UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 20202021
☐ 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 001-35898
LINDBLAD EXPEDITIONS HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware | 27-4749725 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
96 Morton Street, 9th9th Floor,, New York,, New York, 10014
(Address of principal executive offices) (Zip Code)
(212) 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 | ||
Common Stock, par value $0.0001 per share | LIND | The 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. ☒ 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). ☒ 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 | ☐ | Accelerated filer | ☒ | |
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |
Emerging growth company | ☐ | |||
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).
☐ Yes ☒ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
date: As of July 31, 2020, 49,823,19926, 2021, 50,139,831 shares of common stock, par value $0.0001 per share, were issued and outstanding.
LINDBLAD EXPEDITIONS HOLDINGS, INC.
Quarterly Report On Form 10-Q
For The Quarter Ended June 30,, 2020 2021
Page(s) | ||
PART I. FINANCIAL INFORMATION | ||
ITEM 1. | Financial Statements (Unaudited) | |
Condensed Consolidated Balance Sheets as of June 30, | ||
Notes to the Condensed Consolidated Financial Statements (Unaudited) | ||
ITEM 2. |
| |
ITEM 3. | ||
ITEM 4. | ||
PART II. OTHER INFORMATION | ||
ITEM 1. | ||
ITEM 1A. | ||
ITEM 2. | ||
ITEM 3. | ||
ITEM 4. | ||
ITEM 5. | ||
ITEM 6. | ||
PART | FINANCIAL INFORMATION |
| FINANCIAL STATEMENTS |
LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
As of June 30, 2021 | As of December 31, 2020 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 160,081 | $ | 187,531 | ||||
Restricted cash | 43,465 | 16,984 | ||||||
Marine operating supplies | 6,258 | 5,473 | ||||||
Inventories | 2,202 | 2,168 | ||||||
Prepaid expenses and other current assets | 27,819 | 17,014 | ||||||
Total current assets | 239,825 | 229,170 | ||||||
Property and equipment, net | 492,756 | 482,673 | ||||||
Goodwill | 33,652 | 22,105 | ||||||
Intangibles, net | 10,678 | 4,817 | ||||||
Deferred tax asset | 10,697 | 5,539 | ||||||
Right-to-use lease assets | 4,510 | 5,082 | ||||||
Other long-term assets | 7,179 | 8,063 | ||||||
Total assets | $ | 799,297 | $ | 757,449 | ||||
LIABILITIES | ||||||||
Current Liabilities: | ||||||||
Unearned passenger revenues | $ | 203,466 | $ | 120,737 | ||||
Accounts payable and accrued expenses | 28,093 | 22,341 | ||||||
Lease liabilities - current | 1,403 | 1,475 | ||||||
Long-term debt - current | 9,361 | 11,255 | ||||||
Total current liabilities | 242,323 | 155,808 | ||||||
Long-term debt, less current portion | 489,880 | 471,359 | ||||||
Lease liabilities | 3,417 | 3,915 | ||||||
Other long-term liabilities | 90 | 90 | ||||||
Total liabilities | 735,710 | 631,172 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
Series A redeemable convertible preferred stock, 165,000 shares authorized; 85,000 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively | 86,445 | 83,825 | ||||||
Redeemable noncontrolling interest | 10,036 | 7,494 | ||||||
| 96,481 | 91,319 | |||||||
STOCKHOLDERS’ EQUITY | ||||||||
Preferred stock, $0.0001 par value, 1,000,000 shares authorized; 85,000 Series A shares issued and outstanding as of June 30, 2021 and December 31, 2020 | 0 | 0 | ||||||
Common stock, $0.0001 par value, 200,000,000 shares authorized; 50,139,831 and 49,905,512 issued, 50,071,623 and 49,818,676 outstanding as of June 30, 2021 and December 31, 2020, respectively | 5 | 5 | ||||||
Additional paid-in capital | 50,777 | 48,127 | ||||||
Accumulated deficit | (82,733 | ) | (11,572 | ) | ||||
Accumulated other comprehensive loss | (943 | ) | (1,602 | ) | ||||
Total stockholders' equity | (32,894 | ) | 34,958 | |||||
Total liabilities, mezzanine equity and stockholders' equity | $ | 799,297 | $ | 757,449 | ||||
As of June 30, 2020 | As of December 31, 2019 | |||||||
ASSETS | (unaudited) | |||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 80,897 | $ | 101,579 | ||||
Restricted cash | 21,333 | 7,679 | ||||||
Marine operating supplies | 6,759 | 6,299 | ||||||
Inventories | 1,824 | 2,027 | ||||||
Prepaid expenses and other current assets | 23,753 | 29,055 | ||||||
Total current assets | 134,566 | 146,639 | ||||||
Property and equipment, net | 495,370 | 357,790 | ||||||
Goodwill | 22,105 | 22,105 | ||||||
Intangibles, net | 5,607 | 6,396 | ||||||
Deferred tax asset | 639 | 218 | ||||||
Right-to-use lease assets | 5,601 | 6,105 | ||||||
Other long-term assets | 8,401 | 9,405 | ||||||
Total assets | $ | 672,289 | $ | 548,658 | ||||
LIABILITIES | ||||||||
Current Liabilities: | ||||||||
Unearned passenger revenues | $ | 120,788 | $ | 138,825 | ||||
Accounts payable and accrued expenses | 43,443 | 38,231 | ||||||
Lease liabilities - current | 1,394 | 1,335 | ||||||
Long-term debt - current | 5,646 | 4,525 | ||||||
Total current liabilities | 171,271 | 182,916 | ||||||
Long-term debt, less current portion | 395,637 | 213,543 | ||||||
Deferred tax liabilities | 136 | 4,491 | ||||||
Lease liabilities | 4,567 | 5,029 | ||||||
Other long-term liabilities | 6,730 | 3,317 | ||||||
Total liabilities | 578,341 | 409,296 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
REDEEMABLE NONCONTROLLING INTEREST | 9,970 | 16,112 | ||||||
STOCKHOLDERS’ EQUITY | ||||||||
Preferred stock, $0.0001 par value, 1,000,000 shares authorized; no shares issued and outstanding | - | - | ||||||
Common stock, $0.0001 par value, 200,000,000 shares authorized; 49,822,955 and 49,717,522 issued, 49,754,431 and 49,626,498 outstanding as of June 30, 2020 and December 31, 2019, respectively | 5 | 5 | ||||||
Additional paid-in capital | 47,394 | 46,271 | ||||||
Retained earnings | 45,403 | 81,655 | ||||||
Accumulated other comprehensive loss | (8,824 | ) | (4,681 | ) | ||||
Total stockholders' equity | 83,978 | 123,250 | ||||||
Total liabilities, stockholders' equity and redeemable noncontrolling interest | $ | 672,289 | $ | 548,658 | ||||
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 June 30, | For the six months ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Tour revenues | $ | (268 | ) | $ | 76,658 | $ | 80,971 | $ | 166,311 | |||||||
Operating expenses: | ||||||||||||||||
Cost of tours | 12,721 | 37,520 | 54,913 | 76,537 | ||||||||||||
General and administrative | 9,798 | 16,268 | 27,025 | 32,350 | ||||||||||||
Selling and marketing | 3,406 | 12,567 | 16,285 | 26,569 | ||||||||||||
Depreciation and amortization | 8,553 | 6,182 | 15,243 | 12,370 | ||||||||||||
Total operating expenses | 34,478 | 72,537 | 113,466 | 147,826 | ||||||||||||
Operating (loss) income | (34,746 | ) | 4,121 | (32,495 | ) | 18,485 | ||||||||||
Other (expense) income: | ||||||||||||||||
Interest expense, net | (4,179 | ) | (3,188 | ) | (7,234 | ) | (6,176 | ) | ||||||||
(Loss) gain on foreign currency | (3,879 | ) | 501 | (7,322 | ) | 1,157 | ||||||||||
Other expense | (62 | ) | (30 | ) | (113 | ) | (49 | ) | ||||||||
Total other expense | (8,120 | ) | (2,717 | ) | (14,669 | ) | (5,068 | ) | ||||||||
(Loss) income before income taxes | (42,866 | ) | 1,404 | (47,164 | ) | 13,417 | ||||||||||
Income tax (benefit) expense | (2,943 | ) | 553 | (4,770 | ) | (2,513 | ) | |||||||||
Net (loss) income | (39,923 | ) | 851 | (42,394 | ) | 15,930 | ||||||||||
Net (loss) income attributable to noncontrolling interest | (265 | ) | (137 | ) | (801 | ) | 269 | |||||||||
Net (loss) income available to common stockholders | $ | (39,658 | ) | $ | 988 | $ | (41,593 | ) | $ | 15,661 | ||||||
Weighted average shares outstanding | ||||||||||||||||
Basic | 49,741,635 | 46,155,981 | 49,683,381 | 45,607,307 | ||||||||||||
Diluted | 49,741,635 | 49,485,004 | 49,683,381 | 48,281,002 | ||||||||||||
Net (loss) income per share available to common stockholders | ||||||||||||||||
Basic | $ | (0.80 | ) | $ | 0.02 | $ | (0.84 | ) | $ | 0.34 | ||||||
Diluted | $ | (0.80 | ) | $ | 0.02 | $ | (0.84 | ) | $ | 0.32 | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In thousands)
(unaudited)
For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Net (loss) income | $ | (39,923 | ) | $ | 851 | $ | (42,394 | ) | $ | 15,930 | ||||||
Other comprehensive income (loss): | ||||||||||||||||
Cash flow hedges: | ||||||||||||||||
Net unrealized gain (loss) | 3,930 | 377 | (9,469 | ) | (1,261 | ) | ||||||||||
Reclassification adjustment, net of tax | 5,326 | - | 5,326 | - | ||||||||||||
Total other comprehensive income (loss) | 9,256 | 377 | (4,143 | ) | (1,261 | ) | ||||||||||
Total comprehensive (loss) income | (30,667 | ) | 1,228 | (46,537 | ) | 14,669 | ||||||||||
Less: comprehensive (loss) income attributive to non-controlling interest | (265 | ) | (137 | ) | (801 | ) | 269 | |||||||||
Comprehensive (loss) income attributable to common shareholders | $ | (30,402 | ) | $ | 1,365 | $ | (45,736 | ) | $ | 14,400 | ||||||
For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Tour revenues | $ | 15,266 | $ | (268 | ) | $ | 17,047 | $ | 80,971 | |||||||
Operating expenses: | ||||||||||||||||
Cost of tours | 19,391 | 12,721 | 27,670 | 54,913 | ||||||||||||
General and administrative | 15,288 | 9,798 | 29,100 | 27,025 | ||||||||||||
Selling and marketing | 4,962 | 3,406 | 7,467 | 16,285 | ||||||||||||
Depreciation and amortization | 8,213 | 8,553 | 16,462 | 15,243 | ||||||||||||
Total operating expenses | 47,854 | 34,478 | 80,699 | 113,466 | ||||||||||||
Operating loss | (32,588 | ) | (34,746 | ) | (63,652 | ) | (32,495 | ) | ||||||||
Other (expense) income: | ||||||||||||||||
Interest expense, net | (5,705 | ) | (4,179 | ) | (11,374 | ) | (7,234 | ) | ||||||||
Gain (loss) on foreign currency | 199 | (3,879 | ) | 269 | (7,322 | ) | ||||||||||
Other income (expense) | 2 | (62 | ) | 4 | (113 | ) | ||||||||||
Total other expense | (5,504 | ) | (8,120 | ) | (11,101 | ) | (14,669 | ) | ||||||||
Loss before income taxes | (38,092 | ) | (42,866 | ) | (74,753 | ) | (47,164 | ) | ||||||||
Income tax benefit | (2,357 | ) | (2,943 | ) | (5,158 | ) | (4,770 | ) | ||||||||
Net loss | (35,735 | ) | (39,923 | ) | (69,595 | ) | (42,394 | ) | ||||||||
Net loss attributable to noncontrolling interest | (437 | ) | (265 | ) | (1,056 | ) | (801 | ) | ||||||||
Net loss attributable to Lindblad Expeditions Holdings, Inc. | (35,298 | ) | (39,658 | ) | (68,539 | ) | (41,593 | ) | ||||||||
Series A redeemable convertible preferred stock dividend | 1,318 | 0 | 2,622 | 0 | ||||||||||||
Net loss available to stockholders | $ | (36,616 | ) | $ | (39,658 | ) | $ | (71,161 | ) | $ | (41,593 | ) | ||||
Weighted average shares outstanding | ||||||||||||||||
Basic | 50,064,152 | 49,741,635 | 49,964,693 | 49,683,381 | ||||||||||||
Diluted | 50,064,152 | 49,741,635 | 49,964,693 | 49,683,381 | ||||||||||||
Undistributed loss per share available to stockholders: | ||||||||||||||||
Basic | $ | (0.71 | ) | $ | (0.80 | ) | $ | (1.38 | ) | $ | (0.84 | ) | ||||
Diluted | $ | (0.71 | ) | $ | (0.80 | ) | $ | (1.38 | ) | $ | (0.84 | ) | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders’ EquityComprehensive Loss
(In thousands, except share data)thousands)
(unaudited)
Common Stock | Additional Paid-In | Retained | Accumulated Other Comprehensive | Total Stockholders' | ||||||||||||||||||||
Shares | Amount | Capital | Earnings | Loss | Equity | |||||||||||||||||||
Balance as of March 31, 2020 | 49,758,787 | $ | 5 | $ | 46,908 | $ | 78,820 | $ | (18,080 | ) | $ | 107,653 | ||||||||||||
Stock-based compensation | - | - | 703 | - | - | 703 | ||||||||||||||||||
Issuance of stock for equity compensation plans, net | 64,168 | - | (217 | ) | - | - | (217 | ) | ||||||||||||||||
Repurchase of shares and warrants | - | - | - | - | - | - | ||||||||||||||||||
Other comprehensive income, net | - | - | - | - | 9,256 | 9,256 | ||||||||||||||||||
Redeemable noncontrolling interest | - | - | - | 6,241 | - | 6,241 | ||||||||||||||||||
Net loss available to common stockholders | - | - | - | (39,658 | ) | - | (39,658 | ) | ||||||||||||||||
Balance as of June 30, 2020 | 49,822,955 | $ | 5 | $ | 47,394 | $ | 45,403 | $ | (8,824 | ) | $ | 83,978 | ||||||||||||
| Common Stock | Additional Paid-In | Retained | Accumulated Other Comprehensive | Total Stockholders' | ||||||||||||||||||||
| Shares | Amount | Capital | Earnings | Loss | Equity | |||||||||||||||||||
| Balance as of January 1, 2020 | 49,717,522 | $ | 5 | $ | 46,271 | $ | 81,655 | $ | (4,681 | ) | $ | 123,250 | ||||||||||||
| Stock-based compensation | - | - | 1,601 | - | - | 1,601 | ||||||||||||||||||
| Issuance of stock for equity compensation plans, net | 113,950 | - | (351 | ) | - | - | (351 | ) | ||||||||||||||||
| Repurchase of shares and warrants | (8,517 | ) | - | (127 | ) | - | - | (127 | ) | |||||||||||||||
| Other comprehensive loss, net | - | - | - | - | (4,143 | ) | (4,143 | ) | ||||||||||||||||
| Redeemable noncontrolling interest | - | - | - | 5,341 | - | 5,341 | ||||||||||||||||||
| Net loss available to common stockholders | - | - | - | (41,593 | ) | - | (41,593 | ) | ||||||||||||||||
| Balance as of June 30, 2020 | 49,822,955 | $ | 5 | $ | 47,394 | $ | 45,403 | $ | (8,824 | ) | $ | 83,978 | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders’ Equity (continued)
(In thousands, except share data)
(unaudited)
Common Stock | Additional Paid-In | Retained | Accumulated Other Comprehensive | Total Stockholders' | ||||||||||||||||||||
Shares | Amount | Capital | Earnings | Loss | Equity | |||||||||||||||||||
Balance as of March 31, 2019 | 45,768,715 | $ | 5 | $ | 41,102 | $ | 89,844 | (2,309 | ) | $ | 128,642 | |||||||||||||
Stock-based compensation | - | - | 1,001 | - | - | 1,001 | ||||||||||||||||||
Issuance of stock for equity compensation plans, net | 32,310 | - | (486 | ) | - | - | (486 | ) | ||||||||||||||||
Repurchase of shares and warrants | - | - | - | - | - | - | ||||||||||||||||||
Other comprehensive income, net | - | - | - | - | 377 | 377 | ||||||||||||||||||
Net income available to common stockholders | - | - | - | 988 | - | 988 | ||||||||||||||||||
Balance as of June 30, 2019 | 45,801,025 | $ | 5 | $ | 41,617 | $ | 90,832 | $ | (1,932 | ) | $ | 130,522 | ||||||||||||
| Common Stock | Additional Paid-In | Retained | Accumulated Other Comprehensive | Total Stockholders' | ||||||||||||||||||||
| Shares | Amount | Capital | Earnings | Loss | Equity | |||||||||||||||||||
| Balance as of January 1, 2019 | 45,814,925 | $ | 5 | $ | 41,539 | $ | 75,171 | (671 | ) | $ | 116,044 | |||||||||||||
| Stock-based compensation | - | - | 1,754 | - | - | 1,754 | ||||||||||||||||||
| Issuance of stock for equity compensation plans, net | (12,005 | ) | - | (1,653 | ) | - | - | (1,653 | ) | |||||||||||||||
| Repurchase of shares and warrants | (1,895 | ) | - | (23 | ) | - | - | (23 | ) | |||||||||||||||
| Other comprehensive loss, net | - | - | - | - | (1,261 | ) | (1,261 | ) | ||||||||||||||||
| Net income available to common stockholders | - | - | - | 15,661 | - | 15,661 | ||||||||||||||||||
| Balance as of June 30, 2019 | 45,801,025 | $ | 5 | $ | 41,617 | $ | 90,832 | $ | (1,932 | ) | $ | 130,522 | ||||||||||||
For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Net loss | $ | (35,735 | ) | $ | (39,923 | ) | $ | (69,595 | ) | $ | (42,394 | ) | ||||
Other comprehensive income (loss): | ||||||||||||||||
Cash flow hedges: | ||||||||||||||||
Net unrealized gain (loss) | 50 | 3,930 | 544 | (9,469 | ) | |||||||||||
Reclassification adjustment, net of tax | 115 | 5,326 | 115 | 5,326 | ||||||||||||
Total other comprehensive income (loss) | 165 | 9,256 | 659 | (4,143 | ) | |||||||||||
Total comprehensive loss | (35,570 | ) | (30,667 | ) | (68,936 | ) | (46,537 | ) | ||||||||
Less: comprehensive loss attributive to non-controlling interest | (437 | ) | (265 | ) | (1,056 | ) | (801 | ) | ||||||||
Comprehensive loss attributable to stockholders | $ | (35,133 | ) | $ | (30,402 | ) | $ | (67,880 | ) | $ | (45,736 | ) | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders’ Equity
(In thousands, except share data)
(unaudited)
Common Stock | Additional Paid-In | Accumulated | Accumulated Other Comprehensive | Total Stockholders' | ||||||||||||||||||||
Shares | Amount | Capital | Deficit | Loss | Equity | |||||||||||||||||||
Balance as of March 31, 2021 | 50,126,926 | $ | 5 | $ | 51,367 | $ | (46,117 | ) | $ | (1,108 | ) | $ | 4,147 | |||||||||||
Stock-based compensation | - | 0 | 1,129 | 0 | 0 | 1,129 | ||||||||||||||||||
Issuance of stock for equity compensation plans, net | 12,905 | 0 | (1,719 | ) | 0 | 0 | (1,719 | ) | ||||||||||||||||
Other comprehensive income, net | - | 0 | 0 | 0 | 165 | 165 | ||||||||||||||||||
Series A preferred stock dividend | - | 0 | 0 | (1,318 | ) | 0 | (1,318 | ) | ||||||||||||||||
Net loss available to stockholders | - | 0 | 0 | (35,298 | ) | 0 | (35,298 | ) | ||||||||||||||||
Balance as of June 30, 2021 | 50,139,831 | $ | 5 | $ | 50,777 | $ | (82,733 | ) | $ | (943 | ) | $ | (32,894 | ) | ||||||||||
Common Stock | Additional Paid-In | Retained | Accumulated Other Comprehensive | Total Stockholders' | ||||||||||||||||||||
Shares | Amount | Capital | Earnings | Loss | Equity | |||||||||||||||||||
Balance as of January 1, 2021 | 49,905,512 | $ | 5 | $ | 48,127 | $ | (11,572 | ) | $ | (1,602 | ) | $ | 34,958 | |||||||||||
Stock-based compensation | - | 0 | 2,606 | 0 | 0 | 2,606 | ||||||||||||||||||
Issuance of stock for equity compensation plans, net | 152,017 | 0 | (1,726 | ) | 0 | 0 | (1,726 | ) | ||||||||||||||||
Issuance of stock for acquisition | 82,302 | 0 | 1,770 | 0 | 0 | 1,770 | ||||||||||||||||||
Other comprehensive income, net | - | 0 | 0 | 0 | 659 | 659 | ||||||||||||||||||
Series A preferred stock dividend | - | 0 | 0 | (2,622 | ) | 0 | (2,622 | ) | ||||||||||||||||
Net loss available to stockholders | - | 0 | 0 | (68,539 | ) | 0 | (68,539 | ) | ||||||||||||||||
Balance as of June 30, 2021 | 50,139,831 | $ | 5 | $ | 50,777 | $ | (82,733 | ) | $ | (943 | ) | $ | (32,894 | ) | ||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders’ Equity (continued)
(In thousands, except share data)
(unaudited)
Common Stock | Additional Paid-In | Retained | Accumulated Other Comprehensive | Total Stockholders' | ||||||||||||||||||||
Shares | Amount | Capital | Earnings | Loss | Equity | |||||||||||||||||||
Balance as of March 31, 2020 | 49,758,787 | $ | 5 | $ | 46,908 | $ | 78,820 | $ | (18,080 | ) | $ | 107,653 | ||||||||||||
Stock-based compensation | - | 0 | 703 | 0 | 0 | 703 | ||||||||||||||||||
Issuance of stock for equity compensation plans, net | 64,168 | 0 | (217 | ) | 0 | 0 | (217 | ) | ||||||||||||||||
Other comprehensive income, net | - | 0 | 0 | 0 | 9,256 | 9,256 | ||||||||||||||||||
Redeemable noncontrolling interest | - | 0 | 0 | 6,241 | 0 | 6,241 | ||||||||||||||||||
Net loss available to common stockholders | - | 0 | 0 | (39,658 | ) | 0 | (39,658 | ) | ||||||||||||||||
Balance as of June 30, 2020 | 49,822,955 | $ | 5 | $ | 47,394 | $ | 45,403 | $ | (8,824 | ) | $ | 83,978 | ||||||||||||
Common Stock | Additional Paid-In | Retained | Accumulated Other Comprehensive | Total Stockholders' | ||||||||||||||||||||
Shares | Amount | Capital | Earnings | Loss | Equity | |||||||||||||||||||
Balance as of January 1, 2020 | 49,717,522 | $ | 5 | $ | 46,271 | $ | 81,655 | (4,681 | ) | $ | 123,250 | |||||||||||||
Stock-based compensation | - | 0 | 1,601 | 0 | 0 | 1,601 | ||||||||||||||||||
Issuance of stock for equity compensation plans, net | 113,950 | 0 | (351 | ) | 0 | 0 | (351 | ) | ||||||||||||||||
Repurchase of shares and warrants | (8,517 | ) | 0 | (127 | ) | 0 | 0 | (127 | ) | |||||||||||||||
Other comprehensive loss, net | - | 0 | 0 | 0 | (4,143 | ) | (4,143 | ) | ||||||||||||||||
Redeemable noncontrolling interest | - | 0 | 0 | 5,341 | 0 | 5,341 | ||||||||||||||||||
Net loss available to common stockholders | - | 0 | 0 | (41,593 | ) | 0 | (41,593 | ) | ||||||||||||||||
Balance as of June 30, 2020 | 49,822,955 | $ | 5 | $ | 47,394 | $ | 45,403 | $ | (8,824 | ) | $ | 83,978 | ||||||||||||
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 six months ended June 30, | For the six months ended June 30, | |||||||||||||||
2020 | 2019 | 2021 | 2020 | |||||||||||||
Cash Flows From Operating Activities | ||||||||||||||||
Net (loss) income | $ | (42,394 | ) | $ | 15,930 | |||||||||||
Adjustments to reconcile net (loss) income to net cash (used by) provided by operating activities: | ||||||||||||||||
Net loss | $ | (69,595 | ) | $ | (42,394 | ) | ||||||||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||||||||||
Depreciation and amortization | 15,243 | 12,370 | 16,462 | 15,243 | ||||||||||||
Amortization of National Geographic fee | 727 | 1,454 | 0 | 727 | ||||||||||||
Amortization of deferred financing costs and other, net | 972 | 911 | 1,525 | 972 | ||||||||||||
Amortization of right-to-use lease assets | 101 | 185 | 2 | 101 | ||||||||||||
Stock-based compensation | 1,601 | 1,754 | 2,740 | 1,601 | ||||||||||||
Deferred income taxes | (4,817 | ) | (4,106 | ) | (5,158 | ) | (4,817 | ) | ||||||||
