Docoh
Loading...

LIND Lindblad Expeditions

Filed: 29 Oct 20, 8:00pm
 

  

 

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, 2020

 

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

(Address of principal executive offices) (Zip Code)

 

(212) 261-9000

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

 

 

 

 

 

Common Stock, par value $0.0001 per share

 

LIND

 

The NASDAQ Stock Market LLC

 

Securities registered pursuant to Section 12(g) of the Act:

None

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

☐ 

Smaller reporting company

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☒ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of October 26, 2020, 49,875,186 shares of common stock, par value $0.0001 per share, were issued and outstanding.

 

 

 

LINDBLAD EXPEDITIONS HOLDINGS, INC.

 

Quarterly Report On Form 10-Q

For The Quarter Ended September 30, 2020

 

Table of Contents

 

 

 

Page(s)

 

 

 

PART I. FINANCIAL INFORMATION  

 

 

 

 

ITEM 1.

Financial Statements (Unaudited)

 

 

Condensed Consolidated Balance Sheets as of September 30, 2020 (Unaudited) and December 31, 2019 

1

 

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

2

 

Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

3

 

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

4

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019 (Unaudited)

6

 

Notes to the Condensed Consolidated Financial Statements (Unaudited)

7

 

 

 

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

35

ITEM 4.

Controls and Procedures

36

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

ITEM 1.

Legal Proceedings

36

ITEM 1A.

Risk Factors

36

ITEM 2.

Unregistered Sale of Equity Securities and Use of Proceeds

36

ITEM 3.

Defaults Upon Senior Securities

37

ITEM 4.

Mine Safety Disclosures

37

ITEM 5.

Other Information

37

ITEM 6.

Exhibits

38

 

 

 

SIGNATURES 

39

 

 

 

 

 

 

 

PART I.

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, 2020

  

As of December 31, 2019

 

ASSETS

 

(unaudited)

     

Current Assets:

        

Cash and cash equivalents

 $129,647  $101,579 

Restricted cash

  16,523   7,679 

Marine operating supplies

  5,913   6,299 

Inventories

  1,824   2,027 

Prepaid expenses and other current assets

  22,820   29,055 

Total current assets

  176,727   146,639 
         

Property and equipment, net

  488,048   357,790 

Goodwill

  22,105   22,105 

Intangibles, net

  5,212   6,396 

Deferred tax asset

  3,392   218 

Right-to-use lease assets

  5,349   6,105 

Other long-term assets

  7,971   9,405 

Total assets

 $708,804  $548,658 
         

LIABILITIES

        

Current Liabilities:

        

Unearned passenger revenues

 $120,463  $138,825 

Accounts payable and accrued expenses

  31,811   38,231 

Lease liabilities - current

  1,436   1,335 

Long-term debt - current

  8,451   4,525 

Total current liabilities

  162,161   182,916 
         

Long-term debt, less current portion

  391,284   213,543 

Deferred tax liabilities

  0   4,491 

Lease liabilities

  4,321   5,029 

Other long-term liabilities

  401   3,317 

Total liabilities

  558,167   409,296 
         

COMMITMENTS AND CONTINGENCIES

          
         

Series A redeemable convertible preferred stock, 165,000 and no shares authorized; 85,000 and no shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively

  82,636   0 

Redeemable noncontrolling interest

  7,940   16,112 
         

STOCKHOLDERS’ EQUITY

        

Preferred stock, $0.0001 par value, 1,000,000 shares authorized; 85,000 Series A shares issued and outstanding

  0   0 

Common stock, $0.0001 par value, 200,000,000 shares authorized; 49,875,186 and 49,717,522 issued, 49,801,510 and 49,626,498 outstanding as of September 30, 2020 and December 31, 2019, respectively

  5   5 

Additional paid-in capital

  47,662   46,271 

Retained earnings

  19,473   81,655 

Accumulated other comprehensive loss

  (7,079)  (4,681)

Total stockholders' equity

  60,061   123,250 

Total liabilities, stockholders' equity and redeemable noncontrolling interest

 $708,804  $548,658 

 

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

 

 

 

LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(In thousands, except share and per share data)

(unaudited)


 

  

For the three months ended September 30,

  

For the nine months ended September 30,

 
  

2020

  

2019

  

2020

  

2019

 
                 

Tour revenues

 $1,019  $100,983  $81,991  $267,294 
                 

Operating expenses:

                

Cost of tours

  8,075   48,294   62,988   124,831 

General and administrative

  9,145   15,266   36,170   47,615 

Selling and marketing

  2,128   15,531   18,413   42,100 

Depreciation and amortization

  8,485   6,233   23,728   18,603 

Total operating expenses

  27,833   85,324   141,299   233,149 
                 

Operating (loss) income

  (26,814)  15,659   (59,308)  34,145 
                 

Other (expense) income:

                

Interest expense, net

  (4,529)  (3,214)  (11,763)  (9,391)

Gain (loss) on foreign currency

  989   (2,338)  (6,334)  (1,181)

Other expense

  (74)  (30)  (188)  (79)

Total other expense

  (3,614)  (5,582)  (18,285)  (10,651)
                 

(Loss) income before income taxes

  (30,428)  10,077   (77,593)  23,494 

Income tax (benefit) expense

  (2,893)  7,351   (7,664)  4,838 
                 

Net (loss) income

  (27,535)  2,726   (69,929)  18,656 

Net (loss) income attributable to noncontrolling interest

  (156)  565   (956)  834 

Net (loss) income attributable to Lindblad Expeditions Holdings, Inc.

