Docoh
Loading...

LIND Lindblad Expeditions

Filed: 30 Oct 19, 5:24pm
 

 

 

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 September 30, 2019

 

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, 9th Floor, New York, New York, 10014

 

(212) 261-9000

(Address of principal executive offices) (Zip Code)

 

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

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 Exchange LLC

 

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.

 

As of October 29, 2019, 49,716,067 shares of common stock, par value $0.0001 per share, were issued and outstanding.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PART 1.

FINANCIAL INFORMATION

Item 1.

FINANCIAL STATEMENTS

 

LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

 

 

  

As of September 30, 2019

  

As of December 31, 2018

 

ASSETS

 

(unaudited)

     

Current Assets:

        

Cash and cash equivalents

 $104,135  $113,396 

Restricted cash

  7,995   8,755 

Marine operating supplies

  5,479   5,165 

Inventories

  1,910   1,604 

Prepaid expenses and other current assets

  24,044   21,263 

Total current assets

  143,563   150,183 
         

Property and equipment, net

  345,280   285,979 

Goodwill

  22,105   22,105 

Intangibles, net

  6,791   7,975 

Right-to-use lease assets

  6,357   - 

Other long-term assets

  5,517   7,167 

Total assets

 $529,613  $473,409 
         

LIABILITIES

        

Current Liabilities:

        

Unearned passenger revenues

 $124,605  $123,489 

Accounts payable and accrued expenses

  32,914   33,944 

Lease liabilities - current

  1,302   - 

Long-term debt - current

  2,000   2,000 

Total current liabilities

  160,821   159,433 
         

Long-term debt, less current portion

  216,117   188,089 

Deferred tax liabilities

  6,964   2,787 

Lease liabilities

  5,272   - 

Other long-term liabilities

  5,083   554 

Total liabilities

  394,257   350,863 
         

COMMITMENTS AND CONTINGENCIES

        
         

REDEEMABLE NONCONTROLLING INTEREST

  7,336   6,502 
         

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; 49,716,067 and 45,814,925 issued, 49,625,043 and 45,442,728 outstanding as of September 30, 2019 and December 31, 2018, respectively

  5   5 

Additional paid-in capital

  45,377   41,539 

Retained earnings

  90,339   75,171 

Accumulated other comprehensive income

  (7,701)  (671)

Total stockholders' equity

  128,020   116,044 

Total liabilities, stockholders' equity and redeemable noncontrolling interest

 $529,613  $473,409 

 

 The accompanying notes are an integral part of these condensed consolidated financial statements.

 

1

 

 

 

  

LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(In thousands, except share and per share data)

(unaudited)

 

 

  

For the three months ended September 30,

  

For the nine months ended September 30,

 
  

2019

  

2018

  

2019

  

2018

 
                 

Tour revenues

 $100,983  $87,242  $267,294  $239,125 
                 

Operating expenses:

                

Cost of tours

  48,294   44,964   124,831   114,645 

General and administrative

  15,266   14,718   47,615   45,647 

Selling and marketing

  15,531   12,255   42,100   34,911 

Depreciation and amortization

  6,233   5,024   18,603   15,062 

Total operating expenses

  85,324   76,961   233,149   210,265 
                 

Operating income

  15,659   10,281   34,145   28,860 
                 

Other (expense) income:

                

Interest expense, net

  (3,214)  (2,409)  (9,391)  (8,013)

(Loss) gain on foreign currency

  (2,338)  163   (1,181)  (1,430)

Other (expense) income

  (30)  1   (79)  (118)

Total other expense

  (5,582)  (2,245)  (10,651)  (9,561)
                 

Income before income taxes

  10,077   8,036   23,494   19,299 

Income tax expense

  7,351   2,690   4,838   3,194 
                 

Net income

  2,726   5,346   18,656   16,105 

Net income attributable to noncontrolling interest

  565   279   834   107 
Net income attributable to Lindblad Expeditions Holdings, Inc  2,161   5,067   17,822   15,998 
Non-cash deemed dividend to warrant holders  2,654   -   2,654   - 
                 

Net (loss) income available to common stockholders

 $(493) $5,067  $15,168  $15,998 
                 

Weighted average shares outstanding

                

Basic

  48,863,506   45,423,127   46,704,634   45,356,438 

Diluted

  48,863,506   47,690,395   49,091,370   45,963,669 
                 

Net (loss) income per share available to common stockholders

                

Basic

 $(0.01) $0.11  $0.32  $0.35 

Diluted

 $(0.01) $0.11  $0.31  $0.35 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

2

 

 

 

  

LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(unaudited)

 

 

  

For the three months ended September 30,

  

For the nine months ended September 30,

 
  

2019

  

2018

  

2019

  

2018

 
                 

Net income

 $2,726  $5,346  $18,656  $16,105 

Other comprehensive income:

                

Cash flow hedges:

                
Net unrealized (loss) gain  (7,393)  157   (8,654)  230 
Reclassification adjustment, net of tax  1,624   -   1,624   - 

Total other comprehensive (loss) income

  (5,769)  157   (7,030)  230 

Total comprehensive (loss) income

  (3,043)  5,503   11,626   16,335 

Less: comprehensive income attributive to non-controlling interest

  565   279   834   107 

Comprehensive (loss) income attributable to common shareholders

 $(3,608) $5,224  $10,792  $16,228 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

3

 

 

 

  

LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

(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 June 30, 2019

  45,801,025  $5  $41,617  $90,832  $(1,932) $130,522 

Stock-based compensation

  -   -   917   -   -   917 
Issuance of stock for equity compensation plans, net  19,391   -   (95)  -   -   (95)

Warrants

  3,895,651   -   2,938   (2,654)  -   284 

Other comprehensive income, net

  -   -   -   -   (5,769)  (5,769)

Net income attributable to Lindblad Expeditions Holdings, Inc

  -   -   -   2,161   -   2,161 
Balance as of September 30, 2019  49,716,067  $5  $45,377  $90,339  $(7,701) $128,020 

 

 

  

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

  -   -   2,671   -   -   2,671 

Issuance of stock for equity compensation plans, net

  4,786   -   (1,778)  -   -   (1,778)

Repurchase of shares and warrants

  (1,895)  -   (23)  -   -   (23)

Warrants

  3,898,251   -   2,968   (2,654)  -   314 

Other comprehensive income, net

  -   -   -   -   (7,030)  (7,030)

Net income attributable to Lindblad Expeditions Holdings, Inc

  -   -   -   17,822   -   17,822 

Balance as of September 30, 2019

  49,716,067  $5  $45,377  $90,339  $(7,701) $128,020 

 

The accompanying notes are an integral part of these condensed consolidated financial statements. 

 

4

 

 

LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

(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 June 30, 2018

  45,775,648  $5  $39,172  $74,750  $73  $114,000 

Stock-based compensation

  -   -   1,271   -   -   1,271 

Issuance of stock for equity compensation plans, net

  39,777   -   (52)  -   -   (52)

Other comprehensive income, net

  -   -   -   -   157   157 

Net income available to common stockholders

  -   -   -   5,067   -   5,067 

Balance as of September 30, 2018

  45,815,425  $5  $40,391  $79,817  $230  $120,443 

 

 

  

Common Stock

  

Additional Paid-In

  

Retained

  

Accumulated Other Comprehensive

  

Total Stockholders'

 
  

Shares

  

Amount

  

Capital

  

Earnings

  

Loss

  

Equity

 

Balance as of January 1, 2018

  45,427,030  $5  $42,498  $63,819  $-  $106,322 

Stock-based compensation

  -   -   3,256   -   -   3,256 

Issuance of stock for equity compensation plans, net

  397,425   -   (4,509)  -   -   (4,509)

Other comprehensive income, net

  -   -   -   -   230   230 

Repurchase of shares and warrants

  (9,030)  -   (854)  -   -   (854)

Net income available to common stockholders

  -   -   -   15,998   -   15,998 

Balance as of September 30, 2018

  45,815,425  $5  $40,391  $79,817  $230  $120,443 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements. 