Loss (gain) on foreign currency | 7,322 | (1,157 | ) | |||||||||||||
(Gain) loss on foreign currency | (269 | ) | 7,322 | |||||||||||||
Changes in operating assets and liabilities | ||||||||||||||||
Marine operating supplies and inventories | (257 | ) | (32 | ) | (819 | ) | (257 | ) | ||||||||
Prepaid expenses and other current assets | 5,342 | (10,033 | ) | (9,643 | ) | 5,342 | ||||||||||
Unearned passenger revenues | (18,037 | ) | 21,600 | 76,747 | (18,037 | ) | ||||||||||
Other long-term assets | 277 | (767 | ) | 862 | 277 | |||||||||||
Other long-term liabilities | (730 | ) | 706 | 3,336 | (730 | ) | ||||||||||
Accounts payable and accrued expenses | (2,112 | ) | (1,587 | ) | 5,648 | (2,112 | ) | |||||||||
Net cash (used in) provided by operating activities | (36,762 | ) | 37,228 | |||||||||||||
Net cash provided by (used in) operating activities | 21,838 | (36,762 | ) | |||||||||||||
Cash Flows From Investing Activities | ||||||||||||||||
Purchases of property and equipment | (152,031 | ) | (42,311 | ) | (25,239 | ) | (152,031 | ) | ||||||||
Acquisition (net of cash acquired) | (7,177 | ) | 0 | |||||||||||||
Net cash used in investing activities | (152,031 | ) | (42,311 | ) | (32,416 | ) | (152,031 | ) | ||||||||
Cash Flows From Financing Activities | ||||||||||||||||
Proceeds from long-term debt | 183,339 | - | 15,484 | 183,339 | ||||||||||||
Repayments of long-term debt | (1,000 | ) | (1,000 | ) | (1,014 | ) | (1,000 | ) | ||||||||
Payment of deferred financing costs | (96 | ) | (2,340 | ) | (3,135 | ) | (96 | ) | ||||||||
Repurchase under stock-based compensation plans and related tax impacts | (351 | ) | (1,653 | ) | (1,726 | ) | (351 | ) | ||||||||
Repurchase of warrants and common stock | (127 | ) | (23 | ) | 0 | (127 | ) | |||||||||
Net cash provided by (used in) financing activities | 181,765 | (5,016 | ) | |||||||||||||
Net cash provided by financing activities | 9,609 | 181,765 | ||||||||||||||
Net decrease in cash, cash equivalents and restricted cash | (7,028 | ) | (10,099 | ) | (969 | ) | (7,028 | ) | ||||||||
Cash, cash equivalents and restricted cash at beginning of period | 109,258 | 122,150 | 204,515 | 109,258 | ||||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 102,230 | $ | 112,051 | $ | 203,546 | $ | 102,230 | ||||||||
Supplemental disclosures of cash flow information: | ||||||||||||||||
Cash paid during the period: | ||||||||||||||||
Interest | $ | 7,971 | $ | 6,999 | $ | 8,571 | $ | 7,971 | ||||||||
| Income taxes | $ | 60 | $ | 564 | 1 | 60 | ||||||||||
| Non-cash investing and financing activities: | ||||||||||||||||
| Additional paid-in capital exercise proceeds of option shares | $ | - | $ | 225 | ||||||||||||
| Additional paid-in capital exchange proceeds used for option shares | $ | - | $ | (225 | ) | |||||||||||
Non-cash preferred share dividend | 2,622 | 0 | ||||||||||||||
Shares issued for acquisition | 1,770 | 0 | ||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
Lindblad Expeditions Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
NOTE 1 –— BUSINESS AND BASIS OF PRESENTATION
Business
Lindblad Expeditions Holdings, Inc. and its consolidated subsidiariessubsidiaries’ (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 nine owned expedition ships and five seasonal charter vessels under the Lindblad brand, and operates land-based eco-conscious expeditions and nature-focused, small-groupactive nature focused tours under the Natural Habitat, Inc. (“Natural Habitat”) and Off the Beaten Path, LLC (“Off the Beaten Path”) brands and operates luxury cycling and adventure tours under the DuVine Cycling + Adventure Company (“DuVine”) brand.
The Company operates the following tworeportable business segments:
Lindblad Segment. – OffersThe Lindblad segment consists primarily of ship-based expeditions aboard customized, nimble and intimately-scaled vessels that are able to venture where larger cruise ships cannot, thereby allowing Lindblad to offer up-close experiences in the planet’s wild and remote places and capitals of culture. Many of these expeditions involve travel to remote places with limited infrastructure and ports, (suchsuch as Antarctica and the Arctic)Arctic, or places that are best accessed by a ship, (suchsuch as the Galápagos, Alaska, Baja’s Sea of Cortez Costa Rica and Panama),Panama and foster active engagement by guests. Each expedition ship is designed to be comfortable and inviting, while being fully equipped with state-of-the-art tools for in-depth exploration. The Company has an alliance with National Geographic Partners (“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 three primarily land-based brands, Natural Habitat, DuVine and Off the Beaten Path.
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The Company’s common stock is listed on the NASDAQ Capital Market under the symbol “LIND”.
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Bookings Trends
The Company was off to a strong start to the year with Lindblad segment bookings at the end of February up 25% for the full year 2020 as compared to the same point a year ago for 2019, and had sold 86% of its originally projected guest ticket revenues for the year. Since that point, the Company has experienced a substantial impact from the COVID-19 virus including elevated cancellations and softness in near-term demand. As of July 28, 2020, Lindblad segment bookings for travel in 2020 are now 62% below the same point a year ago for 2019 due primarily to the cancelled and rescheduled voyages, as well as cancellations for travel later this year. The Company has substantial advanced bookings for travel in 2021, including 6% more bookings as compared with bookings for 2020 as of the same date a year ago and 35% higher bookings as of the same date in 2018 for 2019. The Company continues to see new bookings for future travel including over $30.0 million since March 1, 2020, and it is receiving deposits and final payments for future travel.
For 2020 voyages that have been cancelled or rescheduled, the Company is providing future travel credits with incremental value or full refunds, as applicable, to its fully paid guests. As of July 28, 2020, the majority of guests have opted for future travel credits.
Balance Sheet and Liquidity
As of June 30, 2020, the Company had $80.9 million in unrestricted cash and $21.3 million in restricted cash primarily related to deposits on future travel originating from U.S. ports. During the first quarter of 2020 the Company drew down $45.0 million under its revolving credit facility as a precautionary measure for working capital and general corporate purposes given the uncertainty related to the COVID-19 pandemic and borrowed $107.7 million under its first export credit agreement in conjunction with final payment on delivery of the National Geographic Endurance in March 2020. During April 2020, the Company drew down $30.6 million under its second export credit agreement in conjunction with its third installment payment on the National Geographic Resolution, scheduled for delivery in the fourth quarter of 2021.
During May 2020, the Company amended its $2.5 million promissory note, changing the maturity date of the principal payments to be due in three equal installments, with the first payment due on December 22, 2020, the second due on December 22, 2021 and the final payment due on December 22, 2022.
The Company has also amended both its export credit agreements and term loan and revolving credit facilities. During June 2020, the Company amended its export credit agreements to defer approximately $9.0 million in aggregate scheduled amortization payments from June 2020 through March 2021 and to suspend the total net leverage ratio covenant from June 2020 through June 2021. On August 7, 2020, the Company amended its term loan and revolving credit facilities to waive the application of the total net leverage ratio covenant through June 2021. In connection with the amendment, the interest rate of the term loan has been increased by 125bps, to be paid-in-kind at maturity, a LIBOR floor of 75bps has been added to each facility and certain covenants have been amended to be more restrictive.
As of June 30, 2020, the Company had a total debt position of $412.3 million and was in compliance with all of its debt covenants currently in effect. The Company has no material debt maturities until 2023.
The Company estimates its monthly cash usage while its vessels are not in operations to be approximately $10-15 million including ship and office operating expenses, necessary capital expenditures and interest and principal payments. This excludes guest payments for future travel and cash refunds requested on previously made guest payments.
The Company is currently evaluating several additional strategies to enhance its liquidity position. These strategies may include, but are not limited to, pursuing additional financing from both the public and private markets through the issuance of equity and/or debt. The timing and structure of any transaction, if completed, will depend on market conditions.
In April 2020, the Company received a U.S. Small Business Administration Loan related to the COVID-19 crisis in the amount of $6.6 million. The Company subsequently returned the funds received from this loan and, as a result, has made additional adjustments to its cost structure.
The Company has not previously experienced a complete cessation of its operations and, as a consequence, its ability to predict the impact of such cessation on its costs and future prospects is limited. Given the dynamic nature of this situation, the Company cannot reasonably estimate the impacts of the COVID-19 virus on its financial condition, results of operations, cash flows, plans and growth for the foreseeable future. It is unknown when travel restrictions and various border closures will be lifted and what the demand for expedition travel will be once these restrictions are no longer in place. The estimates for monthly cash usage reflect the Company’s current forecast for operating costs, capital expenditures and expected debt and interest payments. Based on current liquidity, the actions taken to date and its current forecast, which assumes reduced operations during 2020 with a ramp up in operations throughout 2021, the Company believes that its liquidity should be adequate to meet its obligations for the next 12 months from August 10, 2020, the date of this Quarterly Report on Form 10-Q.
Return to Operations
The Company already has a robust set of operating protocols and, in preparation for the resumption of operations, has been proactively working in close cooperation with various medical policy experts and public health authorities to further augment its procedures and protocols for health and safety onboard its vessels to mitigate the potential impacts of the COVID-19 virus. These protocols encompass, but are not limited to, medical care, screening, testing, social distancing, personal protective equipment, and sanitization during all aspects of the expedition.
While it is uncertain when the Company will return to operations, it believes there are a variety of strategic advantages that should enable it to deploy its ships safely and quickly once travel restrictions have been lifted. The most notable is the size of its owned and operated vessels which range from 48 to 148 passengers, allowing for a highly controlled environment that includes stringent cleaning protocols. The small nature of the Company’s ships should also allow it to efficiently and effectively test its guests and crew prior to boarding. On average, the Company estimates it will only take a few thousand tests a month to ensure all guests and crew across its entire fleet have been tested. Additionally, the majority of its expeditions take place in remote locations where human interactions are limited, so there is less opportunity for external influence. The Company also has the ability to be flexible with regards to existing itineraries and is actively investigating additional itinerary opportunities both internationally and domestically. Lastly, the Company’s guests are explorers by nature, eager to travel and have historically been very resilient following periods of uncertainty.
Valuation of Goodwill
The effects of COVID-19 on the Company’s expected future operating cash flows was an indicator of potential impairment, so the Company performed a discounted cash flow analysis of its reporting unit to estimate its fair value compared to the reporting unit’s carrying value as of June 30, 2020. Based on this analysis, it was determined that there was no impairment of goodwill.
Valuation of Long-lived Assets
The effects of COVID-19 on the Company’s expected future operating cash flows was a potential indicator that the carrying value of the Company's long-lived assets may not be recoverable. The Company performed an undiscounted cash flow analysis of its long-lived assets for potential impairment as of June 30, 2020, and based on the analysis, it was determined that there was no impairment to the Company's long-lived assets.
Recent Accounting Pronouncements
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740)–Simplifying the Accounting for Income Taxes. The amendments of this ASU are intended to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, and early adoption is permitted. The Company will adopt this ASU as required and does not expect it to have a material impact to the Company’s financial statements.
In March 2020, the FASB issued ASU 2020-4, Reference Rate Reform (Topic 848) –Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The guidance of this ASU is designed to provide relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements (e.g., loans, debt securities, derivatives, borrowings) necessitated by reference rate reform. It also provides optional expedients to enable companies to continue to apply hedge accounting to certain hedging relationships impacted by reference rate reform. Application of the guidance is optional, is only available in certain situations, and is only available for companies to apply until December 31, 2022. The Company is currently reviewing its agreements impacted by the reference rate reform and does not expect this ASU to have a material impact to the Company’s financial statements.
NOTE 2 – EARNINGS PER SHARE
Earnings per Common Share
Earnings per common share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. 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, shares issuable upon the exercise of stock options and previously outstanding warrants, using the treasury stock method.
For the three and six months ended June 30, 2020 and 2019, the Company calculated earnings per share as follows:
For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
| (In thousands, except share and per share data) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||
Net (loss) income available to common stockholders | $ | (39,658 | ) | $ | 988 | $ | (41,593 | ) | $ | 15,661 | ||||||
Weighted average shares outstanding: | ||||||||||||||||
Total weighted average shares outstanding, basic | 49,741,635 | 46,155,981 | 49,683,381 | 45,607,307 | ||||||||||||
Dilutive potential common shares | - | 237,813 | - | 251,131 | ||||||||||||
Dilutive potential options | - | 70,164 | - | 55,183 | ||||||||||||
Dilutive potential warrants | - | 3,021,046 | - | 2,367,381 | ||||||||||||
Total weighted average shares outstanding, diluted | 49,741,635 | 49,485,004 | 49,683,381 | 48,281,002 | ||||||||||||
Net (loss) income per share available to common stockholders | ||||||||||||||||
Basic | $ | (0.80 | ) | $ | 0.02 | $ | (0.84 | ) | $ | 0.34 | ||||||
Diluted | $ | (0.80 | ) | $ | 0.02 | $ | (0.84 | ) | $ | 0.32 | ||||||
For the three and six months ended June 30, 2020, the Company incurred a net loss from operations, therefore 0.3 million restricted shares and 0.2 million options were excluded from dilutive potential common shares for the periods as they are anti-dilutive, and basic and diluted net loss per share are the same for the periods. For the three and six months ended June 30, 2019, 0.1 million restricted shares are excluded from dilutive potential common shares as they were anti-dilutive.
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 expedition.
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 U.S. 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, 2020 contained in the Company’s Annual Report on Form 10-K filed with the SEC on March 12, 2021 (the “2020 Annual Report”).
There have been no significant changes to the Company’s accounting policies from those disclosed in the 2020 Annual Report.
Return to Fleet Operations and COVID-19 Business Update
The Company resumed ship operations in June 2021 and as of July 31, 2021 had eight of its nine vessels providing expeditions to guests. During June 2021, the Company launched three ships in Alaska and another in the Galapagos and following the quarter, the Company resumed operations on the majority of its remaining vessels with additional ships launching in Alaska and the Galapagos, as well as Iceland. The Company continues to work with local authorities on plans to operate in additional geographies during the second half of the year. As the COVID-19 virus effects travel restrictions in various locations around the world, the Company also continues to work with its guests to reschedule travel plans and refund payments, as applicable, for those expeditions and trips that the Company is not able to operate.
The Company believes there are a variety of strategic advantages that enable it to deploy its ships safely and quickly, while mitigating the risk of COVID-19 as travel restrictions are lifted. The most notable is the size of its owned and operated vessels which range from 48 to 148 passengers, allowing for a highly controlled environment that includes stringent cleaning protocols. The small nature of the Company’s ships also allows it to efficiently and effectively test its guests and crew prior to boarding. All ship crew and staff have been fully vaccinated. Additionally, the majority of expeditions take place in remote locations where human interactions are limited, so there is less opportunity for external influence.
While the Company’s ships were not in operations, the majority of the fleet was being maintained with minimally required crew on-board to ensure they complied with all necessary regulations and could be fully put back into service quickly as needed. Ahead of launching each ship, crew levels were increased as necessary to prepare each vessel for operations as well as for crew training and vaccinations. The Company offices primarily remain closed, and most employees are working remotely to maintain general business operations, provide assistance to existing and potential guests and maintain information technology systems.
The Company continues to adhere to the comprehensive plan implemented in March 2020 to mitigate the impact of COVID-19 and preserve and enhance its liquidity position. Prior to resuming operations, this plan employed a variety of cost reduction and cash preservation measures including significantly reducing ship and land-based expedition costs such as capital expenditures, crew payroll, land costs, fuel and food, and meaningfully reducing general and administrative expenses through reduced payroll and the elimination of all non-essential travel, office expenses and discretionary spending. The Company also accessed available capital under existing debt facilities and through the issuance of preferred stock, while continuing to explore additional sources of capital and liquidity. With the majority of operations resuming, operating costs are ramping back up, but given the continued uncertainty around COVID-19 and given that guest counts have not yet returned to traditional levels, the Company continues to minimize expenditures as appropriate.
Balance Sheet and Liquidity
As of June 30, 2021, the Company had $160.1 million in unrestricted cash and $43.5 million in restricted cash primarily related to deposits on future travel originating from U.S. ports and credit card reserves. As of June 30, 2021, the Company had a total debt position of $514.7 million and was in compliance with all of its debt covenants.
Since the beginning of the COVID-19 pandemic, the Company has taken a variety of steps to strengthen its balance sheet and increase liquidity including:
In April 2020 the Company drew down $30.6 million and in April 2021 the Company drew down $15.5 million under its second export credit agreement in conjunction with its third and fourth installment payments on the National Geographic Resolution, scheduled for delivery in the fourth quarter of 2021.
In May 2020, the Company amended its $2.5 million promissory note, changing the maturity date of the principal payments to be due in three equal installments, with the first payment on December 22, 2020, the second due on December 22, 2021 and the final payment due on December 22, 2022.