  (27,379)  2,161   (68,973)  17,822 
Non-cash deemed dividend to warrant holders  0   2,654   0   2,654 
                 

Net (loss) income available to stockholders

 $(27,379) $(493) $(68,973) $15,168 
                 

Weighted average shares outstanding

                

Basic

  49,779,525   48,863,506   49,715,663   46,704,634 

Diluted

  49,779,525   48,863,506   49,715,663   49,091,370 
                 

Undistributed (loss) earnings per share available to stockholders

                

Basic

 $(0.56) $(0.01) $(1.40) $0.32 

Diluted

 $(0.56) $(0.01) $(1.40) $0.31 

 


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

 

 

 

LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

(unaudited)


 

  

For the three months ended September 30,

  

For the nine months ended September 30,

 
  

2020

  

2019

  

2020

  

2019

 
                 

Net (loss) income

 $(27,535) $2,726  $(69,929) $18,656 

Other comprehensive income (loss):

                

Cash flow hedges:

                

Net unrealized gain (loss)

  1,745   (7,393)  (7,724)  (8,654)

Reclassification adjustment, net of tax

  0   1,624   5,326   1,624 

Total other comprehensive income (loss)

  1,745   (5,769)  (2,398)  (7,030)

Total comprehensive (loss) income

  (25,790)  (3,043)  (72,327)  11,626 

Less: comprehensive (loss) income attributive to non-controlling interest

  (156)  565   (956)  834 

Comprehensive (loss) income attributable to stockholders

 $(25,634) $(3,608) $(71,371) $10,792 

 

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

 

 

 

 

LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share data)

(unaudited)

 

  

Common Stock

  

Additional Paid-In

  

Retained

  

Accumulated Other Comprehensive

  

Total Stockholders'

 
  

Shares

  

Amount

  

Capital

  

Earnings

  

Loss

  

Equity

 

Balance as of June 30, 2020

  49,822,955  $5  $47,394  $45,403  $(8,824) $83,978 

Stock-based compensation

  -   0   310   0   0   310 

Issuance of stock for equity compensation plans, net

  52,231   0   (42)  0   0   (42)

Repurchase of shares and warrants

  0   0   0   0   0   0 

Other comprehensive income, net

  -   0   0   0   1,745   1,745 

Redeemable noncontrolling interest

  -   0   0   1,874   0   1,874 
Series A preferred stock dividend  -   0   0   (425)  0   (425)

Net loss available to stockholders

  -   0   0   (27,379)  0   (27,379)

Balance as of September 30, 2020

  49,875,186  $5  $47,662  $19,473  $(7,079) $60,061 
                         
  

Common Stock

  

Additional Paid-In

  

Retained

  

Accumulated Other Comprehensive

  

Total Stockholders'

 
  

Shares

  

Amount

  

Capital

  

Earnings

  

Loss

  

Equity

 

Balance as of January 1, 2020

  49,717,522  $5  $46,271  $81,655  $(4,681) $123,250 

Stock-based compensation

  -   0   1,911   0   0   1,911 

Issuance of stock for equity compensation plans, net

  166,181   0   (393)  0   0   (393)

Repurchase of shares and warrants

  (8,517)  0   (127)  0   0   (127)

Other comprehensive loss, net

  -   0   0   0   (2,398)  (2,398)

Redeemable noncontrolling interest

  -   0   0   7,216   0   7,216 
Series A preferred stock dividend  -   0   0   (425)  0   (425)

Net loss available to stockholders

  -   0   0   (68,973)  0   (68,973)

Balance as of September 30, 2020

  49,875,186  $5  $47,662  $19,473  $(7,079) $60,061 

 

 

 

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

 

 

LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity (continued)

(In thousands, except share data)

(unaudited)

 

 

  

Common Stock

  

Additional Paid-In

  

Retained

  

Accumulated Other Comprehensive

  

Total Stockholders'

 
  

Shares

  

Amount

  

Capital

  

Earnings

  

Loss

  

Equity

 

Balance as of June 30, 2019

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

Stock-based compensation

  -   0   917   0   0   917 

Issuance of stock for equity compensation plans, net

  19,391   0   (95)  0   0   (95)

Warrants

  3,895,651   0   2,938   (2,654)  0   284 

Other comprehensive loss, net

  -   0   0   0   (5,769)  (5,769)

Net income available to common stockholders

  -   0   0   2,161   0   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

  -   0   2,671   0   0   2,671 

Issuance of stock for equity compensation plans, net

  4,786   0   (1,778)  0   0   (1,778)

Repurchase of shares and warrants

  (1,895)  0   (23)  0   0   (23)

Warrants

  3,898,251   0   2,968   (2,654)  0   314 

Other comprehensive loss, net

  -   0   0   0   (7,030)  (7,030)

Net income available to common stockholders

  -   0   0   17,822   0   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.

