums, plus accrued and unpaid interest, if any.
The Notes contain covenants that, among other things, restrict the Company’s ability, and the ability of the Company’s restricted subsidiaries, to incur certain additional indebtedness and make certain dividend payments, distributions, investments and other restricted payments. These covenants are subject to a number of important exceptions and qualifications set forth in the Notes.
New Revolving Credit Facility
On February 4, 2022, the Company entered into a new senior secured revolving credit facility (the “New Revolving Credit Facility”), which provides for an aggregate principal amount of commitments of $ i 45.0 million, maturing February 2027, including a letter of credit sub-facility in an aggregate principal amount of up to $ i 5.0 million. The obligations under the New Revolving Credit Facility are guaranteed by the Company and the Guarantors and are secured by first-priority pari passu liens, subject to permitted liens and certain exceptions, on substantially all the assets of the Company and the Guarantors. Borrowings under the New Revolving Credit Facility, if any, will bear interest at a rate per annum equal to, at the Company’s option, an adjusted Secured Overnight Financing Rate (“SOFR”) rate plus a spread or a base rate plus a spread.
The New Revolving Credit Facility contains customary affirmative and negative covenants, as well as financial covenants and event of default provisions.
Senior Secured Credit Agreements
In January 2018, the Company entered into a senior secured credit agreement (the “First Export Credit Agreement”) making available to the Company a loan in an aggregate principal amount not to exceed $ i 107.7 million for the purpose of providing financing for up to i 80% of the purchase price of the Company’s new ice class vessel, the National Geographic Endurance, delivered in March 2020. In September 2021, the Company amended its First Export Credit Agreement to, among other things, waive the net leverage coverage ratio through March 2022 and annualize EBITDA used in its covenant calculation through December 31, 2022. During May 2022, the Company further amended its First Export Credit Agreement to extend the waiver of its net leverage coverage ratio from March 2022 through December 31, 2022. Certain other covenants continue to be more restrictive during the extended covenant waiver period. The First Export Credit Agreement, as amended, bears interest at a variable interest rate equal to three-month LIBOR plus a margin of i 3.50% per annum, for an aggregated rate of i 6.75% over the borrowing period covering September 30, 2022.
In April 2019, the Company entered into a senior secured credit agreement (the “Second Export Credit Agreement”), to make available to the Company and subject to certain conditions, a loan in an aggregate principal amount not to exceed $ i 122.8 million for the purpose of providing pre- and post-delivery financing for up to i 80% of the purchase price of the Company’s new expedition ice-class cruise vessel, the National Geographic Resolution, delivered in September 2021, and borrowed $ i 122.8 million under the Second Export Credit Agreement. In September 2021, the Company amended its Second Export Credit Agreement to, among other things, waive the net leverage coverage ratio through March 2022 and annualize EBITDA used in its covenant calculation through December 31, 2022. During May 2022, the Company further amended its Second Export Credit Agreement to extend the waiver of its net leverage coverage ratio from March 2022 through December 31, 2022. Certain other covenants continue to be more restrictive during the extended covenant waiver period. The Second Export Credit Agreement, as amended, bears a variable interest rate equal to three-month LIBOR plus a margin of i 3.50% per annum, for an aggregated rate of i 7.07% over the borrowing period covering September 30, 2022.
Notes Payable
In connection with the Natural Habitat acquisition in May 2016, Natural Habitat issued a $ i 2.5 million unsecured promissory note, amended in May 2020, to Benjamin L. Bressler, the founder of Natural Habitat, with an outstanding principal amount of $ i 0.8 million as of September 30, 2022. The promissory note accrues interest at a rate of i 1.44% annually, with interest payable every six months and the remaining principal payment due on December 22, 2022.
Other
The Company’s Off the Beaten Path subsidiary has a loan maturing September 2023 for the purchase of guest transportation vehicles. The loan’s original principal was $ i 0.3 million, is collateralized by the vehicles and bears an interest rate of i 4.77% annually.
The Company’s Off the Beaten Path subsidiary has a $ i 0.8 million loan under the Main Street Expanded Loan Facility, originated on December 11, 2020. For the first 12 months, interest was not payable and accrued to the principal balance, thereafter, monthly interest payments are required. The outstanding balance will amortize at a rate of i 15% on both December 2023 and December 2024, with the remaining balance due December 2025. The loan bears a variable interest rate equal to one-month LIBOR plus a spread of i 3.00%, or i 6.14% as of September 30, 2022. This loan may be voluntarily prepaid at any time and from time to time, without premium or penalty, other than customary “breakage costs” and fees for LIBOR-based loans.
The Company’s DuVine subsidiary has a EUR i 0.1 million State Assistance Loan related to the financial consequences of the COVID-19 pandemic, for the purpose of employment preservation. This loan matures August 2025, with monthly payments, and bears an interest rate of i 0.53% annually.
Covenants
The Company’s Notes, New Revolving Credit Facility, First Export Credit Agreement and Second Export Credit Agreement contain financial and restrictive covenants that include among others, net leverage ratios, limits on additional indebtedness and limits on certain investments. The net leverage ratio covenant of the Company’s First Export Credit Agreement and Second Export Credit Agreement have been waived through December 31, 2022. On October 11, 2022, the Company amended the covenants of its Senior Secured Credit Agreements to use an annualized EBITDA calculation in its net leverage ratio covenant for the periods from March 31, 2023 through September 30, 2023. The Company was in compliance with its covenants in effect as of September 30, 2022 and believes that it will be in compliance for the next 12 months.
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NOTE 6—FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
Derivative Instruments and Hedging Activities
The Company’s derivative assets and liabilities consist principally of foreign exchange forward contracts and interest rate caps and are carried at fair value based on significant observable inputs (Level 2 inputs). Derivatives entered into by the Company are typically executed over-the-counter and are valued using internal valuation techniques, as quoted market prices are not readily available. The valuation technique and inputs depend on the type of derivative and the nature of the underlying exposure. The Company principally uses discounted cash flows along with fair value models that primarily use market observable inputs. These models take into account a variety of factors including, where applicable, maturity, currency exchange rates, interest rate yield curves and counterparty credit risks.
Currency Risk. The Company uses currency exchange forward contracts to manage its exposure to changes in currency exchange rates associated with certain of its non-U.S. dollar denominated receivables and payables. The Company primarily economically hedges a portion of its current-year currency exposure to the Canadian and New Zealand dollars, the Brazilian Real, the South African Rand, the Euro and the British pound sterling. The fluctuations in the value of these forward contracts largely offset the impact of changes in the value of the underlying risk they economically hedge.
Interest Rate Risk. The Company previously used interest rate caps to manage the risk related to its previously existing variable rate corporate debt.
The Company recorded the effective portion of changes in the fair value of its cash flow hedges to other comprehensive income (loss), net of tax, and subsequently reclassified these amounts into earnings in the period during which the hedged transaction was recognized. Any changes in fair values of hedges that are determined to be ineffective are immediately reclassified from accumulated other comprehensive income (loss) into earnings. The Company reclassified $ i 0.6 million from other comprehensive income (loss) to earnings for the period ended March 31, 2022 due to the termination of a cash flow hedge relationship between the Company’s interest rate caps and the Company’s underlying corporate variable rate debt, which was repaid during February 2022.
The Company held the following derivative instruments with absolute notional values as of September 30, 2022:
i
| (In thousands) | Absolute Notional Value | |||
| Interest rate caps | $ | i 100,000 | ||
| Foreign exchange contracts | i 13,872 | |||
Estimated fair values (Level 2) of derivative instruments were as follows:
i
| As of September 30, 2022 | As of December 31, 2021 | |||||||||||||||
| (unaudited) | ||||||||||||||||
| (In thousands) | Fair Value, Asset Derivatives | Fair Value, Liability Derivatives | Fair Value, Asset Derivatives | Fair Value, Liability Derivatives | ||||||||||||
| Derivative instruments designated as cash flow hedging instruments: | ||||||||||||||||
| Interest rate cap (a) | $ | i - | $ | i - | $ | i 9 | $ | i - | ||||||||
| Total | $ | i - | $ | i - | $ | i 9 | $ | i - | ||||||||
| Derivative instruments not designated as cash flow hedging instruments: | ||||||||||||||||
| Interest rate cap (a) | $ | i 1,392 | $ | i - | $ | i - | $ | i - | ||||||||
| Foreign exchange forward (a) | i - | 753 | i 664 | i - | ||||||||||||
| Total | $ | i 1,392 | $ | i 753 | $ | i 664 | $ | i - | ||||||||
| (a) | Recorded in prepaid expenses and other current assets. |
Changes in the fair value of the Company’s hedging instruments are recorded in accumulated other comprehensive income. The effects of derivatives recognized in the Company’s condensed consolidated financial statements were as follows:
i
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| (In thousands) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
| Derivative instruments designated as cash flow hedging instruments: | ||||||||||||||||
| Interest rate cap (a) | $ | i - | $ | ( i 93 | ) | $ | i - | $ | ( i 256 | ) | ||||||
| Foreign exchange forward (b) | i - | ( i 109 | ) | i - | ( i 605 | ) | ||||||||||
| Derivative instruments not designated as cash flow hedging instruments: | ||||||||||||||||
| Interest rate cap (a) | i 1,046 | i - | i 749 | i - | ||||||||||||
| Foreign exchange forward (c) | ( i 872 | ) | i 268 | ( i 1,417 | ) | i 188 | ||||||||||
| Total | $ | i 174 | $ | i 66 | $ | ( i 668 | ) | $ | ( i 673 | ) | ||||||
| (a) | For the three months ended September 30, 2022, recognized as income in interest expense, net. For the nine months ended September 30, 2022, $ i 1.3 million was recognized as income in interest expense, net, and $ i 0.6 million was reclassified from other comprehensive income (loss) to interest expense, net. For the three and nine months ended September 30, 2021, recognized, net of tax, as a component of other comprehensive income (loss) within stockholders’ equity. | |
| (b) | For the three and nine months ended September 30, 2021, $ i 0.9 million and $ i 1.0 million, respectively, were recognized as losses on foreign currency in the condensed consolidated statements of income, and $ i 2.4 million and $ i 2.0 million losses, respectively, were recognized, net of tax, as a component of other comprehensive income (loss) within stockholders’ equity. | |
| (c) | Gains (losses) related to derivative instruments are expected to be largely offset by (losses) gains on the underlying exposures being hedged and recognized in gain (loss) on foreign currency. |
In connection with the acquisition of Classic Journeys, the purchase agreement includes a contingent consideration earnout, see Note 11—Acquisitions, which is required to be recorded at fair value at each period. The possible contingent acquisition consideration earnout is either i zero or $ i 0.6 million, depending on the achievement of certain average annual net profits targets for the years ended December 31, 2022 and 2023 by the acquired operation. As of September 30, 2022, the contingent liability had a value of $ i 0.3 million using a Level 3 valuation method, which was recorded in other long-term liabilities.