 

5

 

 

 

  

LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(unaudited)

 

 

  

For the nine months ended September 30,

 
  

2019

  

2018

 

Cash Flows From Operating Activities

        

Net income

 $18,656  $16,105 

Adjustments to reconcile net income to net cash provided by operating activities:

        

Depreciation and amortization

  18,603   15,062 

Amortization of National Geographic fee

  2,181   2,181 

Amortization of deferred financing costs and other, net

  1,392   1,477 

Stock-based compensation

  2,671   3,256 

Deferred income taxes

  4,177   2,653 

Loss on foreign currency

  1,181   1,430 

Write-off of unamortized issuance costs related to debt refinancing

  -   359 

Loss on write-off of assets

  -   129 

Changes in operating assets and liabilities

        

Marine operating supplies and inventories

  (620)  169 

Prepaid expenses and other current assets

  (2,780)  (1,806)

Right-to-use lease assets

  (6,357)  - 

Lease liabilities

  6,574   - 

Unearned passenger revenues

  1,116   449 

Other long-term assets

  (7,561)  (1,981)

Other long-term liabilities

  4,530   22 

Accounts payable and accrued expenses

  (2,213)  (247)

Net cash provided by operating activities

  41,550   39,258 
         

Cash Flows From Investing Activities

        

Purchases of property and equipment

  (76,720)  (45,510)

Net cash used in investing activities

  (76,720)  (45,510)
         

Cash Flows From Financing Activities

        

Proceeds from long-term debt

  30,476   200,000 

Repayments of long-term debt

  (1,500)  (171,125)

Payment of deferred financing costs

  (2,340)  (6,486)

Repurchase under stock-based compensation plans and related tax impacts

  (1,778)  (4,509)
Warrants exercised  314   - 

Repurchase of warrants and common stock

  (23)  (854)

Net cash provided by financing activities

  25,149   17,026 

Effect of exchange rate changes on cash

  -   7 

Net (decrease) increase in cash, cash equivalents and restricted cash

  (10,021)  10,781 

Cash, cash equivalents and restricted cash at beginning of period

  122,151   103,500 
         

Cash, cash equivalents and restricted cash at end of period

 $112,130  $114,281 
         

Supplemental disclosures of cash flow information:

        

Cash paid during the period:

        

Interest

 $10,651  $9,952 

Income taxes

 $1,893  $468 

Non-cash investing and financing activities:

        

Additional paid-in capital exercise proceeds of option shares

 $225  $1,682 

Additional paid-in capital exchange proceeds used for option shares

 $(225) $(1,682)
Non-cash deemed dividend to warrant holders $2,654  $- 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

6

 

 

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 subsidiaries (the “Company” or “Lindblad”) mission is offering life-changing adventures around the world and pioneering innovative ways to allow its guests to connect with exotic and remote places. The Company currently operates a fleet of eight owned expedition ships and five seasonal charter vessels under the Lindblad brand and operates eco-conscious expeditions and nature-focused, small-group tours under the Natural Habitat, Inc. (“Natural Habitat”) brand.

 

The Company operates the following reportable business segments:

 

Lindblad – primarily ship-based expeditions aboard customized, nimble and intimately-scaled vessels that are able to venture where larger cruise ships cannot, thus allowing Lindblad to offer up-close experiences in the planet’s wild and remote places and capitals of culture. Many of these expeditions involve travel to remote places with limited infrastructure and ports, such as Antarctica and the Arctic, or places that are best accessed by a ship, such as the Galápagos Islands, Alaska, Baja’s Sea of Cortez, Costa Rica and 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.

 

Natural Habitat – primarily land-based adventure travel expeditions around the globe, as well as select itineraries on small chartered vessels for parts of the year, with unique itineraries designed to offer intimate encounters with nature and our planet's wild destinations. Natural Habitat creates opportunities for adventure and discovery that transform lives with expeditions 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.

 

The Company’s common stock is listed on the NASDAQ Capital Market under the symbol “LIND”.

 

 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 (“U.S. 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, 2018 contained in the Company’s Annual Report on Form 10-K filed with the SEC on February 28, 2019 (the “2018 Annual Report”).

 

The presentation of certain prior year items in the notes to the condensed consolidated financial statements of the Company have been reclassified to conform to the 2019 presentation. The reclassifications had no effect on previously reported results of operations or retained earnings.

 

There have been no significant changes to the Company’s accounting policies from those disclosed in the 2018 Annual Report other than those noted below.

7

 

 

The Company accounts for its various operating leases in accordance with Accounting Standards Codification (“ASC”) 842-Leases, as updated by Accounting Standards Update (“ASU”) 2016-02. At the inception of a lease, the Company recognizes right-of-use lease assets and related lease liabilities measured as the present value of future lease payments on its balance sheet. Lease expense is recognized on a straight-line basis over the term of the lease. The Company reviewed its contracts with vendors and customers, determining that its right-to-use lease assets consisted primarily of office space operating leases. In determining the right-to-use lease assets and related lease liabilities, the Company did not recognize any lease extension options and elected to exclude leases with terms of 12-months or less. During the three and nine months ended September 30, 2019, the Company recognized $0.4 million and $1.1 million, respectively, in operating lease expense. During the three and nine months ended September 30, 2018, the Company recognized $0.4 million and $1.1 million, respectively, in operating lease expense. As of September 30, 2019, the Company’s remaining weighted average operating lease terms were approximately 67 months. A reconciliation of operating lease payments undiscounted cash flows to lease liabilities recognized as of September 30, 2019 is as follows:

 

(In thousands)

 

Operating Lease Payments

 
  

(unaudited)

 

Remainder of 2019

 $303 

2020

  1,335 

2021

  1,372 

2022

  1,437 

2023

  1,324 

Thereafter

  1,922 

Present value discount (6% weighted average)

  (1,119

)

Total lease liability

 $6,574 

 

Accounting Pronouncements Recently Adopted

 

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842) and in July 2018 issued ASU 2018-11, Leases (Topic 842): Targeted Improvements. The guidance requires the recognition of lease right-of-use assets and lease liabilities by lessees for those leases previously classified as operating. This guidance was issued to increase transparency and comparability among organizations by disclosing key information about leasing arrangements and requiring the recognition of current and non-current right-of-use assets and lease liabilities on the balance sheet. Most prominent among the changes in the standard is the recognition of right-of-use assets and lease liabilities by lessees for those leases classified as operating leases. ASU 2016-02 was effective for fiscal years beginning after December 15, 2018. The Company adopted this guidance on January 1, 2019, as required, electing to apply retrospectively at the period of adoption with practical expedients. The adoption of this guidance had a material impact on the Company’s balance sheet by virtue of including the present value of its future operating lease payments as a liability of $6.2 million and related right-to-use lease assets as of January 1, 2019.

 

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. This amendment is intended to improve the effectiveness of fair value measurement disclosures by adding and modifying a few disclosure requirements, as well as eliminating several disclosures. ASU 2018-13 was effective for fiscal years beginning after December 15, 2018. The Company adopted this guidance on January 1, 2019, as required, and it did not have a material impact on the Company’s financial position or results of operations.

 

In August 2018, the FASB issued ASU 2018-15 Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software, and hosting arrangements that include an internal-use software license. ASU 2018-15 was effective for fiscal years beginning after December 15, 2019 and early adoption was permitted. The Company adopted this guidance on January 1, 2019, and it did not have a material impact on the Company's financial statements.

 

8

 

 

 

 

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 nine months ended September 30, 2019 and 2018, the Company calculated earnings per share as follows:

 

  

For the three months ended September 30,

  

For the nine months ended September 30,

 

(In thousands, except share and per share data)

 

2019

  

2018

  

2019

  

2018

 
  

(unaudited)

  

(unaudited)

  

(unaudited)

  

(unaudited)

 
Net income attributable to Lindblad Expeditions Holdings, Inc $2,161  $5,067  $17,822  $15,998 
Non-cash deemed dividend to warrant holders  2,654   -   2,654   - 

Net (loss) income available to common stockholders

 $(493) $5,067  $15,168  $15,998 
                 

Weighted average shares outstanding:

                

Total weighted average shares outstanding, basic

  48,863,506   45,423,127   46,704,634   45,356,438 

Dilutive potential common shares

  -   2,267,268   2,386,736   607,231 

Total weighted average shares outstanding, diluted

  48,863,506   47,690,395   49,091,370   45,963,669 
                 

Net (loss) income per share available to common stockholders

                

Basic

 $(0.01) $0.11  $0.32  $0.35 

Diluted

 $(0.01) $0.11  $0.31  $0.35 

 

For the three months ended September 30, 2019, diluted weighted average shares outstanding equals basic weighted average shares outstanding as the Company incurred a net loss available to common stockholders. For the nine months ended September 30, 2019, 0.1 million restricted shares are excluded from dilutive potential common shares as performance conditions have not been met. For the three and nine months ended September 30, 2018, 0.2 million restricted shares are excluded from dilutive potential common shares as performance conditions have not been met.

 

On July 17, 2019, the Company completed a consent solicitation and exchange offer relating to the Company’s previously outstanding warrants (see Note 7 – Stockholders' Equity for more information). 