  

 

 

LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(unaudited)

 

 

  

For the nine months ended September 30,

 
  

2020

  

2019

 

Cash Flows From Operating Activities

        

Net (loss) income

 $(69,929) $18,656 

Adjustments to reconcile net (loss) income to net cash (used by) provided by operating activities:

        

Depreciation and amortization

  23,728   18,603 

Amortization of National Geographic fee

  727   2,181 

Amortization of deferred financing costs and other, net

  1,549   1,392 

Amortization of right-to-use lease assets

  149   217 

Stock-based compensation

  1,911   2,671 

Deferred income taxes

  (7,710)  4,177 

Loss on foreign currency

  6,334   1,181 

Changes in operating assets and liabilities

        

Marine operating supplies and inventories

  589   (620)

Prepaid expenses and other current assets

  6,320   (2,780)

Unearned passenger revenues

  (18,362)  1,116 

Other long-term assets

  698   (7,561)

Other long-term liabilities

  (4,949)  4,530 

Accounts payable and accrued expenses

  (12,794)  (2,213)

Net cash (used in) provided by operating activities

  (71,739)  41,550 
         

Cash Flows From Investing Activities

        

Purchases of property and equipment

  (152,791)  (76,720)

Net cash used in investing activities

  (152,791)  (76,720)
         

Cash Flows From Financing Activities

        

Proceeds from long-term debt

  183,339   30,476 

Proceeds from Series A preferred stock issuance

  85,000   0 

Repayments of long-term debt

  (1,500)  (1,500)

Payment of deferred financing costs

  (4,877)  (2,340)

Repurchase under stock-based compensation plans and related tax impacts

  (393)  (1,778)

Repurchase of warrants and common stock

  (127)  (23)

Warrants exercised

  0   314 

Net cash provided by financing activities

  261,442   25,149 

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

  36,912   (10,021)

Cash, cash equivalents and restricted cash at beginning of period

  109,258   122,151 
         

Cash, cash equivalents and restricted cash at end of period

 $146,170  $112,130 
         

Supplemental disclosures of cash flow information:

        

Cash paid during the period:

        

Interest

 $12,418  $10,651 

Income taxes

 $650  $1,893 

Non-cash investing and financing activities:

        

Additional paid-in capital exercise proceeds of option shares

 $0  $225 

Additional paid-in capital exchange proceeds used for option shares

 $0  $(225)

Non-cash deemed dividend to warrant holders

 $0  $2,654 

 

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

  

 

Lindblad Expeditions Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

 

 

NOTE 1 – BUSINESS AND BASIS OF PRESENTATION

 

Business

 

Lindblad Expeditions Holdings, Inc. and its consolidated 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 nine 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 – Offers primarily ship-based expeditions aboard customized, nimble and intimately-scaled vessels that are able to venture where larger cruise ships cannot, thereby allowing Lindblad to offer up-close experiences in the planet’s wild and remote places and capitals of culture. Many of these expeditions involve travel to remote places with limited infrastructure and ports (such as Antarctica and the Arctic) or places that are best accessed by a ship (such as the Galápagos, 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 – Offers over 100 different expedition itineraries of primarily land-based nature adventures in more than 45 countries spanning all seven continents. The expeditions focus on small groups led by award-winning naturalists to achieve close-up wildlife and nature experiences. Examples of expeditions offered include safaris in Botswana, grizzly bear adventures in Alaska, polar bear tours in Canada and small-group Galápagos tours. Many of the expeditions feature access to private wildlife reserves, remote corners of national parks and distinctive lodges and camps for the best wildlife viewing. 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 (“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, 2019 contained in the Company’s Annual Report on Form 10-K filed with the SEC on February 26, 2020 (the “2019 Annual Report”).

 

The presentation of certain items in the condensed consolidated statements of cash flows have been reclassified to conform to the 2020 presentation. The reclassification had no effect on previously reported results of net cash provided by operating activities.

 

There have been no significant changes to the Company’s accounting policies from those disclosed in the 2019 Annual Report, with the exception of those noted below.

 

Series A Redeemable Convertible Preferred Stock 

 

The Company’s Series A redeemable convertible preferred stock is accounted for as equity instruments, presented on the condensed consolidated balance sheets in the temporary equity section. The redemption or conversion of the preferred stock into shares of the Company’s common stock is not solely controlled by the Company. At the six-year anniversary of the issuance, the holders have the right to require the Company to repurchase their redeemable convertible preferred stock. The redeemable convertible preferred stock is convertible into the Company’s common stock (i) any time at the holder’s election, (ii) at the six-year anniversary of the issuance of those shares not redeemed at the request of the holder, or (iii) after the third anniversary of the issuance by the Company under certain circumstances. 

 

 

7

 

COVID-19 Business Update 

 

Due to the spread of the COVID-19 virus and the effects of travel restrictions around the world, the Company has suspended or rescheduled the majority of its expeditions departing March 16, 2020 through December 31, 2020 and has rescheduled its 2020-2021 Antarctica season. The Company has been working with guests to amend travel plans and refund payments, as applicable. The Company’s ships are currently being maintained with minimally required crew on-board to ensure they comply with all necessary regulations and can be fully put back into service quickly as needed. In accordance with local regulations, the Company closed its offices and most employees are working remotely to maintain general business operations, to provide assistance to existing and potential guests and to maintain information technology systems. 

 

The Company moved quickly to implement a comprehensive plan to mitigate the impact of COVID-19 and preserve and enhance its liquidity position. The Company is employing a variety of cost reduction and cash preservation measures, while accessing available capital under its existing debt facilities and through the issuance of preferred stock, while exploring additional sources of capital and liquidity. These measures include the following operating expense and capital expenditure reductions:

 

 

Significantly reduced ship and land-based expedition costs including crew payroll, land costs, fuel and food. All ships have been safely laid up. 

 

 

 

 

Lowered expected annual maintenance capital expenditures by over $10 million, savings of more than 50% from originally planned levels. 

 

 

 

 

Meaningfully reduced general and administrative expenses through staff furloughs, payroll reductions and the elimination of all non-essential travel, office expenses and discretionary spending.

 

 

 

 

Suspended the majority of planned advertising and marketing spend. 

 

 

 

 

Suspended all repurchases of common stock under the stock repurchase plan.