In June 2020, the Company amended its export credit agreements to defer scheduled amortization payments from June 2020 through March 2021 and suspend the total net leverage ratio covenant from June 2020 through June 2021. During June 2021, the Company further amended its export credit agreements to, among other things, extend the deferral of scheduled amortization payments of the first export credit facility through December 2021 in the aggregate amount of $15.7 million, extend the waiver of its total net leverage ratio covenant through March 31, 2022, increase the interest rate spreads of the export credit facilities by 50 basis points and annualize EBITDA used in its covenant calculation through December 31, 2022. The deferred principal payments will amortize quarterly over three years starting in March 2022. Certain other covenants continue to be more restrictive during the extended covenant waiver period.
In August 2020, the Company amended its term loan and revolving credit facilities to waive the application of the total net leverage ratio covenant through June 2021. In connection with the amendment, the interest rate of the term loan was increased by 125 basis points, to be paid-in-kind at maturity, a LIBOR floor of 75 basis points was added to the term loan and certain covenants were amended to be more restrictive. During April 2021, the Company further amended its term loan and revolving credit facilities to, among other things, extend the waiver of its total net leverage ratio covenant through March 31, 2022, annualize EBITDA used in its covenant calculation through December 31, 2022 and increase the interest rate spreads of the term loan, excluding the Main Street Loan, and the revolving credit facility by an additional 50 basis points. Certain other covenants continue to be more restrictive during the extended covenant waiver period.
In August 2020, the Company raised $85.0 million in gross proceeds through the private placement issuance of Redeemable Convertible Series A Preferred Stock that carries a 6% annual dividend, which is payable in kind for two years and, thereafter, in cash or in-kind at the Company’s option. The preferred stock is convertible into shares of Lindblad common stock at a conversion price of $9.50 per share, representing a premium of 23% to Lindblad’s 30-day trading volume weighted average price on the date of issuance.
In December 2020, the Company amended its term loan and revolving credit facilities and borrowed an incremental $85.0 million under the amended term loan facility through the Main Street Expanded Loan Facility program established by the Board of Governors of the Federal Reserve System. The incremental borrowing carries an interest rate of LIBOR plus 3.0%, without any LIBOR floor, and matures December 2025 with no early payment restrictions.
As the Company continues to ramp up operations, its monthly cash usage will increase as it incurs costs in operating expeditions, preparing additional ships for return to service, spending to market and advertise upcoming expeditions and trips and reinstating remaining furloughed and part-time office staff as needed. The Company also anticipates a significant increase in guest payments as it receives final payments for upcoming expeditions and trips, as well as deposits for new reservations for future travel. Given the dynamic nature of the COVID-19 pandemic, the Company cannot reasonably estimate the potential impacts the pandemic will have on its financial condition, results of operations, cash flows, plans and growth for the foreseeable future. It is unknown when travel restrictions and various border closures will be lifted and what the demand for expedition travel will be once restrictions are no longer in place. Based on the actions taken to date by the Company, its planned and anticipated actions and its current forecast, the Company believes that it can meet its obligations for the next 12 months from August 4, 2021,
Valuation of Long-lived Assets
The effects of COVID-19 on the Company’s expected future operating cash flows was a potential indicator that the carrying value of the Company's long-lived assets may not be recoverable. As a result, the Company performed an undiscounted cash flow analysis of its long-lived assets for potential impairment as of June 30, 2021. Based on this analysis, there was no impairment to the Company's long-lived assets.
Recently Adopted Accounting Pronouncements
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes. The amendments of this ASU are intended to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, and early adoption is permitted. The Company adopted this ASU as required, and it has not had, nor is it expected to have, a material impact to the Company’s financial statements.
Recent Accounting Pronouncements
In March 2020, the FASB issued ASU 2020-4, Reference Rate Reform (Topic 848)—Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The guidance of this ASU is designed to provide relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements (e.g., loans, debt securities, derivatives, borrowings) necessitated by reference rate reform. It also provides optional expedients to enable companies to continue to apply hedge accounting to certain hedging relationships impacted by reference rate reform. Application of the guidance is optional, is only available in certain situations, and is only available for companies to apply until December 31, 2022. The Company is currently reviewing its agreements impacted by the reference rate reform and does not expect this ASU to have a material impact to the Company’s financial statements.
In August 2020, the FASB issued ASU 2020-06, Debt–Debt with conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. The amendments in this ASU address issues identified as a result of the complexity associated with applying GAAP for certain financial instruments with characteristics of liabilities and equity. The amendments reduce the number of accounting models for convertible debt instruments and convertible preferred stock, and address convertible instruments with conversion features, as well as other items. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021, early adoption is permitted for fiscal years beginning after December 15, 2020, and must be adopted at the beginning of an entities’ fiscal year. The Company will adopt this ASU as required and does not expect it to have a material impact to the Company’s financial statements.
NOTE 2— EARNINGS PER SHARE
Earnings per Common Share
Earnings (loss) per common share is computed using the two-class method related to its 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 convertible preferred shares 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, shares issuable upon the exercise of stock options and previously outstanding warrants, 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 six months ended June 30, 2021 and 2020, the Company incurred a net loss from operations, therefore basic and diluted net loss per share are the same for the periods. For the three and six months ended June 30, 2021, approximately 0.8 million restricted shares, 1.5 million options and 9.4 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 six months ended June 30, 2020, 0.3 million restricted shares and 0.2 million options were excluded from dilutive potential common shares for the periods as they are anti-dilutive.
For the three and six months ended June 30, 2021 and 2020, the Company calculated earnings (loss) per share as follows:
For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
(In thousands, except share and per share data) | ||||||||||||||||
Net loss attributable to Lindblad Expeditions Holdings, Inc. | $ | (35,298 | ) | $ | (39,658 | ) | $ | (68,539 | ) | $ | (41,593 | ) | ||||
Series A redeemable convertible preferred stock dividend | 1,318 | 0 | 2,622 | 0 | ||||||||||||
Undistributed loss available to stockholders | $ | (36,616 | ) | $ | (39,658 | ) | $ | (71,161 | ) | $ | (41,593 | ) | ||||
Weighted average shares outstanding: | ||||||||||||||||
Total weighted average shares outstanding, basic | 50,064,152 | 49,741,635 | 49,964,693 | 49,683,381 | ||||||||||||
Total weighted average shares outstanding, diluted | 50,064,152 | 49,741,635 | 49,964,693 | 49,683,381 | ||||||||||||
Undistributed loss per share available to stockholders: | ||||||||||||||||
Basic | $ | (0.71 | ) | $ | (0.80 | ) | $ | (1.38 | ) | $ | (0.84 | ) | ||||
Diluted | $ | (0.71 | ) | $ | (0.80 | ) | $ | (1.38 | ) | $ | (0.84 | ) | ||||
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. The change in contract liabilities within unearned passenger revenues presented in our condensed consolidated balance sheets are as follows:
Contract Liabilities | ||||
(In thousands) | (unaudited) | |||
Balance as of January 1, 2020 | $ | 72,051 | ||
Recognized in tour revenues during the period | (68,182 | ) | ||
Additional contract liabilities in period | 66,706 | |||
Balance as of June 30, 2020 | $ | 70,575 | ||
Contract Liabilities | ||||
(In thousands) | ||||
Balance as of January 1, 2021 | $ | 73,267 | ||
Recognized in tour revenues during the period | (3,531 | ) | ||
Additional contract liabilities in period | 71,098 | |||
Balance as of June 30, 2021 | $ | 140,834 | ||
The following table disaggregates our tour revenues by the sales channel it was derived from:
For the three months ended June 30, | For the six months ended June 30, | For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||
| Guest ticket revenue: | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||||||
Direct | 0 | % | 43 | % | 42 | % | 42 | % | 59 | % | 0 | % | 58 | % | 42 | % | ||||||||||||||||
National Geographic | 0 | % | 17 | % | 18 | % | 19 | % | 11 | % | 0 | % | 10 | % | 18 | % | ||||||||||||||||
Agencies | 0 | % | 24 | % | 24 | % | 24 | % | 19 | % | 0 | % | 19 | % | 24 | % | ||||||||||||||||
Affinity | 0 | % | 7 | % | 5 | % | 6 | % | 2 | % | 0 | % | 2 | % | 5 | % | ||||||||||||||||
Guest ticket revenue | 0 | % | 91 | % | 89 | % | 91 | % | 91 | % | 0 | % | 89 | % | 89 | % | ||||||||||||||||
Other tour revenue | 0 | % | 9 | % | 11 | % | 9 | % | 9 | % | 0 | % | 11 | % | 11 | % | ||||||||||||||||
Tour revenues | 0 | % | 100 | % | 100 | % | 100 | % | 100 | % | 0 | % | 100 | % | 100 | % | ||||||||||||||||
NOTE 4 – — FINANCIAL STATEMENT DETAILS
The following is a reconciliation of cash, cash equivalents and restricted cash to the statement of cash flows:
For the six months ended June 30, | For the six months ended June 30, | |||||||||||||||
2020 | 2019 | 2021 | 2020 | |||||||||||||
(In thousands) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||
Cash and cash equivalents | $ | 80,897 | $ | 78,746 | $ | 160,081 | $ | 80,897 | ||||||||
Restricted cash | 21,333 | 33,305 | 43,465 | 21,333 | ||||||||||||
Total cash, cash equivalents and restricted cash as presented in the statement of cash flows | $ | 102,230 | $ | 112,051 | $ | 203,546 | $ | 102,230 | ||||||||
Restricted cash consistconsists of the following:
As of June 30, 2020 | As of December 31, 2019 | As of | As of | |||||||||||||
(In thousands) | (unaudited) | (unaudited) | ||||||||||||||
Federal Maritime Commission escrow | $ | 19,692 | $ | 6,104 | $ | 32,277 | $ | 13,856 | ||||||||
Credit card processor reserves | 9,992 | 1,945 | ||||||||||||||
Certificates of deposit and other restricted securities | 1,321 | 1,575 | 1,196 | 1,183 | ||||||||||||
| Credit card processor reserves | 320 | - | ||||||||||||||
Total restricted cash | $ | 21,333 | $ | 7,679 | $ | 43,465 | $ | 16,984 | ||||||||
The Company’s prepaid expenses and other current assets consist of the following:
As of June 30, 2020 | As of December 31, 2019 | As of June 30, 2021 | As of December 31, 2020 | |||||||||||||
(In thousands) | (unaudited) | (unaudited) | ||||||||||||||
Prepaid tour expenses | $ | 14,973 | $ | 15,630 | $ | 14,591 | $ | 5,630 | ||||||||
Prepaid marketing, commissions and other expenses | 3,961 | 3,504 | ||||||||||||||
Prepaid client insurance | 2,396 | 3,064 | 3,990 | 2,283 | ||||||||||||
Prepaid air expense | 3,069 | 4,415 | 3,447 | 3,817 | ||||||||||||
Prepaid marketing, commissions and other expenses | 2,175 | 4,026 | ||||||||||||||
Prepaid port agent fees | 1,303 | 530 | ||||||||||||||
Prepaid corporate insurance | 712 | 1,376 | 383 | 1,105 | ||||||||||||
Prepaid port agent fees | 288 | 491 | ||||||||||||||
Prepaid income taxes | 140 | 53 | 144 | 145 | ||||||||||||
Total prepaid expenses | $ | 23,753 | $ | 29,055 | $ | 27,819 | $ | 17,014 | ||||||||
The Company’s accounts payable and accrued expenses consist of the following:
As of June 30, 2021 | As of December 31, 2020 | |||||||||||||||
As of June 30, 2020 | As of December 31, 2019 | (unaudited) | ||||||||||||||
(In thousands) | (unaudited) | |||||||||||||||
Refunds and commissions payable | $ | 13,876 | $ | 1,873 | ||||||||||||
Accounts payable | 9,869 | 14,633 | $ | 9,115 | $ | 5,285 | ||||||||||
Accrued other expense | 7,841 | 8,348 | 6,203 | 5,645 | ||||||||||||
Employee liability | 3,940 | 3,495 | ||||||||||||||
Bonus compensation liability | 4,724 | 5,322 | 2,978 | 2,963 | ||||||||||||
Employee liability | 3,856 | 3,712 | ||||||||||||||
Refunds and commissions payable | 2,568 | 1,803 | ||||||||||||||
Foreign currency forward contract liability | 2,083 | 1,300 | 1,782 | 2,008 | ||||||||||||
Travel certificate liability | 870 | 888 | 870 | 870 | ||||||||||||
Accrued travel insurance expense | 322 | 477 | 505 | 270 | ||||||||||||
Royalty payable | 130 | 0 | ||||||||||||||
Income tax liabilities | 2 | 603 | 2 | 2 | ||||||||||||
Royalty payable | - | 1,075 | ||||||||||||||
Total accounts payable and accrued expenses | $ | 43,443 | $ | 38,231 | $ | 28,093 | $ | 22,341 | ||||||||
LoanLoan Receivable
The Company’s loan receivable is recorded at amortized cost within other long-term 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 June 30, 2020.2021. 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 no0 allowance for loan loss for the three or six months ended June 30, 2020.2021. The roll-forwardfollowing is a rollforward of the loan receivable balance is as follows:balance:
|
| Loan Receivable |
| For the six months ended June 30, 2021 | ||||
(In thousands) |
| (unaudited) |
| (unaudited) | ||||
Balance as of January 1, 2020 |
| $ | 4,084 |
| ||||
Balance as of January 1, 2021 | $ | 4,220 | ||||||
Adjustment for ship building expense | (390 | ) | ||||||
Legal invoices deferred | 43 | |||||||
Accrued interest |
| 79 |
| 72 | ||||
Amortization of deferred costs |
|
| (12 | ) | (35 | ) | ||
Balance as of June 30, 2020 |
| $ | 4,151 |
| ||||
Balance as of June 30, 2021 | $ | 3,910 | ||||||
NOTE 5 –— LONG-TERM DEBT
As of June 30, 2020 | As of December 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||
(unaudited) | As of June 30, 2021 | As of December 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | Principal | Deferred Financing Costs, net | Balance | Principal | Deferred Financing Costs, net | Balance | Principal | Deferred Financing Costs, net | Balance | Principal | Deferred Financing Costs, net | Balance | ||||||||||||||||||||||||||||||||||||
Note payable | $ | 2,525 | $ | - | $ | 2,525 | $ | 2,525 | $ | - | $ | 2,525 | ||||||||||||||||||||||||||||||||||||
Revolving Facility | 45,000 | (417 | ) | 44,583 | - | - | - | |||||||||||||||||||||||||||||||||||||||||
Credit Facility | 196,000 | (6,558 | ) | 189,442 | 197,000 | (9,704 | ) | 187,296 | $ | 282,669 | $ | (10,388 | ) | $ | 272,281 | $ | 280,993 | $ | (9,492 | ) | $ | 271,501 | ||||||||||||||||||||||||||
1st Senior Secured Credit Agreement | 107,695 | (1,883 | ) | 105,812 | - | - | - | 107,695 | (2,221 | ) | 105,474 | 107,695 | (1,784 | ) | 105,911 | |||||||||||||||||||||||||||||||||
2nd Senior Secured Credit Agreement | 61,120 | (2,199 | ) | 58,921 | 30,476 | (2,229 | ) | 28,247 | 76,604 | (2,607 | ) | 73,997 | 61,120 | (2,261 | ) | 58,859 | ||||||||||||||||||||||||||||||||
Revolving Facility | 45,000 | (265 | ) | 44,735 | 45,000 | (341 | ) | 44,659 | ||||||||||||||||||||||||||||||||||||||||
Note payable | 1,684 | 0 | 1,684 | 1,684 | 0 | 1,684 | ||||||||||||||||||||||||||||||||||||||||||
Other | 1,070 | 0 | 1,070 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||
Total long-term debt | 412,340 | (11,057 | ) | 401,283 | 230,001 | (11,933 | ) | 218,068 | 514,722 | (15,481 | ) | 499,241 | 496,492 | (13,878 | ) | 482,614 | ||||||||||||||||||||||||||||||||
Less current portion | (5,646 | ) | - | (5,646 | ) | (4,525 | ) | - | (4,525 | ) | (9,361 | ) | 0 | (9,361 | ) | (11,255 | ) | 0 | (11,255 | ) | ||||||||||||||||||||||||||||
Total long-term debt, non-current | $ | 406,694 | $ | (11,057 | ) | $ | 395,637 | $ | 225,476 | $ | (11,933 | ) | $ | 213,543 | $ | 505,361 | $ | (15,481 | ) | $ | 489,880 | $ | 485,237 | $ | (13,878 | ) | $ | 471,359 | ||||||||||||||||||||
For the three and six months ended June 30, 2021, deferred financing costs charged to interest expense were $0.8 million and $1.5 million, respectively. For the three and six months ended June 30, 2020, deferred financing costs charged to interest expense were $0.5 million and $1.0 million, respectively. For the three and six months ended June 30, 2019, deferred financing costs charged to interest expense was $0.5 million and $0.9 million, respectively.
Credit Facility
In March 2018, the Company entered into the ThirdThird Amended and Restated Credit Agreement (the “Amended Credit Agreement”), providing for a $200.0 million senior secured first lien term loan facility (the “Term Facility”), maturing March 2025, and a $45.0 million senior secured incremental revolving credit facility (the “Revolving Facility”), maturing March 2023, which includes a $5.0 million letter of credit sub-facility. The Term Facility bears interest at an adjusted Intercontinental Exchange (“ICE”) Benchmark administration LIBOR plus a spread of 3.25%, for an aggregated rate of 3.41% as of June 30, 2020.
DuringIn March 2020, the Company drew $45.0 million against the Revolving Facility as a reserve for general corporate purposes and other expense needs due to the uncertainty related to the COVID-19 pandemic.
In August 2020, the Company amended the Amended Credit Agreement to waive the application of the total net leverage ratio covenant through June 2021. In connection with the amendment, the interest rate of the Term Facility was increased 125 basis points, to be paid-in-kind at maturity, a LIBOR minimum of 0.75% was added to the Term Facility and certain covenants were amended to be more restrictive. During April 2021, the Company further amended its Amended Credit Agreement to, among other things, extend the waiver of its total net leverage ratio covenant through March 2022, annualize EBITDA used in its covenant calculation through December 31, 2022 and increase the interest rate spreads of the Term Facility, excluding the Main Street Loan, and the Revolving Facility by 50 basis points. Certain other covenants under the Amended Credit Agreement continue to be more restrictive during the extended covenant waiver period.
In December 2020, the Company amended the Amended Credit Agreement to provide for the borrowing of a new tranche of incremental term loans under the Amended Credit Agreement in an amount of $85.0 million, maturing December 2025, made under the Main Street Expanded Loan Facility (the “Main Street Loan”). Interest on the Main Street Loan shall be paid-in-kind for the first year and the principal shall amortize at a rate of 15% in each of the third and fourth years, with the remaining amounts to be paid at maturity. The Company may voluntarily prepay the Main Street Loan at any time and from time to time, without premium or penalty, other than customary “breakage costs” and fees for LIBOR-based loans.
The Term Facility, as amended, bears interest at an adjusted Intercontinental Exchange (“ICE”) Benchmark administration LIBOR with a minimum of 0.75%, plus a spread of 5.25%, for an aggregated rate of 6.00% as of June 30, 2021. 125 basis points of the spread are to be paid-in-kind at maturity. Borrowings under the Revolving Facility mature March 27, 2023 and bearas amended, bears interest at an adjusted ICE Benchmark administration LIBOR, plus a spread of 3.50%, for an aggregated rate of 3.60% as of June 30, 2021. The Main Street Loan bears interest at a rate per annum adjusted ICE Benchmark administration LIBOR for an interest period of 3-months plus 3.00%, for an aggregated rate of 3.16%3.15% as of June 30, 2020.2021.
Senior Secured Credit Agreements
In January 2018, the Company entered into a senior secured credit agreement (the “Export Credit Agreement”) with Citibank, N.A., London Branch and Eksportkreditt Norge AS, which madeto make available to the Company a loan in an aggregate principal amount not to exceed $107.7 million for the purpose of providing financing for up to 80% of the purchase price of the Company’s new ice class vessel, the National Geographic Endurance. During March 2020, the Company took possession of the National Geographic Endurance and borrowed $107.7 million under the Export Credit Agreement for final payment. The Export Credit Agreement, as amended, bears interest at a floating interest rate equal to three-month LIBOR plus a margin of 3.00%3.50% per annum, for an aggregated rate of 3.31%3.62% over the borrowing period covering June 30, 2020.2021.
In April 2019, the Company entered into a senior secured credit agreement (the “Second Export Credit Agreement”) with the Lenders. Pursuant to the Second Export Credit Agreement, the Lenders have agreedCitibank, N.A., London Branch and Eksportkreditt Norge AS, to make available to the Company, at the Company's option and subject to certain conditions, a loan in an aggregate principal amount not to exceed $122.8 million for the purpose of providing pre- and post-delivery financing for up to 80% of the purchase price of the Company’s new expedition ice-class cruise vessel, the National Geographic Resolution, scheduled to be delivered in the fourth quarter of 2021. 30% of the borrowing will mature over five years from the final drawdown, and 70% of the borrowing will mature over twelve years from the final drawdown. Additionally, 70% percent of the loan will be guaranteed by Garantiinstituttet for Eksportkreditt, the official export credit agency of Norway. In September 2019, April 2020 and April 2020,2021, the Company drew approximately $30.5 million, and $30.6 million and $15.5 million, respectively, underagainst the Second Export Credit Agreement for contracted installment payments on the National Geographic Resolution.