The carrying amounts of cash and cash equivalents, accounts payable and accrued expenses, approximate fair value due to the short-term nature of these instruments. The Company estimates the approximate fair value of its long-term debt to be $ i 495.3 million as of September 30, 2022, based on the terms of the agreements and comparable market data as of September 30, 2022. As of September 30, 2022 and December 31, 2021, the Company had no other significant liabilities that were measured at fair value on a recurring basis.
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NOTE 7—STOCKHOLDERS’ EQUITY
Stock Repurchase Plan
The Company’s Board of Directors approved a stock and warrant repurchase plan (“Repurchase Plan”) in November 2015 and increased the repurchase plan to $ i 35.0 million in November 2016. The Repurchase Plan authorizes the Company to purchase, from time to time, the Company’s outstanding common stock and previously outstanding warrants. Any shares purchased will be retired. The Repurchase Plan has no time deadline and will continue until otherwise modified or terminated at the sole discretion of the Company’s Board of Directors. These repurchases exclude shares repurchased to settle statutory employee tax withholding related to the exercise of stock options and vesting of stock awards. The Company has cumulatively repurchased i 875,218 shares of common stock for $ i 8.3 million and i 6,011,926 warrants for $ i 14.7 million, since plan inception. The remaining balance for the Repurchase Plan was $ i 12.0 million as of September 30, 2022. The Repurchase Plan is suspended due to restrictions related to the Main Street Expanded Loan Facility program that continue for one year upon repayment. The Company repaid the Main Street Expanded Loan Facility in February 2022.
Preferred Stock
In August 2020, the Company issued and sold i 85,000 shares of Preferred Stock for $ i 1,000 per share for gross proceeds of $ i 85.0 million. The Preferred Stock has senior and preferential ranking to the Company’s common stock. The Preferred Stock is entitled to cumulative dividends of i 6.00% per annum, and for the first two years the dividends were paid-in-kind. After the second anniversary of the issuance date, the dividends may be paid-in-kind or be paid in cash at the Company’s option. At any time after the third anniversary of the issuance, the Company may, at its option, convert all, but not less than all, of the Preferred Stock into common stock if the closing price of shares of common stock is at least 150% of the conversion price for 20 out of 30 consecutive trading days. The Preferred Stock is convertible at any time, at the holder’s election, into a number of shares of common stock of the Company equal to the quotient obtained by dividing the then-current accrued value by the conversion price of $ i 9.50. The Preferred Stock deferred issuance costs were approximately $ i 2.1 million as of September 30, 2022, recorded as reduction to preferred stock on balance sheet. During the year ended December 31, 2021, i 5,000 shares of Preferred Stock and related accumulated dividends were converted by the holder into i 566,364 shares of the Company’s common stock. During the nine months ended September 30, 2022, i 18,000 shares of Preferred Stock and related accumulated dividends were converted by the holder into i 2,109,561 shares of the Company’s common stock. The Company recorded accrued dividends for Preferred Stock of $ i 1.0 million and $ i 3.6 million for the three and nine months ended September 30, 2022, respectively, and $ i 1.3 million and $ i 4.0 million for the three and nine months ended September 30, 2021, respectively. As of September 30, 2022, the i 62,000 shares of Preferred Stock outstanding and accumulated dividends could be converted at the option of the holders into approximately i 7.4 million shares of the Company’s common stock.
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NOTE 8—STOCK BASED COMPENSATION
The Company is authorized to issue up to i 4.7 million shares of common stock under the 2021 Long-Term Incentive Plan (“the Plan”) which was approved by shareholders in September 2021. As of September 30, 2022, approximately i 3.6 million shares were available to be granted under the Plan.
As of September 30, 2022 and December 31, 2021, options to purchase an aggregate of i 1.4 million and i 1.5 million shares of the Company’s common stock, respectively, with a weighted average exercise price of $ i 15.10 and $ i 10.30, respectively, were outstanding. As of September 30, 2022, i 388,000 options were exercisable.
The Company recorded stock-based compensation expense of $ i 1.6 million and $ i 5.3 million, during the three and nine months ended September 30, 2022, respectively, and $ i 1.4 million and $ i 4.1 million during the three and nine months ended September 30, 2021, respectively.
2022 Long-Term Incentive Compensation
During the nine months ended September 30, 2022, the Company granted i 342,602 restricted stock units ("RSUs") with a weighted average grant price of $ i 13.27. The RSUs will primarily vest equally over three years on the anniversary of the grant date, subject to the recipient’s continued employment or service with the Company on the applicable vesting date. The number of shares were determined based upon the closing price of our common stock on the date of the award.
During the nine months ended September 30, 2022, the Company awarded i 56,209 market performance share units (“MSUs”) with a weighted average grant price of $ i 15.08. The MSUs are market-based equity incentive awards based on a performance-multiplier of change in the stock price of the Company’s common stock between the grant date and March 31, 2025. The number of shares that will eventually be earned and vest may be more or less than the number of MSUs that are awarded, depending on the Company's common stock price, at a level ranging from i 0% to i 150%. The number of MSUs earned shall be determined and shall vest on March 31, 2025, subject to the recipient’s continued employment or service with the Company on the vesting date.
Natural Habitat Contingent Arrangement
In connection with the acquisition of Natural Habitat, Mr. Bressler, the founder of Natural Habitat, has an equity incentive opportunity to earn an award of options based on the future financial performance of Natural Habitat, where if the Final Year Equity Value of Natural Habitat, as defined in Mr. Bressler's amended employment agreement, exceeds $ i 25.0 million, effective as of December 31, 2023, Mr. Bressler will be granted options with a fair value equal to i 10.1% of such excess, subject to certain conditions.
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NOTE 9—RELATED PARTY TRANSACTIONS
In May 2016, in connection with the Company's acquisition of Natural Habitat, Natural Habitat issued an unsecured promissory note, amended May 2020, to Mr. Bressler, the founder of Natural Habitat. See Note 5—Long-term Debt for more information.
NOTE 10—INCOME TAXES
As of September 30, 2022 and December 31, 2021, the Company had i no unrecognized tax benefits recorded. The Company's effective tax rate for the three and nine months ended September 30, 2022 was an expense of i 46.0% and i 0.8%, respectively, versus an expense of i 12.1% and a benefit of i 2.8% for the three and nine months ended September 30, 2021, respectively.
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NOTE 11—ACQUISITIONS
To further expand the Company’s land-based experiential travel offerings and increase its addressable market, the Company completed three acquisitions during 2021. On February 1, 2021, the Company acquired i 80.1% of the outstanding common stock of Off the Beaten Path, a land-based travel operator specializing in authentic national park experiences, on March 3, 2021, the Company acquired i 70% of the outstanding common stock of DuVine, an international luxury cycling and adventure company focused on exceptional food and wine experiences, and on October 13, 2021, the Company acquired i 80.1% of Classic Journeys, a leading luxury walking tour company.
The acquisitions had an aggregate purchase price of $ i 23.6 million, including $ i 1.8 million in Company stock and $ i 0.2 million in deferred contingent consideration. The deferred contingent consideration has an earnout potential between i zero and $ i 0.6 million. The acquisitions were accounted for under purchase accounting and are included in the Company's consolidated financial statements since the date of the acquisitions. The Company preliminarily recorded $ i 10.4 million in intangible assets related to tradenames and customer lists and $ i 19.9 million in goodwill related to these acquisitions. The amount recorded for the intangible assets and goodwill is subject to possible adjustment when the valuation of Classic Journeys is finalized.
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NOTE 12—COMMITMENTS AND CONTINGENCIES
Redeemable Non-Controlling Interest
The Company has controlling interests in its Natural Habitat, Off the Beaten Path, DuVine and Classic Journeys consolidated subsidiaries. The noncontrolling interests are subject to put/call agreements. The put options enable the minority holders, but do not obligate them, to sell the remaining interests to the Company. The Company has call options which enable it, but does not obligate it, to acquire the remaining interests in the subsidiaries, subject to certain dates, expirations and similar redemption value purchase measurements as the put options.
Since the redemption of the noncontrolling interests are not solely in the Company’s control, the Company is required to record the redeemable noncontrolling interest outside of stockholders’ equity but after its total liabilities. In addition, if it is probable that the instrument will become redeemable, as such solely due to the passage of time, the redeemable noncontrollable interest should be adjusted to the redemption value via one of two measurement methods. The Company elected the income classification-excess adjustment and accretion methods for recognizing changes in the redemption value of the put options. Under this methodology, a calculation of the present value of the redemption value is compared to the carrying value of the redeemable noncontrolling interest and the carrying value of the redeemable noncontrolling interest is adjusted to the redemption value’s present value. Any adjustments to the carrying value of the redeemable noncontrolling interest, up to the redemption value of the noncontrolling interest, are classified to retained earnings. Adjustments in excess of the redemption value of the noncontrolling interest, are treated as a decrease to net income available to common stockholders.
The redemption value of the put options were determined using a discounted cash flow model. The redemption values were adjusted to their present value using the Company’s weighted average cost of capital.
The following is a rollforward of redeemable non-controlling interest:
i
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| (In thousands) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
| Beginning balance | $ | i 19,595 | $ | i 10,036 | $ | i 10,626 | $ | i 7,494 | ||||||||
| Net income (loss) attributable to noncontrolling interest | i 3,228 | i 1,039 | i 3,000 | ( i 17 | ) | |||||||||||
| Redemption value adjustment of put option | i 8,760 | i - | i 17,957 | i - | ||||||||||||
| Acquired businesses' noncontrolling interest | i - | ( i 941 | ) | i - | i 2,657 | |||||||||||
| Ending balance | $ | i 31,583 | $ | i 10,134 | $ | i 31,583 | $ | i 10,134 | ||||||||
Royalty Agreement – National Geographic
The Company is party to an alliance and license agreement with National Geographic, which allows the Company to use the National Geographic name and logo. In return for these rights, the Company is charged a royalty fee. The royalty fee is included within selling and marketing expense on the accompanying condensed consolidated statements of operations. The fee is calculated based upon a percentage of certain ticket revenues less travel agent commission, including the revenues received from cancellation fees and any revenues received from the sale of pre- and post-expedition extensions. Royalty expense for the three and nine months ended September 30, 2022 was $ i 1.9 million and $ i 4.5 million, respectively, and was $ i 0.7 million and $ i 0.9 million for the three and nine months ended September 30, 2021, respectively.