 

Bookings Trends

 

The Company was off to a strong start to the year with Lindblad segment bookings at the end of February up 25% for the full year 2020 as compared to the same point a year ago for 2019, and had sold 86% of its originally projected guest ticket revenues for the year. Since that point, the Company has experienced a substantial impact from the COVID-19 virus including elevated cancellations and softness in near-term demand. As of October 26, 2020, Lindblad segment bookings for travel in 2020 are now 74% below the same point a year ago for 2019 due primarily to the cancelled and rescheduled voyages. The Company has substantial advanced bookings for travel in 2021 and despite increased cancellations for travel in the first quarter of 2021, total bookings for 2021 are 4% ahead of bookings for 2019 as of the same date in 2018 and only 12% below the same date a year ago for 2020. For the last nine months of 2021 bookings are 12% ahead of the bookings for the same period in 2020 as of the same date a year ago. The Company continues to see new bookings for future travel including over $44.0 million since March 1, 2020, and it is receiving deposits and final payments for future travel.

 

For 2020 voyages that have been cancelled or rescheduled, the Company is providing future travel credits with incremental value or full refunds, as applicable, to its fully paid guests. As of October 26, 2020, the majority of guests have opted for future travel credits.

 

Balance Sheet and Liquidity

 

As of September 30, 2020, the Company had $129.6 million in unrestricted cash and $16.5 million in restricted cash primarily related to deposits on future travel originating from U.S. ports. During the first quarter of 2020 the Company drew down $45.0 million under its revolving credit facility as a precautionary measure for working capital and general corporate purposes given the uncertainty related to the COVID-19 pandemic and borrowed $107.7 million under its first export credit agreement in conjunction with final payment on delivery of the National Geographic Endurance in March 2020. During April 2020, the Company drew down $30.6 million under its second export credit agreement in conjunction with its third installment payment on the National Geographic Resolution, scheduled for delivery in the fourth quarter of 2021. 

 

During May 2020, the Company amended its $2.5 million promissory note, changing the maturity date of the principal payments to be due in three equal installments, with the first payment due on December 22, 2020, the second due on December 22, 2021 and the final payment due on December 22, 2022.

 

8

 

During June 2020, the Company amended its export credit agreements to defer approximately $9.0 million in aggregate scheduled amortization payments originally due in June 2020 through March 2021 and to suspend the total net leverage ratio covenant from June 2020 through June 2021. During August 2020, the Company amended its term loan and revolving credit facilities to waive the application of the total net leverage ratio covenant through June 2021. In connection with the amendment, the interest rate of the term loan has been increased 125 basis points, to be paid-in-kind at maturity, a LIBOR minimum of 0.75% has been added to the term loan and revolving credit facilities and certain covenants have been amended to be more restrictive.

 

During August 2020, the Company raised $85.0 million in gross proceeds through the private placement issuance of 85,000 shares of Series A Redeemable Convertible Preferred Stock (“Preferred Stock”), that carries a 6.0% annual dividend, which is payable in kind for two years and thereafter in cash or in-kind at the Company’s option. The Preferred Stock is convertible into shares of Lindblad common stock at a conversion price of $9.50 per share, representing a premium of 23% to Lindblad’s 30-trading volume weighted average price on the date of issuance. The holders may request redemption of the Preferred Stock at the six-year anniversary of the issuance.

 

As of September 30, 2020, the Company had a total debt position of $412.2 million and was in compliance with all of its debt covenants in effect. The Company has no material debt maturities until 2023.

 

The Company estimates its monthly cash usage while its vessels are not in operations to be approximately $10-15 million including ship and office operating expenses, necessary capital expenditures and interest and principal payments. This excludes guest payments for future travel and cash refunds requested on previously made guest payments. The Company continues to evaluate additional strategies to enhance its liquidity position which may include, but are not limited to, further reductions in operating expenses, capital expenditures and administrative costs as well as additional financings. 

 

In April 2020, the Company received a U.S. Small Business Administration Loan related to the COVID-19 crisis in the amount of $6.6 million. The Company subsequently returned the funds received from this loan and, as a result, made additional adjustments to its cost structure.

 

The Company has not previously experienced a complete cessation of its operations and, as a consequence, its ability to predict the impact of such cessation on its costs and future prospects is limited. Given the dynamic nature of this situation, the Company cannot reasonably estimate the impacts of the COVID-19 virus on its financial condition, results of operations, cash flows, plans and growth for the foreseeable future. It is unknown when travel restrictions and various border closures will be lifted and what the demand for expedition travel will be once these restrictions are no longer in place. The estimates for monthly cash usage reflect the Company’s current forecast for operating costs, capital expenditures and expected debt and interest payments. Based on current liquidity, the actions taken to date and its current forecast, which assumes rescheduled operations during 2020 with a ramp up in operations throughout 2021, the Company believes that its liquidity should be adequate to meet its obligations for the next 12 months from October 29, 2020, the date of this Quarterly Report on Form 10-Q. 

 

Return to Operations

 

The Company already has a robust set of operating protocols and, in preparation for the resumption of operations, has been proactively working in close cooperation with various medical policy experts and public health authorities to further augment its procedures and protocols for health and safety onboard its vessels to mitigate the potential impacts of the COVID-19 virus. These protocols encompass, but are not limited to, medical care, screening, testing, social distancing, personal protective equipment, and sanitization during all aspects of an expedition.