The Second Export Credit Agreement, as amended, bears a variable interest rate equal to three-month LIBOR plus a margin of 3.00%3.50% per annum, or 3.31%3.62% over the borrowing period covering June 30, 2020.2021. After completion of the vessel, the Second Export Credit Agreement, at the Company’s option, will bear an interest rate of either a fixed rate of 6.36% or a variable rate equal to three-month LIBOR plus a margin of 3.00% per annum.
The Company has also amended both its export credit agreements and term loan and revolving credit facilities. DuringIn June 2020, the Company amended its export credit agreements to defer approximately $9.0 million in aggregate scheduled amortization payments from June 2020 through March 2021 and to suspend the total net leverage ratio covenant from June 2020 through June 2021. OnDuring August 7, 2020,June 2021, the Company further amended its term loan and revolvingexport credit facilitiesagreements to, waiveamong other things, extend the applicationdeferral of scheduled amortization payments of thefirst export credit facility through December 2021 in the aggregate amount of $15.7 million, extend the waiver of its total net leverage ratio covenant through June 2021.March 31, 2022, In connection with the amendment,increase the interest rate spreads of the term loan has been increasedexport credit facilities by 125bps, to be paid-in-kind at maturity, a LIBOR floor of 75bps has been added to each facility50 basis points and certainannualize EBITDA used in its covenant calculation through December 31, 2022. The deferred principal payments will amortize quarterly over three years starting in March 2022. Certain other covenants have been amendedcontinue to be more restrictive.restrictive during the extended covenant waiver period.
NoteNotes Payable
In connection with the Natural Habitat acquisition in May 2016, Natural Habitat issued ana $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 $2.5 million. $1.7 million as of June 30, 2021. The promissory note accrues interest at a rate of 1.44% annually, with interest payable every six months. On May 1, 2020, months and the promissory note was amended, changing the maturity date of theremaining principal payments to be due in threeequal installments with the first payment due on December 22, 2020, the second on December 22, 2021 and the final payment on December 22, 2022.
OtherCovenants
On April 10, 2020, the Company received a U.S. Small Business Administration Loan related to the COVID-19 crisis in the amount of $6.6 million. The Company subsequently returned the funds received from this loan.
Covenants
The Company’s Amended Credit Agreement, Export Credit Agreement and Second Export Credit Agreement contain financial and restrictive covenants that include among others, net leverage ratios, minimum liquidity, limits on additional indebtedness and limits on certain investments. As of June 30, 2020,2021, the net leverage ratio covenant of the Company’s Amended Credit Agreement has been waived through March 2022. The Company was in compliance with its covenants.covenants in effect as of June 30, 2021.
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 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 hedges a portion of its current-year currency exposure to several currencies, which normally include, but are not limited 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.
In March 2019, the Company entered into foreign exchange forward contracts, designated as cash flow hedges, to hedge its exposure to Norwegian Kroner ("NOK"), related to the Company’s contract to purchase the new polar ice-class vessel (see Note 1112 –— Commitments and Contingencies). The cost of the foreign exchange forward contracts will be amortized to interest expense over their lives, from the effective date through settlement dates.
Interest Rate Risk. The Company uses interest rate caps, designated as cash flow hedges, to manage the risk related to its floating rate corporate debt.
The Company records the effective portion of changes in the fair value of its cash flow hedges to other comprehensive income (loss), net of tax, and subsequently reclassifies these amounts into earnings in the period during which the hedged transaction is 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. NoNaN gains or losses of the Company’s cash flow hedges were considered to be ineffective and reclassified from other comprehensive income (loss) to earnings for the period ended June 30, 2020.2021. The Company reclassified $5.3$0.1 million from other comprehensive income (loss) to earnings for the period ended June 30, 2020 due to the maturity of a cash flow hedge and the hedged item. The Company estimates that approximately $2.1$0.1 million of losses currently recorded in accumulated other comprehensive income (loss) will be recognized in earnings over the next 12 months due to maturity of the cash flow hedge and the hedged item. The Company will continue to assess the effectiveness of the hedges on an ongoing basis.
The Company held the following derivative instruments with absolute notional values as of June 30, 2020:2021:
(in thousands) | Absolute Notional Value | Absolute Notional Value | ||||||
Interest rate caps | $ | 100,000 | $ | 100,000 | ||||
Foreign exchange contracts | 96,097 | 57,913 | ||||||
Estimated fair values (Level 2) of derivative instruments were as follows:
As of June 30, 2020 | As of December 31, 2019 | |||||||||||||||
(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: | ||||||||||||||||
Foreign exchange forward (a) | $ | - | $ | 8,464 | $ | - | $ | 4,459 | ||||||||
Interest rate cap (b) | - | - | 138 | - | ||||||||||||
Total | $ | - | $ | 8,464 | $ | 138 | $ | 4,459 | ||||||||
Derivative instruments not designated as cash flow hedging instruments: | ||||||||||||||||
Foreign exchange forward (c) | $ | - | $ | 1,607 | $ | 459 | $ | 70 | ||||||||
Total | $ | - | $ | 1,607 | $ | 459 | $ | 70 | ||||||||
|
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(a) | Recorded in accounts payable and accrued |
(b) | Recorded in prepaid expenses and other current |
|
|
Changes in the fair value of the Company’s hedging instruments are recorded in accumulated other comprehensive income, pursuant to the guidelines of cash flow hedge accounting as outlined in ASC 815.
The effects of derivatives recognized in the Company’s condensed consolidated financial statements were as follows:
For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||||||||||||||||||
For the three months ended June 30, | For the six months ended June 30, | (unaudited) | (unaudited) | |||||||||||||||||||||||||||||
(In thousands) | 2020 | 2019 | 2020 | 2019 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||
Derivative instruments designated as cash flow hedging instruments: | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||||||||
Foreign exchange forward (a) | $ | (9,272 | ) | $ | (516 | ) | $ | 4,005 | $ | 972 | $ | (79 | ) | $ | (9,272 | ) | $ | (496 | ) | $ | 4,005 | |||||||||||
Interest rate cap (b) | 16 | 140 | 138 | 289 | (86 | ) | 16 | (163 | ) | 138 | ||||||||||||||||||||||
Derivative instruments not designated as cash flow hedging instruments: | ||||||||||||||||||||||||||||||||
Foreign exchange forward (c) | 1,447 | 501 | (1,996 | ) | 1,157 | 0 | 1,447 | (80 | ) | (1,996 | ) | |||||||||||||||||||||
Total | $ | (7,809 | ) | $ | 125 | $ | 2,147 | $ | 2,418 | $ | (165 | ) | $ | (7,809 | ) | $ | (739 | ) | $ | 2,147 | ||||||||||||
(a) | For the three and six months ended June 30, 2021, $0.1 million was recognized as a loss on foreign currency in the condensed consolidated statements of income, and a $0.0 million and a $0.4 million gain, respectively, was recognized, net of tax, as a component of other comprehensive income (loss) within stockholders’ equity. For the three and six months ended June 30, 2020, $5.3 million was recognized as a loss on foreign currency in the condensed consolidated statements of income, and a $3.9 million gain and a $9.3 million loss, respectively, was recognized, net of tax, as a component of other comprehensive income (loss) within stockholders’ equity. |
(b) | Recognized, net of tax, as a component of other comprehensive income (loss) within stockholders’ |
(c) | Gains (losses) related to derivative instruments are expected to be largely offset by (losses) gains on the underlying exposures being hedged. During the three and six months ended June 30, 2021, a loss of $0.0 million and $0.1 million, respectively, were recognized in gain (loss) on foreign currency. During the three and six months ended June 30, 2020, a gain of $1.4 million and a loss of $2.0 million was recognized in gain (loss) on foreign currency. |
Fair Value Measurements
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 carrying value of long-term debt approximates fair value given that the terms of the agreementagreements were comparable to the market as of June 30, 2020.2021. As of June 30, 20202021 and December 31, 2019,2020, the Company had no other significant liabilities that were measured at fair value on a recurring basis.
NOTE 7 – STOCKHOLDERS’— STOCKHOLDERS’ EQUITY
Stock and Warrant 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 $35.0 million in November 2016. The Repurchase Plan authorizes the Company to purchase, from time to time, the Company’s outstanding common stock.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. All repurchases were made using cash resources. During theIn three months ended March 31, 2020, the Company repurchased 8,517 sharesRepurchase Plan was suspended due to the uncertain impact of commonthe COVID-19 pandemic and our borrowings through the Main Street Expanded Loan Facility program places restrictions on stock for approximately $127,000.repurchases. The Company has cumulatively repurchased 875,218 shares of common stock for $8.3 million and 6,011,926 warrants for $14.7 million, since plan inception. The remaining balance for the Repurchase Plan was $12.0 million as of June 30, 2020. 2021.During
Preferred Stock
On MarchAugust 31, 2020, the Repurchase Plan was suspended dueCompany 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. The Preferred Stock has senior and preferential ranking to the uncertain impactCompany’s common stock. The Preferred Stock is entitled to cumulative dividends of 6.00% per annum, and for the firsttwo years, the dividends will be paid-in-kind. After the second anniversary of the COVID-issuance date, the dividends 19may be paid-in-kind or be paid in cash at the Company’s option. 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 $9.50. At any time after the third virus.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 number of shares of common stock received in such conversion shall be equal to the quotient obtained by dividing the then-current accrued value by the conversion price. At the six-year anniversary of the closing date, each investor has the right to require the Company to repurchase their Preferred Stock and any Preferred Stock not requested to be repurchased shall be converted into common shares of the Company equal to the quotient obtained by dividing the then-current accrued value by the conversion price. The Preferred Stock deferred issuance costs was approximately $2.9 million as of June 30, 2021. For the three and six months ended June 30, 2021, the Company recorded $1.3 million and $2.6 million, respectively, in accrued dividends for Preferred Stock. As of June 30, 2021, the Preferred Stock could be converted at the option of the holders into approximately 9.4 million shares of the Company’s common stock.
NOTE 8 – —STOCK- STOCK BASED COMPENSATION
The Company is authorized to issue up to 2.54.7 million shares of common stock under the 20152021 Long-Term Incentive Plan to directors and key employees, and as(“the Plan”) which was approved by shareholders in June 2021. As of June 30, 2020,2021, approximately 1.13.9 million shares were available to be granted.granted under the Plan.
As of June 30, 20202021 and December 31, 2019,2020, options to purchase an aggregate of 200,0001.5 million and 510,000 shares of the Company’s common stock, respectively, with a weighted average exercise price of $9.47,$14.37 and $10.30, respectively, were outstanding. As of June 30, 2020,2021, 150,000188,000 options were exercisable.
The Company recorded stock-based compensation expense of $1.1 million and $2.6 million during the three and six months ended June 30, 2021, respectively, and $0.7 million and $1.6 million during the three and six months ended June 30, 2020, respectively, and $1.0 million and $1.8 million during the three and six months ended June 30, 2019.respectively.
20212020Long-Term Incentive Compensation
During the six months ended June 30, 2020,2021, the Company granted 150,575170,870 restricted stock units ("RSUs") with a weighted average grant price of $5.41.$18.22. The RSUs will primarily vest dependentequally over three years on the grant, either on the first anniversary of the grant date, or in equal installments over a three-year period, 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. The RSUs granted during the six months ended June 30, 2020 represent 50% of the 2020 long-term incentive compensation RSU awards. Due to the circumstances related to the impact of the COVID-19 virus, the compensation committee of the Company's Board of Directors approved the deferral of a portion of the RSU awards, and determined that the remaining 50% of the grants shall be made in equal portions on September 30, 2020 and December 31, 2020.
During the six months ended June 30, 2020,2021, the Company awarded 86,783 targeted50,072 market performance stockshare units ("PSUs"(“MSUs”) with a weighted average grant price of $5.42.$18.90. The PSUsMSUs are performance-vestingmarket-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, 2024. The number of shares that will eventually be earned based on our performance against metrics relating to annual Adjusted EBITDA and annual revenue. Awards will vest after a three-year performance period and may be earnedmore or less then the number of MSUs that are awarded, depending on the Company's common stock price, at a level ranging from 0%-200% of the number of PSUs granted, depending on performance. to 150%. The number of shares were determined based upon the closing price of our common stock on the date of the award. The PSUs granted during the six months ended June 30, 2020 represent 50% of the 2020 long-term incentive compensation PSU awards. Due to the circumstances related to the impact of the COVID-19 virus, the compensation committee of the Company's Board of Directors approved the deferral of a portion of the PSU awards, and determined that the remaining 50% of the grantsMSUs earned shall be made in equal portionsdetermined and shall vest on September 30, 2020 and DecemberMarch 31, 2020.2024.
As a new grant under his compensation agreement, the Company granted to Mr. Berle, the Company’s new Chief Executive Officer, 1.0 million options on May 10, 2021 and, after Mr. Berle purchased a required amount of the Company’s common stock in the open market, as specified in this compensation agreement, granted 58,452 RSUs on June 3, 2021. The options were granted with an exercise price of $16.38, and vest ratably over five years. The RSUs were granted with a weighted average grant price of $17.33 and vest ratably over five years.
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 $25.0$25 million, effective as of December 31, 2023, Mr. Bressler will be granted options with a fair value equal to 10.1% of such excess, subject to certain conditions.
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, with an outstanding principal amount of $2.5 million. The promissory note was amended during May 2020, seeHabitat. See Note 5 –— Long-term Debt for more information.
NOTE 10 – — INCOME TAXES
Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The measurement of net deferred tax assets is reduced by the amount of any tax benefit that, based on available evidence, is not expected to be realized, and a corresponding valuation allowance is established. The determination of the required valuation allowance against net deferred tax assets was made without taking into account the deferred tax liabilities created from the book and tax differences on indefinite-lived assets.
The Company accounts for income taxes using the asset and liability method, under which it recognizes deferred income taxes for the tax consequences attributable to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities, as well as for tax loss carryforwards and tax credit carryforwards. The Company measures deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recoverable or settled. The Company recognizes the effect on deferred taxes of a change in tax rates in income in the period that includes the enactment date. The Company provides a valuation allowance against deferred tax assets if, based upon the weight of available evidence, the Company does not believe it is “more-likely-than-not” that some or all of the deferred tax assets will be realized. The Company will continue to evaluate the deferred tax asset valuation allowance balances in all of our foreign and U.S. companies to determine the appropriate level of valuation allowances.
The Company is subject to income taxes in both the U.S. and the non-U.S. jurisdictions in which it operates. The Company regularly assesses the potential outcome of current and future examinations in each of the taxing jurisdictions when determining the adequacy of the provision for income taxes. The Company has only recorded financial statement benefits for tax positions which it believes reflect the “more-likely-than-not” criteria of FASB’s authoritative guidance on accounting for uncertainty in income taxes, and it has established income tax reserves in accordance with this guidance where necessary. Once a financial statement benefit for a tax position is recorded or a tax reserve is established, the Company adjusts it only when there is more information available or when an event occurs necessitating a change. While the Company believes that the amount of the recorded financial statement benefits and tax reserves reflect the more-likely-than-not criteria, it is possible that the ultimate outcome of current or future examinations may result in a reduction to the tax benefits previously recorded on its condensed consolidated financial statements or may exceed the current income tax reserves in amounts that could be material. As of June 30, 2020,2021, and December 31, 2019,2020, the Company had a liability for unrecognized tax benefits of $0.0 million. The Company’s policy is to record interest and penalties on uncertain tax positions as a component of income tax expense. During the three and six months ended June 30, 20202021 and 2019,2020, interest and penalties related to uncertain tax positions included in income tax expense are not significant. The Company's effective tax rate for the three and six months ended June 30, 20202021 was a benefit of 6.2% and 6.9%, respectively, versus a benefit of 6.9% and 10.1%, respectively, versus an expense of 39.4% and a benefit of 18.7% for the three and six months ended June 30, 2019, 31,2020,respectively, primarily due to the timing of losses in the first quarter and the expected amount of lossesincome for the full year2021 as compared to 2020 due to the impact of the COVID-19 pandemic on the Company's operations.
The Company is subject to tax audits in all jurisdictions for which it files tax returns. Tax audits by their very nature are often complex and can require several years to complete. Currently, there are no U.S. federal, state or foreign jurisdiction tax audits pending. The Company’s corporate U.S. federal and state tax returns for the current year and three prior years remain subject to examination by tax authorities and the Company’s foreign tax returns for the current year and four prior years remain subject to examination by tax authorities.
NOTE 11 – — ACQUISITIONS
To further expand the Company’s land-based experiential travel offerings and increase its addressable market, on February 1, 2021, the Company acquired, through its Natural Habitat subsidiary, 90.1% of the outstanding common stock of Off the Beaten Path, LLC, a land-based travel operator specializing in authentic national park experiences, and on March 3, 2021, acquired 70% of the outstanding common stock of DuVine Cycling + Adventure LLC, an international luxury cycling and adventure company focused on exceptional food and wine experiences.
The acquisitions had an aggregate purchase price of $10.6 million, including $1.8 million in Company stock at closing. The acquisitions were accounted for under purchase accounting and are included in our consolidated results from the acquisition dates. Acquisition related cost were approximately $0.4 million and are included in general and administrative expenses in the condensed consolidated statements of operations for the six months ended June 30, 2021. The purchase accounting valuations for the acquisitions are ongoing and have not been completed as of this report date and is subject to change as third-party valuations are finalized. The Company preliminarily recorded approximately $6.5 million in intangible assets related to tradenames and customer lists and approximately $11.5 million in goodwill related to these acquisitions, which could be subject to possible adjustment when the valuations have been completed. The acquired businesses contributed aggregate revenue of $3.2 million and $3.5 million during the three and six months ended June 30, 2021, respectively, while their aggregate net loss contributed for the three and six months ended June 30, 2021 was immaterial to the Company's financial statements. Following are pro forma revenue and net loss available to stockholders for the three and six months ended June 30, 2021 and 2020, assuming the Company had completed the acquisitions on January 1, 2020:
For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
(In thousands) | (unaudited) | (unaudited) | ||||||||||||||
Revenue | $ | 15,266 | $ | (65 | ) | $ | 17,100 | $ | 82,699 | |||||||
Net loss available to stockholders | (36,616 | ) | (40,118 | ) | (71,464 | ) | (42,892 | ) | ||||||||
NOTE 12 — COMMITMENTS AND CONTINGENCIES
Fleet Expansion
In February 2019, the Company entered into an agreement, which was amended in December 2019, with Ulstein Verft, to construct a second polar ice class vessel, the National Geographic Resolution, with a total purchase price of 1,291.0 million NOK. The purchase price is subject to potential adjustments from contract specifications for variations in speed, dead weight, fuel consumption and delivery date. In March 2019, the Company entered into foreign exchange forward contracts to lock in a purchase price for the second polar ice class vessel of $153.5 million, subject to potential contract specification adjustments. The purchase price is due in installments, with 20% paid shortly after execution of the agreement, 20% paid in September 2019, 20% paid in April 2020 and 10% duepaid in April 2021. The final 30% is due upon delivery and acceptance of the vessel. In December 2019, the Company and Ulstein Verft amended the National Geographic Resolution construction agreement, providing for an expedited delivery schedule for the vessel and a loan agreement for which all or a portion may be considered as a delivery bonus and forgiven, as determined by the expedited delivery schedule per the agreement. The vessel is scheduled to be delivered in the fourth quarter of 2021.
Redeemable Non-Controlling Interest
Mr. Bressler, founder of Natural Habitat, retains a 19.9% noncontrolling interest in Natural Habitat, which is subject to a put/call arrangement, amended in May 2020. The arrangement between the Company and Mr. Bressler was established in order to provide a formal exit opportunity for Mr. Bressler and a path to 100% ownership for the Company. Mr. Bressler has a put option that under certain conditions, and subject to providing notice by January 31, 2024, that enables him, but does not obligate him, to sell his remaining interest in Natural Habitat to the Company, valued as of December 31, 2023. The Company has a call option, but not an obligation, with an expiration of March 31, 2029, under which it can buy Mr. Bressler’s remaining interest at a similar fair value measure as Mr. Bressler’s put option, subject to a call purchase price minimum.
Mr. Lawrence, through a combination of his original minority interest and the profit interest units he received, retains a 19.9% noncontrolling interest in Off the Beaten Path, which is subject to a put/call arrangement. The arrangement between the Company and Mr. Lawrence was established in order to provide a formal exit opportunity for Mr. Lawrence and a path to 100% ownership for the Company. Mr. Lawrence has a put option, that under certain conditions and subject to providing notice by October 31, 2025, that enables him, but does not obligate him, to sell his remaining interest in Off the Beaten Path to the Company on December 31, 2025. The Company has a call option, but not an obligation, with an expiration of December 31, 2030, under which it can buy Mr. Lawrence’s remaining interest at a similar fair value measure as Mr. Lawrence’s put option.