The royalty balance payable to National Geographic as of September 30, 2022 and December 31, 2021 was $ i 1.8 million and $ i 0.9 million, respectively, and are included in accounts payable and accrued expenses on the accompanying condensed consolidated balance sheets.
Royalty Agreement – World Wildlife Fund
Natural Habitat has a license agreement with WWF, which allows it to use the WWF name and logo. In return for these rights, Natural Habitat is charged a royalty fee and a fee based on annual gross sales. The fees are included within selling and marketing expense on the accompanying condensed consolidated statements of operations. This royalty fee expense was $0.4 million and $1.0 million for the three and nine months ended September 30, 2022, respectively, and $ i 0.2 million and $ i 0.3 million for the three and nine months ended September 30, 2021, respectively.
Charter Commitments
From time to time, the Company enters into agreements to charter vessels onto which it holds its tours and expeditions. Future minimum payments on its charter agreements as of September 30, 2022 are as follows:
i
| For the years ended December 31, | Amount | |||
| (In thousands) | (unaudited) | |||
| 2022 (three months) | $ | i 3,130 | ||
| 2023 | i 12,188 | |||
| Total | $ | i 15,318 | ||
NOTE 13—SEGMENT INFORMATION
The Company is primarily a specialty cruise and experiential travel operator with operations in i two reportable segments, Lindblad and Land Experiences. The Company evaluates the performance of the business based largely on the results of its operating segments. The chief operating decision maker and management review operating results monthly, and base operating decisions on the total results at a consolidated level, as well as at a segment level. The reports provided to the Board of Directors are at a consolidated level and contain information regarding the separate results of both segments.
The Company evaluates the performance of its business segments based largely on tour revenues and operating income, without allocating other income and expenses, net, income taxes and interest expense, net. Operating results for the Company’s reportable segments were as follows:
i
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||||||||||||||||||
| 2021 | Change | % | 2022 | 2021 | Change | % | ||||||||||||||||||||||||||
| (In thousands) | (unaudited) | (unaudited) | ||||||||||||||||||||||||||||||
| Tour revenues: | ||||||||||||||||||||||||||||||||
| Lindblad | $ | i 83,741 | $ | i 33,100 | $ | i 50,641 | i 153 | % | $ | i 198,063 | $ | i 40,264 | $ | i 157,799 | i 392 | % | ||||||||||||||||
| Land Experiences | i 61,042 | i 31,407 | i 29,635 | i 94 | % | i 105,477 | i 41,291 | i 64,186 | i 155 | % | ||||||||||||||||||||||
| Total tour revenues | $ | i 144,783 | $ | i 64,507 | $ | i 80,276 | i 124 | % | $ | i 303,540 | $ | i 81,555 | $ | i 221,985 | i 272 | % | ||||||||||||||||
| Operating income (loss): | ||||||||||||||||||||||||||||||||
| Lindblad | $ | ( i 7,142 | ) | $ | ( i 22,282 | ) | $ | i 15,140 | i 68 | % | $ | ( i 60,380 | ) | $ | ( i 80,617 | ) | $ | i 20,237 | i 25 | % | ||||||||||||
| Land Experiences | i 12,950 | i 4,630 | i 8,320 | i 180 | % | i 12,629 | ( i 686 | ) | i 13,315 | NM | ||||||||||||||||||||||
| Total operating income (loss) | $ | i 5,808 | $ | ( i 17,652 | ) | $ | i 23,460 | i 133 | % | $ | ( i 47,751 | ) | $ | ( i 81,303 | ) | $ | i 33,552 | i 41 | % | |||||||||||||
Depreciation and amortization are included in segment operating income as shown below:
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||||||||||||||||||
| 2021 | Change | % | 2022 | 2021 | Change | % | ||||||||||||||||||||||||||
| (In thousands) | (unaudited) | (unaudited) | ||||||||||||||||||||||||||||||
| Depreciation and amortization: | ||||||||||||||||||||||||||||||||
| Lindblad | $ | i 10,090 | $ | i 8,928 | $ | i 1,162 | i 13 | % | $ | i 31,087 | $ | i 24,618 | $ | i 6,469 | i 26 | % | ||||||||||||||||
| Land Experiences | i 749 | i 395 | i 354 | i 90 | % | i 2,106 | i 1,167 | i 939 | i 80 | % | ||||||||||||||||||||||
| Total depreciation and amortization | $ | i 10,839 | $ | i 9,323 | $ | i 1,516 | i 16 | % | $ | i 33,193 | $ | i 25,785 | $ | i 7,408 | i 29 | % | ||||||||||||||||
The following table presents our total assets, intangibles, net and goodwill by segment:
| (In thousands) | As of September 30, 2022 | As of December 31, 2021 | ||||||
| Total Assets: | (unaudited) | |||||||
| Lindblad | $ | i 674,610 | $ | i 724,873 | ||||
| Land Experiences | i 136,920 | i 102,618 | ||||||
| Total assets | $ | i 811,530 | $ | i 827,491 | ||||
| Intangibles, net: | ||||||||
| Lindblad | $ | i 1,702 | $ | i 1,874 | ||||
| Land Experiences | i 9,969 | i 11,361 | ||||||
| Total intangibles, net | $ | i 11,671 | $ | i 13,235 | ||||
| Goodwill: | ||||||||
| Lindblad | $ | i - | $ | i - | ||||
| Land Experiences | i 42,017 | i 42,017 | ||||||
| Total goodwill | $ | i 42,017 | $ | i 42,017 | ||||
For the three and nine months ended September 30, 2022 there was $ i 1.7 million and $ i 5.3 million, respectively, in intercompany tour revenues between the Lindblad and Land Experiences reportable segments, which were eliminated in consolidation. For the three and nine months ended September 30, 2021, there was $ i 1.0 and $ i 1.1 million, respectively, of intercompany tour revenues between the Lindblad and Land Experiences reportable segments eliminated in consolidation.
NOTE 14—SUBSEQUENT EVENTS
On October 11, 2022, the Company amended the covenants of its Senior Secured Credit Agreements to use an annualized EBITDA calculation in its net leverage ratio covenant for the periods from March 31, 2023 through September 30, 2023.
| MANAGEMENT’S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION |
The following discussion and analysis addresses material changes in the financial condition and results of operations of the Company for the periods presented. This discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q (“Form 10-Q”), as well as the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 28, 2022. Unless the context otherwise requires, in this Form 10-Q, “Company,” “Lindblad,” “we,” “us,” “our,” and “ours” refer to Lindblad Expeditions Holdings, Inc., and its subsidiaries.
Cautionary Note Regarding Forward-Looking Statements
Any statements in this Form 10-Q about our expectations, beliefs, plans, objectives, prospects, financial condition, assumptions or future events or performance are not historical facts and are “forward-looking statements” as that term is defined under the federal securities laws. These statements are often, but not always, made through the use of words or phrases such as “believe,” “anticipate,” “should,” “intend,” “plan,” “will,” “expects,” “estimates,” “projects,” “positioned,” “strategy,” “outlook” and similar words. You should read the statements that contain these types of words carefully. Such forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause actual results to differ materially from what is expressed or implied in such forward-looking statements. There may be events in the future that we are not able to predict accurately or over which we have no control. Potential risks and uncertainties include, but are not limited to:
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suspended operations, cancelling or rescheduling of voyages and other potential disruptions to our business and operations related to the COVID-19 virus and/or the Russia-Ukraine conflict; |
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the impacts of the COVID-19 virus and/or the Russia-Ukraine conflict on our financial condition, liquidity, results of operations, cash flows, employees, plans and growth, fuel prices, changes in fuels consumed and availability of fuel supply in the geographies in which we operate or in general; |
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adverse worldwide economic, geopolitical or other conditions could reduce the demand for expedition travel; |
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adverse publicity regarding the cruise industry in general; |
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unscheduled disruptions in our business due to travel restrictions, weather events, mechanical failures, pandemics or other events; |
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changes adversely affecting the business in which we are engaged; |
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management of our growth and our ability to execute on our planned growth, including our ability to successfully integrate acquisitions; |
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our business strategy and plans; |
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our ability to maintain our relationship with National Geographic; |
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compliance with the financial and/or operating covenants in our debt arrangements; |
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the impact of severe or unusual weather conditions, including climate change, on our business; |
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loss of business due to competition; |
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the result of future financing efforts; |
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compliance with new and existing laws and regulations, including environmental regulations and travel advisories and restrictions; |
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| ● | the loss of key employees, our inability to recruit or retain qualified shoreside and shipboard employees and increased labor costs; | |
| ● | the inability to meet or achieve our sustainability related goals, aspirations, initiatives, and our public statements and disclosures regarding them; |
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our common stock ranks junior to our Series A Preferred Stock with respect to dividends and amounts payable in the event of our liquidation, dissolution or winding up our affairs; and |
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those risks discussed herein and in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on February 28, 2022 (the “2021 Annual Report”). |
We urge you not to place undue reliance on these forward-looking statements, which speak only as of the date of this Form 10-Q. We do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or uncertainties after the date hereof or to reflect the occurrence of unanticipated events.
Business Overview
We provide expedition cruising and land-based adventure travel fostering a spirit of exploration and discovery, using itineraries featuring up-close encounters with wildlife and nature, history and culture and promote guest empowerment, human connections and interactivity. Our mission is to offer life-changing adventures around the world and pioneering innovative ways to allow our guests to connect with exotic and remote places.
We currently operate a fleet of ten owned expedition ships and five seasonal charter vessels under the Lindblad Expeditions, LLC (“Lindblad”) brand. Each expedition ship is fully equipped with state-of-the-art tools for in-depth exploration and the majority of our expeditions involve travel to remote places, such as voyages to the Arctic, Antarctic, the Galápagos Islands, Alaska, Baja’s Sea of Cortez, the South Pacific, Costa Rica and Panama. We have a longstanding relationship with the National Geographic Society (“National Geographic”) dating back to 2004, which is based on a shared interest in exploration, research, technology and conservation. This relationship includes a co-selling, co-marketing and branding arrangement whereby our owned vessels carry the National Geographic name and National Geographic sells our expeditions through its internal travel division. We collaborate with National Geographic on voyage planning to enhance the guest experience by having National Geographic experts, including photographers, writers, marine biologists, naturalists, field researchers and film crews, join our expeditions. Guests are able to interface with these experts through lectures, excursions, dining and other experiences throughout their voyage.