 

While it is uncertain when the Company will return to operations, it believes there are a variety of strategic advantages that should enable it to deploy its ships safely and quickly once travel restrictions have been lifted. The most notable is the size of its owned and operated vessels which range from 48 to 148 passengers, allowing for a highly controlled environment that includes stringent cleaning protocols. The small nature of the Company’s ships should also allow it to efficiently and effectively test its guests and crew prior to boarding. On average, the Company estimates it will only take a few thousand tests a month to ensure all guests and crew across its entire fleet have been tested. Additionally, the majority of its expeditions take place in remote locations where human interactions are limited, so there is less opportunity for external influence. The Company also has the ability to be flexible with regards to existing itineraries and is actively investigating additional itinerary opportunities both internationally and domestically. Lastly, the Company’s guests are explorers by nature, eager to travel and have historically been very resilient following periods of uncertainty. 

 

Valuation of Goodwill

 

In accordance with ASC 360, the Company tests for impairment annually as of September 30, or more frequently if warranted. The Company assesses qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of goodwill is less than its carrying amount. The Company completed the annual impairment test as of September 30, 2020 with no indication of goodwill impairment.

 

9

 

Valuation of Long-lived Assets

 

The effects of COVID-19 on the Company’s expected future operating cash flows was a potential indicator that the carrying value of the Company's long-lived assets may not be recoverable. The Company performed an undiscounted cash flow analysis of its long-lived assets for potential impairment as of September 30, 2020, and based on the analysis, it was determined that there was no impairment to the Company's long-lived assets.

 

Recent Accounting Pronouncements

 

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740)–Simplifying the Accounting for Income Taxes. The amendments of this ASU are intended to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, and early adoption is permitted. The Company will adopt this ASU as required and does not expect it to have a material impact to the Company’s financial statements.

 

In March 2020, the FASB issued ASU 2020-4, Reference Rate Reform (Topic 848) –Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The guidance of this ASU is designed to provide relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements (e.g., loans, debt securities, derivatives, borrowings) necessitated by reference rate reform. It also provides optional expedients to enable companies to continue to apply hedge accounting to certain hedging relationships impacted by reference rate reform. Application of the guidance is optional, is only available in certain situations, and is only available for companies to apply until December 31, 2022. The Company is currently reviewing its agreements impacted by the reference rate reform and does not expect this ASU to have a material impact to the Company’s financial statements.

 

In August 2020, the FASB issued ASU 2020-06, Debt – Debt with conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. The amendments in this Update address issues identified as a result of the complexity associated with applying GAAP for certain financial instruments with characteristics of liabilities and equity. The amendments in this Update reduce the number of accounting models for convertible debt instruments and convertible preferred stock, and address convertible instruments with conversion features, as well as other items. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021, early adoption is permitted for fiscal years beginning after December 15, 2020, and must be adopted at the beginning of an entities’ fiscal year. The Company will adopt this ASU as required and is currently reviewing the impacts this ASU will have on its financial statements.

 

 

 

NOTE 2 – EARNINGS PER SHARE

 

Earnings per Common Share

 

Earnings per common share is computed using the two-class method related to its Preferred Stock. Under the two-class method, undistributed earnings available to stockholders for the period are allocated on a pro rata basis to the common stockholders and to the holders of convertible preferred shares based on the weighted average number of common shares outstanding and number of shares that could be issued upon conversion of the Preferred Stock. Diluted earnings per share is computed using the weighted average number of common shares outstanding and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the dilutive incremental common shares associated with restricted stock awards, shares issuable upon the exercise of stock options and previously outstanding warrants, using the treasury stock method, and the potential common shares that could be issued from conversion of the Preferred Stock, using the if-converted method. When a net loss occurs, potential common shares have an anti-dilutive effect on earnings per share and such shares are excluded from the diluted EPS calculation.

 

10

 

For the three and nine months ended September 30, 2020 and 2019, the Company calculated earnings (loss) per share as follows:

 

  

For the three months ended September 30,

  

For the nine months ended September 30,

 
  

2020

  

2019

  

2020

  

2019

 

(In thousands, except share and per share data)

 

(unaudited)

  

(unaudited)

  

(unaudited)

  

(unaudited)

 

Net (loss) income attributable to Lindblad Expeditions Holdings, Inc.

 $(27,379) $2,161  $(68,973) $17,822 
Series A redeemable convertible preferred stock dividend  425   0   425   0 

Non-cash deemed dividend to warrant holders

  0   2,654   0   2,654 

Undistributed (loss) earnings available to stockholders

 $(27,804) $(493) $(69,398) $15,168 
                 

Weighted average shares outstanding:

                

Total weighted average shares outstanding, basic

  49,779,525   48,863,506   49,715,663   46,704,634 

Dilutive potential common shares

  0   0   0   252,279 

Dilutive potential options

  0   0   0   66,105 
Dilutive potential redeemable convertible preferred shares  0   0   0   0 

Dilutive potential warrants

  0   0   0   2,068,352 

Total weighted average shares outstanding, diluted

  49,779,525   48,863,506   49,715,663   49,091,370 
                 

Undistributed (loss) earnings per share available to stockholders

                

Basic

 $(0.56) $(0.01) $(1.40) $0.32 

Diluted

 $(0.56) $(0.01) $(1.40) $0.31 

 

For the three and nine months ended September 30, 2020, the Company incurred a net loss from operations, therefore 0.3 million restricted shares, 0.2 million options and 8.9 million common shares issuable upon the conversion of the Preferred Stock as of September 30, 2020, were excluded from dilutive potential common shares for the periods as they are anti-dilutive, and basic and diluted net loss per share are the same for the periods. For the three months ended September 30, 2019, the Company incurred a net loss available to common stockholders, therefore 0.6 million restricted shares and 0.2 million options were excluded from dilutive potential common shares for the period as they are anti-dilutive, and basic and diluted net loss per share are the same for the period. For the nine months ended September 30, 2019, 0.1 million restricted shares were excluded from dilutive potential common shares as performance conditions have not been met. 