Mr. Levine, founder of DuVine, retains a 30% noncontrolling interest in DuVine, which is subject to a put/call arrangement. The arrangement between the Company and Mr. Levine was established in order to provide a formal exit opportunity for Mr. Levine and a path to 100% ownership for the Company. Mr. Levine has a put option, that under certain conditions and subject to providing notice by January 31, 2026, that enables him, but does not obligate him, to sell his remaining interest in DuVine to the Company as of December 31, 2025. The Company has call options, but not an obligation, with a first call option to on or after December 31, 2023, expiring December 31, 2025, acquire an additional 10% of DuVine from Mr. Levine, and a second call option with an expiration of December 31, 2030, under which it can buy Mr. Levine’s remaining interest at a similar fair value measure as Mr. Levine’s put option, subject to a call purchase price minimum.
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 fair value of the noncontrolling interest, are classified to retained earnings. Adjustments in excess of the fair value of the noncontrolling interest, are treated as a decrease to net income available to common stockholders.
The fair 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:
For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
(In thousands) | 2021 | 2020 | 2021 | 2020 | ||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
Beginning balance | $ | 10,473 | $ | 16,476 | $ | 7,494 | $ | 16,112 | ||||||||
Net loss attributable to noncontrolling interest | (437 | ) | (265 | ) | (1,056 | ) | (801 | ) | ||||||||
Acquired businesses' noncontrolling interest | 0 | 0 | 3,598 | 0 | ||||||||||||
Fair value adjustment of put option | 0 | (6,241 | ) | 0 | (5,341 | ) | ||||||||||
Balance June 30, | $ | 10,036 | $ | 9,970 | $ | 10,036 | $ | 9,970 | ||||||||
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 amount 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 six months ended June 30, 20202021 was $0.1 million and $1.3$0.1 million, respectively, and $0.1 million and $1.3 million for the three and six months ended June 30, 2020, 30,2019, was $1.8 million and $3.3 million, respectively.
The royalty balances outstandingbalance payable to National Geographic as of June 30, 20202021 and December 31, 20192020 werewas $0.1 and $0.0 million and $2.2 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 $0.1$0.0 million and $0.2$0.1 million for the three and six months ended June 30, 2021, 30,2020,respectively, and$0.2 million and $0.4 million for the three and six months ended June 30, 2020 30,2019,was $0.1 million and $0.2 million, 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 June 30, 20202021 are as follows:
For the years ended December 31, | Amount | Amount | ||||||
(In thousands) | (unaudited) | |||||||
2020 | $ | 3,520 | ||||||
2021 | 9,536 | $ | 1,748 | |||||
2022 | 1,850 | 6,142 | ||||||
Total | $ | 14,906 | $ | 7,890 | ||||
Natural Habitat Redeemable Non-Controlling Interest
Mr. Bressler, founder of Natural Habitat, retains a 19.9% noncontrolling interest in Natural Habitat, which is subject to a put/call arrangement. The arrangement between the Company and Mr. Bressler was established in order to provide a formal exit opportunity for Mr. Bressler and a path to 100% ownership for the Company. Mr. Bressler has a put option, amended in May 2020, that under certain conditions and subject to providing notice by January 31,2024, that enables him, but does not obligate him, to sell his remaining interest in Natural Habitat to the Company, valued as of December 31, 2023. The Company has a call option, but not an obligation, with an expiration of March 31, 2029, under which it can buy Mr. Bressler’s remaining interest at a similar fair value measure as Mr. Bressler’s put option, subject to a call purchase price minimum.
Since the redemption of the noncontrolling interest is 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 Mr. Bressler’s put option. 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 fair value of the noncontrolling interest, are classified to retained earnings. Adjustments in excess of the fair value of the noncontrolling interest, are treated as a decrease to net income available to common stockholders.
The fair value of Mr. Bressler’s put option was determined using a discounted cash flow model. The redemption value was adjusted to its present value using the Company’s weighted average cost of capital.
The following is a rollforward of redeemable non-controlling interest:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
(In thousands) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Beginning balance | $ | 16,476 | $ | 6,908 | $ | 16,112 | $ | 6,502 | ||||||||
Net income attributable to noncontrolling interest | (265 | ) | (137 | ) | (801 | ) | 269 | |||||||||
Fair value adjustment of put option | (6,241 | ) | - | (5,341 | ) | - | ||||||||||
Balance June 30, | $ | 9,970 | $ | 6,771 | $ | 9,970 | $ | 6,771 | ||||||||
Legal Proceedings
From time to time, the Company is party to litigation and regulatory matters and claims. The Company expenses legal fees as incurred. The Company records a provision for contingent losses when it is both probable that a liability will be incurred and the amount or range of the loss can be reasonably estimated. The results of complex proceedings and reviews are difficult to predict and the Company’s view of these matters may change in the future as events related thereto unfold. An unfavorable outcome to any legal or regulatory matter, if material, could have an adverse effect on the Company’s operations or its financial position, liquidity or results of operations.
NOTE 1213 – — SEGMENT INFORMATION
The Company is primarily a specialty cruise and adventure expeditionexperiential travel operator with operations in two reportable segments, Lindblad and Natural Habitat.Land Experiences. The Company evaluates the performance of the business based largely on the results of its operating segments. The chief operating decision maker or CODM, 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 also contain information regarding the separate results of both segments. While both segments have similar characteristics, the two operating and reporting segments cannot be aggregated because they fail to meet the requirements for aggregation.
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. For the three and six months ended June 30, 20202021 and 2019,2020, operating results for the Company’s reportable segments were as follows:
For the three months ended June 30, | For the six months ended June 30, | For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | Change | % | 2020 | 2019 | Change | % | 2021 | 2020 | Change | % | 2021 | 2020 | Change | % | |||||||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tour revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lindblad | $ | (22 | ) | $ | 64,930 | $ | (64,952 | ) | NM | $ | 69,517 | $ | 140,968 | $ | (71,451 | ) | (51 | %) | $ | 6,680 | $ | (22 | ) | $ | 6,702 | NM | $ | 7,164 | $ | 69,517 | $ | (62,353 | ) | NM | ||||||||||||||||||||||||||||||
Natural Habitat | (246 | ) | 11,728 | (11,974 | ) | NM | 11,454 | 25,343 | (13,889 | ) | (55 | %) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Land Experiences | 8,586 | (246 | ) | 8,832 | NM | 9,883 | 11,454 | (1,571 | ) | NM | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total tour revenues | $ | (268 | ) | $ | 76,658 | $ | (76,926 | ) | NM | $ | 80,971 | $ | 166,311 | $ | (85,340 | ) | (51 | %) | $ | 15,266 | $ | (268 | ) | $ | 15,534 | NM | $ | 17,047 | $ | 80,971 | $ | (63,924 | ) | NM | ||||||||||||||||||||||||||||||
Operating (loss) income: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lindblad | $ | (31,641 | ) | $ | 5,302 | $ | (36,943 | ) | NM | $ | (29,452 | ) | $ | 18,943 | $ | (48,395 | ) | NM | $ | (31,038 | ) | $ | (31,641 | ) | $ | 603 | 2 | % | $ | (58,335 | ) | $ | (29,452 | ) | $ | (28,883 | ) | (98 | )% | |||||||||||||||||||||||||
Natural Habitat | (3,105 | ) | (1,181 | ) | (1,924 | ) | NM | (3,043 | ) | (458 | ) | (2,585 | ) | NM | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total operating (loss) income | $ | (34,746 | ) | $ | 4,121 | $ | (38,867 | ) | NM | $ | (32,495 | ) | $ | 18,485 | $ | (50,980 | ) | NM | ||||||||||||||||||||||||||||||||||||||||||||||
Land Experiences | (1,550 | ) | (3,105 | ) | 1,555 | 50 | % | (5,317 | ) | (3,043 | ) | (2,274 | ) | (75 | )% | |||||||||||||||||||||||||||||||||||||||||||||||||
Total operating loss | $ | (32,588 | ) | $ | (34,746 | ) | $ | 2,158 | 6 | % | $ | (63,652 | ) | $ | (32,495 | ) | $ | (31,157 | ) | (96 | )% | |||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization are included in segment operating income as shown below:
For the three months ended June 30, | For the six months ended June 30, | For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | Change | % | 2020 | 2019 | Change | % | 2021 | 2020 | Change | % | 2021 | 2020 | Change | % | |||||||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lindblad | $ | 7,939 | $ | 5,774 | $ | 2,165 | 37 | % | $ | 14,188 | $ | 11,568 | $ | 2,620 | 23 | % | $ | 7,823 | $ | 7,939 | $ | (116 | ) | (1 | )% | $ | 15,690 | $ | 14,188 | $ | 1,502 | 11 | % | |||||||||||||||||||||||||||||||
Natural Habitat | 614 | 408 | 206 | 50 | % | 1,055 | 802 | 253 | 32 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Land Experiences | 390 | 614 | (224 | ) | (36 | )% | 772 | 1,055 | (283 | ) | (27 | %) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total depreciation and amortization | $ | 8,553 | $ | 6,182 | $ | 2,371 | 38 | % | $ | 15,243 | $ | 12,370 | $ | 2,873 | 23 | % | $ | 8,213 | $ | 8,553 | $ | (340 | ) | (4 | )% | $ | 16,462 | $ | 15,243 | $ | 1,219 | 8 | % | |||||||||||||||||||||||||||||||
The following table presents our total assets, intangibles, net and goodwill by segment:
(In thousands) | As of June 30, 2020 | As of December 31, 2019 | As of June 30, 2021 | As of December 31, 2020 | ||||||||||||
Total Assets: | (unaudited) | (unaudited) | ||||||||||||||
Lindblad | $ | 600,062 | $ | 471,499 | $ | 701,301 | $ | 698,420 | ||||||||
Natural Habitat | 72,227 | 77,159 | ||||||||||||||
Land Experiences | 97,996 | 59,029 | ||||||||||||||
Total assets | $ | 672,289 | $ | 548,658 | $ | 799,297 | $ | 757,449 | ||||||||
Intangibles, net: | ||||||||||||||||
Lindblad | $ | 2,962 | $ | 3,325 | $ | 2,237 | $ | 2,599 | ||||||||
Natural Habitat | 2,645 | 3,071 | ||||||||||||||
Land Experiences | 8,441 | 2,218 | ||||||||||||||
Total intangibles, net | $ | 5,607 | $ | 6,396 | $ | 10,678 | $ | 4,817 | ||||||||
Goodwill: | ||||||||||||||||
Lindblad | $ | - | $ | - | $ | 0 | $ | 0 | ||||||||
Natural Habitat | 22,105 | 22,105 | ||||||||||||||
Land Experiences | 33,652 | 22,105 | ||||||||||||||
Total goodwill | $ | 22,105 | $ | 22,105 | $ | 33,652 | $ | 22,105 | ||||||||
For the three and six months ended June 30, 2021 there were 0 intercompany tour revenues between the Lindblad and Land Experiences reportable segments eliminated in consolidation. For the three and six months ended June 30, 2020, there were $0.0 million and $2.2 million in intercompany tour revenues between the Lindblad and Natural HabitatLand Experiences reportable segments eliminated in consolidation, respectively. For the three and six months ended June 30, 2019 there were $0.7 million and $2.5 million in intercompany tour revenues between the Lindblad and Natural Habitat segments eliminated in consolidation, respectively.
NOTE 13 – SUBSEQUENT EVENT
The Company has rescheduled or rebooked all expedition voyages scheduled to sail through September 30, 2020 due to continued travel restrictions from the global spread of the COVID-19 virus.
On August 7, 2020, the Company amended its term loan and revolving credit facilities to waive the application of the total net leverage ratio covenant through June 2021. In connection with the amendment, the interest rate of the term loan has been increased by 125bps, to be paid-in-kind at maturity, a LIBOR floor of 75bps has been added to each facility and certain covenants have been amended to be more restrictive.
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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”10-Q”), as well as the audited consolidated financial statements and related notes included in the Company’sCompany’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”(“SEC”) on February 26, 2020.March 12, 2021.
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:
● | suspended operations and disruptions to our business and operations related to the novel corona virus COVID-19; | |
● | the impacts of the novel coronavirus COVID-19 on our financial condition, liquidity, results of operations, cash flows, employees, plans and growth; | |
● | the impacts of the novel coronavirus COVID-19 on future travel and the cruise and airline industries in general; | |
● | unscheduled disruptions in our business due to travel restrictions, weather events, mechanical failures, pandemics or other events; | |
● | changes adversely affecting the business in which we are engaged; | |
● | management of our growth and our ability to execute on our planned growth; | |
● | our business strategy and plans; | |
● | our ability to maintain our relationship with National Geographic; | |
● | compliance with new and existing laws and regulations, including environmental regulations and travel advisories and restrictions; | |
● | compliance with the financial and/or operating covenants in our debt arrangements; | |
● | adverse publicity regarding the cruise industry in general; | |
● | loss of business due to competition; | |
● | the result of future financing efforts; | |
● | delays and costs overruns with respect to the construction and delivery of newly constructed vessels; | |
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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, |
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.
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.
Business Overview
We provide expedition cruising, and land-based adventure travel and cycling touring experiences, using itineraries that feature up-close encounters with wildlife, nature, history and culture, and promote guest empowerment, human connections and interactivity. Our mission is to offeroffering life-changing adventures around the world and pioneerpioneering innovative ways to allow our guests to connect with exotic and remote places. Many of these expeditions involve travel to remote places, such as the Arctic, Antarctica, the Galápagos, Alaska, Baja's Sea of Cortez, Costa Rica, Panama, Churchill and Africa.
We currently operate a fleet of nine owned expedition ships and have contracted for a new polar ice class vessel, the National Geographic Resolution, scheduled to be delivered in the fourth quarter of 2021.
In addition, we2021, and operate five seasonal charter vessels under the Lindblad Expeditions Holdings, Inc. (“Lindblad”) brand. We deploy chartered vessels for various seasonal offeringsOur voyages include destinations such as the Arctic, Antarctic, the Galápagos, Alaska and continually seek to optimize our charter fleet to balance our inventory with demand and maximize yields. We use our charter inventory as a mechanism to both increase travel options for our existing and prospective guests and to test demand for certain areas and seasons to understand the potential for longer term deployments and additional vessel needs.
Baja's Sea of Cortez. We have a longstanding relationship with the National Geographic Society 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 arrangementsarrangement with National Geographic Partners, LLC (“National Geographic”), whereby our owned vessels carry the National Geographic name and National Geographic sells our expeditions through theirits internal travel divisions.division. We collaborate with National Geographic on expeditionvoyage 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 have the ability to interface with these experts through lectures, excursions, dining and other experiences throughout their expedition.voyage. We deploy chartered vessels for various seasonal offerings and continually seek to optimize our charter fleet to balance our inventory with demand and maximized yields. We use our charter inventory as a mechanism to both increase travel options of our existing and prospective guests and also to test demand for certain areas and seasons to understand the potential for longer term deployments and additional vessel needs.
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”) creates opportunities for adventure and discovery that transform lives with eco-conscious expeditions and nature-focused, small-group tours that include polar bear tours in Churchill, Canada, Alaskan grizzly bear adventures, small-group Galápagos 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 international cycling adventures and unforgettable travel experiences, connecting with local character and culture on small, intimate group cycling tours around the world with cycling experts as guides, immersion in local cuisine, accommodations and history. Cycling tours include in the United States, from cycling beneath the California redwoods to pedaling through farmland on a Vermont bike tour, wine tastings in the world-class vineyards of Napa and Sonoma or farm-to-table renaissance dining, cycling through exotic Costa Rican rainforests, the rocky coasts of Ireland, deep in the vineyards of Spain, or high in the Swiss Alps, exploring the roads of ancient cities and trek the Atlas desert by camel, to bamboo forests and Buddhist temples or pedaling past tea plantations in Kyoto.
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, to change people's lives through exceptional travel. Off the Beaten Path is known for providing distinctive insider national park experiences in the Rocky Mountains, Desert Southwest, and Alaska, and includes unique trips across Europe, Africa, Australia, Central and South America and the South Pacific, for connecting the heart of the traveler with the soul of the place.
The Company operates 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 and Off the Beaten Path brands.
2021 Highlights
We resumed ship operations in June 2021 and as of July 31, 2021 had eight of our nine vessels providing expeditions to guests. During June 2021, we launched three ships in Alaska and another in the Galapagos and, following the quarter, we resumed operations on the majority of our remaining vessels with additional ships launching in Alaska and the Galapagos, as well as Iceland.
During June 2021, we amended our export credit facilities to, among other things, extend the deferral of scheduled amortization payments of the first export credit facility through December 2021 in the aggregate amount of $15.7 million, extend the effective suspension of the total net leverage ratio covenant through March 2022, increase the interest rate spreads for the export credit facilities by 50 basis points and annualize EBITDA used in its covenant calculation through December 31, 2022. The deferred tranches will amortize quarterly over three years starting in March 2022.
During April 2021, we further amended our amended credit agreement to, among other things, extend the waiver of its total net leverage ratio covenant through March 31, 2022, annualize EBITDA used in its covenant calculation through December 31, 2022 and increase the interest rate spreads of the Term Facility, excluding the Main Street Loan, and the Revolving Facility by 50 basis points, such additional interest to be paid in cash. Certain other covenants under the amended credit agreement continue to be more restrictive during the extended covenant waiver period.
During the first quarter of 2021, we completed the acquisitions of Off the Beaten Path, a land-based travel operator specializing in authentic national park experiences, and DuVine, an international luxury cycling and adventure company focused on exceptional food and wine experiences.
Return to Fleet Operations and COVID-19 Business Update
DueWe resumed ship operations in June 2021 and, as of July 31, 2021, had eight of our nine vessels providing expeditions to guests. During June 2021, we launched three ships in Alaska and another in the spreadGalapagos and, following the quarter, we resumed operations on the majority of our remaining vessels with additional ships launching in Alaska and the Galapagos, as well as Iceland. We continue to work with local authorities on plans to operate in additional geographies during the second half of the year. As the COVID-19 virus and the effects of travel restrictions in various locations around the world, we have suspended or rescheduled the majority ofalso continue to work with our expeditions departing March 16, 2020 through September 30, 2020 and have been working with guests to reschedule travel plans and refund payments, as applicable.applicable, for those expeditions and trips that we are not able to operate due to local restrictions.
We believe there are a variety of strategic advantages that enable us to deploy our ships safely and quickly, while mitigating the risk of COVID-19 as travel restrictions are lifted. The Company’smost notable is the size of our owned and operated vessels which range from 48 to 148 passengers, allowing for a highly controlled environment that includes stringent cleaning protocols. The small nature of our ships also allows us to efficiently and effectively test our guests and crew prior to boarding. All ship crew and staff members have been fully vaccinated. Additionally, the majority of expeditions take place in remote locations where human interactions are currentlylimited, so there is less opportunity for external influence.
While our ships were not in operations, the majority of the fleet was being maintained with minimally required crew on-board to ensure they complycomplied with all necessary regulations and cancould be fully put back into service quickly as needed. In accordance with local regulations, weAhead of launching each ship, crew levels were increased as necessary to prepare each vessel for operations as well as for crew training and vaccinations. Our offices primarily remain closed, our offices and most employees are working remotely to maintain general business operations, to provide assistance to existing and potential guests and to maintain information technology systems.
We moved quicklycontinue to implement aadhere to the comprehensive plan we implemented in March 2020 to mitigate the impact of COVID-19 and preserve and enhance our liquidity position. We are employingPrior to resuming operations, this plan employed a variety of cost reduction and cash preservation measures while accessingincluding significantly reducing ship and land-based expedition costs such as capital expenditures, crew payroll, land costs, fuel and food, and meaningfully reducing general and administrative expenses through reduced payroll and the elimination of all non-essential travel, office expenses and discretionary spending. We also accessed available capital under our existing debt facilities and exploring additional sourcesthrough the issuance of capitalpreferred stock. With the majority of operations resuming, operating costs are ramping back up, but given the continued uncertainty around COVID-19 and liquidity. These measures include the following operating expense and capital expenditure reductions:given that guest counts have not yet returned to traditional levels, we continue to minimize expenditures as appropriate.
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Bookings Trends
We were off to a strong start to the year with Lindblad segment bookings at the end of February up 25% for the full year 2020 as compared to the same point a year ago for 2019, and had sold 86% of its originally projected guest ticket revenues for the year. Since that point, we have experienced a substantial negative impact from the COVID-19 virus including elevated cancellations and softness in near-term demand. As of July 28, 2020, Lindblad segment bookings for travel in 2020 are now 62% belowDespite the same point a year ago for 2019 due primarily to the cancelled and rescheduled voyages, as well as cancellations for travel later this year. WeCOVID-19 impact, we still have substantial advanced reservations for future travel. Bookings for the full year 2022 are 36% ahead of the bookings for travel in 2021 including 6% more bookings as compared with bookings for 2020 as of the same date a year ago and 35% higher37% ahead of the bookings for 2020 as of the same date in 2018 for 2019.two years ago. We continue to see new bookings for future travel including over $30.0$174.0 million since March 1, 2020,the beginning of 2021 and we are receiving significant deposits and final payments for future travel.
For 20202021 voyages that have been cancelled or rescheduled, we are providingoffering future travel credits with incremental value or full refunds as applicable, to our fully paid guests. As of July 28, 2020,August 3, 2021, the majority of guests have opted for future travel credits.