We operate land-based nature adventure travel expeditions around the globe, with unique itineraries designed to offer intimate encounters with nature and the planet’s wild destinations and the animals and people who live there.
Natural Habitat, Inc. (“Natural Habitat”) provides eco-conscious expeditions and nature-focused, small-group experiences that include polar bear tours in Churchill, Canada, Alaskan grizzly bear adventures, small-group Galápagos Islands tours and African safaris. Natural Habitat has partnered with World Wildlife Fund (“WWF”) to offer conservation travel, which is sustainable travel that contributes to the protection of nature and wildlife.
DuVine Cycling + Adventure Company (“DuVine”) provides intimate cycling adventures and travel experiences, led by expert guides, with a focus on connecting with local character and culture, including high-quality local cuisine and accommodations. International cycling tours include the exotic Costa Rican rainforests, the rocky coasts of Ireland and the vineyards of Spain, while cycling adventures in the United States include cycling beneath the California redwoods, pedaling through Vermont farmland and wine tastings in the world-class vineyards of Napa and Sonoma.
Off the Beaten Path, LLC (“Off the Beaten Path”) provides small group travel, led by local, experienced guides, with distinct focus on wildlife, hiking national parks and culture. Off the Beaten Path offerings include insider national park experiences in the Rocky Mountains, Desert Southwest, and Alaska, as well as unique trips across Europe, Africa, Australia, Central and South America and the South Pacific.
Classic Journeys, LLC (“Classic Journeys”) offers highly curated active small-group and private custom journeys centered around cinematic walks led by expert local guides in over 50 countries around the world. These walking tours are highlighted by luxury boutique accommodations and handcrafted itineraries that immerse guests into the history and culture of the places they are exploring and the people who live there.
We operate two segments including the Lindblad segment, which consists of the operations of our Lindblad brand, and the Land Experiences segment, consisting of our Natural Habitat, DuVine, Off the Beaten Path and Classic Journeys brands.
2022 Highlights
During 2022, we have provided immersive expeditions to our guests, on all ten of our owned and operated vessels, to Alaska, Antarctica, the Arctic, Baja California’s Sea of Cortez, British Columbia, Canada's Northwest Passage, French Polynesia, the Galápagos Islands, Greenland, Iceland, Norway, the Pacific Northwest, South America and elsewhere. During third quarter 2022, we launched the National Geographic Islander II, our spacious all-suite ship, for expeditions in the Galápagos Islands.
During May 2022, we amended our senior secured credit agreements to, among other things, extend the waiver of the net leverage ratio covenant through December 31, 2022. On October 11, 2022, we amended the covenants our senior secured credit agreements to use an annualized EBITDA calculation in our net leverage ratio covenant for the periods from March 31, 2023 through September 30, 2023.
During February 2022, we issued $360.0 million of 6.75% senior secured notes due 2027 and entered into a new $45.0 million revolving credit facility, which remains undrawn and matures February 2027. We used the proceeds from the notes to prepay in full all outstanding borrowings under our prior term loan, including the Main Street Loan, and revolving credit facility, and paid all related premiums, terminating in full our existing credit agreement and the commitments thereunder.
During February 2022, our cupos necessary for tours in the Galápagos Islands were contractually renewed for a 20-year period.
Ramp of Fleet Operations
We resumed operation in June 2021 and, since then, have continually ramped our operations, providing immersive expeditions in 2022 across all ten of our owned vessels. During the third quarter of 2022, operations included trips to Alaska, the Arctic, the Pacific Northwest, British Columbia, Canada's Northwest Passage, the Galápagos Islands, Greenland, Iceland, Norway and South America. Travel restrictions related to COVID-19 have diminished dramatically, and we will resume operations in additional geographies in the remainder of 2022 and throughout 2023. Where travel restrictions remain, which primarily includes a limited number of itineraries impacted by the Russia-Ukraine conflict, we are adjusting itineraries where possible, and working with guests to reschedule travel plans and refund payments or issue future travel certificates, as applicable. Previously, due to the spread of the COVID-19 virus and the effects of travel restrictions around the world, we had suspended or rescheduled the majority of its expeditions departing between March 16, 2020 through May 31, 2021.
We believe there are a variety of strategic advantages that enabled us to deploy our ships safely and quickly as travel restrictions were lifted. Most notably, the size of our owned and operated vessels, which range from 48 to 148 passengers, allows for a highly controlled environment that includes stringent cleaning protocols. The small nature of our ships also allowed us to efficiently and effectively test our guests and crew prior to boarding, or as otherwise needed. Additionally, the majority of expeditions take place in remote locations where human interactions are limited, so there is less opportunity for external influence.
Bookings Trends
We have substantial advanced reservations for future travel despite some continued impact from the COVID-19 virus, including, but not limited to, elevated cancellations, as well as some impact related to itinerary changes due to the Russia-Ukraine conflict. Bookings for 2023 are 23% ahead of the bookings for the full year 2020 at the same point in 2019.
Balance Sheet and Liquidity
As of September 30, 2022, we had $116.4 million in unrestricted cash and $29.5 million in restricted cash primarily related to deposits on future travel originating from U.S. ports and credit card reserves.
Our total debt position was $572.4 million as of September 30, 2022, and we were in compliance with all of our debt covenants currently in effect.
As we continue to ramp operations, we anticipate a significant increase in guest payments as we receive final payments for upcoming expeditions as well as deposits for new reservations for future travel. Our monthly cash usage will increase as we incur costs in operating expeditions, including the impact of higher fuel costs and inflation, and spending to market and advertise upcoming expeditions and trips. However, there can be no assurance that cash flows from operations will be available to fund future obligations or that we will not experience delays or cancellations with respect to the resumption of our operations.
The discussion and analysis of our results of operations and financial condition are organized as follows:
| ● |
a description of certain line items and operational and financial metrics we utilize to assist us in managing our business; |
|
| ● |
results and a comparable discussion of our consolidated and segment results of operations for the three and nine months ended September 30, 2022 and 2021; |
|
| ● |
a discussion of our liquidity and capital resources, including future capital and contractual commitments and potential funding sources; and |
|
| ● |
a review of our critical accounting policies. |
Financial Presentation
Description of Certain Line Items
Tour revenues
Tour revenues consist of the following:
| ● |
Guest ticket revenues recognized from the sale of guest tickets; and |
|
| ● |
Other tour revenues from the sale of pre- or post-expedition excursions, hotel accommodations, air transportation to and from the ships and excursions, goods and services rendered onboard that are not included in guest ticket prices, trip insurance, and cancellation fees. |
Cost of tours
Cost of tours includes the following:
| ● |
Direct costs associated with revenues, including cost of pre- or post-expedition excursions, hotel accommodations, and land-based expeditions, air and other transportation expenses, and cost of goods and services rendered onboard; |
|
| ● |
Payroll costs and related expenses for shipboard and expedition personnel; |
|
| ● |
Food costs for guests and crew, including complimentary food and beverage amenities for guests; |
|
| ● |
Fuel costs and related costs of delivery, storage and safe disposal of waste; and |
|
| ● |
Other tour expenses, such as land costs, port costs, repairs and maintenance, equipment expense, drydock, ship insurance, and charter hire costs. |
Selling and marketing
Selling and marketing expenses include commissions, royalties and a broad range of advertising and promotional expenses.
General and administrative
General and administrative expenses include the cost of shoreside vessel support, reservations and other administrative functions, including salaries and related benefits, credit card commissions, professional fees and rent.
Operational and Financial Metrics
We use a variety of operational and financial metrics, including non-GAAP financial measures, such as Adjusted EBITDA, Net Yields, Occupancy and Net Cruise Costs, to enable us to analyze our performance and financial condition. We utilize these financial measures to manage our business on a day-to-day basis and believe that they are the most relevant measures of performance. Some of these measures are commonly used in the cruise and tourism industry to evaluate performance. We believe these non-GAAP measures provide expanded insight to assess revenue and cost performance, in addition to the standard GAAP-based financial measures. There are no specific rules or regulations for determining non-GAAP measures, and as such, they may not be comparable to measures used by other companies within the industry.
The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. You should read this discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and the related notes thereto also included within.
Adjusted EBITDA is net income (loss) excluding depreciation and amortization, net interest expense, other income (expense), income tax (expense) benefit, (gain) loss on foreign currency, (gain) loss on transfer of assets, reorganization costs, and other supplemental adjustments. Other supplemental adjustments include certain non-operating items such as stock-based compensation, executive severance costs, the National Geographic fee amortization, debt refinancing costs, acquisition-related expenses and other non-recurring charges. We believe Adjusted EBITDA, when considered along with other performance measures, is a useful measure as it reflects certain operating drivers of the business, such as sales growth, operating costs, selling and administrative expense, and other operating income and expense. We believe Adjusted EBITDA helps provide a more complete understanding of the underlying operating results and trends and an enhanced overall understanding of our financial performance and prospects for the future. Adjusted EBITDA is not intended to be a measure of liquidity or cash flows from operations or a measure comparable to net income as it does not take into account certain requirements, such as unearned passenger revenues, capital expenditures and related depreciation, principal and interest payments, and tax payments. Our use of Adjusted EBITDA may not be comparable to other companies within the industry.
The following metrics apply to our Lindblad segment:
Adjusted Net Cruise Cost represents Net Cruise Cost adjusted for non-GAAP other supplemental adjustments which include certain non-operating items such as stock-based compensation, the National Geographic fee amortization, and acquisition-related expenses.
Available Guest Nights is a measurement of capacity and represents double occupancy per cabin (except single occupancy for a single capacity cabin) multiplied by the number of cruise days for the period. We also record the number of guest nights available on our limited land programs in this definition.
Gross Cruise Cost represents the sum of cost of tours plus, selling and marketing expenses, and general and administrative expenses.
Gross Yield per Available Guest Night represents tour revenues less insurance proceeds divided by Available Guest Nights.
Guest Nights Sold represents the number of guests carried for the period multiplied by the number of nights sailed within the period.
Maximum Guests is a measure of capacity and represents the maximum number of guests in a period and is based on double occupancy per cabin (except single occupancy for a single capacity cabin).