 

 

 

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 our condensed consolidated balance sheets are as follows:

 

 

  

Contract Liabilities

 

(In thousands)

 

(unaudited)

 

Balance as of January 1, 2020

 $72,051 

Recognized in tour revenues during the period

  (68,182)

Additional contract liabilities in period

  88,689 

Balance as of September 30, 2020

 $92,558 

 

11

 

The following table disaggregates our tour revenues by the sales channel it was derived from:
 

  

For the three months ended September 30,

  

For the nine months ended September 30,

 
  

2020

  

2019

  

2020

  

2019

 

Guest ticket revenue:

 

(unaudited)

  

(unaudited)

  

(unaudited)

  

(unaudited)

 

Direct

  32%  48%  41%  44%

National Geographic

  0%  14%  18%  16%

Agencies

  26%  21%  24%  23%

Affinity

  6%  10%  6%  8%

Guest ticket revenue

  64%  93%  89%  91%

Other tour revenue

  36%  7%  11%  9%

Tour revenues

  100%  100%  100%  100%

 

 

 

NOTE 4 – FINANCIAL STATEMENT DETAILS

 

The following is a reconciliation of cash, cash equivalents and restricted cash to the statement of cash flows: 

 

  

As of September 30,

 
  

2020

  

2019

 

(In thousands)

 

(unaudited)

  

(unaudited)

 

Cash and cash equivalents

 $129,647  $104,135 

Restricted cash

  16,523   7,995 

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

 $146,170  $112,130 

 

Restricted cash consist of the following: 

 

  

As of September 30, 2020

  

As of December 31, 2019

 

(In thousands)

 

(unaudited)

     

Federal Maritime Commission escrow

 $14,264  $6,104 

Certificates of deposit and other restricted securities

  1,290   1,575 

Credit card processor reserves

  969   0 

Total restricted cash

 $16,523  $7,679 

 

The Company’s prepaid expenses and other current assets consist of the following: 

 

  

As of September 30, 2020

  

As of December 31, 2019

 

(In thousands)

 

(unaudited)

     

Prepaid tour expenses

 $13,223  $15,630 

Prepaid air expense

  3,361   4,415 

Prepaid marketing, commissions and other expenses

  2,159   4,026 

Prepaid client insurance

  2,085   3,064 

Prepaid corporate insurance

  1,433   1,376 

Prepaid port agent fees

  415   491 

Prepaid income taxes

  144   53 

Total prepaid expenses

 $22,820  $29,055 

 

12

 

The Company’s accounts payable and accrued expenses consist of the following: 

 

  

As of September 30, 2020

  

As of December 31, 2019

 

(In thousands)

 

(unaudited)

     

Accounts payable

 $8,192  $14,633 

Foreign currency forward contract liability

  6,909   1,300 

Accrued other expense

  5,996   8,348 

Employee liability

  3,958   3,712 

Refunds and commissions payable

  2,697   1,873 

Bonus compensation liability

  2,697   5,322 

Travel certificate liability

  870   888 

Accrued travel insurance expense

  270   477 

Royalty payable

  222   1,075 

Income tax liabilities

  0   603 

Total accounts payable and accrued expenses

 $31,811  $38,231 

 

Loan Receivable

 

The Company’s loan receivable is recorded at amortized cost within other long-term assets. The Company reviewed its loan receivable for credit losses in connection with the preparation of its condensed consolidated financial statements for the period ended September 30, 2020. In evaluating the allowance for loan losses, the Company considered factors such as historical loss experience, the type and amount of loan, adverse situations that may affect the borrower’s ability to repay and prevailing economic conditions. Based on these credit loss estimation and experience factors, the Company realized no allowance for loan loss for the nine months ended September 30, 2020. The roll-forward of the loan receivable balance is as follows:

 

  

Loan Receivable

 

(In thousands)

 

(unaudited)

 

Balance as of January 1, 2020

 $4,084 

Accrued interest

  122 

Amortization of deferred costs

  (20

)

Balance as of September 30, 2020

 $4,186 

 

 

 

NOTE 5 – LONG-TERM DEBT

 

  

As of September 30, 2020

  

As of December 31, 2019

 
      

(unaudited)

                 

(In thousands)

 

Principal

  

Deferred Financing Costs, net

  

Balance

  

Principal

  

Deferred Financing Costs, net

  

Balance

 

Note payable

 $2,525  $0  $2,525  $2,525  $0  $2,525 

Revolving Facility

  45,000   (379)  44,621   0   0   0 

Credit Facility

  195,868   (7,957)  187,911   197,000   (9,704)  187,296 

1st Senior Secured Credit Agreement

  107,695   (1,834)  105,861   0   0   0 

2nd Senior Secured Credit Agreement

  61,120   (2,303)  58,817   30,476   (2,229)  28,247 

Total long-term debt

  412,208   (12,473)  399,735   230,001   (11,933)  218,068 

Less current portion

  (8,451)  0   (8,451)  (4,525)  0   (4,525)

Total long-term debt, non-current

 $403,757  $(12,473) $391,284  $225,476  $(11,933) $213,543 

 

For the three and nine months ended September 30, 2020, deferred financing costs charged to interest expense were $0.5 million and $1.5 million, respectively. 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. 

 

13

 

The Company has amended its export credit agreements, term loan and revolving credit facilities. During June 2020, the Company amended its export credit agreements to defer approximately $9.0 million in aggregate scheduled amortization payments originally due June 2020 through March 2021 and to suspend the total net leverage ratio covenant from June 2020 through June 2021.