Balance Sheet and Liquidity
As of June 30, 2020,2021, we had $80.9$160.1 million in unrestricted cash and $21.3$43.5 million in restricted cash primarily related to deposits on future travel originating from U.S. ports. Duringports and credit card reserves. As of June 30, 2021, we had a total debt position of $514.7 million and were in compliance with all of our debt covenants.
Since the first quarterbeginning of 2020 we drew down $45.0 million under our revolving credit facility as a precautionary measure for working capital and general corporate purposes given the uncertainty related to the COVID-19 pandemic, we have taken a variety of steps to strengthen our balance sheet and borrowed $107.7 million under our first export credit agreement in conjunction with final payment on delivery of the National Geographic Endurance in March 2020. Duringincrease liquidity including:
In April 2020, we drew down $30.6 million and in April 2021 we drew down $15.5 million under our second export credit agreement in conjunction with theour third and fourth installment paymentpayments on the National Geographic Resolution, scheduled for delivery in the fourth quarter of 2021..
DuringIn May 2020, we amended our $2.5 million promissory note, changing the maturity date of the principal payments to be due in three equal installments, with the first payment of due on December 22, 2020, the second due on December 22, 2021 and the final payment due on December 22, 2022.
The Company has also amended both its export credit agreements and term loan and revolving credit facilities. DuringIn June 2020, the Companywe amended itsour export credit agreements to defer approximately $9.0 million in aggregate scheduled amortization payments from June 2020 through March 2021 and to suspend the total net leverage ratio covenant from June 2020 through June 2021. OnDuring June 2021, we further amended our export credit facilities to, among other things, extend the deferral of scheduled amortization payments of the first export credit facility through December 2021 in the aggregate amount of $15.7 million, extend the effective suspension of the total net leverage ratio covenant through March 2022, increase the interest rate for the export credit facilities by 50 basis points and annualize EBITDA used in the covenant calculation through December 31, 2022. The deferred principal payments will amortize quarterly over three years starting in March 2022. Certain other covenants continue to be more restrictive during the extended covenant waiver period.
In August 7, 2020, the Companywe amended itsour term loan and revolving credit facilities to waive the application of the total net leverage ratio covenant through June 2021. In connection with the amendment, the interest rate of the term loan has been increased by 125bps,125 basis points, to be paid-in-kind at maturity, a LIBOR floor of 75bps75 basis points has been added to eachthe term loan facility and certain covenants have beenwere amended to be more restrictive. During April 2021, we further amended our term loan and revolving credit agreement to, among other things, extend the waiver of its total net leverage ratio covenant through March 31, 2022, annualized EBITDA used in our covenant calculation through December 31, 2022 and increase the interest rate spreads of the Term Facility, excluding the Main Street Loan, and the Revolving Facility by 50 basis points, such additional interest to be paid in cash. Certain other covenants continue to be more restrictive during the extended covenant waiver period.
As of June 30,In August 2020, we hadraised $85.0 million in gross proceeds through the private placement issuance of Redeemable Convertible Series A Preferred Stock that carries a total debt position6% annual dividend, which is payable in kind for two years and, thereafter, in cash or in-kind at our option. The preferred stock is convertible into shares of $412.3 million and were in compliance with allLindblad common stock at a conversion price of our debt covenants currently in effect. We have no material debt maturities until 2023.$9.50 per share, representing a premium of 23% to Lindblad’s 30-day trading volume weighted average price on the date of issuance.
We estimateIn December 2020, we amended our term loan and revolving credit facilities and borrowed an incremental $85.0 million under the amended term loan facility through the Main Street Expanded Loan Facility program established by the Board of Governors of the Federal Reserve System. The incremental borrowing carries an interest rate of LIBOR plus 3.0%, without any LIBOR floor, and matures December 2025 with no early payment restrictions.
As we continue to ramp up operations, our monthly cash usage while our vessels are notwill increase as we incur costs in operations is approximately $10-15 million including shipoperating expeditions, preparing additional ships for return to service, spending to market and advertise upcoming expeditions and trips and instating remaining furloughed and part-time office operating expenses, necessary capital expenditures and interest and principal payments. This excludesstaff as needed. We also 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 andtravel. However, there can be no assurance that cash refunds requested on previously made guest payments.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.
We are currently evaluating several additional strategies to enhance our liquidity position. These strategies may include, but are not limited to, pursuing additional financing from both the public and private markets through the issuance of equity and/or debt. The timing and structure of any transaction, if completed, will depend on market conditions.
In April 2020, we received a U.S. Small Business Administration Loan related to the COVID-19 crisis in the amount of $6.6 million. We subsequently returned the funds received from this loan and, as a result, have made additional adjustments to our cost structure.
We have not previously experienced a complete cessation of our operations and, as a consequence, our ability to predict the impact of such cessation on our costs and future prospects is limited. Given the dynamic nature of this situation,the COVID-19 pandemic, we cannot reasonably estimate the potential impacts of the COVID-19 viruspandemic will have on our financial condition, results of operations, cash flows, plans and growth for the foreseeable future. It is unknown when travel restrictions and various border closures will be lifted and what the demand for expedition travel will be once these restrictions are no longer in place. The estimates for monthly cash usage reflect our current forecast for operating costs, capital expenditures and expected debt and interest payments. Based on current liquidity, theour actions taken to date, our planned and anticipated actions and our current forecast, which assumes reduced operations during 2020 with a ramp up in operations throughout 2021,we believe that our liquidity should be adequate towe can meet our obligations for the next 12 months from August 10, 2020,4, 2021, the date of this Quarterly Report on Form 10-Q.
Return to Operations
We already have a robust set of operating protocols and, in preparation for the resumption of operations, have been proactively working in close cooperation with various medical policy experts and public health authorities to further augment our procedures and protocols for health and safety onboard our vessels to mitigate the potential impacts of the COVID-19 virus. These protocols encompass, but are not limited to, medical care, screening, testing, social distancing, personal protective equipment, and sanitization during all aspects of the expedition.
While it is uncertain when we will return to operations, we believe there are a variety of strategic advantages that should enable us to deploy our ships safely and quickly once travel restrictions have been lifted. The most notable is the size of our owned and operated vessels which range from 48 to 148 passengers, allowing for a highly controlled environment that includes stringent cleaning protocols. The small nature of our ships should also allow us to efficiently and effectively test our guests and crew prior to boarding. On average, we estimate it will only take a few thousand tests a month to ensure all guests and crew across our entire fleet have been tested. Additionally, the majority of our expeditions take place in remote locations where human interactions are limited, so there is less opportunity for external influence. We also have the ability to be flexible with regards to existing itineraries and are actively investigating additional itinerary opportunities both internationally and domestically. Lastly, our guests are explorers by nature, eager to travel and have historically been very resilient following periods of uncertainty.
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 six months ended June 30, |
● | 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 Revenue Yield represents tour revenues less insurance proceeds, commissions and direct costs of other tour revenues.
Net Yield per Available Guest Night represents Net RevenueYield 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 from the sale of guest tickets 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. Natural Habitat, is aDuVine and Off the Beaten Path are seasonal business,businesses, with the majority of itsNatural Habitat’s tour revenue recorded in the third and fourth quarters from its summer season departures and polar bear tours.tours, while the majority of Off the Beaten Path and DuVine’s revenues are recorded during the second and third quarters from their summer season tours and cycling adventures.
Results of Operations - Consolidated
For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||||||||||||||||||
(In thousands) | 2020 | 2019 | Change | % | 2020 | 2019 | Change | % | ||||||||||||||||||||||||
Tour revenues | $ | (268 | ) | $ | 76,658 | $ | (76,926 | ) | NM | $ | 80,971 | $ | 166,311 | $ | (85,340 | ) | (51 | %) | ||||||||||||||
Cost of tours | 12,721 | 37,520 | (24,799 | ) | (66 | )% | 54,913 | 76,537 | (21,624 | ) | (28 | %) | ||||||||||||||||||||
General and administrative | 9,798 | 16,268 | (6,470 | ) | (40 | )% | 27,025 | 32,350 | (5,325 | ) | (16 | %) | ||||||||||||||||||||
Selling and marketing | 3,406 | 12,567 | (9,161 | ) | (73 | )% | 16,285 | 26,569 | (10,284 | ) | (39 | %) | ||||||||||||||||||||
Depreciation and amortization | 8,553 | 6,182 | 2,371 | 38 | % | 15,243 | 12,370 | 2,873 | 23 | % | ||||||||||||||||||||||
Operating (loss) income | $ | (34,746 | ) | $ | 4,121 | $ | (38,867 | ) | NM | $ | (32,495 | ) | $ | 18,485 | $ | (50,980 | ) | NM | ||||||||||||||
Net (loss) income | $ | (39,923 | ) | $ | 851 | $ | (40,774 | ) | NM | $ | (42,394 | ) | $ | 15,930 | $ | (58,324 | ) | NM | ||||||||||||||
Net (loss) income per share available to common stockholders | ||||||||||||||||||||||||||||||||
Basic | $ | (0.80 | ) | $ | 0.02 | $ | (0.82 | ) | $ | (0.84 | ) | $ | 0.34 | $ | (1.18 | ) | ||||||||||||||||
Diluted | $ | (0.80 | ) | $ | 0.02 | $ | (0.82 | ) | $ | (0.84 | ) | $ | 0.32 | $ | (1.16 | ) | ||||||||||||||||
For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||||||||||||||||||
(In thousands) | 2021 | 2020 | Change | % | 2021 | 2020 | Change | % | ||||||||||||||||||||||||
Tour revenues | $ | 15,266 | $ | (268 | ) | $ | 15,534 | NM | $ | 17,047 | $ | 80,971 | $ | (63,924 | ) | NM | ||||||||||||||||
Cost of tours | 19,391 | 12,721 | 6,670 | 52 | % | 27,670 | 54,913 | (27,243 | ) | (50 | )% | |||||||||||||||||||||
General and administrative | 15,288 | 9,798 | 5,490 | 56 | % | 29,100 | 27,025 | 2,075 | 8 | % | ||||||||||||||||||||||
Selling and marketing | 4,962 | 3,406 | 1,556 | 46 | % | 7,467 | 16,285 | (8,818 | ) | (54 | )% | |||||||||||||||||||||
Depreciation and amortization | 8,213 | 8,553 | (340 | ) | (4 | )% | 16,462 | 15,243 | 1,219 | 8 | % | |||||||||||||||||||||
Operating loss | $ | (32,588 | ) | $ | (34,746 | ) | $ | 2,158 | 6 | % | $ | (63,652 | ) | $ | (32,495 | ) | $ | (31,157 | ) | (96 | )% | |||||||||||
Net loss | $ | (35,735 | ) | $ | (39,923 | ) | $ | 4,188 | 10 | % | $ | (69,595 | ) | $ | (42,394 | ) | $ | (27,201 | ) | (64 | )% | |||||||||||
Undistributed loss per share available to stockholders: | ||||||||||||||||||||||||||||||||
Basic | $ | (0.71 | ) | $ | (0.80 | ) | $ | 0.09 | $ | (1.38 | ) | $ | (0.84 | ) | $ | (0.54 | ) | |||||||||||||||
Diluted | $ | (0.71 | ) | $ | (0.80 | ) | $ | 0.09 | $ | (1.38 | ) | $ | (0.84 | ) | $ | (0.54 | ) | |||||||||||||||
Comparison of the Three and Six Months Ended June 30,, 2020 2021 to Three and Six Months Ended June 30,, 2019 2020 - Consolidated
Tour Revenues
Tour revenues for the three months ended June 30, 2020 decreased $76.92021 increased $15.5 million or 100%,to $15.3 million for the three months ended June 30, 2021. The Lindblad segment tour revenues increased by $6.7 million, and the Land Experiences segment increased $8.8 million, primarily as a result of rescheduling allrestarting certain expeditions due to COVID-19.and trips during the second quarter of 2021 and the inclusion of the operations of Off the Beaten Path and DuVine, which were acquired during the first quarter of 2021.
Tour revenues for the six months ended June 30, 20202021 decreased $85.3$63.9 million or 51%, to $81.0$17.0 million, compared to $166.3$81.0 million for the six months ended June 30, 2019.2020. The Lindblad segment tour revenues decreased by $71.5$62.4 million, primarily as a result of cancelled, disrupted and rescheduled expeditions due to COVID-19.COVID-19 during 2020. At the Natural HabitatLand Experiences segment, tour revenues decreased $13.9$1.6 million over the prior year period, primarily related to cancelled, disrupted and rescheduled expeditionstrips due to COVID-19.COVID-19, partially offset by the inclusion of the operations of Off the Beaten Path and DuVine, which were acquired during the first quarter of 2021.
Cost of Tours
Total cost of tours for the three months ended June 30, 2020 decreased $24.82021 increased $6.7 million, or 66%52%, to $12.7$19.4 million compared to $37.5$12.7 million for the three months ended June 30, 2019.2020. At the Lindblad segment, cost of tours increased $2.7 million, due to the restart of certain expeditions during June 2021. At the Land Experiences segment, cost of tours increased $4.0 million, due to operating additional trips during the second quarter of 2021 and the inclusion of the operations of Off the Beaten Path and DuVine, which were acquired during the first quarter of 2021.
Total cost of tours for the six months ended June 30, 2021 decreased $27.2 million, or 50%, to $27.7 million, compared to $54.9 million for the six months ended June 30, 2020. At the Lindblad segment, cost of tours decreased $17.9$25.3 million, primarily related to cancelled, disrupted and rescheduled expeditions due to COVID-19, partially offset by costs incurred while ships are laid up and fromassociated with the addition of the National Geographic Endurance to our fleet in March 2020. At the Natural HabitatLand Experiences segment, cost of tours decreased $6.9 million due to rescheduled trips directly related to COVID-19.
Total cost of tours for the six months ended June 30, 2020 decreased $21.6 million, or 28%, to $54.9 million, compared to $76.5 million for the six months ended June 30, 2019. At the Lindblad segment, cost of tours decreased $13.7 million, primarily related to cancelled, disrupted and rescheduled expeditions due to COVID-19, partially offset by costs incurred while ships are laid up, and from the addition of the National Geographic Endurance to our fleet in March 2020. At the Natural Habitat segment, cost of tours decreased $7.9$2.0 million, primarily due to cancelled, disrupted and rescheduled trips directly relateddue to COVID-19.COVID-19, partially offset by the inclusion of the operations of Off the Beaten Path and DuVine, which were acquired during the first quarter of 2021.
General and Administrative
General and administrative expenses for the three months ended June 30, 2020 decreased $6.52021 increased $5.5 million, or 40%56%, to $9.8$15.3 million compared to $16.3$9.8 million for the three months ended June 30, 2019.2020. At the Lindblad segment, general and administrative expenses decreased $4.1increased $3.0 million overfrom the prior year period primarily due to reduced personnel costs andincreased credit card commissions relateddue to the disruption ofstrong booking environment, higher personnel costs associated with restarting operations due to COVID-19.and increased stock-based compensation expense. At the Natural HabitatLand Experiences segment, general and administrative expenses decreased $2.4increased $2.3 million, primarily due to a decrease inincreased personnel costs related to operating additional trips and the disruptioninclusion of the operations due to COVID-19.of Off the Beaten Path and DuVine which were acquired during the first quarter of 2021.
General and administrative expenses for the six months ended June 30, 2020 decreased $5.32021 increased $2.1 million, or 16%8%, to $27.0$29.1 million compared to $32.4$27.0 million for the six months ended June 30, 2019.2020. At the Lindblad segment, general and administrative expenses decreased $3.1 million primarily duewere flat compared to reduced personnel costs and credit card commissions related to the disruption of operations due to COVID-19.prior year. At the Natural HabitatLand Experiences segment, general and administrative expenses decreased $2.2increased $1.9 million, primarily due to a decrease in personnel costs related to the disruptioninclusion of the operations due to COVID-19.of Off the Beaten Path and DuVine which were acquired during the first quarter of 2021.
Selling and Marketing
Selling and marketing expenses for the three months ended June 30, 2020 decreased $9.22021 increased $1.6 million, or 73%46%, to $3.4$5.0 million, compared to $12.6$3.4 million for the three months ended June 30, 2019.2020. At the Lindblad segment, selling and marketing expenses increased $0.4 million as increased advertising spend was partially offset by lower commissions. At the Land Experiences segment, selling and marketing expenses increased $1.2 million, primarily due to increased marketing spend related to the operating additional trips, and the inclusion of the operations of Off the Beaten Path and DuVine which were acquired during the first quarter of 2021.
Selling and marketing expenses for the six months ended June 30, 2021 decreased $8.8 million, or 54%, to $7.5 million, compared to $16.3 million for the six months ended June 30, 2020. At the Lindblad segment, selling and marketing expenses decreased $8.1$9.9 million, primarily due to lower commission expenses related to the impact of COVID-19 on revenue and decreased advertising expenditures.revenue. At the Natural HabitatLand Experiences segment, selling and marketing expenses decreased $1.0 million, primarily driven by a decrease in advertising expenditures.
Selling and marketing expenses for the six months ended June 30, 2020 decreased $10.3 million, or 39%, to $16.3 million, compared to $26.6 million for the six months ended June 30, 2019. At the Lindblad segment, selling and marketing expenses decreased $8.8increased $1.1 million, primarily due to lower commission expensesincreased advertising related to operating additional trips, and the impactinclusion of COVID-19 on revenuethe operations of Off the Beaten Path and decreased advertising expenditures. AtDuVine which were acquired during the Natural Habitat segment, selling and marketing expenses decreased $1.5 million, primarily driven by a decrease in advertising expenditures.first quarter of 2021.
Depreciation and Amortization
Depreciation and amortization expenses for the three months ended June 30, 2020 increased $2.42021 decreased $0.3 million, or 38%4%, to $8.6$8.2 million, compared to $6.2$8.6 million for the three months ended June 30, 2019, primarily due to the addition of the National Geographic Endurance to the fleet in March 2020.
Depreciation and amortization expenses for the six months ended June 30, 20202021 increased $2.9$1.2 million, or 23%8%, to $15.2$16.5 million, compared to $12.4$15.2 million for the six months ended June 30, 2019,2020, primarily due to the additiona full six months of depreciation of the National Geographic Endurance which was added to the fleet in March 2020.