 

 

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. 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 the Company's condensed consolidated balance sheets are as follows:

 

  

Contract Liabilities

 

(In thousands)

 

(unaudited)

 

Balance as of January 1, 2019

 $70,903 

Recognized in tour revenues during the period

  (204,935)

Additional contract liabilities in period

  192,864 

Balance as of September 30, 2019

 $58,832 

 

The following table disaggregates total revenues by revenue type:

 

  

For the three months ended September 30,

  

For the nine months ended September 30,

 
  

2019

  

2018

  

2019

  

2018

 

(In thousands)

 

(unaudited)

  

(unaudited)

  

(unaudited)

  

(unaudited)

 

Guest ticket revenues

 $94,100  $80,265  $244,171  $218,010 

Other tour revenue

  6,883   6,977   23,123   21,115 

Tour revenues

 $100,983  $87,242  $267,294  $239,125 

 

9

 

 

 

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 nine months ended September 30,

 

(In thousands)

 

2019

  

2018

 
  

(unaudited)

  

(unaudited)

 

Cash and cash equivalents

 $104,135  $105,688 

Restricted cash

  7,995   8,593 

Total cash, cash equivalents and restricted cash as presented in the statement of cash flows

 $112,130  $114,281 

 

Restricted cash consists of the following:

 

(In thousands)  As of September 30, 2019   As of December 31, 2018 
  

(unaudited)

     

Federal Maritime Commission escrow

 $6,476  $5,823 

Certificates of deposit and other restricted securities

  1,519   1,402 

Credit card processor reserves

  -   1,530 

Total restricted cash

 $7,995  $8,755 

 

Prepaid expenses and other current assets consist of the following:

 

(In thousands)

 

As of September 30, 2019

  

As of December 31, 2018

 
  

(unaudited)

     

Prepaid tour expenses

 $13,358  $10,617 

Prepaid air expense

  3,386   2,973 

Prepaid corporate insurance

  2,358   1,158 

Prepaid client insurance

  2,223   2,436 

Prepaid marketing, commissions and other expenses

  2,064   2,622 

Prepaid port agent fees

  382   1,433 

Prepaid income taxes

  273   24 

Total prepaid expenses

 $24,044  $21,263 

 

Accounts payable and accrued expenses consist of the following:

 

(In thousands)

 

As of September 30, 2019

  

As of December 31, 2018

 
  

(unaudited)

     

Accrued other expense

 $9,849  $11,464 

Accounts payable

  6,122   9,326 

Bonus compensation liability

  4,875   5,195 

Employee liability

  3,505   2,943 
Foreign currency forward contract liability  3,048   387 

Royalty payable

  1,859   1,005 

Income tax liabilities

  1,352   576 

Travel certificate liability

  977   1,088 

Refunds and commissions payable

  850   1,533 

Accrued travel insurance expense

  477   427 

Total accounts payable and accrued expenses

 $32,914  $33,944 

 

10

 

 

 

NOTE 5 – LONG-TERM DEBT

 

  

As of September 30, 2019

  

As of December 31, 2018

 
  

(unaudited)

             

(In thousands)

 

Principal

  

Deferred Financing Costs, net

  

Balance

  

Principal

  

Deferred Financing Costs, net

  

Balance

 

Note payable

 $2,525  $-  $2,525  $2,525  $-  $2,525 

Credit Facility

  197,500   (10,155)  187,345   199,000   (11,436)  187,564 
Senior Secured Credit Agreement  30,476   (2,229)  28,247   -   -   - 

Total long-term debt

  230,501   (12,384)  218,117   201,525   (11,436)  190,089 

Less current portion

  (2,000)  -   (2,000)  (2,000)  -   (2,000)

Total long-term debt, non-current

 $228,501  $(12,384) $216,117  $199,525  $(11,436) $188,089 

 

For the three and nine months ended September 30, 2019, deferred financing costs charged to interest expense was $0.5 million and $1.4 million, respectively. For the three and nine months ended September 30, 2018, deferred financing costs charged to interest expense was $0.4 million and $1.5 million, respectively.

 

Credit Facility

 

In March 2018, the Company entered into the Third 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”), which includes a $5.0 million letter of credit sub-facility. The Term Facility bears interest at an adjusted Intercontinental Exchange Benchmark administration LIBOR plus a spread of 3.250%, for an aggregated rate of 5.266% as of September 30, 2019. Borrowings under the Revolving Facility may be used for general corporate and working capital purposes and related fees and expenses. As of September 30, 2019, the Company had no borrowings under the Revolving Facility.

 

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 (“Citi”) and Eksportkreditt Norge AS (“EK” and together with Citi, the “Lenders”), to 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, targeted to be completed in the first quarter of 2020. If drawn upon, the loan will be made at the time of delivery of the vessel. The Export Credit Agreement, at the Company's election, will bear interest either at a fixed interest rate effectively equal to 5.78% or a floating interest rate equal to three-month LIBOR plus a margin of 3.00% per annum.

 

On April 8, 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 agreed 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. The Second Export Credit Agreement bears a variable interest rate equal to three-month LIBOR plus a margin of 3.00% per annum, or 5.09% as of September 30, 2019. 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. 30% of the borrowing will mature over five years from drawdown, and 70% of the borrowing will mature over twelve years from drawdown. Additionally, 70% percent of the loan will be guaranteed by Garantiinstituttet for eksportkreditt, the official export credit agency of Norway. The Company incurred approximately $2.3 million in financing fees related to the Second Export Agreement, recorded as deferred financing costs as part of long-term debt. During September 2019, the Company drew approximately $30.5 million against the Second Export Credit Agreement for the second contracted installment payment on the National Geographic Resolution.

 

Note Payable

 

In connection with the Natural Habitat acquisition in May 2016, Natural Habitat issued an unsecured promissory note to Benjamin L. Bressler, the founder of Natural Habitat, with an outstanding principal amount of $2.5 million due at maturity on December 31, 2020. The promissory note accrues interest at a rate of 1.44% annually, with interest payable every six months.

 

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, limits on additional indebtedness and limits on certain investments. As of September 30, 2019, the Company was in compliance with its covenants.

 

11

 

 

 

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 the Canadian and New Zealand dollars, the Brazilian Real, South African Rand, Indian Rupee, 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, the National Geographic Resolution (see Note 11 – 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. No 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 nine-month period ended September 30, 2019. The Company estimates that approximately $2.2 million of losses currently recorded in accumulated other comprehensive income (loss) will be recognized in earnings over the next 12 months due to the 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. During the three and nine months ended September 30, 2019, a $1.6 million loss was reclassified from other comprehensive income and recognized as a loss on foreign currency due to the maturity of a foreign exchange forward contract that was designated as a cash flow hedge.

 

The Company held the following derivative instruments with absolute notional values as of September 30, 2019:

 

(in thousands)

 

Absolute Notional Value

 

Interest rate caps

 $100,000 

Foreign exchange contracts

  130,744 

 

12

 

 

Estimated fair values (Level 2) of derivative instruments were as follows:

 

  

As of

September 30, 2019

  

As of

December 31, 2018

 
  

(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)

 $-  $7,157  $-  $- 

Interest rate cap (b)

  123   -   710   - 

Total

 $123  $7,157  $710  $- 

Derivative instruments not designated as cash flow hedging instruments:

                

Foreign exchange forward (c)

 $-  $886  $-  $1,328 

Total

 $-  $886  $-  $1,328 

_________

 

(a)

Recorded in accounts payable and accrued expenses and other long-term liabilities.

 

(b)

Recorded in prepaid expenses and other current assets and other long-term assets.

 

(c)

Recorded in accounts payable and accrued expenses.

 

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:

 

  

Three Months Ended

September 30,

  

Nine Months Ended

September 30,

 

(In thousands)

 

2019

  

2018

  

2019

  

2018

 
  

(unaudited)

  

(unaudited)

  

(unaudited)

  

(unaudited)

 

Derivative instruments designated as cash flow hedging instruments:

                

Foreign exchange forward contracts (a)

 $(7,094

)

 $-  $(8,066) $- 

Interest rate caps (b)

  (298)  157

 

  (587)  230

 

                 

Derivative instruments not designated as cash flow hedging instruments (c):

                

Foreign exchange forward contracts

  (715)  163

 

  442   (1,430

)

Total

 $(8,107) $320

 

 $(8,211) $(1,200

)

__________

 

(a)

For the three and nine months ended September 30, 2019, $1.6 million was recognized as a loss on foreign currency in the condensed consolidated statements of income, and $5.5 million and $6.4 million, 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’ equity.

 

(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 nine months ended September 30, 2019, a loss of $0.7 million and a gain of $0.4 million, respectively, was recognized in gain (loss) on foreign currency. During the three and nine months ended September 30, 2018, a gain of $0.2 million and a loss of $1.4 million, respectively, 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 agreement were comparable to the market as of September 30, 2019. As of September 30, 2019 and December 31, 2018, the Company had no other significant liabilities that were measured at fair value on a recurring basis.

 

13

 

 

 

NOTE 7 – 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. 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 the nine months ended September 30, 2019, the Company repurchased 1,895 shares of common stock for approximately $23,000. The Company has cumulatively repurchased 866,701 shares of common stock for $8.2 million and 6,011,926 warrants for $14.7 million, since plan inception. The available balance for the Repurchase Plan was $12.1 million as of September 30, 2019.

 

Warrants

 

During the nine months ended September 30, 2019, 27,311 warrants to purchase the Company's common stock were exercised for cash.  