Net Cruise Cost represents Gross Cruise Cost excluding commissions and certain other direct costs of guest ticket revenues and other tour revenues.
Net Cruise Cost Excluding Fuel represents Net Cruise Cost excluding fuel costs.
Net Yield represents tour revenues less insurance proceeds, commissions and direct costs of other tour revenues.
Net Yield per Available Guest Night represents Net Yield divided by Available Guest Nights.
Number of Guests represents the number of guests that travel with us in a period.
Occupancy is calculated by dividing Guest Nights Sold by Available Guest Nights.
Voyages represent the number of ship expeditions completed during the period.
Foreign Currency Translation
The U.S. dollar is the functional currency in our foreign operations and re-measurement adjustments and gains or losses resulting from foreign currency transactions are recorded as foreign exchange gains or losses in the condensed consolidated statements of operations.
Seasonality
Traditionally, our Lindblad brand tour revenues are mildly seasonal, historically larger in the first and third quarters. The seasonality of our operating results fluctuates due to our vessels being taken out of service for scheduled maintenance or drydocking, which is typically during nonpeak demand periods, in the second and fourth quarters. Our drydock schedules are subject to cost and timing differences from year-to-year due to the availability of shipyards for certain work, drydock locations based on ship itineraries, operating conditions experienced especially in the polar regions and the applicable regulations of class societies in the maritime industry, which require more extensive reviews periodically. Drydocking impacts operating results by reducing tour revenues and increasing cost of tours. Our Natural Habitat, DuVine, Off the Beaten Path and Classic Journeys brands are seasonal businesses, with the majority of Natural Habitat’s tour revenue recorded in the third and fourth quarters from its summer season departures and polar bear tours, while the majority of Off the Beaten Path, DuVine and Classic Journeys’ revenues are recorded during the second and third quarters from their spring and summer season departures.
Results of Operations - Consolidated
| For the three months ended September 30, |
For the nine months ended September 30, |
|||||||||||||||||||||||||||||||
| (In thousands) |
2022 |
2021 |
Change |
% | 2022 |
2021 |
Change |
% | ||||||||||||||||||||||||
| Tour revenues |
$ | 144,783 | $ | 64,507 | $ | 80,276 | 124 | % | $ | 303,540 | $ | 81,555 | $ | 221,985 | 272 | % | ||||||||||||||||
| Cost of tours |
87,576 | 45,600 | 41,976 | 92 | % | 208,023 | 73,270 | 134,753 | 184 | % | ||||||||||||||||||||||
| General and administrative |
24,535 | 17,023 | 7,512 | 44 | % | 68,882 | 46,123 | 22,759 | 49 | % | ||||||||||||||||||||||
| Selling and marketing |
16,025 | 10,213 | 5,812 | 57 | % | 41,193 | 17,680 | 23,513 | 133 | % | ||||||||||||||||||||||
| Depreciation and amortization |
10,839 | 9,323 | 1,516 | 16 | % | 33,193 | 25,785 | 7,408 | 29 | % | ||||||||||||||||||||||
| Operating income (loss) |
$ | 5,808 | $ | (17,652 | ) | $ | 23,460 | 133 | % | $ | (47,751 | ) | $ | (81,303 | ) | $ | 33,552 | 41 | % | |||||||||||||
| Net loss |
$ | (5,498 | ) | $ | (23,299 | ) | $ | 17,801 | 76 | % | $ | (76,203 | ) | $ | (92,894 | ) | $ | 16,691 | 18 | % | ||||||||||||
| Undistributed loss per share available to stockholders: |
||||||||||||||||||||||||||||||||
| Basic |
$ | (0.18 | ) | $ | (0.50 | ) | $ | 0.31 | $ | (1.60 | ) | $ | (1.87 | ) | $ | 0.27 | ||||||||||||||||
| Diluted |
$ | (0.18 | ) | $ | (0.50 | ) | $ | 0.31 | $ | (1.60 | ) | $ | (1.87 | ) | $ | 0.27 | ||||||||||||||||
Comparison of the Three and Nine Months Ended September 30, 2022 to Three and Nine Months Ended September 30, 2021 — Consolidated
Tour Revenues
Tour revenues for the three months ended September 30, 2022 increased $80.3 million, to $144.8 million, compared to $64.5 million for the three months ended September 30, 2021. The Lindblad segment tour revenues increased by $50.6 million, and the Land Experiences segment increased $29.6 million, primarily due to the ramp of expeditions and trips, and higher pricing. The Land Experiences segment also includes the results for Classic Journeys for 2022, which was acquired in the fourth quarter of 2021.
Tour revenues for the nine months ended September 30, 2022 increased $222.0 million, to $303.5 million, compared to $81.6 million for the nine months ended September 30, 2021. The Lindblad segment tour revenues increased by $157.8 million, and the Land Experiences segment increased $64.2 million, primarily due to the ramp of expeditions and trips, and higher pricing. For 2022, the Land Experiences segment also includes results for the full year-to-date period for Off the Beaten Path and DuVine, which were acquired in the first quarter of 2021, and the results for Classic Journeys, which was acquired during the fourth quarter of 2021.
Cost of Tours
Total cost of tours for the three months ended September 30, 2022 increased $42.0 million, or 92%, to $87.6 million, compared to $45.6 million for the three months ended September 30, 2021. The Lindblad segment cost of tours increased by $25.5 million, and the Land Experiences segment increased $16.5 million, primarily due to the ramp of expeditions and trips. The Land Experiences segment also includes the results for Classic Journeys for 2022, which was acquired in the fourth quarter of 2021.
Total cost of tours for the nine months ended September 30, 2022 increased $134.8 million to $208.0 million, compared to $73.3 million for the nine months ended September 30, 2021. The Lindblad segment cost of tours increased by $97.0 million, and the Land Experiences segment increased $37.8 million, primarily due to the ramp of expeditions and trips. The Land Experiences segment also includes results for the full year-to-date period for Off the Beaten Path and DuVine, which were acquired in the first quarter of 2021, and the results for Classic Journeys, which was acquired in the fourth quarter of 2021.
General and Administrative
General and administrative expenses for the three months ended September 30, 2022 increased $7.5 million, or 44%, to $24.5 million, compared to $17.0 million for the three months ended September 30, 2021. At the Lindblad segment, general and administrative expenses increased $4.6 million from the prior year period, primarily due to higher personnel costs associated with the ramp in operations and higher credit card commissions due to the strong booking environment. At the Land Experiences segment, general and administrative expenses increased $2.9 million, primarily due to increased personnel costs related to operating additional trips, higher credit card commissions due to the strong booking environment and the inclusion of results for Classic Journeys, which was acquired in the fourth quarter of 2021.
General and administrative expenses for the nine months ended September 30, 2022 increased $22.8 million, or 49%, to $68.9 million, compared to $46.1 million for the nine months ended September 30, 2021. At the Lindblad segment, general and administrative expenses increased $14.2 million from the prior year period, primarily due to higher personnel costs associated with the ramp in operations, increased credit card commissions due to the strong booking environment and higher stock-based compensation expense. At the Land Experiences segment, general and administrative expenses increased $8.6 million, primarily due to increased personnel costs related to operating additional trips, higher credit card commissions due to the strong booking environment and the inclusion of results for the full year-to-date period for Off the Beaten Path and DuVine, which were acquired in the first quarter of 2021, and the results for Classic Journeys, which was acquired in the fourth quarter of 2021.
Selling and Marketing
Selling and marketing expenses for the three months ended September 30, 2022 increased $5.8 million, or 57%, to $16.0 million, compared to $10.2 million for the three months ended September 30, 2021. At the Lindblad segment, selling and marketing expenses increased $4.2 million, primarily due to higher commissions related to the ramp in operations. At the Land Experiences segment, selling and marketing expenses increased $1.6 million, primarily due to increased marketing spend associated with the ramp in operations and the inclusion of results for Classic Journeys, which was acquired in the fourth quarter of 2021.
Selling and marketing expenses for the nine months ended September 30, 2022 increased $23.5 million to $41.2 million, compared to $17.7 million for the nine months ended September 30, 2021. At the Lindblad segment, selling and marketing expenses increased $20.0 million, primarily due to higher commissions related to the ramp in operations and increased advertising spend to drive future growth. At the Land Experiences segment, selling and marketing expenses increased $3.5 million, primarily due to increased marketing spend associated with the ramp in operations, and includes results for the full year-to-date period for Off the Beaten Path and DuVine, which were acquired in the first quarter of 2021, and the results for Classic Journeys, which was acquired in the fourth quarter of 2021.
Depreciation and Amortization
Depreciation and amortization expenses for the three months ended September 30, 2022 increased $1.5 million, or 16%, to $10.8 million, compared to $9.3 million for the three months ended September 30, 2021, primarily due to depreciation for the National Geographic Resolution placed into service in September 2021, depreciation of technology assets placed into service to support our digital initiatives, accelerated depreciation for the National Geographic Islander, which was replaced in August 2022, and the amortization of acquired intangibles.
Depreciation and amortization expenses for the nine months ended September 30, 2022 increased $7.4 million, or 29%, to $33.2 million, compared to $25.8 million for the nine months ended September 30, 2021, primarily due to depreciation for the National Geographic Resolution placed into service in September 2021, depreciation of technology assets placed into service to support our digital initiatives, accelerated depreciation for the National Geographic Islander, which was replaced in August 2022, and the amortization of acquired intangibles.