Other Expense
Other expenses for the three months ended June 30, 2020, increased $5.42021, decreased $2.6 million to $8.1$5.5 million from $2.7$8.1 million for the three months ended June 30, 2019,2020, primarily due to the following:
● | A | |
● | A |
Other expenses, for the six months ended June 30, 2020, increased $9.62021, decreased $3.6 million to $14.7$11.1 million from $5.1$14.7 million for the six months ended June 30, 2019,2020, primarily due to the following:
● | A $0.3 million gain in foreign currency translation in 2021, compared to a $7.3 million loss in foreign currency translation in 2020 which was primarily due | |
● | A |
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 June 30, | For the six months ended June 30, | For the three months ended | For the six months ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | 2020 | 2019 | Change | % | 2020 | 2019 | Change | % | 2021 | 2020 | Change | % | 2021 | 2020 | Change | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| Tour revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lindblad | $ | (22 | ) | $ | 64,930 | $ | (64,952 | ) | NM | $ | 69,517 | $ | 140,968 | $ | (71,451 | ) | (51 | %) | $ | 6,680 | $ | (22 | ) | $ | 6,702 | NM | $ | 7,164 | $ | 69,517 | $ | (62,353 | ) | NM | ||||||||||||||||||||||||||||||
Natural Habitat | (246 | ) | 11,728 | (11,974 | ) | NM | 11,454 | 25,343 | (13,889 | ) | (55 | %) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Land Experiences | 8,586 | (246 | ) | 8,832 | NM | 9,883 | 11,454 | (1,571 | ) | NM | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total tour revenues | $ | (268 | ) | $ | 76,658 | $ | (76,926 | ) | NM | $ | 80,971 | $ | 166,311 | $ | (85,340 | ) | (51 | %) | $ | 15,266 | $ | (268 | ) | $ | 15,534 | NM | $ | 17,047 | $ | 80,971 | $ | (63,924 | ) | NM | ||||||||||||||||||||||||||||||
Operating (loss) income: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lindblad | $ | (31,641 | ) | $ | 5,302 | $ | (36,943 | ) | NM | $ | (29,452 | ) | $ | 18,943 | $ | (48,395 | ) | NM | $ | (31,038 | ) | $ | (31,641 | ) | $ | 603 | 2 | % | $ | (58,335 | ) | $ | (29,452 | ) | $ | (28,883 | ) | (98 | )% | |||||||||||||||||||||||||
Natural Habitat | (3,105 | ) | (1,181 | ) | (1,924 | ) | NM | (3,043 | ) | (458 | ) | (2,585 | ) | NM | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total operating (loss) income | $ | (34,746 | ) | $ | 4,121 | $ | (38,867 | ) | NM | $ | (32,495 | ) | $ | 18,485 | $ | (50,980 | ) | NM | ||||||||||||||||||||||||||||||||||||||||||||||
Land Experiences | (1,550 | ) | (3,105 | ) | 1,555 | 50 | % | (5,317 | ) | (3,043 | ) | (2,274 | ) | (75 | )% | |||||||||||||||||||||||||||||||||||||||||||||||||
Total operating loss | $ | (32,588 | ) | $ | (34,746 | ) | $ | 2,158 | 6 | % | $ | (63,652 | ) | $ | (32,495 | ) | $ | (31,157 | ) | (96 | )% | |||||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lindblad | $ | (22,986 | ) | $ | 13,270 | $ | (36,256 | ) | NM | $ | (12,911 | ) | $ | 34,200 | $ | (47,111 | ) | NM | $ | (21,832 | ) | $ | (22,986 | ) | $ | 1,154 | 5 | % | $ | (39,785 | ) | $ | (12,911 | ) | $ | (26,874 | ) | (208 | )% | |||||||||||||||||||||||||
Natural Habitat | (2,491 | ) | (773 | ) | (1,718 | ) | NM | (1,988 | ) | 344 | (2,332 | ) | NM | |||||||||||||||||||||||||||||||||||||||||||||||||||
Land Experiences | (1,121 | ) | (2,491 | ) | 1,370 | 55 | % | (3,985 | ) | (1,988 | ) | (1,997 | ) | (100 | )% | |||||||||||||||||||||||||||||||||||||||||||||||||
Total adjusted EBITDA | $ | (25,477 | ) | $ | 12,497 | $ | (37,974 | ) | NM | $ | (14,899 | ) | $ | 34,544 | $ | (49,443 | ) | NM | $ | (22,953 | ) | $ | (25,477 | ) | $ | 2,524 | 10 | % | $ | (43,770 | ) | $ | (14,899 | ) | $ | (28,871 | ) | (194 | )% | |||||||||||||||||||||||||
Results of Operations – 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 and six months ended June 30, 20202021 and 2019:2020:
For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Available Guest Nights | - | 53,983 | 51,624 | 112,652 | ||||||||||||
Guest Nights Sold | - | 48,216 | 46,050 | 101,829 | ||||||||||||
Occupancy | - | 89 | % | 89 | % | 90 | % | |||||||||
Maximum Guests | - | 6,829 | 6,512 | 14,142 | ||||||||||||
Number of Guests | - | 6,269 | 5,564 | 12,801 | ||||||||||||
Voyages | - | 87 | 85 | 180 | ||||||||||||
For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Available Guest Nights | 6,270 | - | 6,270 | 51,624 | ||||||||||||
Guest Nights Sold | 4,920 | - | 4,920 | 46,050 | ||||||||||||
Occupancy | 78 | % | - | 78 | % | 89 | % | |||||||||
Maximum Guests | 1,029 | - | 1,029 | 6,512 | ||||||||||||
Number of Guests | 818 | - | 818 | 5,564 | ||||||||||||
Voyages | 14 | - | 14 | 85 | ||||||||||||
The following table shows the calculations of Gross Yield and Net Yield for the three and six months ended June 30, 20202021 and 2019.2020. 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:
For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||||||||||||||||||
(In thousands, except for Available Guest Nights, Gross and Net Yield) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||
Calculation of Gross Yield per Available Guest Night and Net Yield per Available Guest Night | For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||||||||||
(In thousands, except for Available Guest Nights, Gross and Net Yield per Available Guest Night) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||
Guest ticket revenues | $ | (11 | ) | $ | 58,416 | $ | 60,351 | $ | 125,526 | $ | 5,762 | $ | (11 | ) | $ | 5,762 | $ | 60,351 | ||||||||||||||
Other tour revenue | (11 | ) | 6,514 | 9,166 | 15,442 | 918 | (11 | ) | 1,402 | 9,166 | ||||||||||||||||||||||
Tour Revenues | (22 | ) | 64,930 | 69,517 | 140,968 | 6,680 | (22 | ) | 7,164 | 69,517 | ||||||||||||||||||||||
Less: Commissions | (1,835 | ) | (4,908 | ) | (7,262 | ) | (10,759 | ) | (515 | ) | (1,835 | ) | (543 | ) | (7,262 | ) | ||||||||||||||||
Less: Other tour expenses | (953 | ) | (4,418 | ) | (6,713 | ) | (10,104 | ) | (432 | ) | (953 | ) | (1,066 | ) | (6,713 | ) | ||||||||||||||||
Net Revenue | $ | (2,810 | ) | $ | 55,604 | $ | 55,542 | $ | 120,105 | |||||||||||||||||||||||
Net Yield | $ | 5,733 | $ | (2,810 | ) | $ | 5,555 | $ | 55,542 | |||||||||||||||||||||||
Available Guest Nights | - | 53,983 | 51,624 | 112,652 | 6,270 | - | 6,270 | 51,624 | ||||||||||||||||||||||||
Gross Yield | NM | $ | 1,203 | $ | 1,347 | $ | 1,251 | |||||||||||||||||||||||||
Net Yield | NM | 1,030 | 1,076 | 1,066 | ||||||||||||||||||||||||||||
Gross Yield per Available Guest Night | $ | 1,065 | NM | $ | 1,143 | $ | 1,347 | |||||||||||||||||||||||||
Net Yield per Available Guest Night | 914 | NM | 886 | 1,076 | ||||||||||||||||||||||||||||
The following table reconciles operating income to our Net Yield Guest Metric for the Lindblad Segment:
For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
(In thousands) | 2021 | 2020 | 2021 | 2020 | ||||||||||||
Operating loss | $ | (31,038 | ) | $ | (31,641 | ) | $ | (58,335 | ) | $ | (29,452 | ) | ||||
Cost of tours | 14,835 | 12,182 | 22,440 | 47,702 | ||||||||||||
General and administrative | 11,479 | 8,297 | 22,092 | 21,895 | ||||||||||||
Selling and marketing | 3,581 | 3,201 | 5,277 | 15,184 | ||||||||||||
Depreciation and amortization | 7,823 | 7,939 | 15,690 | 14,188 | ||||||||||||
Less: Commissions | (515 | ) | (1,835 | ) | (543 | ) | (7,262 | ) | ||||||||
Less: Other tour expenses | (432 | ) | (953 | ) | (1,066 | ) | (6,713 | ) | ||||||||
Net Yield | $ | 5,733 | $ | (2,810 | ) | $ | 5,555 | $ | 55,542 | |||||||
The following table shows the calculations of Gross Cruise Cost per Available Guest Night and Net Cruise Costs per Available Guest Night for the three and six months ended June 30, 20202021 and 2019:2020:
Calculation of Gross Cruise Cost and Net Cruise Cost | For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||
(In thousands, except for Available Guest Nights, Gross and Net Cruise Cost per Avail. Guest Night) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Cost of tours | $ | 12,182 | $ | 30,118 | $ | 47,702 | $ | 61,439 | ||||||||
Plus: Selling and marketing | 3,201 | 11,321 | 15,184 | 23,962 | ||||||||||||
Plus: General and administrative | 8,297 | 12,415 | 21,895 | 25,054 | ||||||||||||
Gross Cruise Cost | 23,680 | 53,854 | 84,781 | 110,455 | ||||||||||||
Less: Commissions | (1,835 | ) | (4,908 | ) | (7,262 | ) | (10,759 | ) | ||||||||
Less: Other tour expenses | (953 | ) | (4,418 | ) | (6,713 | ) | (10,104 | ) | ||||||||
Net Cruise Cost | 20,892 | 44,528 | 70,806 | 89,592 | ||||||||||||
Less: Fuel Expense | (931 | ) | (2,459 | ) | (3,323 | ) | (5,146 | ) | ||||||||
Net Cruise Cost Excluding Fuel | 19,961 | 42,069 | 67,483 | 84,446 | ||||||||||||
Non-GAAP Adjustments: | ||||||||||||||||
Stock-based compensation | (703 | ) | (1,001 | ) | (1,601 | ) | (1,754 | ) | ||||||||
National Geographic fee amortization | - | (727 | ) | (727 | ) | (1,454 | ) | |||||||||
| Warrant exchange and debt refinancing costs | - | (466 | ) | - | (466 | ) | ||||||||||
Other | (13 | ) | - | (25 | ) | (15 | ) | |||||||||
Adjusted Net Cruise Cost Excluding Fuel | $ | 19,245 | $ | 39,875 | $ | 65,130 | $ | 80,757 | ||||||||
Adjusted Net Cruise Cost | $ | 20,176 | $ | 42,334 | $ | 68,453 | $ | 85,903 | ||||||||
Available Guest Nights | - | 53,983 | 51,624 | 112,652 | ||||||||||||
Gross Cruise Cost per Available Guest Night | NM | $ | 998 | $ | 1,642 | $ | 980 | |||||||||
Net Cruise Cost per Available Guest Night | NM | 825 | 1,372 | 795 | ||||||||||||
Net Cruise Cost Excluding Fuel per Available Guest Night | NM | 779 | 1,307 | 750 | ||||||||||||
Adjusted Net Cruise Cost Excluding Fuel per Available Guest Night | NM | 739 | 1,262 | 717 | ||||||||||||
Adjusted Net Cruise Cost per Available Guest Night | NM | 784 | 1,326 | 763 | ||||||||||||
Calculation of Gross Cruise Cost and Net Cruise Cost | For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||
(In thousands, except for Available Guest Nights, Gross and Net Cruise Cost per Avail. Guest Night) | 2021 | 2020 | 2021 | 2020 | ||||||||||||
Cost of tours | $ | 14,835 | $ | 12,182 | $ | 22,440 | $ | 47,702 | ||||||||
Plus: Selling and marketing | 3,581 | 3,201 | 5,277 | 15,184 | ||||||||||||
Plus: General and administrative | 11,479 | 8,297 | 22,092 | 21,895 | ||||||||||||
Gross Cruise Cost | 29,895 | 23,680 | 49,809 | 84,781 | ||||||||||||
Less: Commissions | (515 | ) | (1,835 | ) | (543 | ) | (7,262 | ) | ||||||||
Less: Other tour expenses | (432 | ) | (953 | ) | (1,066 | ) | (6,713 | ) | ||||||||
Net Cruise Cost | 28,948 | 20,892 | 48,200 | 70,806 | ||||||||||||
Less: Fuel Expense | (1,011 | ) | (931 | ) | (1,523 | ) | (3,323 | ) | ||||||||
Net Cruise Cost Excluding Fuel | 27,937 | 19,961 | 46,677 | 67,483 | ||||||||||||
Non-GAAP Adjustments: | ||||||||||||||||
Stock-based compensation | (1,129 | ) | (703 | ) | (2,606 | ) | (1,601 | ) | ||||||||
National Geographic fee amortization | - | - | - | (727 | ) | |||||||||||
Other | (293 | ) | (13 | ) | (680 | ) | (25 | ) | ||||||||
Adjusted Net Cruise Cost Excluding Fuel | $ | 26,515 | $ | 19,245 | $ | 43,391 | $ | 65,130 | ||||||||
Adjusted Net Cruise Cost | $ | 27,526 | $ | 20,176 | $ | 44,914 | $ | 68,453 | ||||||||
Comparison of Three and Six Months Ended June 30,, 2020 2021 to Three and Six Months Ended June 30,, 2019 2020 at the Lindblad Segment
Tour Revenues
Tour revenues for the three months ended June 30, 2020 decreased $64.92021 increased $6.7 million or 100%, to $0.0 million compared to $64.9 million for the three months ended June 30, 2019.$6.7 million. The decreaseincrease was a result of restarting certain expeditions during the second quarter of 2021 compared with cancelling, disrupting and rescheduling all expeditions due to COVID-19. COVID-19 during the second quarter of 2020.
Tour revenues for the six months ended June 30, 20202021 decreased $71.5$62.4 million or 51%, to $69.5$7.2 million, compared to $141.0$69.5 million for the six months ended June 30, 2019.2020. The decrease was primarily driven by additional cancelled, disrupted and rescheduled expeditions due to COVID-19.COVID-19 during 2021.
Operating IncomeLoss
Operating incomeloss decreased $36.9$0.6 million to aloss of $31.0 million for the three months ended June 30, 2021 compared to operating loss of $31.6 million for the three months ended June 30, 2020 compared to $5.3 million operating income for the three months ended June 30, 2019.2020. The decrease was primarily a result of restarting certain expeditions during the second quarter of 2021 compared with cancelling, disrupting and rescheduling all expeditions due to COVID-19.COVID-19 during the second quarter of 2020.
Operating income decreased $48.4loss increased $28.8 million to a loss of $58.3 million for the six months ended June 30, 2021, compared to a loss of $29.5 million for the six months ended June 30, 2020, compared to operating income of $18.9 million for the six months ended June 30, 2019.2020. The decreaseincrease was primarily driven by lower revenue from cancelled, disrupted and rescheduled voyages due to COVID-19 and costs associated with adding the National Geographic Endurance to the fleet in March 2020.
Results of Operations – Natural Habitat Land ExperiencesSegment
Comparison of Three and Six Months Ended June 30, 2021 to Three and Six Months Ended June 30, 2020
Comparison of Three and Six Months Ended June 30, 2020 to Three and Six Months Ended June 30, 2019
Tour Revenues
Tour revenues for the three months ended June 30, 2020 decreased $12.02021 increased $8.8 million compared to $11.7$8.6 million, for the three months ended June 30, 2019,primarily as a result of rescheduled expeditions due to COVID-19.operating additional trips during the second quarter 2021 and the inclusion of the operations of Off the Beaten Path and DuVine, which were acquired during the first quarter of 2021.
Tour revenues for the six months ended June 30, 20202021 decreased $13.9$1.6 million or 55%, to $11.5$9.9 million compared to $25.3$11.5 million for the six months ended June 30, 2019,2020, due primarily to cancelled, disrupted and rescheduled expeditions due to COVID-19.COVID-19, partially offset by the inclusion of the operations of Off the Beaten Path and DuVine, which were acquired during the first quarter of 2021.
Operating IncomeLoss
Operating incomeAn operating loss of $1.5 million was incurred for the three months ended June 30, 2020 decreased $1.9 million2021, compared to aoperating loss of $3.1 million compared to a $1.2 million loss for the three months ended June 30, 2019.2020. The decreaselower operating loss was primarily a result of rescheduled expeditions due to COVID-19.operating additional trips during the second quarter of 2021. The second quarter of 2021 also included the operations of Off the Beaten Path and DuVine which were acquired during the first quarter of 2021.
Operating income for the six months ended June 30, 2020 decreased $2.6 million to a loss of $3.0 million compared to a $0.4 million loss for the six months ended June 30, 2019.2021 increased $2.3 million to a loss of $5.3 million compared to a loss of $3.0 million for the six months ended June 30, 2020. The decreaseincrease was primarily a result of cancelled, disrupted and rescheduled expeditions due to COVID-19. The second quarter of 2021 also included the operations of Off the Beaten Path and DuVine which were acquired during the first quarter of 2021.
Adjusted EBITDA– Consolidated
The following table outlines the reconciliation to net income (loss) and calculation of consolidated Adjusted EBITDA for the three and six months ended June 30, 20202021 and 2019.2020. 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 June 30, | For the six months ended June 30, | For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||||||||
(In thousands) | 2020 | 2019 | 2020 | 2019 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||
Net (loss) income | $ | (39,923 | ) | $ | 851 | $ | (42,394 | ) | $ | 15,930 | ||||||||||||||||||||||
Net loss | $ | (35,735 | ) | $ | (39,923 | ) | $ | (69,595 | ) | $ | (42,394 | ) | ||||||||||||||||||||
Interest expense, net | 4,179 | 3,188 | 7,234 | 6,176 | 5,705 | 4,179 | 11,374 | 7,234 | ||||||||||||||||||||||||
Income tax (benefit) expense | (2,943 | ) | 553 | (4,770 | ) | (2,513 | ) | |||||||||||||||||||||||||
Income tax benefit | (2,357 | ) | (2,943 | ) | (5,158 | ) | (4,770 | ) | ||||||||||||||||||||||||
Depreciation and amortization | 8,553 | 6,182 | 15,243 | 12,370 | 8,213 | 8,553 | 16,462 | 15,243 | ||||||||||||||||||||||||
Loss (gain) on foreign currency | 3,879 | (501 | ) | 7,322 | (1,157 | ) | (199 | ) | 3,879 | (269 | ) | 7,322 | ||||||||||||||||||||
Other expense | 62 | 30 | 113 | 49 | (2 | ) | 62 | (4 | ) | 113 | ||||||||||||||||||||||
Stock-based compensation | 703 | 1,001 | 1,601 | 1,754 | 1,129 | 703 | 2,740 | 1,601 | ||||||||||||||||||||||||
National Geographic fee amortization | - | 727 | 727 | 1,454 | - | - | - | 727 | ||||||||||||||||||||||||
| Warrant exchange and debt refinancing costs | - | 466 | - | 466 | ||||||||||||||||||||||||||||
Other | 13 | - | 25 | 15 | 293 | 13 | 680 | 25 | ||||||||||||||||||||||||
Adjusted EBITDA | $ | (25,477 | ) | $ | 12,497 | $ | (14,899 | ) | $ | 34,544 | $ | (22,953 | ) | $ | (25,477 | ) | $ | (43,770 | ) | $ | (14,899 | ) | ||||||||||
The following tables outline the reconciliation for each reportable segment from operating income to Adjusted EBITDA for the three and six months ended June 30, 20202021 and 2019.2020.
Lindblad Segment | For the three months ended June 30, | For the six months ended June 30, | For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||||||||
(In thousands) | 2020 | 2019 | 2020 | 2019 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||
Operating (loss) income | $ | (31,641 | ) | $ | 5,302 | $ | (29,452 | ) | $ | 18,943 | ||||||||||||||||||||||
Operating loss | $ | (31,038 | ) | $ | (31,641 | ) | $ | (58,335 | ) | $ | (29,452 | ) | ||||||||||||||||||||
Depreciation and amortization | 7,939 | 5,774 | 14,188 | 11,568 | 7,823 | 7,939 | 15,690 | 14,188 | ||||||||||||||||||||||||
Stock-based compensation | 703 | 1,001 | 1,601 | 1,754 | 1,129 | 703 | 2,606 | 1,601 | ||||||||||||||||||||||||
National Geographic fee amortization | - | 727 | 727 | 1,454 | - | - | - | 727 | ||||||||||||||||||||||||
| Warrant exchange and debt refinancing costs | - | 466 | - | 466 | ||||||||||||||||||||||||||||
Other | 13 | - | 25 | 15 | 254 | 13 | 254 | 25 | ||||||||||||||||||||||||
Adjusted EBITDA | $ | (22,986 | ) | $ | 13,270 | $ | (12,911 | ) | $ | 34,200 |
| $ | (21,832 | ) | $ | (22,986 | ) | $ | (39,785 | ) | $ | (12,911 | ) | |||||||||
Natural Habitat Segment | For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||
(In thousands) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Operating loss | $ | (3,105 | ) | $ | (1,181 | ) | $ | (3,043 | ) | $ | (458 | ) | ||||
Depreciation and amortization | 614 | 408 | 1,055 | 802 | ||||||||||||
Adjusted EBITDA | $ | (2,491 | ) | $ | (773 | ) | $ | (1,988 | ) | $ | 344 | |||||
Land Experiences Segment | For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||
(In thousands) | 2021 | 2020 | 2021 | 2020 | ||||||||||||
Operating loss | $ | (1,550 | ) | $ | (3,105 | ) | $ | (5,317 | ) | $ | (3,043 | ) | ||||
Depreciation and amortization | 390 | 614 | 772 | 1,055 | ||||||||||||
Stock-based compensation | - | - | 134 | - | ||||||||||||
Other | 39 | - | 426 | - | ||||||||||||
Adjusted EBITDA | $ | (1,121 | ) | $ | (2,491 | ) | $ | (3,985 | ) | $ | (1,988 | ) | ||||
Liquidity and Capital Resources
Due to the spread of the COVID-19 virus and the effects of travel restrictions around the world, we suspended or rescheduled the majority of expeditions and fleet operations departing after March 16, 2020 through September 30, 2020 and have been working with guests to reschedule travel plans and refund payments, as applicable. Our Land Experiences segment has operated limited tours during the first six months of 2021 and our Lindblad segment partially resumed expeditions during June 2021, with expeditions to Alaska and the Galapagos and, following the quarter, we resumed operations on the majority of our remaining vessels with additional ships launching in Alaska and the Galapagos, as well as Iceland. The COVID-19 pandemic has already had a material negative impact on our operations and financial results and we expect the evolving pandemic to have ongoing material negative effects on operations, financial results and liquidity.liquidity as various geographical locations around the world continue to be significantly impacted by COVID-19 and have travel restrictions. Given the dynamic nature of this situation, we cannot reasonably estimate the impacts of the COVID-19 viruspandemic on our financial condition, results of operations, cash flows, plans and growth for the foreseeable future. It is unknown when travel restrictions and various border closures will be completely lifted and what the demand for expedition travel will be once these restrictions are no longer in place.
As of June 30, 2020,2021, we had approximately $412.3$514.7 million in long-term debt obligations, including the current portion of long-term debt. We estimate that our monthly cash usage while our vessels are not in operations is approximately $10-15 million, excluding guest payments for future travel and cash refunds requested on previously made guest payments. To date, the majority of guests on rescheduled voyages have requested future travel credits. Additionally, we continue to see deposits for future travel. We believe that our cash on hand, our Second Export Credit Agreement and expected future operating cash inflows will be sufficient to fund operations, debt service requirements and necessary capital expenditures.expenditures, assuming that our operations resume on the timeline we currently expect.