 

On August 7, 2020, the Company amended its term loan and revolving credit facilities to waive the application of the total net leverage ratio covenant through June 2021. In connection with the amendment, the interest rate of the term loan has been increased 125 basis points, to be paid-in-kind at maturity, a LIBOR minimum of 0.75% has been added to the term loan and revolving credit facilities and certain covenants have been amended to be more restrictive.

 

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, as amended, bears interest at an adjusted Intercontinental Exchange (“ICE”) Benchmark administration LIBOR, with a floor of 0.75%, plus a spread of 4.50%, for an aggregated rate of 5.25% as of September 30, 2020. During March 2020, the Company drew $45.0 million against the Revolving Facility as a reserve for general corporate purposes and other expense needs due to the uncertainty related to the COVID-19 pandemic. Borrowings under the Revolving Facility mature March 2023 and, as amended, bear interest at an adjusted ICE Benchmark administration LIBOR, with a minimum of 0.75%, plus a spread of 3.00%, for an aggregated rate of 3.75% as of September 30, 2020.

 

Export Credit Agreements

 

In January 2018, the Company entered into a senior secured credit agreement (the “Export Credit Agreement”) with Citibank, N.A., London Branch and Eksportkreditt Norge AS, which made available to the Company a loan in an aggregate principal amount not to exceed $107.7 million for the purpose of providing financing for up to 80% of the purchase price of the Company’s new ice class vessel, the National Geographic Endurance. During March 2020, the Company took possession of the National Geographic Endurance and borrowed $107.7 million under the Export Credit Agreement for final payment. The Export Credit Agreement bears interest at a floating interest rate equal to three-month LIBOR plus a margin of 3.00% per annum, for an aggregated rate of 3.25% over the borrowing period covering September 30, 2020. 

 

In April 2019, the Company entered into a senior secured credit agreement (the “Second Export Credit Agreement”) with the Citibank, N.A., London Branch and Eksportkreditt Norge AS. 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 vessel, the National Geographic Resolution, scheduled to be delivered in the fourth quarter of 2021. 30% of the borrowing will mature over five years from the final drawdown, and 70% of the borrowing will mature over twelve years from the final drawdown. Additionally, 70% percent of the loan will be guaranteed by Garantiinstituttet for Eksportkreditt, the official export credit agency of Norway. In September 2019 and April 2020, the Company drew approximately $30.5 million and $30.6 million, respectively, under the Second Export Credit Agreement for contracted installment payments on the National Geographic Resolution

 

The Second Export Credit Agreement bears a variable interest rate equal to three-month LIBOR plus a margin of 3.00% per annum, or 3.23% over the borrowing period covering September 30, 2020. 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.

 

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. The promissory note accrues interest at a rate of 1.44% annually, with interest payable every six months. On May 1, 2020, the promissory note was amended, changing the maturity date of the principal payments to be due in three equal installments with the first payment due on December 22, 2020, the second on December 22, 2021 and the final payment on December 22, 2022.

 

Other

 

On April 10, 2020, the Company received a U.S. Small Business Administration Loan related to the COVID-19 crisis in the amount of $6.6 million. The Company subsequently returned the funds received from this loan.

 

14

 

Covenants

 

The Company’s Amended Credit Agreement, Export Credit Agreement and Second Export Credit Agreement contain financial and restrictive covenants that include among others, net leverage ratios, minimum liquidity, limits on additional indebtedness and limits on certain investments. The net leverage ratios covenants of the Company’s credit agreements have been suspended or waived through June 2021. As of September 30, 2020, the Company was in compliance with its covenants.


 

 

NOTE 6 – FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

 

Derivative Instruments and Hedging Activities

 

The Company’s derivative assets and liabilities consist principally of foreign exchange forward contracts and interest rate caps and are carried at fair value based on significant observable inputs (Level 2 inputs). Derivatives entered into by the Company are typically executed over-the-counter and are valued using internal valuation techniques, as quoted market prices are not readily available. The valuation technique and inputs depend on the type of derivative and the nature of the underlying exposure. The Company principally uses discounted cash flows along with fair value models that primarily use market observable inputs. These models take into account a variety of factors including, where applicable, maturity, currency exchange rates, interest rate yield curves and counterparty credit risks.

 

Currency Risk. The Company uses currency exchange contracts to manage its exposure to changes in currency exchange rates associated with certain of its non-U.S.-dollar denominated receivables and payables. The Company primarily hedges a portion of its current-year currency exposure to several currencies, which normally include, but are not limited to, the Canadian and New Zealand dollars, the Brazilian Real, the South African Rand, the Euro and the British pound sterling. The fluctuations in the value of these forward contracts largely offset the impact of changes in the value of the underlying risk they economically hedge.

 

In March 2019, the Company entered into foreign exchange forward contracts, designated as cash flow hedges, to hedge its exposure to Norwegian Kroner ("NOK"), related to the Company’s contract to purchase the new polar ice-class vessel (see Note 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 for the period ended September 30, 2020. The Company reclassified $5.3 million from other comprehensive income (loss) to earnings for the nine months ended September 30, 2020 due to the maturity of a cash flow hedge and the hedged item. The Company estimates that approximately $6.9 million of losses currently recorded in accumulated other comprehensive income (loss) will be recognized in earnings over the next 12 months due to maturity of the cash flow hedge and the hedged item. The Company will continue to assess the effectiveness of the hedges on an ongoing basis.