Other Income (Expense)
Other expense for the three months ended September 30, 2022, increased $6.4 million to $9.5 million from $3.1 million for the three months ended September 30, 2021, primarily due to the following:
| ● | A $2.3 million increase in interest expense, net to $8.4 million in 2022, primarily due to additional drawdowns throughout 2021 under our export credit agreements related to the delivery of the National Geographic Resolution, as well as increased principal on our notes as a result of the debt refinancing in February 2022 and higher rates across our debt facilities. | |
| ● |
A $0.6 million decrease in loss on foreign currency translation. |
|
| ● | A $4.6 million increase in other expenses due to the $4.4 million related to expenses covered under the grant for the Coronavirus Economic Relief for Transportation Services (“CERTS”) Act recognized in third quarter 2021. |
Other expense for the nine months ended September 30, 2022, increased $13.5 million to $27.8 million from $14.2 million for the nine months ended September 30, 2021, primarily due to the following:
| ● | A $9.1 million increase in interest expense, net to $26.5 million in 2022, primarily due to additional drawdowns throughout 2021 under our export credit agreements related to the delivery of the National Geographic Resolution, as well as increased principal on our notes as a result of the debt refinancing in February 2022 and higher rates across our debt facilities. | |
| ● |
A $0.3 million increase in loss on foreign currency translation. |
|
| ● | A $4.3 million decrease in other income primarily due to the write-off of $9.0 million of deferred financing costs and $1.9 million of fees and other expenses related to the repayment of our prior credit agreement, including the term facility, Main Street Loan and revolving credit facility, during 2022, and the $4.4 million related to expenses covered under the CERTS grant during 2021, mostly offset by the by recognition of $11.6 million related to expenses covered under the CERTS grant during 2022. |
Results of Operations — Segments
Selected information for our reportable segments is below. The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
| For the three months ended September 30, |
For the nine months ended September 30, |
|||||||||||||||||||||||||||||||
| (In thousands) |
2022 |
2021 |
Change |
% | 2022 |
2021 |
Change |
% | ||||||||||||||||||||||||
| Tour revenues: |
||||||||||||||||||||||||||||||||
| Lindblad |
$ | 83,741 | $ | 33,100 | $ | 50,641 | 153 | % | $ | 198,063 | $ | 40,264 | $ | 157,799 | 392 | % | ||||||||||||||||
| Land Experiences |
61,042 | 31,407 | 29,635 | 94 | % | 105,477 | 41,291 | 64,186 | 155 | % | ||||||||||||||||||||||
| Total tour revenues |
$ | 144,783 | $ | 64,507 | $ | 80,276 | 124 | % | $ | 303,540 | $ | 81,555 | $ | 221,985 | 272 | % | ||||||||||||||||
| Operating income (loss): |
||||||||||||||||||||||||||||||||
| Lindblad |
$ | (7,142 | ) | $ | (22,282 | ) | $ | 15,140 | 68 | % | $ | (60,380 | ) | $ | (80,617 | ) | $ | 20,237 | 25 | % | ||||||||||||
| Land Experiences |
12,950 | 4,630 | 8,320 | 180 | % | 12,629 | (686 | ) | 13,315 | NM | ||||||||||||||||||||||
| Total operating income (loss) |
$ | 5,808 | $ | (17,652 | ) | $ | 23,460 | 133 | % | $ | (47,751 | ) | $ | (81,303 | ) | $ | 33,552 | 41 | % | |||||||||||||
| Adjusted EBITDA: |
||||||||||||||||||||||||||||||||
| Lindblad |
$ | 4,889 | $ | (11,596 | ) | $ | 16,485 | 142 | % | $ | (23,560 | ) | $ | (51,382 | ) | $ | 27,822 | 54 | % | |||||||||||||
| Land Experiences |
13,699 | 5,001 | 8,698 | 174 | % | 14,735 | 1,017 | 13,718 | NM | |||||||||||||||||||||||
| Total adjusted EBITDA |
$ | 18,588 | $ | (6,595 | ) | $ | 25,183 | 382 | % | $ | (8,825 | ) | $ | (50,365 | ) | $ | 41,540 | 82 | % | |||||||||||||
Comparison of Three and Nine Months Ended September 30, 2022 to Three and Nine Months Ended September 30, 2021 at the Lindblad Segment
Tour Revenues
Tour revenues for the three months ended September 30, 2022 increased $50.6 million to $83.7 million, compared to $33.1 million for the three months ended September 30, 2021. The increase in 2022 was a result of the ramp in expeditions and higher pricing compared with the third quarter of 2021.
Tour revenues for the nine months ended September 30, 2022 increased $157.8 million to $198.1 million, compared to $40.3 million for the nine months ended September 30, 2021. The increase in 2022 was a result of the ramp in expeditions and higher pricing compared with the nine months ended September 30, 2021.
Operating Loss
Operating loss for the three months ended September 30, 2022 improved by $15.2 million to a loss of $7.1 million compared to a loss of $22.3 million for the three months ended September 30, 2021, primarily due to the increase in tour revenues, partially offset by higher cost of tours and personnel costs due to the ramp in operations, increased commissions related to the revenue and bookings growth and increased depreciation mainly from the delivery of the National Geographic Resolution.
Operating loss for the nine months ended September 30, 2022 improved $20.2 million to a loss of $60.4 million compared to a loss of $80.6 million for the nine months ended September 30, 2021, primarily due to the increase in tour revenues, partially offset by higher cost of tours and personnel costs due to the ramp in operations, increased commissions related to the revenue and bookings growth, higher marketing costs to drive future growth and increased depreciation mainly from the delivery of the National Geographic Resolution.
Comparison of Three and Nine Months Ended September 30, 2022 to Three and Nine Months Ended September 30, 2021 at the Land Experiences Segment
Tour Revenues
Tour revenues for the three months ended September 30, 2022 increased $29.6 million to $61.0 million compared to $31.4 million for the three months ended September 30, 2021, primarily as a result of operating additional trips during the third quarter 2022, higher pricing and the inclusion of results for Classic Journeys in 2022, which was acquired in the fourth quarter of 2021.
Tour revenues for the nine months ended September 30, 2022 increased $64.2 million to $105.5 million compared to $41.3 million for the nine months ended September 30, 2021, primarily as a result of operating additional trips during 2022, higher pricing and the inclusion of the full year-to-date period of results for Off the Beaten Path and DuVine, which were acquired in the first quarter of 2021, and the results for Classic Journeys, which was acquired in the fourth quarter of 2021.
Operating Income (Loss)
Operating income for the three months ended September 30, 2022 improved $8.4 million to $13.0 million compared to operating income of $4.6 million for the three months ended September 30, 2021, primarily a result of operating additional trips during the third quarter of 2022 and the inclusion of results for Classic Journeys in 2022, which was acquired in the fourth quarter of 2021.
Operating income of $12.6 million for the nine months ended September 30, 2022 improved by $13.3 million compared to a loss of $0.7 million for the nine months ended September 30, 2021. The improvement in operating income was primarily a result of operating additional trips during 2022 and the inclusion of the full year-to-date period of results for Off the Beaten Path and DuVine, which were acquired in the first quarter of 2021, and the results for Classic Journeys, which was acquired in the fourth quarter of 2021.
Adjusted EBITDA — Consolidated
The following table outlines the reconciliation of net loss to consolidated Adjusted EBITDA. The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
| Consolidated |
For the three months ended September 30, |
For the nine months ended September 30, |
||||||||||||||
| (In thousands) |
2022 |
2021 |
2022 |
2021 |
||||||||||||
| Net loss |
$ | (5,498 | ) | $ | (23,299 | ) | $ | (76,203 | ) | $ | (92,894 | ) | ||||
| Interest expense, net |
8,369 | 6,063 | 26,500 | 17,436 | ||||||||||||
| Income tax expense (benefit) |
1,732 | 2,507 | 619 | (2,648 | ) | |||||||||||
| Depreciation and amortization |
10,839 | 9,323 | 33,193 | 25,785 | ||||||||||||
| Loss on foreign currency |
872 | 1,434 | 1,417 | 1,165 | ||||||||||||
| Other expense (income) |
333 | (4,357 | ) | (84 | ) | (4,362 | ) | |||||||||
| Stock-based compensation |
1,632 | 1,406 | 5,283 | 4,146 | ||||||||||||
| Other |
309 | 328 | 450 | 1,007 | ||||||||||||
| Adjusted EBITDA |
$ | 18,588 | $ | (6,595 | ) | $ | (8,825 | ) | $ | (50,365 | ) | |||||
The following tables outline the reconciliation for each reportable segment from operating income to Adjusted EBITDA.