As we continue to ramp up operations, our monthly cash usage will increase as we incur costs in operating expeditions, preparing additional ships for return to service, spending to market and advertise upcoming expeditions and trips and instating remaining furloughed and part-time office staff as needed. We also 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. However, there can be no assurance that we will commence operating in the near term or if we do commence operations, that the level of initial demand will generate cash flows from operations will be available to fund future obligations. We are currently evaluating several additional strategiesobligations or that we will not experience delays or cancellations with respect to enhancethe resumption of our liquidity position. These strategies may include, but are not limited to, pursuing additional financing from both the public and private markets through the issuance of equity and/or debt. The timing and structure of any transaction, if completed, will depend on market conditions. There can be no assurance that debt or equity financing will be available to us on favorable terms or at all.operations.
Sources and Uses of Cash for the Six Months Ended June 30,, 2020 2021 and 20192020
Net cash usedprovided by operating activities was $21.8 million in 2021 compared to net cash used in operating activities of $36.8 million in 2020 compared to $37.22020. The $58.6 million provided by operations in 2019,increase is primarily due to the reschedulingcash received from guests for deposits on upcoming expeditions and trips partially offset by costs of expeditions due to COVID-19 pandemic.operations.
Net cash used in investing activities was $32.4 million in 2021 compared to $152.0 million in 2020 compared to $42.32020. The $119.6 million in 2019. The $109.7 million increasedecrease was primarily due to the final paymentpayments for the completion of the National Geographic Endurance, and a $30.6 million contracted installment payment for during the first quarter 2020, partially offset mainly by costs associated with building the National Geographic Resolution duringand the current year, partially offset by the $30.2 million initial down-paymentnet cash used for the National Geographic Resolution inacquisitions of Off the first quarter of 2019Beaten Path and other capital expenditures.DuVine during 2021.
Net cash provided by financing activities was $9.6 million in 2021 compared to $181.8 million in 2020 compared to net cash used in financing activities of $5.02020. The $172.3 million in 2019. The $186.8 million increase in cash provided wasdecrease is primarily due to the borrowing $107.7 million under the first senior secured credit agreement for the final contracted payment of the National Geographic Endurance, borrowing $30.6 million under the second senior secured credit agreement for contracted installment payment on the National Geographic Resolution, and a $45.0 million drawdown of our revolving credit facility.
$15.5 million under the senior secured credit agreement for a contracted payment of the Funding SourcesNational Geographic Resolution.
Funding Sources
Debt Facilities
Revolving Credit Facility
Our Third Amended and Restated Credit Agreement (the “Amended Credit Agreement”), provides a $200.0 million senior secured first lien term loan facility (the “Term Facility”), maturing March 2025, and a $45.0 million senior secured incremental revolving credit facility (the “Revolving Facility”), which includes a $5.0 million letter of credit sub-facility. DuringIn March 2020, we drew $45.0 million on our Revolving Facility, maturingwhich matures in March 2023.
The Amended Credit Agreement was amended in August 2020 to waive the application of the total net leverage ratio covenant through June 2021. In connection with the amendment, the interest rate of the Term Facility was increased 125 basis points, to be paid-in-kind at maturity, a LIBOR minimum of 0.75% was added to the Term Facility and certain covenants were amended to be more restrictive. During April 2021, we further amended our Amended Credit Agreement that, among other things, extends the waiver of the total net leverage ratio covenant through March 31, 2022, annualized EBITDA used in the covenant calculation through December 31, 2022 and increases the interest rate spreads of the Term Facility, excluding the Main Street Loan, and the Revolving Facility by 50 basis points. Certain other covenants under the Amended Credit Agreement continue to be more restrictive during the extended covenant waiver period.
In December 2020, we amended the Amended Credit Agreement to provide for the borrowing of a new tranche of incremental term loans under the Amended Credit Agreement in an amount of $85.0 million, maturing December 2025, made under the Main Street Expanded Loan Facility (the “Main Street Loan”). Interest on the Main Street Loan shall be paid-in-kind for the first year and the principal shall amortize at a rate of 15% in each of the third and fourth years, with the remaining amounts to be paid at maturity.
The Term Facility (excluding the Main Street Loan), as amended as of June 30, 2021, bears interest at an adjusted Intercontinental Exchange (“ICE”) Benchmark administration LIBOR, with a minimum of 0.75%, plus a spread of 3.25%5.25%, or 3.41%for an aggregated rate of 6.00% as of June 30, 2020,2021, and the Revolving Facility bears interest at an adjusted ICE Benchmark administration LIBOR plus a spread of 3.00%3.50%, or 3.16%for an aggregated rate of 3.60% as of June 30, 2020. 2021. The Main Street Loan bears interest at a rate per annum of an adjusted ICE Benchmark administration LIBOR for an interest period of 3-months plus 3.00%, for an aggregated rate of 3.15% as of June 30, 2021.
In 2018, we entered into interest rate cap agreements to hedge our exposure to interest rate movements and manage our interest rate expense related to the Term Facility.
Senior Secured Credit Agreements
Our senior secured credit agreement (the “Export Credit Agreement”) mademakes available a loan in an aggregate principal amount not to exceed $107.7 million 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, we took possession of the National Geographic Endurance and borrowed the $107.7 million under the Export Credit Agreement for the final payment.contracted payment of the National Geographic Endurance. The Export Credit Agreement, as amended, bears interest at a floating interest rate equal to three-month LIBOR plus a marginspread of 3.00%3.50% per annum, or 3.31% for3.62% over the borrowing period covered as ofcovering June 30, 2020.2021, with interest and principal payments due every 90 days from borrowing date, with final principal due January 2032.
Our senior secured credit agreement (the “Second Export Credit Agreement”) makes available to us a loan in an aggregate principal amount not to exceed $122.8 million for the purpose of providing pre- and post- delivery financing for up to 80% of the purchase price of Company’s new expedition ice-class vessel, the National Geographic Resolution, scheduled to be delivered in the fourth quarter of 2021. The Second Export Credit Agreement, as amended, bears a variable interest rate equal to three-month LIBOR plus a marginspread of 3.00%3.50% per annum, or 3.31% for3.62% over the borrowing period covered as ofcovering June 30, 2020.2021. After completion of the vessel, the Second Export Credit Agreement, at our option, will bear an interest rate of either a fixed rate of 6.36% or a variable rate equal to three-month LIBOR plus a margin of 3.00% per annum. In September 2019, April 2020 and April 2020,2021, we drew approximately $30.5 million, and $30.6 million and $15.5 million, respectively, underagainst the Second Export Credit Agreement for the second and third contracted installment payments respectively, on the National Geographic Resolution. The final 30% is due upon delivery and acceptance of the vessel. During 2019, we entered into foreign exchange forward contracts, designated as cash flow hedges, to hedge our exposure to the Norwegian kroner (“NOK”), related to our installment payments under the contract to purchase the National Geographic Resolution.
The Company has also amended both its export credit agreements and term loan and revolving credit facilities. During
In June 2020, the Companywe amended itsour export credit agreements to defer approximately $9.0 million in aggregate scheduled amortization payments from June 2020 throughto March 2021 and to suspend the total net leverage ratio covenant from June 2020 through June 2021. On August 7, 2020, the Company amended its term loan and revolving credit facilities to waive the application of the total net leverage ratio covenant through June 2021. In connection withDuring June 2021, we further amended our export credit agreements to, among other things, extend the amendment,deferral of scheduled amortization payments of the first export credit agreement through December 2021 in the aggregate amount of $15.7 million, extend the waiver of the total leverage ratio covenant through March 31, 2022, increase interest rate spreads of the term loan has been increasedexport credit agreements by 125bps, to be paid-in-kind at maturity, a LIBOR floor of 75bps has been added to each facility50 basis points and certainannualize EBITDA used in the covenant calculation through December 31, 2022. The deferred principal payments will amortize quarterly over three years starting March 2022. Certain other covenants have been amendedcontinue to be more restrictive.
The Amended Credit Agreement,restrictive during the Export Credit Agreement and the Second Export Credit Agreement contain financial and restrictive covenants. As of June 30, 2020, weextended covenant waiver period. We were in compliance with our covenants.covenants in effect as of June 30, 2021.
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. 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 will be 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 any time after the third anniversary of the issuance, we may, at our 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 number of shares of common stock received in such conversion shall be equal to the quotient obtained by dividing the then-current accrued value by the conversion price. 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.
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 credit facilities, make long-term investments or any other use of cash. AsWhile traditionally we run a working capital deficit due primarily to a large balance of unearned passenger revenues, as of June 30, 20202021 and December 31, 2019,2020, we had a working capital deficit of $36.7$2.5 million and $36.3working capital of $73.4 million, respectively. At December 31, 2020, the working capital balance was a result of lower unearned passenger revenues while we were not operating and higher cash balances driven by the debt borrowings and a preferred share offering during the year. As of June 30, 20202021 and December 31, 2019,2020, we had $80.9$160.1 million and $101.6$187.5 million, respectively, in cash and cash equivalents, excluding restricted cash.
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. All repurchases were made using cash resources. During March 2020, the three months ended June 30, 2020, we repurchased 8,517 sharesRepurchase Plan was suspended due to the uncertain impact of commonthe COVID-19 pandemic and our borrowings through the Main Street Expanded Loan Facility program places restrictions on stock for approximately $127,000.repurchases. 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 June 30, 2020. During March 2020, the Repurchase Plan was suspended due to the uncertain impact of the COVID-19 virus.2021.
In February 2019, we entered into an agreement with Ulstein Verft to construct a polar ice-class vessel, the National Geographic Resolution, a sister ship of the National Geographic Endurance, with a total purchase price of 1,291.0 million Norwegian Kroner (NOK). In MarchNOK, which was amended in December 2019 we entered into foreign exchange forward contract hedges to lock(i) provide a $4 million loan to the builder, to be repaid at 112% of the principle balance on maturity in December 2023, and (ii) an expedited delivery incentive that, if the National Geographic Resolution is delivered early, as determined by the expedited delivery schedule per the agreement, that all or a purchase priceportion of $153.5 million, including hedging costs. The purchase price is subject to potential adjustments from contract specifications for variations in speed, deadweight, fuel consumptionthe of the loan will be considered as a delivery bonus and delivery date.forgiven. The purchase price is due in installments, with the first 20% paid shortly after execution of the agreement, 20% in September 2019, 20% in April 2020, 10% due in April 202150% being paid over the duration of the build and the final 30% due upon delivery and acceptance of the vessel. The vessel is scheduled to be delivered in the fourth quarter of 2021. The new-build process exposes us to certain risks typically associated
with new ship construction which we manage through detailed planning and close monitoring by our internal marine team. In September 2019, April 2020, and April 2020,2021, we drew approximately $30.5 million, and $30.6 million and $15.5 million, respectively, underagainst the Second Export Credit Agreement for the contracted installment payments.payments on the National Geographic Resolution. The final 30% is due upon delivery and acceptance of the vessel. The remaining purchase price of the vessel is expected towill be funded through a combination of available cash, available on our balance sheet,borrowing under our Second Export Credit Agreement and our Revolving Facility and excess cash flows generated by our existing operations.
During March 2020, we borrowed the $107.7 million under the Export Credit Agreement for the final contracted payment of the National Geographic Endurance and drew $45.0 million on our Revolver Facility. During April 2020, we drew $30.6 millionThe additional borrowings under the Second Export Credit Agreement for a contracted installment payment on the National Geographic Resolution. During May 2020, we amended the maturity datesand amendments of the note payable and during June 2020, we amended the senior secured credit agreements. The additional borrowings and amendmentsExport Credit Agreement created material changes in our future obligations from those reported in our 20192020 Annual Report. The additionalchanged or amended related obligations as of June 30, 20202021 are as follows:
(In thousands) |
| Total |
|
| Current |
|
| 1-2 years |
|
|
| 3-4 years |
|
|
| Thereafter |
| |||
Export Credit Agreement |
| $ | 107,695 |
|
| $ | 2,805 |
|
| $ | 22,436 |
|
| $ | 41,620 |
|
| $ | 40,834 |
|
Second Export Credit Agreement | 30,644 | - | - | - | 30,644 | |||||||||||||||
Revolver |
|
| 45,000 |
|
|
| - |
|
|
| 45,000 |
|
|
| - |
|
|
| - |
|
Note Payable |
|
| 2,525 |
|
|
| 842 |
|
|
| 1,683 |
|
|
| - |
|
|
| - |
|
Payments due by period | ||||||||||||||||||||
(In thousands) | Total | Current | 1-2 years | 3-4 years | Thereafter | |||||||||||||||
Financing Activities: | ||||||||||||||||||||
Export Credit Agreement (a) | $ | 107,695 | $ | 6,450 | $ | 25,802 | $ | 39,320 | $ | 36,123 | ||||||||||
Second Export Credit Agreement (b) | 76,604 | 3,192 | 12,767 | 12,767 | 47,878 | |||||||||||||||
Total | $ | 184,299 | $ | 9,642 | $ | 38,569 | $ | 52,087 | $ | 84,001 | ||||||||||
(a) | The June 2021 amendment to the Export Credit Agreement deferred principal amortization payments through December 31, 2021, as described above. |
(b) | The balance and future obligations reflect the April 2021 $15.5 million additional borrowing under the Second Export Credit Agreement for contracted installment payment on the National Geographic Resolution. |
Off-Balance Sheet Arrangements
In 2019, we entered into a Second Export Credit Agreement as described above.
Critical Accounting Policies
For a detailed discussion of the Critical Accounting Policies, please see our 20192020 Annual Report.
|
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 20192020 Annual Report.
We are exposed to a market risk for interest rates related to our variable rate debt.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 1.0%100 basis point change in interest rates. For additional information regarding our long-term borrowings see Note 5 to our Condensed Consolidated Financial Statements.Statements included herein. As of June 30, 2020,2021, we had interest rate cap agreements to hedge a portion of our exposure to interest rate movements of our variable rate debt and to manage our interest expense. The notional amount of outstanding debt associated with interest rate cap agreements as of June 30, 20202021 was $100.0 million. Based on our June 30, 20202021 outstanding variable rate debt balance, a hypothetical 1.0% change100 basis point increase in the six-month LIBOR interest rates related to our variable interest rate debt instruments would impact our annual interest expense by approximately $1.0$3.8 million.
As of June 30, 2020,2021, we had foreign currency forward contracts to hedge our exposure to foreign currency exchange rate risk related to our ship construction contracts denominated in NOK. For the six months ended June 30, 2020,2021, we recorded a loss of approximately $3.9$0.5 million in other comprehensive income related to these foreign exchange derivatives. During the six months ended June 30, 2021, we reclassified a loss of $0.1 million from other comprehensive income to a loss on foreign currency due to the maturity of a foreign exchange contract that was designated as a cash flow hedge. The strengthening of the NOK at June 30, 20202021 by a hypothetical 10%, would result in an approximately $6.0$5.0 million gain being recorded in other comprehensive income. The weakening of the NOK at June 30, 20202021 by a hypothetical 10%, would result in an approximately $4.9$4.1 million loss being recorded in other comprehensive income.
|
Evaluation of Disclosure Controls and Procedures
Under the supervisionOur management is responsible for establishing and with the participation of our management, including our principal executive officer and principalmaintaining adequate internal control over financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the quarter ended June 30, 2020,reporting, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act Rule 13a-15(f). Our internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of 1934,financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as amended (the “Exchange Act”)necessary to permit preparation of financial statements in accordance with GAAP and that our receipts and expenditures are being made only in accordance with authorizations of our management and our directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting, as of June 30, 2021, using the criteria described in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on thisthe evaluation our principal executive officer and principal financial and accounting officer haveunder the updated internal control framework in Internal Control-Integrated Framework (2013), management concluded that duringinternal control over financial reporting were effective as of June 30, 2021.
Management has taken steps to date, as described below under “Remediation Plan,” to remediate the period covered byprior material weakness in our internal control over financial reporting identified at December 31, 2020. Management believes that the financial statements included in this report,Quarterly Report on Form 10-Q fairly present, in all material respects, our disclosurefinancial condition, results of operations and cash flows for the periods presented.
Description of Material Weakness
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
During our assessment of our internal controls in connection with the preparation of our 2020 Annual Report, management identified a material weakness in internal controls over financial reporting related to having inadequate documentation to evidence the review over certain accounting journal entries and account reconciliations. These control deficiencies, if not remediated, could have resulted in a misstatement to the annual or interim consolidated financial statements that would not have been prevented or detected. Accordingly, our management has determined that these control deficiencies constituted material weaknesses.
RemediationPlan
Management had previously established a comprehensive set of controls and procedures were effective.
Disclosureover financial reporting. However, in several instances during the year ended December 31, 2020 we noted a lack of complete compliance with these controls and procedures, are designedspecifically related to the required documentation of certain review procedures performed. Management has taken additional steps to ensure consistent compliance with those controls and procedures, as well as to ensure appropriate documentation of reviews that information requiredhave taken place. Measures we have taken to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported withinremediate the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.prior material weakness at December 31, 2020 described above include:
● | Additional ongoing communications and training to employees across the entire organization regarding the importance of adhering to control procedures and maintaining proper documentation. | |
● | Enhanced communications and documentation regarding reviews of journal entries and balance sheet reconciliations in a timely manner. | |
● | Additional layers of examination to ensure appropriate review procedures over journal entries and balance sheet reconciliations have taken place and have been subsequently documented appropriately. | |
● | Exploring the ability to further leverage our information technology resources and general ledger system to enhance communication and documentation of review over journal entries and balance sheet reconciliations. |
We are committed to maintaining a strong internal control environment, and we believe the measures described above have strengthened our internal control over financial reporting and remediated the material weakness we have identified.
Changes in Internal Control over Financial Reporting
ThereExcept as described above under Remediation Plan, 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.
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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 our 2019the 2020 Annual Report filed on February 26, 2020, and those discussed in Item 1A. Risk Factors in our Quarterly Report on Form 10-Q for the period ended March 31, 2020, as filed on May 6, 2020.Report.
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Recent Sales by the Company of Unregistered Securities
There were no unregistered sales of equity securities during the quarter ended June 30, 2020.2021.
Repurchases of Securities
The Company’sOur 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 the Companyus to purchase from time to time the Company’sour 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 the Company’sour 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. During March 2020, the three months ended March 31, 2020, we repurchased 8,517 sharesRepurchase Plan was suspended due to the uncertain impact of commonthe COVID-19 pandemic and our borrowings through the Main Street Expanded Loan Facility program places restrictions on stock for approximately $127,000.repurchases. 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 remaining balance for the Repurchase Plan was $12.0 million as of June 30, 2020. In March 2020, the Repurchase Plan was suspended due to the uncertain impact of the COVID-19 virus.2021.
No shares were repurchased under the Repurchase Plan during the three months ended June 30, 2020. The following table represents information with respect to shares of common stock repurchased under the Repurchase Plan as well as shares withheld from vesting of stock-based compensation awards for employee income taxes, 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 | ||||||||||||
April 1 through April 30, 2020 (a) | 39,269 | $ | 3.80 | $ | - | $ | 11,974,787 | |||||||||
May 1 through May 31, 2020 (a) | 8,600 | 7.75 | - | 11,974,787 | ||||||||||||
June 1 through June 30, 2020 (a) | 93 | 10.23 | - | 11,974,787 | ||||||||||||
Total | 47,962 | $ | - | |||||||||||||
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 | ||||||||||||
April 1 through April 30, 2021 (a) | 2,754 | $ | 17.56 | $ | - | $ | 11,974,787 | |||||||||
May 1 through May 31, 2021 | - | - | - | 11,974,787 | ||||||||||||
June 1 through June 30, 2021 (a) | 10,918 | 18.03 | - | 11,974,787 | ||||||||||||
Total | 13,672 | $ | - | |||||||||||||
(a) | Amount relates to shares withheld from vesting's of stock-based compensation awards for employee income tax withholding. |
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Not applicable.
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Not applicable.
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On August 7, 2020, the Company amended its term loan and revolving credit facilities to waive the application of the total net leverage ratio covenant through June 2021. In connection with the amendment, the interest rate of the term loan has been increased by 125bps, to be paid-in-kind at maturity, a LIBOR floor of 75bps has been added to each facility and certain covenants have been amended to be more restrictive.Not applicable.
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Number | Description | Included | Form | Filing Date | |||||
| 10.1 | Lindblad Expeditions Holdings, Inc. 2021 Long Term Incentive Plan. | DEF 14A | April 19, 2021 | ||||||
| 10.2 | Amendment No | 8-K | June | ||||||
| Amendment No | 8-K | June | |||||||
| 17, 2021 | |||||||||
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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 | Herewith | |||||||
101.CAL | Inline XBRL Taxonomy | Herewith | |||||||
101.DEF | Inline XBRL Taxonomy Extension Definition | Herewith | |||||||
101.LAB | Inline XBRL Taxonomy | Herewith | |||||||
101.PRE | Inline XBRL Taxonomy | 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 August 10, 2020.4, 2021.
LINDBLAD EXPEDITIONS HOLDINGS, INC. | ||
(Registrant) | ||
By | /s/ | |
Dolf Berle | ||
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Chief Executive Officer | ||