 

On June 14, 2019, the Company launched an offer to exchange all warrants to purchase common stock of the Company (the "Warrant Exchange"). The Warrant Exchange provided (i) an offer to each holder of the Company's outstanding warrants to receive 0.385 shares of common stock in exchange for each warrant tendered by the holder and exchanged pursuant to the Warrant Exchange, and (ii) the solicitation of consents (the "Consent Solicitation") from holders of the warrants to amend the warrant agreement that governs all of the warrants to permit the Company to require that each outstanding warrant not tendered in the Warrant Exchange be converted into 0.36575 shares of common stock. The Warrant Exchange and Consent Solicitation closed on July 17, 2019, with 9,935,000 warrants tendered via the Warrant Exchange for an aggregate of 3,824,959 shares of Company common stock, and approval was received for the Consent Solicitation. The remaining 125,763 warrants not tendered via the Warrant Exchange were converted, per the Consent Solicitation, into 45,981 shares of Company common stock. Following the Warrant Exchange and Consent Solicitation, no warrants remain outstanding. 

 

As the fair value of the warrants tendered in the Warrant Exchange offer was less than the fair value of the common stock issued, the Company recorded a non-cash deemed dividend of approximately $2.7 million for the incremental fair value provided to the warrant holders. The fair value of the Company's common stock and warrants were determined using the closing market prices on August 17, 2019, Level 1 fair value inputs.

 

 

 

NOTE 8 – STOCK-BASED COMPENSATION

 

The Company is authorized to issue up to 2.5 million shares of common stock under the 2015 Long-Term Incentive Plan to key employees, and as of September 30, 2019, approximately 1.3 million shares were available to be granted.

 

As of September 30, 2019, and December 31, 2018, options to purchase an aggregate of 200,000 and 220,000 shares, respectively, of the Company’s common stock, with a weighted average exercise price of $9.47 and $9.63, respectively, were outstanding. As of September 30, 2019, 150,000 options were exercisable.

 

The Company recorded stock-based compensation expense of $0.9 million and $2.7 million during the three and nine months ended September 30, 2019, respectively, and $1.3 million and $3.3 million during the three and nine months ended September 30, 2018, respectively.

 

2019 Long-Term Incentive Compensation

 

During the nine months ended September 30, 2019, the Company granted 109,357 restricted stock units with a weighted average grant price of $15.30. The restricted stock units will vest in equal installments on each of the first three anniversaries of the grant date, subject to the recipient’s continued employment or service with the Company on the applicable vesting date.

 

During the nine months ended September 30, 2019, the Company granted 23,706 restricted shares with a weighted average grant price of $18.98. The restricted shares will vest on the first anniversary of the grant date, subject to the recipient's continued service or employment with the Company on the applicable vesting date. 

 

During the nine months ended September 30, 2019, the Company awarded 61,631 targeted performance stock units ("PSUs") with a weighted average grant price of $15.25. The PSUs are performance-vesting equity incentive awards that may be earned based on the Company's performance against metrics relating to annual Adjusted EBITDA and annual revenue. Awards, if earned, will vest after a three-year performance period and may be earned at a level ranging from 0%-200% of the number of PSUs granted, depending on performance. The number of shares were determined based upon the closing price of the Company's common stock on the date of the award.

  

 

NOTE 9 – RELATED PARTY TRANSACTIONS

 

The Company and National Geographic Society collaborate on exploration, research, technology and conservation in order to provide travel experiences and disseminate geographic knowledge around the globe. The Lindblad/National Geographic Society alliance is set forth in (i) an Alliance and License Agreement and (ii) a Tour Operator Agreement. The extension of the agreements, entered into July 2015, between the Company and National Geographic Society was contingent on the execution by Mr. Lindblad, the Company's Chief Executive Officer, of an option agreement granting National Geographic Society the right to purchase from Mr. Lindblad, for a per share price of $10.00 per share, five percent of the issued and outstanding shares of the Company’s common stock as of July 8, 2015, including all outstanding options, warrants or other derivative securities (excluding options granted under the 2015 Plan and shares issuable upon the exercise of warrants). During March 2019, National Geographic Society exercised its rights in full under the option agreement to acquire the shares, and in a cashless transaction acquired shares from Mr. Lindblad.

  

14

 

 

 

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 its 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 September 30, 2019, and December 31, 2018, the Company had a liability for unrecognized tax benefits of $0.1 million and $0.6 million, respectively, which was included in other long-term liabilities. 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 nine months ended September 30, 2019 and 2018, interest and penalties related to uncertain tax positions included in income tax expense are not significant. The Company's effective tax rate for the nine months ended September 30, 2019 and 2018 was an expense of 20.6% and 16.6%, respectively.

 

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 (except for the Ecuador entities, where the Company's foreign tax returns for the current year and three prior years remain subject to examination by tax authorities).

 

15

 

 

 

NOTE 11 – COMMITMENTS AND CONTINGENCIES

 

Fleet Expansion

 

In 2017, the Company entered into an agreement with Ulstein Verft to construct a polar ice class vessel, the National Geographic Endurance, with a total purchase price of 1,066.0 million NOK. Subsequently, the Company exercised its right to make payments in United States Dollars, which resulted in a purchase price of $134.6 million, including hedging costs. The purchase price is subject to potential adjustments from contract specifications for variations in speed, dead weight, fuel consumption and delivery date, and is due in installments. The first twenty percent of the purchase price was paid shortly after execution of the agreement with the remaining eighty percent due upon delivery and acceptance of the vessel. The vessel is targeted to be delivered in the first quarter of 2020.

 

During February 2019, the Company entered into an agreement with Ulstein Verft, to construct a second 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 NOK. The purchase price is subject to potential adjustments from contract specifications for variations in speed, dead weight, fuel consumption and delivery date. The purchase price is due in installments, with the first 20% paid shortly after execution of the agreement, 50% to be 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. During March 2019, the Company entered into foreign exchange forward contracts to lock in a purchase price for the National Geographic Resolution of $153.5 million, subject to potential contract specification adjustments.

 

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 income. The amount is calculated based upon a percentage of certain ticket revenues less travel agent commission, including the revenues received from certain cancellation fees and any certain revenues received from the sale of pre- and post-expedition extensions. A pre- and post-expedition extension occurs when a guest extends his or her trip with pre- or post-voyage hotel nights. Royalty expense was $1.7 million and $4.8 million, for the three and nine months ended September 30, 2019, respectively, and $1.2 million and $3.3 million, for the three and nine months ended September 30, 2018, respectively.

 

The royalty balance outstanding to National Geographic as of September 30, 2019 and December 31, 2018 was $1.7 million and $1.0 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 income. This royalty fee expense was $0.3 million and $0.7 million for the three and nine months ended September 30, 2019, respectively, and $0.3 million and $0.6 million for the three and nine months ended September 30, 2018, respectively.

 

Charter Commitments

 

From time to time, the Company enters into agreements to charter vessels onto which it holds its tours and expeditions. Future minimum payments on its charter agreements as of September 30, 2019 are as follows:

 

For the years ended December 31,

 

Amount

 

(In thousands)

 

(unaudited)

 

Remainder of 2019

 $3,223 

2020

  12,472 

2021

  7,280 

2022

  1,850 

Total

 $24,825 

 

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.

  

16

 

 

 

NOTE 12 – SEGMENT INFORMATION

 

The Company is primarily a specialty cruise and adventure expedition operator with operations in two segments, Lindblad and Natural Habitat. The Company evaluates the performance of the business based largely on the results of its operating segments. The chief operating decision maker and management review operating results monthly, and base operating decisions on the total results at a consolidated level, as well as at a segment level. The reports provided to the Board of Directors are at a consolidated level and 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 nine months ended September 30, 2019 and 2018, operating results were as follows:

 

  

For the three months ended September 30,

  

For the nine months ended September 30,

 
  

2019

  

2018

  

Change

  %  

2019

  

2018

  

Change

  % 

(In thousands)

 

(unaudited)

  

(unaudited)

          

(unaudited)

  

(unaudited)

         

Tour revenues:

                                

Lindblad

 $76,581  $64,507  $12,074   19% $217,549  $194,516  $23,033   12%

Natural Habitat

  24,402   22,735   1,667   7%  49,745   44,609   5,136   12%

Total tour revenues

 $100,983  $87,242  $13,741   16% $267,294  $239,125  $28,169   12%

Operating Income:

                                

Lindblad

 $12,570  $8,209  $4,361   53% $31,514  $26,755  $4,759   18%
Natural Habitat  3,089   2,072   1,017   49%  2,631   2,105   526   25%

Total operating income

 $15,659  $10,281  $5,378   52% $34,145  $28,860  $5,285   18%

 

Depreciation and amortization are included in segment operating income as shown below:

 

  

For the three months ended September 30,

  

For the nine months ended September 30,

 
  