| Lindblad Segment |
For the three months ended September 30, |
For the nine months ended September 30, |
||||||||||||||
| (In thousands) |
2022 |
2021 |
2022 |
2021 |
||||||||||||
| Operating loss |
$ | (7,142 | ) | $ | (22,282 | ) | $ | (60,380 | ) | $ | (80,617 | ) | ||||
| Depreciation and amortization |
10,090 | 8,928 | 31,087 | 24,618 | ||||||||||||
| Stock-based compensation |
1,632 | 1,406 | 5,283 | 4,012 | ||||||||||||
| Other |
309 | 352 | 450 | 605 | ||||||||||||
| Adjusted EBITDA |
$ | 4,889 | $ | (11,596 | ) | $ | (23,560 | ) | $ | (51,382 | ) | |||||
| Land Experiences Segment |
For the three months ended September 30, |
For the nine months ended September 30, |
||||||||||||||
| (In thousands) |
2022 |
2021 |
2022 |
2021 |
||||||||||||
| Operating income (loss) |
$ | 12,950 | $ | 4,630 | $ | 12,629 | $ | (686 | ) | |||||||
| Depreciation and amortization |
749 | 395 | 2,106 | 1,167 | ||||||||||||
| Stock-based compensation |
- | - | - | 134 | ||||||||||||
| Other |
- | (24 | ) | - | 402 | |||||||||||
| Adjusted EBITDA |
$ | 13,699 | $ | 5,001 | $ | 14,735 | $ | 1,017 | ||||||||
Guest Metrics — Lindblad Segment
The following table sets forth our Available Guest Nights, Guest Nights Sold, Occupancy, Maximum Guests, Number of Guests and Voyages:
| For the three months ended September 30, |
For the nine months ended September 30, |
|||||||||||||||
| 2021 |
2022 |
2021 |
||||||||||||||
| Available Guest Nights |
70,995 | 35,251 | 174,954 | 41,474 | ||||||||||||
| Guest Nights Sold |
57,229 | 28,829 | 130,836 | 33,749 | ||||||||||||
| Occupancy |
81 | % | 82 | % | 75 | % | 81 | % | ||||||||
| Maximum Guests |
8,826 | 5,493 | 21,785 | 6,514 | ||||||||||||
| Number of Guests |
7,225 | 4,418 | 16,656 | 5,236 | ||||||||||||
| Voyages |
114 | 75 | 302 | 89 | ||||||||||||
The following table shows the calculations of Gross and Net Yield. Gross Yield is calculated by dividing Tour Revenues by Available Guest Nights and Net Yield is calculated by dividing Net Revenue by Available Guest Nights:
| Calculation of Gross and Net Yield per Available Guest Night |
For the three months ended September 30, |
For the nine months ended September 30, |
||||||||||||||
| (In thousands, except for Available Guest Nights, Gross and Net Yield per Available Guest Night) |
2022 |
2021 |
2022 |
2021 |
||||||||||||
| Guest ticket revenues |
$ | 73,700 | $ | 32,325 | $ | 174,762 | $ | 38,087 | ||||||||
| Other tour revenue |
10,041 | 775 | 23,301 | 2,177 | ||||||||||||
| Tour Revenues |
83,741 | 33,100 | 198,063 | 40,264 | ||||||||||||
| Less: Commissions |
(5,728 | ) | (2,705 | ) | (14,381 | ) | (3,248 | ) | ||||||||
| Less: Other tour expenses |
(6,030 | ) | (1,545 | ) | (21,025 | ) | (2,611 | ) | ||||||||
| Net Yield |
$ | 71,983 | $ | 28,850 | $ | 162,657 | $ | 34,405 | ||||||||
| Available Guest Nights |
70,995 | 35,251 | 174,954 | 41,474 | ||||||||||||
| Gross Yield per Available Guest Night |
$ | 1,180 | $ | 939 | $ | 1,132 | $ | 971 | ||||||||
| Net Yield per Available Guest Night |
1,014 | 818 | 930 | 830 | ||||||||||||
The following table reconciles operating income to our Net Yield Guest Metric for the Lindblad Segment:
| For the three months ended September 30, |
For the nine months ended September 30, |
|||||||||||||||
| (In thousands) |
2022 |
2021 |
2022 |
2021 |
||||||||||||
| Operating income (loss) |
$ | (7,142 | ) | $ | (22,282 | ) | $ | (60,380 | ) | $ | (80,617 | ) | ||||
| Cost of tours |
51,296 | 25,842 | 145,251 | 48,282 | ||||||||||||
| General and administrative |
16,871 | 12,230 | 48,487 | 34,322 | ||||||||||||
| Selling and marketing |
12,626 | 8,382 | 33,618 | 13,659 | ||||||||||||
| Depreciation and amortization |
10,090 | 8,928 | 31,087 | 24,618 | ||||||||||||
| Less: Commissions |
(5,728 | ) | (2,705 | ) | (14,381 | ) | (3,248 | ) | ||||||||
| Less: Other tour expenses |
(6,030 | ) | (1,545 | ) | (21,025 | ) | (2,611 | ) | ||||||||
| Net Yield |
$ | 71,983 | $ | 28,850 | $ | 162,657 | $ | 34,405 | ||||||||
The following table shows the calculations of Gross and Net Cruise Costs:
| Calculation of Gross and Net Cruise Cost |
For the three months ended September 30, |
For the nine months ended September 30, |
||||||||||||||
| (In thousands, except for Available Guest Nights, Gross and Net Cruise Cost per Avail. Guest Night) |
2022 |
2021 |
2022 |
2021 |
||||||||||||
| Cost of tours |
$ | 51,296 | $ | 25,842 | $ | 145,251 | $ | 48,282 | ||||||||
| Plus: Selling and marketing |
12,626 | 8,382 | 33,618 | 13,659 | ||||||||||||
| Plus: General and administrative |
16,871 | 12,230 | 48,487 | 34,322 | ||||||||||||
| Gross Cruise Cost |
80,793 | 46,454 | 227,356 | 96,263 | ||||||||||||
| Less: Commissions |
(5,728 | ) | (2,705 | ) | (14,381 | ) | (3,248 | ) | ||||||||
| Less: Other tour expenses |
(6,030 | ) | (1,545 | ) | (21,025 | ) | (2,611 | ) | ||||||||
| Net Cruise Cost |
69,035 | 42,204 | 191,950 | 90,404 | ||||||||||||
| Less: Fuel Expense |
(8,933 | ) | (2,357 | ) | (21,419 | ) | (3,880 | ) | ||||||||
| Net Cruise Cost Excluding Fuel |
60,102 | 39,847 | 170,531 | 86,524 | ||||||||||||
| Non-GAAP Adjustments: |
||||||||||||||||
| Stock-based compensation |
(1,632 | ) | (1,406 | ) | (5,283 | ) | (4,012 | ) | ||||||||
| Other |
(309 | ) | (328 | ) | (450 | ) | (1,007 | ) | ||||||||
| Adjusted Net Cruise Cost Excluding Fuel |
$ | 58,161 | $ | 38,113 | $ | 164,798 | $ | 81,505 | ||||||||
| Adjusted Net Cruise Cost |
$ | 67,094 | $ | 40,470 | $ | 186,217 | $ | 85,385 | ||||||||
| Available Guest Nights |
70,995 | 35,251 | 174,954 | 41,474 | ||||||||||||
| Gross Cruise Cost per Available Guest Night |
$ | 1,138 | $ | 1,318 | $ | 1,300 | $ | 2,321 | ||||||||
| Net Cruise Cost per Available Guest Night |
972 | 1,197 | 1,097 | 2,180 | ||||||||||||
| Net Cruise Cost Excluding Fuel per Available Guest Night |
847 | 1,130 | 975 | 2,086 | ||||||||||||
| Adjusted Net Cruise Cost Excluding Fuel per Available Guest Night |
819 | 1,081 | 942 | 1,965 | ||||||||||||
| Adjusted Net Cruise Cost per Available Guest Night |
945 | 1,148 | 1,064 | 2,059 | ||||||||||||
Liquidity and Capital Resources
The COVID-19 pandemic has had a material negative impact on our operations and financial results and, while we have substantially resumed operations, given the dynamic nature of this situation, we cannot reasonably estimate the impacts of the COVID-19 pandemic on our financial condition, results of operations, cash flows, plans and growth in the future.
As of September 30, 2022, we had approximately $572.4 million in long-term debt obligations, including the current portion of long-term debt. We believe that our cash on hand and expected future operating cash inflows will be sufficient to fund operations, debt service requirements and necessary capital expenditures, assuming that our operations continue to ramp as we currently expect.
We anticipate a significant increase in guest payments as we receive final payments for upcoming expeditions and trips, as well as deposits for new reservations for future travel. As we continue to ramp operations, our monthly cash usage will continue to increase as we incur costs in operating additional expeditions and trips and increase spending to market and advertise upcoming expeditions and trips. However, there can be no assurance that cash flows from operations will be available to fund future obligations or that we will not experience delays or cancellations with respect to the resumption of our operations.
Sources and Uses of Cash for the Nine Months Ended September 30, 2022 and 2021
Net cash provided by operating activities was $0.8 million for the nine months ended September 30, 2022 compared to $21.5 million for the same period in 2021. The $20.7 million decrease is primarily due to higher costs during 2022 as we ramped operations.
Net cash used in investing activities was $29.6 million for the nine months ended September 30, 2022 compared to $96.3 million in the same period in 2021. 2022 primarily included routine vessel maintenance across the fleet and renovations to the National Geographic Islander II for its launch during the third quarter of this year, while 2021 primarily included costs associated with building the National Geographic Resolution and the acquisitions of Off the Beaten Path and DuVine.
Net cash provided by financing activities was $2.1 million for the nine months ended September 30, 2022 compared to $55.3 million for the same period in 2021. 2022 primarily included the issuance of new senior secured notes which were used to repay the prior credit agreement, including the term facility, the Main Street Loan and the revolving facility. 2021 mainly included the drawdown of $61.7 million under a senior secured credit agreement for the remaining payments on the National Geographic Resolution.
Funding Sources
Debt Facilities
6.75% Notes
On February 4, 2022, we issued $360.0 million aggregate principal amount of 6.75% senior secured notes due 2027 (the “Notes”) in a private offering. The Notes bear interest at a rate of 6.75% per year, accruing from February 4, 2022, and interest on the Notes is payable semiannually in arrears on February 15 and August 15 of each year. The Notes will mature on February 15, 2027, subject to earlier repurchase or redemption. We used the net proceeds from the offering to prepay in full all outstanding borrowings under our prior credit agreement, including the term facility, Main Street Loan, and revolving credit facility, to pay any related premiums and to terminate in full our prior credit agreement and the commitments thereunder. The Notes are senior secured obligations and are guaranteed on a senior secured basis by us and certain of our subsidiaries (collectively, the “Guarantors”) and secured by first-priority pari passu liens, subject to permitted liens and certain exceptions, on substantially all of our and the Guarantors’ assets. We may redeem the Notes at set redemption prices and premiums, plus accrued and unpaid interest, if any.
The Notes contain covenants that, among other things, restrict our ability and the ability of our restricted subsidiaries to incur certain additional indebtedness and make certain dividend payments, distributions, investments and other restricted payments. These covenants are subject to a number of important exceptions and qualifications set forth in the Notes.
New Revolving Credit Facility
On February 4, 2022, we entered into a new senior secured revolving credit facility (the “New Revolving Credit Facility”), which provides for an aggregate principal amount of commitments of $45.0 million, maturing February 2027, including a letter of credit sub-facility in an aggregate principal amount of up to $5.0 million. The obligations under the New Revolving Credit Facility are guaranteed by us and the Guarantors and are secured by first-priority pari passu liens, subject to permitted liens and certain exceptions, on substantially all the assets of the Company and the Guarantors. Borrowings under the New Revolving Credit Facility, if any, will bear interest at a rate per annum equal to, at our option, an adjusted SOFR rate plus a spread or a base rate plus a spread.
The New Revolving Credit Facility contains customary affirmative and negative covenants, as well as financial covenants and event of default provisions.
Senior Secured Credit Agreements
Our first senior secured credit agreement (the “First Export Credit Agreement”) made available a loan for the purpose of providing financing for up to 80% of the purchase price of our new polar ice class vessel, the National Geographic Endurance. During March 2020, upon delivery, we borrowed $107.7 million under the First Export Credit Agreement for the final contracted payment of the National Geographic Endurance.
Our second senior secured credit agreement (the “Second Export Credit Agreement”) made available a loan for the purpose of providing pre- and post-delivery financing for up to 80% of the purchase price of the National Geographic Resolution. We borrowed $122.8 million under the Second Export Credit Agreement, drawing approximately $30.5 million in 2019, $30.6 million in 2020 and $61.7 million in 2021, with the ship delivered in September 2021.
In September 2021, we amended our export credit agreements to, among other things, annualize EBITDA used in the covenant calculations through December 31, 2022. During May 2022, we further amended our export credit agreements to extend the waiver of the total net leverage ratio covenant through December 31, 2022. Certain other covenants continue to be more restrictive during the extended covenant waiver period. We were in compliance with our covenants in effect as of September 30, 2022 and are expected to be in compliance for the next 12 months.