2019

  

2018

  

Change

  %  

2019

  

2018

  

Change

  % 

(In thousands)

 

(unaudited)

  

(unaudited)

          

(unaudited)

  

(unaudited)

         

Depreciation and amortization:

                                

Lindblad

 $5,812  $4,645  $1,167   25% $17,380  $13,954  $3,426   25%

Natural Habitat

  421   379   42   11%  1,223   1,108   115   10%

Total depreciation and amortization

 $6,233  $5,024  $1,209   24% $18,603  $15,062  $3,541   24%

 

The following table presents the total assets, intangibles, net and goodwill by segment:

 

  

As of September 30, 2019

  

As of December 31, 2018

 

(In thousands)

 

(unaudited)

     

Total Assets:

        

Lindblad

 $453,176  $409,622 

Natural Habitat

  76,437   63,787 

Total assets

 $529,613  $473,409 
         

Intangibles, net:

        

Lindblad

 $3,506  $4,050 

Natural Habitat

  3,285   3,925 

Total intangibles, net

 $6,791  $7,975 
         

Goodwill:

        

Lindblad

 $-  $- 

Natural Habitat

  22,105   22,105 

Total goodwill

 $22,105  $22,105 

 

For the three and nine months ended September 30, 2019 there were $1.3 million and $3.8 million in intercompany tour revenues between the Lindblad and Natural Habitat segments eliminated in consolidation, respectively. For the three and nine months ended September 30, 2018 there were $1.2 million and $2.6 million in intercompany tour revenues between the Lindblad and Natural Habitat segments eliminated in consolidation, respectively.

 

 

 

17

 

 

 

Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION

 

The following discussion and analysis addresses material changes in the financial condition and results of operations of the Company for the periods presented. This discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q (“Form 10-Q”), as well as the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 28, 2019.

 

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:

 

 

general economic conditions;

 

 

 

 

unscheduled disruptions in our business due to weather events, mechanical failures, 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;

 

 

 

 

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;

 

 

 

 

the inability to meet revenue and Adjusted EBITDA projections; and

 

 

 

 

those risks discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC on February 28, 2019 (the “2018 Annual Report”).

 

We urge you not to place undue reliance on these forward-looking statements, which speak only as of the date of this Form 10-Q. We do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or uncertainties after the date hereof or to reflect the occurrence of unanticipated events.

 

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.

 

18

 

 

Business Overview

 

Lindblad provides expedition cruising and land-based adventure travel experiences, using itineraries that feature up-close encounters with wildlife, nature, history and culture, and promote guest empowerment and interactivity. Our mission is to offer life-changing adventures and wildlife experiences around the world and pioneer 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 Islands, Alaska, Baja's Sea of Cortez, Costa Rica, Panama, polar bear tours in Churchill, Canada, Alaskan grizzly bear adventures and African safaris.

 

We operate a fleet of eight owned expedition ships and have contracted for two new polar ice class vessels, the National Geographic Endurance targeted to be completed in the first quarter of 2020, and the National Geographic Resolution, a sister ship of the National Geographic Endurance, scheduled to be delivered in the fourth quarter of 2021. In addition, we operate five seasonal charter vessels under the Lindblad brand. We deploy chartered vessels for various seasonal offerings 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 also to test demand for certain areas and seasons to understand the potential for longer term deployments and additional vessel needs. 

 

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 co-selling, co-marketing and branding arrangements with National Geographic Partners, LLC (“National Geographic”) whereby our owned vessels carry the National Geographic name and National Geographic sells our expeditions through their internal travel divisions. We collaborate with National Geographic on expedition 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.

  

2019 Highlights

 

During February 2019, we entered into an agreement to construct a second 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. In March 2019, we entered into a foreign exchange forward contract hedge to lock in a purchase price of approximately $153.5 million. The purchase price is subject to potential adjustments from contract specifications for variations in speed, deadweight, fuel consumption and delivery date. The purchase price is due in installments, with the first 20% paid shortly after execution of the agreement, 50% to be 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. 

 

During April 2019, we entered into a senior secured credit agreement (the “Second Export Credit Agreement”) with Citibank, N.A., London Branch (“Citi”) and Eksportkreditt Norge AS (“EK” and together with Citi, the “Lenders”). Pursuant to the Second Export Credit Agreement, the Lenders have agreed to make available to us, at our 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 National Geographic Resolution. 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. During September 2019, we drew approximately $30.5 million against the Second Export Credit Agreement for the second contracted installment payment on the National Geographic Resolution.

 

On June 14, 2019, we launched an offer to exchange all warrants to purchase our common stock (the "Warrant Exchange"). The Warrant Exchange provided (i) an offer to each holder of our outstanding warrants to receive 0.385 shares of common stock in exchange for each warrant tendered by the holder and exchanged pursuant to the Warrant Exchange, and (ii) the solicitation of consents (the "Consent Solicitation") from holders of the warrants to amend the warrant agreement that governs all of the warrants to permit us to require that each outstanding warrant not tendered in the Warrant Exchange be converted into 0.36575 shares of common stock. The Warrant Exchange and Consent Solicitation closed on July 17, 2019, with 9,935,000 warrants tendered via the Warrant Exchange for an aggregate of 3,824,959 shares of our common stock, and approval was received for the Consent Solicitation. The remaining 125,763 warrants not tendered via the Warrant Exchange were converted, per the Consent Solicitation, into 45,981 shares of our common stock. Following the Warrant Exchange and Consent Solicitation, no warrants remain outstanding. As the fair value of the warrants tendered in the Warrant Exchange offer was less than the fair value of the common stock issued, the Company recorded a non-cash deemed dividend of approximately $2.7 million for the incremental fair value provided to the warrant holders. The Company's common stock and warrants were determined using the closing market prices on August 17, 2019, Level 1 fair value inputs.

 

The discussion and analysis of our results of operations and financial condition are organized as follows:

 

 

a description of certain line items and operational and financial metrics we utilize to assist us in managing our business;

 

 

 

 

results and a comparable discussion of our consolidated and segment results of operations for the three and nine months ended September 30, 2019 and 2018;

 

 

 

 

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, goods and services rendered onboard that are not included in guest ticket prices, trip insurance, and cancellation fees.

 

19

 

 

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, promotional and customer relationship technology 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, the National Geographic fee amortization, debt refinancing costs and certain other items. 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.

 

20

 

 

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 certain other items.

 

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 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 represents tour revenues less insurance proceeds, commissions and direct costs of other tour revenues.

 

Net Yield represents Net Revenue 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 income.

 

Seasonality

 

Our 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 a seasonal business, with the majority of its tour revenue recorded in the third and fourth quarters from its summer season departures and polar bear tours.

 

21

 

 

Results of Operations - Consolidated

 

  

For the three months ended September 30,

  

For the nine months ended September 30,

 

(In thousands)

 

2019

  

2018

  

Change

  %  

2019

  

2018

  

Change

  % 

Tour revenues

 $100,983  $87,242  $13,741   16% $267,294  $239,125  $28,169   12%
                                 

Cost of tours

  48,294   44,964   3,330   7%  124,831   114,645   10,186   9%

General and administrative

  15,266   14,718   548   4%  47,615   45,647   1,968   4%

Selling and marketing

  15,531   12,255   3,276   27%  42,100   34,911   7,189   21%

Depreciation and amortization

  6,233   5,024   1,209   24%  18,603   15,062   3,541   24%

Operating income

 $15,659  $10,281  $5,378   52% $34,145  $28,860  $5,285   18%
Net income $2,726  $5,346  $(2,620)  (49%) $18,656  $16,105  $2,551   16%

Net (loss) income per share available to common stockholders

                                

Basic

 $(0.01) $0.11  $(0.12)     $0.32  $0.35  $(0.03)    

Diluted

 $(0.01) $0.11  $(0.12)     $0.31  $0.35  $(0.04)    

 

Comparison of the Three and Nine Months Ended September 30, 2019 to Three and Nine Months Ended September 30, 2018 - Consolidated

 

Tour Revenues

 

Tour revenues for the three months ended September 30, 2019 increased $13.7 million, or 16%, to $101.0 million, compared to $87.2 million for the three months ended September 30, 2018. The Lindblad segment tour revenues increased by $12.1 million, primarily driven by an increase in Available Guest Nights during 2019, due to the addition of the National Geographic Venture to our fleet in the fourth quarter of 2018. At the Natural Habitat segment, tour revenues increased $1.7 million over the prior year period, primarily due to additional departures and increased pricing.

 

Tour revenues for the nine months ended September 30, 2019 increased $28.2 million, or 12%, to $267.3 million, compared to $239.1 million for the nine months ended September 30, 2018. The Lindblad segment tour revenues increased by $23.0 million, primarily driven by an increase in Available Guest Nights during 2019, mainly due to the addition of the National Geographic Venture to our fleet in the fourth quarter of 2018. At the Natural Habitat segment, tour revenues increased $5.1 million over the prior year period, primarily due to additional departures and increased pricing.

 

Cost of Tours

 

Total cost of tours for the three months ended September 30, 2019 increased $3.3 million, or 7%, to $48.3 million, compared to $45.0 million for the three months ended September 30, 2018. At the Lindblad segment, cost of tours increased $3.4 million, primarily due to incremental costs related to the National Geographic Venture. At the Natural Habitat segment, cost of tours decreased $0.1 million.

 

Total cost of tours for the nine months ended September 30, 2019 increased $10.2 million, or 9%, to $124.8 million, compared to $114.6 million for the nine months ended September 30, 2018. At the Lindblad segment, cost of tours increased $8.6 million, primarily due to incremental costs related to the National Geographic Venture, partially offset by lower drydock expense. At the Natural Habitat segment, cost of tours increased $1.6 million, primarily due to additional departures.

 

General and Administrative

 

General and administrative expenses for the three months ended September 30, 2019 increased $0.5 million, or 4% to $15.3 million, compared to $14.7 million for the three months ended September 30, 2018. At the Lindblad segment, general and administrative expenses increased $0.1 million over the prior year period, as costs incurred related to the Warrant Exchange and increased personnel costs were partially offset by lower value-added tax ("VAT") expense and stock-based compensation. At the Natural Habitat segment, general and administrative expenses increased $0.4 million, primarily due to an increase in personnel costs.

 

General and administrative expenses for the nine months ended September 30, 2019 increased $2.0 million, or 4%, to $47.6 million, compared to $45.6 million for the nine months ended September 30, 2018. At the Lindblad segment, general and administrative expenses were in line with a year ago as lower VAT expense and stock-based compensation, as well as the absence of debt financing costs incurred in 2018, were offset by the costs incurred related to the Warrant Exchange, increased personnel costs and credit card commissions. At the Natural Habitat segment, general and administrative expenses increased $1.8 million, primarily due to an increase in personnel costs.

 

 Selling and Marketing

 

Selling and marketing expenses for the three months ended September 30, 2019 increased $3.3 million, or 27%, to $15.5 million, compared to $12.3 million for the three months ended September 30, 2018. At the Lindblad segment, selling and marketing expenses increased $3.1 million, primarily due to higher advertising spend and increased commission expenses. At the Natural Habitat segment, selling and marketing expenses increased $0.2 million, primarily driven by an increase in advertising spend and commission expense.

 

Selling and marketing expenses for the nine months ended September 30, 2019 increased $7.2 million, or 21%, to $42.1 million, compared to $34.9 million for the nine months ended September 30, 2018. At the Lindblad segment, selling and marketing expenses increased $6.2 million, primarily due to higher advertising spend and increased commission and customer relationship technology expenses. At the Natural Habitat segment, selling and marketing expenses increased $1.1 million, primarily driven by an increase in advertising expenditures.

 

22

 

 

Depreciation and Amortization

 

Depreciation and amortization expenses for the three months ended September 30, 2019 increased $1.2 million, or 24%, to $6.2 million, compared to $5.0 million for the three months ended September 30, 2018, primarily due to the addition of the National Geographic Venture to the Lindblad segment in December 2018.

 

Depreciation and amortization expenses for the nine months ended September 30, 2019 increased $3.5 million, or 24%, to $18.6 million, compared to $15.1 million for the nine months ended September 30, 2018, primarily due to the addition of the National Geographic Venture to the Lindblad segment in December 2018.

 

Other Expense

 

Other expenses, for the three months ended September 30, 2019, increased $3.4 million to $5.6 million, compared to $2.2 million for the three months ended September 30, 2018, primarily due to the following:

 

 

The $2.3 million loss in foreign currency translation in 2019, primarily related to the $1.6 million loss on a foreign exchange hedge that matured during the quarter, as well as, the weakening of the U.S dollar primarily in relation to the Canadian dollar, South African Rand and the Euro in the same period a year ago.

 

 

 

 

A $0.8 million increase in interest expense, net, due to commitment fees and foreign currency hedge expenses associated with our senior secured credit agreement entered into in April of 2019. 

 

Other expenses, for the nine months ended September 30, 2019, increased $1.1 million to $10.7 million, compared to $9.6 million for the nine months ended September 30, 2018, primarily due to the following:

 

 

A $1.2 million loss in foreign currency translation in 2019 compared to a loss of $1.4 million in 2018, primarily related to the $1.6 million loss on a foreign exchange hedge that matured during the quarter, partially offset by the strengthening of the U.S dollar primarily in relation to the Canadian dollar, South African Rand and the Euro year-over-year.

 

 

 

 

A $1.4 million increase in interest expense, net, due to the increased borrowings related to the debt refinancing in 2018 and commitment fees and foreign currency hedge expenses associated with our senior secured credit agreement entered into in April of 2019. 

Income Taxes

 

During the three months ended September 30, 2019, the Company recognized an income tax expense of $7.4 million, compared to an expense of $2.7 million in the prior year. The increase is due to changes in certain itineraries and the improved operating performance of the Company.

 

During the nine months ended September 30, 2019, the Company recognized an income tax expense of $4.8 million, compared to an expense of $3.2 million in the prior year. The change is due to itinerary timing and the release of certain uncertain tax positions.

 

Results of Operations – Segments

 

Selected information for our segments is below. The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP

 

  

For the three months ended September 30,

  

For the nine months ended September 30,

 

(In thousands)

 

2019

  

2018

  

Change

  %  

2019

  

2018

  

Change

  % 
  

(unaudited)

  

(unaudited)

          

(unaudited)

  

(unaudited)

         

Tour revenues:

                                

Lindblad

 $76,581  $64,507  $12,074   19% $217,549  $194,516  $23,033   12%

Natural Habitat

  24,402   22,735   1,667   7%  49,745   44,609   5,136   12%

Total tour revenues

 $100,983  $87,242  $13,741   16% $267,294  $239,125  $28,169   12%

Operating Income:

                                

Lindblad

 $12,570  $8,209  $4,361   53% $31,514  $26,755  $4,759   18%
Natural Habitat  3,089   2,072   1,017   49%  2,631   2,105   526   25%

Total operating income

 $15,659  $10,281  $5,378   52% $34,145  $28,860  $5,285   18%

Adjusted EBITDA:

                                

Lindblad

 $20,600  $14,668  $5,932   40% $54,802  $47,538  $7,264   15%

Natural Habitat

  3,510   2,451   1,059   43%  3,854   3,213   641   20%

Total adjusted EBITDA

 $24,110  $17,119  $6,991   41% $58,656  $50,751  $7,905   16%

 

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 months ended September 30,

  

For the nine months ended September 30,

 

(In thousands)

 

2019

  

2018

  

2019

  

2018

 

Available Guest Nights

  63,386   55,741   176,038   160,575 

Guest Nights Sold

  59,682   50,993   161,511   145,714 

Occupancy

  94%  92%  92%  91%

Maximum Guests

  7,721   7,137   21,863   20,388 

Number of Guests

  7,294   6,582   20,095   18,553 

Voyages

  98   93   278   269 

 

23

 

 

The following table shows the calculations of Gross Yield and Net Yield. Gross Yield is calculated by dividing Tour Revenues by Available Guest Nights and Net Yield is calculated by dividing Net Revenue by Available Guest Nights:

 

Calculation of Gross Yield and Net Yield

 

For the three months ended September 30,

  

For the nine months ended September 30,

 

(In thousands, except for Available Guest Nights, Gross and Net Yield)

 

2019

  

2018

  

2019

  

2018

 

Guest ticket revenues

 $70,319  $58,187  $195,845  $174,699 

Other tour revenue

  6,262   6,320   21,704   19,817 

Tour Revenues

  76,581   64,507   217,549   194,516 

Less: Commissions

  (5,716)  (5,055)  (16,475)  (14,977)

Less: Other tour expenses

  (4,051)  (4,673)  (14,155)  (12,952)

Net Revenue

 $66,814  $54,779  $186,919  $166,587 

Available Guest Nights

  63,386   55,741   176,038   160,575 

Gross Yield

 $1,208  $1,157  $1,236  $1,211 

Net Yield

  1,054   983   1,062   1,037 

 

The following table shows the calculations of Gross Cruise Cost per Available Guest Night and Net Cruise Costs per Available Guest Night:

 

Calculation of Gross Cruise Cost and Net Cruise Cost

 

For the three months ended September 30,

  

For the nine months ended September 30,

 

(In thousands, except for Available Guest Nights, Gross and Net Cruise Cost per Avail. Guest Night)

 

2019

  

2018

  

2019

  

2018

 

Cost of tours

 $33,031  $29,647  $94,470  $85,837 

Plus: Selling and marketing

  13,804   10,754   37,767   31,699 

Plus: General and administrative

  11,364   11,252   36,416   36,271 

Gross Cruise Cost

  58,199   51,653   168,653   153,807 

Less: Commissions

  (5,716)  (5,055)  (16,475)  (14,977)