The First Export Credit Agreement, as amended, bears interest at a variable interest rate equal to three-month LIBOR plus a spread of 3.50% per annum, or 6.75% over the borrowing period covering September 30, 2022. The Second Export Credit Agreement, as amended, bears a variable interest rate equal to three-month LIBOR plus a spread of 3.50% per annum, or 7.07% over the borrowing period covering September 30, 2022. On October 11, 2022, we amended the covenants of our export credit agreements to use an annualized EBITDA calculation in our net leverage ratio covenant for the periods from March 31, 2023 through September 30, 2023.
Notes Payable
In connection with the Natural Habitat acquisition in May 2016, Natural Habitat issued a $2.5 million unsecured promissory note, amended in May 2020, to Benjamin L. Bressler, the founder of Natural Habitat, with an outstanding principal amount of $0.8 million as of September 30, 2022. The promissory note accrues interest at a rate of 1.44% annually, with interest payable every six months and the remaining principal payment due on December 22, 2022.
Other
Our Off the Beaten Path subsidiary has a loan maturing September 2023 for the purchase of guest transportation vehicles. The loan’s original principal was $0.3 million, is collateralized by the vehicles and bears an annual interest rate of 4.77%.
Our Off the Beaten Path subsidiary has a $0.8 million loan under the Main Street Expanded Loan Facility, originated on December 11, 2020. For the first 12 months, interest is not payable and accrued to the principal balance, thereafter, monthly interest payments are required. The outstanding balance will amortize at a rate of 15% on both December 2023 and December 2024, with the remaining balance due December 2025. The loan bears a variable interest rate equal to one-month LIBOR plus a spread of 3.00%, or 6.14% as of September 30, 2022. This loan may be voluntarily prepaid at any time and from time to time, without premium or penalty, other than customary “breakage costs” and fees for LIBOR-based loans.
Our DuVine subsidiary has a EUR 0.1 million State Assistance Loan related to the financial consequences of the COVID-19 pandemic, for the purpose of employment preservation. This loan matures August 2025, with monthly payments, and bears an annual interest rate of 0.53%.
Equity
Preferred Stock
In August 2020, we issued and sold 85,000 shares of Series A Redeemable Convertible Preferred Stock, par value of $0.0001, (“Preferred Stock”) for $1,000 per share for gross proceeds of $85.0 million. As of September 30, 2022, 62,000 shares of Preferred Stock were outstanding. The Preferred Stock has senior and preferential ranking to our common stock. The Preferred Stock is entitled to cumulative dividends of 6.00% per annum, and for the first two years, the dividends were paid-in-kind. After the second anniversary of the issuance date, the dividends may be paid-in-kind or be paid in cash at our option. The Preferred Stock is convertible at any time, at the holder’s election, into a number of shares of our common stock equal to the quotient obtained by dividing the then-current accrued value by the conversion price of $9.50. At the six-year anniversary of the closing date, each investor has the right to request that we repurchase their Preferred Stock, and any Preferred Stock not requested to be repurchased shall be converted into our common shares equal to the quotient obtained by dividing the then-current accrued value by the conversion price. During the nine months ended September 30, 2022, 18,000 shares of Preferred Stock and related accumulated dividends were converted by the holder into 2,109,561 shares of our common stock. As of September 30, 2022, the outstanding Preferred Stock and accumulated dividends could be converted, at the option of the holders, into approximately 7.4 million shares of our common stock.
Funding Needs
We generally rely on a combination of cash flows provided by operations and the incurrence of additional debt to fund obligations. A vast majority of guest ticket receipts are collected in advance of the applicable expedition date. These advance passenger receipts remain a current liability until the expedition date, and the cash generated from these advance receipts is used interchangeably with cash on hand from other cash from operations. The cash received as advanced receipts can be used to fund operating expenses for the applicable future expeditions or otherwise, pay down debt, make long-term investments or any other use of cash. Traditionally we run a working capital deficit due primarily to a large balance of unearned passenger revenues. As of September 30, 2022, we had a working capital deficit of $126.4 million, and as of December 31, 2021, we had a working capital deficit of $79.1 million.
Critical Accounting Policies
For a detailed discussion of the Critical Accounting Policies, please see our 2021 Annual Report.
| QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
There have been no material changes in our exposure to market risks from the information set forth in the “Quantitative and Qualitative Disclosures About Market Risk” sections contained in our 2021 Annual Report.
We are exposed to a market risk for interest rates related to our variable rate debt instruments. We assess our market risks based on changes in interest rates utilizing a sensitivity analysis that measures the potential impact on earnings and cash flows based on a hypothetical 100 basis point change in interest rates. For additional information regarding our long-term borrowings see Note 5 to our Condensed Consolidated Financial Statements included herein. Based on our September 30, 2022 outstanding variable rate debt balance, a hypothetical 100 basis point increase in LIBOR interest rates related to our variable interest rate debt instruments would impact our annual interest expense by approximately $2.1 million.
| CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
Based on an evaluation under the supervision and with the participation of the Company’s management, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) were effective as of September 30, 2022 to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| PART 2. |
OTHER INFORMATION |
| ITEM 1. |
The Company is involved in various claims, legal actions and regulatory proceedings arising from time to time in the ordinary course of business. We have protection and indemnity insurance that would be expected to cover any damages.
| ITEM 1A. |
We operate in a rapidly changing environment that involves a number of risks that could materially affect our business, financial condition or future results, some of which are beyond our control. The risks and uncertainties that we believe are most important for you to consider are discussed under the heading “Risk Factors” in the 2021 Annual Report.
| ITEM 2. |
Recent Sales by the Company of Unregistered Securities
There were no unregistered sales of equity securities during the quarter ended September 30, 2022.
Stock Repurchase Plan
Our Board of Directors approved a stock and warrant repurchase plan (“Repurchase Plan”) in November 2015 and increased the repurchase plan to $35.0 million in November 2016. The Repurchase Plan authorizes us to purchase from time to time our outstanding common stock and our previously outstanding warrants. Any shares and warrants purchased will be retired. The Repurchase Plan has no time deadline and will continue until otherwise modified or terminated at the sole discretion of our Board of Directors. These repurchases exclude shares repurchased to settle statutory employee tax withholding related to the exercise of stock options and vesting of stock awards. We have cumulatively repurchased 875,218 shares of common stock for $8.3 million and 6,011,926 warrants for $14.7 million, since plan inception. All repurchases were made using cash resources. The balance for the Repurchase Plan was $12.0 million as of September 30, 2022. The Repurchase Plan is suspended due to restrictions related to the Main Street Expanded Loan Facility program, which was repaid in February 2022.
Repurchases of Securities
The following table represents information with respect to shares of common stock withheld from vesting's of stock-based compensation awards for employee income tax withholding for the periods indicated:
| Period |
Total number of shares purchased |
Average price paid per share |
Dollar value of shares purchased as part of publicly announced plans or programs |
Maximum dollar value of warrants and shares that may be purchased under approved plans or programs |
||||||||||||
| July 1 through July 31, 2022 |
- | $ | - | $ | - | $ | 11,974,787 | |||||||||
| August 1 through August 31, 2022 |
410 | 7.73 | - | 11,974,787 | ||||||||||||
| September 1 through September 30, 2022 |
- | - | - | 11,974,787 | ||||||||||||
| Total |
410 | $ | - | |||||||||||||
| ITEM 3. |
Not applicable.
| ITEM 4. |
Not applicable.
| ITEM 5. |
Not applicable.
| ITEM 6. |
| Number |
Description |
Included |
Form |
Filing Date |
||||
| 10.1 | LINDBLAD – $107,694,892.00 SENIOR SECURED CREDIT AGREEMENT – SIDE LETTER TO CREDIT AGREEMENT (Hull 312) October 2022 | Herewith | ||||||
| 10.2 | LINDBLAD – $122,840,000.00 SENIOR SECURED CREDIT AGREEMENT – SIDE LETTER TO CREDIT AGREEMENT (Hull 316) October 2022 | Herewith | ||||||
|
|
Fifth Amendment to that Tour Operator Agreement, dated December 12, 2011, as amended. |
|
By reference | 8-K | September 16, 2022 | |||
|
|
Sixth Amendment to that Alliance and License Agreement, dated as of December 12, 2011, as amended. |
|
By reference |
|
8-K | September 16, 2022 | ||
| 101.INS |
Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) |
Herewith |
||||||
| 101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
Herewith |
||||||
| 101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
Herewith |
||||||
| 101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
Herewith |
||||||
| 101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document |
Herewith |
||||||
| 101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
Herewith |
||||||
| 104 |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
|||||||
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on November 2, 2022.
| LINDBLAD EXPEDITIONS HOLDINGS, INC. |
||
| (Registrant) |
||
| By |
/s/ Dolf Berle |
|
| Chief Executive Officer |
||
|
(Principal Executive Officer)
|
||
| By |
/s/ Craig Felenstein
|
|
|
Chief Financial Officer
|
||
|
(Principal Financial and Accounting Officer)
|
||
| This ‘10-Q’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| 2/15/27 | ||||
| 3/31/25 | ||||
| 12/31/23 | ||||
| 9/30/23 | ||||
| 3/31/23 | ||||
| 12/31/22 | ||||
| 12/22/22 | ||||
| Filed on: | 11/2/22 | 8-K | ||
| 10/31/22 | ||||
| 10/11/22 | ||||
| For Period end: | 9/30/22 | 4 | ||
| 8/31/22 | ||||
| 7/31/22 | ||||
| 6/30/22 | 10-Q, 4 | |||
| 3/31/22 | 10-Q, 10-Q/A, 4, 4/A | |||
| 2/28/22 | 10-K | |||
| 2/4/22 | 8-K | |||
| 12/31/21 | 10-K, 4 | |||
| 10/13/21 | 8-K | |||
| 9/30/21 | 10-Q, 4, 8-K | |||
| 6/30/21 | 10-Q, 4 | |||
| 5/31/21 | ||||
| 3/3/21 | ||||
| 2/1/21 | ||||
| 12/31/20 | 10-K, 4 | |||
| 12/11/20 | ||||
| 3/16/20 | 4, SC 13D/A | |||
| List all Filings | ||||
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 3/10/23 Lindblad Expeditions Holdings Inc 10-K 12/31/22 99:10M RDG Filings/FA |
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 9/16/22 Lindblad Expeditions Holdings Inc 8-K:1,9 9/15/22 13:363K RDG Filings/FA |