Less: Other tour expenses

  (4,051)  (4,673)  (14,155)  (12,952)

Net Cruise Cost

  48,432   41,925   138,023   125,878 

Less: Fuel Expense

  (2,251)  (2,168)  (7,397)  (6,876)

Net Cruise Cost Excluding Fuel

  46,181   39,757   130,626   119,002 

Non-GAAP Adjustments:

                

Stock-based compensation

  (917)  (1,271)  (2,671)  (3,256)

National Geographic fee amortization

  (727)  (727)  (2,181)  (2,181)

Warrant exchange fees

  (504)  -   (970)  - 

Executive severance costs

  -   215   -   (71)

Reorganization costs

  (70)  (31)  (86)  (324)

Debt refinancing costs

  -   -   -   (997)

Adjusted Net Cruise Cost Excluding Fuel

 $43,963  $37,943  $124,718  $112,173 

Adjusted Net Cruise Cost

 $46,214  $40,111  $132,115  $119,049 

Available Guest Nights

  63,386   55,741   176,038   160,575 

Gross Cruise Cost per Available Guest Night

 $918  $927  $958  $958 

Net Cruise Cost per Available Guest Night

  764   752   784   784 

Net Cruise Cost Excluding Fuel per Available Guest Night

  729   713   742   741 

Adjusted Net Cruise Cost Excluding Fuel per Available Guest Night

  694   681   708   699 

Adjusted Net Cruise Cost per Available Guest Night

  729   720   750   741 

 

24

 

 

Comparison of Three and Nine Months Ended September 30, 2019 to Three and Nine Months Ended September 30, 2018 at the Lindblad Segment

 

Tour Revenues

 

Tour revenues for the three months ended September 30, 2019 increased $12.1 million, or 19%, to $76.6 million, compared to $64.5 million for the three months ended September 30, 2018. The increase was primarily driven by higher guest ticket revenue, predominantly due to a 14% increase in Available Guest Nights mainly from the addition of the National Geographic Venture to our fleet in the fourth quarter of 2018. Net Yield increased 7% for the three months ended September 30, 2019 to $1,054, compared to $983 for the three months ended September 30, 2018, due primarily to higher pricing and itinerary changes. In addition, Occupancy increased to 94% for the three months ended September 30, 2019, compared to 92% in the same period a year ago.

 

Tour revenues for the nine months ended September 30, 2019 increased $23.0 million, or 12%, to $217.5 million, compared to $194.5 million for the nine months ended September 30, 2018. The increase was primarily driven by higher guest ticket revenue, predominantly due to a 10% increase in Available Guest Nights mainly from the addition of the National Geographic Venture to our fleet in the fourth quarter of 2018. Net Yield increased 2% for the nine months ended September 30, 2019 to $1,062, compared to $1,037 for the nine months ended September 30, 2018 due primarily to higher pricing and itinerary changes. In addition, occupancy rates increased to 92% for the nine months ended September 30, 2019, compared to 91% in the same period a year ago.

 

Operating Income

 

Operating income increased $4.4 million to $12.6 million, for the three months ended September 30, 2019, compared to $8.2 million for the three months ended September 30, 2018. The increase was primarily driven by the addition of the National Geographic Venture, as well as lower VAT expense, partially offset by increased marketing spend, commission costs, costs related to the Warrant Exchange and higher personnel expenses.

 

Operating income increased $4.8 million to $31.5 million, for the nine months ended September 30, 2019, compared to $26.8 million for the nine months ended September 30, 2018. The increase was primarily driven by the addition of the National Geographic Venture, and lower drydock and VAT expense, as well as the absence of the debt financing costs incurred in 2018, partially offset by increased marketing spend, commission costs, costs related to the Warrant Exchange and higher personnel expenses.

 

Results of Operations – Natural Habitat Segment

 

Comparison of Three and Nine Months Ended September 30, 2019 to Three and Nine Months Ended September 30, 2018

 

Tour Revenues

 

Tour revenues for the three months ended September 30, 2019 increased $1.7 million, or 7%, to $24.4 million compared to $22.7 million for the three months ended September 30, 2018, due to additional departures, increased travelers and itinerary changes that drove higher average pricing.

 

Tour revenues for the nine months ended September 30, 2019 increased $5.1 million, or 12%, to $49.7 million compared to $44.6 million for the nine months ended September 30, 2018, due to additional departures and itinerary changes that drove higher average pricing.

 

Operating income

 

Operating income for the three months ended September 30, 2019 increased $1.0 million to $3.1 million compared to $2.1 million for the three months ended September 30, 2018, due to growth in tour revenue, partially offset by higher operating costs related to additional departures, as well as higher personnel and marketing costs to support future growth initiatives.

 

Operating income for the nine months ended September 30, 2019 increased $0.5 million to $2.6 million compared to $2.1 million for the nine months ended September 30, 2019, due to growth in tour revenue, partially offset by higher operating costs related to additional departures, as well as higher personnel and marketing costs to support future growth initiatives.

 

25

 

 

Adjusted EBITDA – Consolidated

 

The following table outlines the reconciliation to net income and calculation of consolidated Adjusted EBITDA. The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

 

Consolidated

 

For the three months ended September 30,

  

For the nine months ended September 30,

 

(In thousands)

 

2019

  

2018

  

2019

  

2018

 

Net income

 $2,726  $5,346  $18,656  $16,105 

Interest expense, net

  3,214   2,409   9,391   8,013 

Income tax expense

  7,351   2,690   4,838   3,194 

Depreciation and amortization

  6,233   5,024   18,603   15,062 

Loss (gain) on foreign currency

  2,338   (163)  1,181   1,430 

Other expense (income)

  30   (1)  79   118 

Stock-based compensation

  917   1,271   2,671   3,256 

National Geographic fee amortization

  727   727   2,181   2,181 

Warrant exchange fees

  504   -   970   - 

Executive severance costs

  -   (215)  -   71 

Reorganization costs

  70   31   86   324 

Debt refinancing costs

  -   -   -   997 

Adjusted EBITDA

 $24,110  $17,119  $58,656  $50,751 

 

The following tables outline the reconciliation for each segment from operating income to Adjusted EBITDA.

 

Lindblad Segment

 

For the three months ended September 30,

  

For the nine months ended September 30,

 

(In thousands)

 

2019

  

2018

  

2019

  

2018

 

Operating income

 $12,570  $8,209  $31,514  $26,755 

Depreciation and amortization

  5,812   4,645   17,380   13,954 

Stock-based compensation

  917   1,271   2,671   3,256 

National Geographic fee amortization

  727   727   2,181   2,181 

Warrant exchange fees

  504   -   970   - 

Executive severance costs

  -   (215)  -   71 

Reorganization costs

  70   31   86   324 

Debt refinancing costs

  -   -   -   997 

Adjusted EBITDA

 $20,600  $14,668  $54,802  $47,538 

 

Natural Habitat Segment

 

For the three months ended September 30,

  

For the nine months ended September 30,

 

(In thousands)

 

2019

  

2018

  

2019

  

2018

 

Operating income

 $3,089  $2,072  $2,631  $2,105 

Depreciation and amortization

  421   379   1,223   1,108 

Adjusted EBITDA

 $3,510  $2,451  $3,854  $3,213 

 

Liquidity and Capital Resources

 

Sources and Uses of Cash for the Nine Months Ended September 30, 2019 and 2018

 

Net cash provided by operating activities was $41.6 million in 2019 compared to $39.3 million in 2018. The $2.3 million increase was primarily due to improved operating results and higher bookings for future travel.

 

Net cash used in investing activities was $76.7 million in 2019 compared to $45.5 million in 2018. The $31.2 million increase was due to an increase in purchases of property and equipment primarily related to the spend on the two new polar ice-class vessels in 2019.

 

Net cash provided by financing activities was $25.1 million in 2019 compared to $17.0 million in 2018. The $8.1 million increase in cash provided was primarily due to the borrowing under the Second Export Credit Agreement for our second ice-class vessel, the National Geographic Resolution, along with lower deferred financing costs and stock and warrant repurchases in 2019, compared to the 2018. 2018 included the refinancing of our credit facility, which was partially offset by the $170.6 million repayment of the previous senior debt.

 

26

 

 

Funding Sources

 

Debt Facilities 

 

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. The Term Facility bears interest at an adjusted Intercontinental Exchange Benchmark administration LIBOR plus a spread of 3.25%. In 2018, we entered into interest rate cap agreements to hedge a portion of 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”) makes 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, targeted to be completed in the first quarter of 2020. If drawn upon, the loan will be made at the time of delivery of the vessel. The Export Credit Agreement, at our election, will bear interest either at a fixed interest rate effectively equal to 5.78% or a floating interest rate equal to three-month LIBOR plus a margin of 3.00% per annum. 

 

Our 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 the National Geographic Resolution, scheduled to be delivered in the fourth quarter of 2021. The Second Export Credit Agreement bears a variable interest rate equal to three-month LIBOR plus a margin of 3.00% per annum, or 5.09% as of September 30, 2019. 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. During September 2019, we drew approximately $30.5 million against the Second Export Credit Agreement for the contracted installment payment on the National Geographic Resolution

 

The Amended Credit Agreement, the Export Credit Agreement and the Second Export Credit Agreement contain financial and restrictive covenants. As of September 30, 2019, we were in compliance with our covenants.

 

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 general corporate expenses. As of September 30, 2019 and December 31, 2018, we had a working capital deficit of $17.3 million and $9.3 million, respectively. As of September 30, 2019 and December 31, 2018, we had cash and cash equivalents, excluding restricted cash of $104.1 million and $113.4 million, respectively.

 

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. 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 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 the nine months ended September 30, 2019, we repurchased 1,895 shares of common stock for approximately $23,000. We have cumulatively repurchased 866,701 shares of common stock for $8.2 million and 6,011,926 warrants for $14.7 million, since plan inception. The balance for the Repurchase Plan was $12.1 million as of September 30, 2019. 

 

In 2017, we executed a contract with Ulstein Verft to build a polar ice class vessel, the National Geographic Endurance, targeted to be competed in the first quarter of 2020, with a total purchase price of 1,066.0 million Norwegian Kroner. Subsequently, we exercised our right to make payments in United States Dollars, which resulted in a purchase price of $134.6 million, including hedging costs. The purchase price is subject to potential adjustments from contract specifications for variations in speed, deadweight, fuel consumption and delivery date. The first twenty percent of the purchase price was paid shortly after execution of the contract with the remaining eighty percent due upon delivery and acceptance of the vessel. The remaining purchase price of the vessel will be funded through a combination of cash available on our balance sheet, our Export Credit Agreement, our Revolving Facility and excess cash flows generated by our existing operations.

 

In February 2019, we entered into an agreement with Ulstein Verft to construct a second 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. During March 2019, we entered into foreign exchange forward contract hedges to lock in a purchase price of $153.5 million, including hedging costs. The purchase price is subject to potential adjustments from contract specifications for variations in speed, deadweight, fuel consumption and delivery date. The purchase price is due in installments, with the first 20% paid shortly after execution of the agreement, 50% to be 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. During September 2019, we drew approximately $30.5 million against the Second Export Credit Agreement for the contracted installment payment on the National Geographic ResolutionThe remaining purchase price of the vessel will be funded through a combination of cash available on our balance sheet, our Second Export Credit Agreement, our Revolving Facility and excess cash flows generated by our existing operations. 

 

The 2019 agreement to construct the National Geographic Resolution and the borrowing through the Second Export Credit Agreement created material changes in our future obligations from those reported in our 2018 Annual Report. The additional related obligations as of September 30, 2019 are as follows: 

 

(In thousands)

 

Total

  

Current

  

1-2 years

 

National Geographic Resolution construction contract

 $92,851  $30,645  $62,206 
Long-term debt  30,476   -   30,476 

            

As of September 30, 2019, we had approximately $230.5 million in long-term debt obligations, including the current portion of long-term debt. We believe that our cash on hand, our revolving credit facility, our senior secured credit agreements and expected future operating cash inflows will be sufficient to fund operations, debt service requirements, capital expenditures for our newbuilds and other assets, acquisitions, and our Repurchase Plan. However, there can be no assurance that cash flows from operations will be available in the future to fund future obligations.

 

Off-Balance Sheet Arrangements

 

We entered into an Export Credit Agreement and a Second Export Credit Agreement as described above.

 

Critical Accounting Policies

 

For a detailed discussion of the Critical Accounting Policies, please see our 2018 Annual Report.

 

27

 

 

Item 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

There have been no material changes in our exposure to market risks from the information set forth in the “Quantitative and Qualitative Disclosures About Market Risk” sections contained in our 2018 Annual Report, with the exception of foreign currency denominated agreement for the construction of our polar ice class vessel and the foreign exchange forward contracts that we entered into and designated as a cash flow hedge for the purchase of the contracted polar ice class vessel scheduled to be delivered in the fourth quarter of 2021.

 

As of September 30, 2019, we had foreign currency forward contracts to hedge our exposure to foreign currency exchange rate risk related to our ship construction contracts denominated in Norwegian Kroner ("NOK"). As of September 30, 2019 we recorded in other comprehensive income a loss of approximately $6.4 million related to these foreign exchange derivatives. The strengthening of the NOK at September 30, 2019 by a hypothetical 10%, would result in an approximately $9.5 million gain being recorded in other comprehensive income. The weakening of the NOK at September 30, 2019 by a hypothetical 10%, would result in an approximately $7.7 million loss being recorded in other comprehensive income.

 

We are exposed to a market risk for interest rates related to our variable rate debt. 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% change (increase and decrease) in interest rates. For additional information regarding our long-term borrowings see Note 5 to our Condensed Consolidated Financial Statements. As of September 30, 2019, 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 September 30, 2019 was $100.0 million. Based on our September 30, 2019 outstanding variable rate debt balance, a hypothetical 1.0% change in the one-month LIBOR interest rates would impact our annual interest expense by approximately $1.0 million.

 

Item 4.

Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Under the supervision and with the participation of our management, including our principal executive officer and principal 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 September 30, 2019, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that as of September 30, 2019, our disclosure controls and procedures were effective.

 

Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within 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.

 

Changes in Internal Control over Financial Reporting

 

There was no change in our internal control over financial reporting that occurred during the quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

 

Part 2.

OTHER INFORMATION

 

Item 1.

LEGAL PROCEEDINGS

 

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.

RISK FACTORS

 

We operate in a rapidly changing environment that involves a number of risks that could materially affect our business, financial condition or future results, some of which are beyond our control. The risks and uncertainties that we believe are most important for you to consider are discussed under the heading “Risk Factors” in the 2018 Annual Report filed on February 28, 2019.

 

28

 

 

Item 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

Recent Sales by the Company of Unregistered Securities

 

There were no unregistered sales of equity securities during the quarter ended September 30, 2019.

 

Repurchases of Securities

 

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. 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. During the three months ended September 30, 2019, no shares were repurchased. We have cumulatively repurchased 866,701 shares of common stock for $8.2 million and 6,011,926 warrants for $14.7 million, since plan inception. The balance for the Repurchase Plan was $12.1 million as of September 30, 2019.

 

The following table represents information with respect to shares of common stock 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

July 1 through July 30, 2019 (a)

  185  $17.93  $-  $12,102,046 

August 1 through August 31, 2019 (a)

  144   18.80   -   12,102,046 

September 1 through September 30, 2019 (a)

  4,897   18.33   -   12,102,046 

Total

  5,226      $-     

 __________

 

 

(a)

Amount relates to shares withheld from vesting’s of stock-based compensation awards for employee income tax withholding.

 

Item 3.

DEFAULTS UPON SENIOR SECURITIES

 

Not applicable.

 

Item 4.

MINE SAFETY DISCLOSURES

 

Not applicable.

 

Item 5.

Other information

 

Not applicable

 

 

 

29

 

 

 

 

Item 6.

exhibits

Number

 

Description

 

Included

 

Form

 

Filing Date

31.1

 

Certification of Chief Executive Officer of Lindblad Expeditions Holdings, Inc. pursuant to Rule 13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended.

 

Herewith

 

 

 

 

31.2

 

Certification of Chief Financial Officer of Lindblad Expeditions Holdings, Inc. pursuant to Rule 13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended.

 

Herewith

 

 

 

 

32.1

 

Certification of Chief Executive Officer of Lindblad Expeditions Holdings, Inc. pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

Herewith

 

 

 

 

32.2

 

Certification of Chief Financial Officer of Lindblad Expeditions Holdings, Inc. pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

Herewith

 

 

 

 

101.INS

 

XBRL Instance Document

 

Herewith

 

 

 

 

101.SCH

 

XBRL Taxonomy extension schema document

 

Herewith

 

 

 

 

101.CAL

 

XBRL Taxonomy extension calculation link base document

 

Herewith

 

 

 

 

101.LAB

 

XBRL Taxonomy extension label link base document

 

Herewith

 

 

 

 

101.PRE

 

XBRL Taxonomy extension presentation link base document

 

Herewith

 

 

 

 

101.DEF

 

XBRL Taxonomy Extension Definition Link base

 

Herewith

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30

 

SIGNATURE

 

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 October 30, 2019.

 

 

LINDBLAD EXPEDITIONS HOLDINGS, INC.

 

(Registrant)

 

 

 

 

By

/s/ Sven-Olof Lindblad

 

 

Sven-Olof Lindblad

 

 

Chief Executive Officer and President

 

 

31