 

The Company held the following derivative instruments with absolute notional values as of September 30, 2020:

 

(in thousands)

 

Absolute Notional Value

 

Interest rate caps

 $100,000 

Foreign exchange contracts

  93,868 

 

15

 

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

 

  

As of September 30, 2020

  

As of December 31, 2019

 
  

(unaudited)

         

(In thousands)

 

Fair Value, Asset Derivatives

  

Fair Value, Liability Derivatives

  

Fair Value, Asset Derivatives

  

Fair Value, Liability Derivatives

 

Derivative instruments designated as cash flow hedging instruments:

                

Foreign exchange forward (a)

 $0  $6,909  $0  $4,459 

Interest rate cap (b)

  0   0   138   0 

Total

 $0  $6,909  $138  $4,459 

Derivative instruments not designated as cash flow hedging instruments:

                

Foreign exchange forward (c)

 $31  $640  $459  $70 

Total

 $31  $640  $459  $70 

__________

 

(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 prepaid expenses and other current assets, and 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:

 

 

  

For the three months ended September 30,

  

For the nine months ended September 30,

 

(In thousands)

 

2020

  

2019

  

2020

  

2019

 

Derivative instruments designated as cash flow hedging instruments:

 

(unaudited)

  

(unaudited)

  

(unaudited)

  

(unaudited)

 

Foreign exchange forward (a)

 $(1,745) $(7,094) $2,261  $(8,066)

Interest rate cap (b)

  0   (298)  137   (587)
                 

Derivative instruments not designated as cash flow hedging instruments:

                

Foreign exchange forward (c)

  989   (715)  (1,008)  442 

Total

 $(756) $(8,107) $1,390  $(8,211)

 

 

(a)

For the three and nine months ended September 30, 2020, a $1.7 million gain and a $7.6 million loss, respectively, was recognized, net of tax, as a component of other comprehensive income (loss) within stockholders’ equity, and for the nine months ended September 30, 2020, $5.3 million was recognized as a loss on foreign currency in the condensed consolidated statements of income. 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, 2020, a gain of $1.0 million and a loss of $1.0 million was recognized in gain (loss) on foreign currency. 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.

 

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, 2020. As of September 30, 2020 and December 31, 2019, the Company had no other significant liabilities that were measured at fair value on a recurring basis.

 

 

16

 
 

NOTE 7 – STOCKHOLDERS’ EQUITY

 

Preferred Stock

 

On August 31, 2020, the Company issued and sold 85,000 shares of Series A Redeemable Convertible Preferred Stock, par value of $0.0001, (“Preferred Stock”) for $1,000 per share for gross proceeds of $85.0 million. The Preferred Stock has senior and preferential ranking to the Company’s common stock. The Preferred Stock is entitled to cumulative dividends of 6.00% per annum, and for the first two years, the dividends will be paid-in-kind. After the second anniversary of the issuance date, the dividends may be paid-in-kind or be paid in cash at the Company’s option. The Preferred Stock is convertible at any time, at the holder’s election, into a number of shares of common stock of the Company equal to the quotient obtained by dividing the then-current accrued value by the conversion price of $9.50. At any time after the third anniversary of the issuance, the Company may, at its option, convert all, but not less than all, of the Preferred Stock into common stock if the closing price of shares of common stock is at least 150% of the conversion price for 20 out of 30 consecutive trading days. The number of shares of common stock received in such conversion shall be equal to the quotient obtained by dividing the then-current accrued value by the conversion price. At the six-year anniversary of the closing date, each investor has the right to require the Company to repurchase their Preferred Stock and any Preferred Stock not requested to be repurchased shall be converted into common shares of the Company equal to the quotient obtained by dividing the then-current accrued value by the conversion price.

 

For the three and nine months ended September 30, 2020, the Company recorded $0.4 million in accrued dividends for Preferred Stock.

 

The Preferred Stock deferred issuance costs was approximately $2.8 million as of September 30, 2020.

 

As of September 30, 2020, the Preferred Stock could be converted at the option of the holders into approximately 8.9 million shares of the Company’s common stock.

 

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 and previously outstanding warrants. Any shares purchased will be retired. The Repurchase Plan has no time deadline and will continue until otherwise modified or terminated at the sole discretion of the Company’s Board of Directors. These repurchases exclude shares repurchased to settle statutory employee tax withholding related to the exercise of stock options and vesting of stock awards. Since March 2020, the Repurchase Plan has been suspended due to the uncertain impact of the COVID-19 virus. Prior to its suspension, the Company had repurchased 8,517 shares of common stock for approximately $127,000 during 2020. The Company has cumulatively repurchased 875,218 shares of common stock for $8.3 million and 6,011,926 warrants for $14.7 million since plan inception. All repurchases were made using cash resources. The remaining balance for the Repurchase Plan was $12.0 million as of September 30, 2020.

 

 

 

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 directors and key employees, and as of September 30, 2020, approximately 1.0 million shares were available to be granted.

 

As of September 30, 2020 and December 31, 2019, options to purchase an aggregate of 200,000 shares of the Company’s common stock, with a weighted average exercise price of $9.47, were outstanding. All 200,000 options were exercisable as of September 30, 2020.

 

The Company recorded stock-based compensation expense of $0.3 million and $1.9 million during the three and nine months ended September 30, 2020, respectively, and $0.9 million and $2.7 million during the three and nine months ended September 30, 2019, respectively.

 

2020 Long-Term Incentive Compensation

 

During the nine months ended September 30, 2020, the Company granted 186,515 restricted stock units ("RSUs") with a weighted average grant price of $6.07. The RSUs will vest, depending on the grant, either on the first anniversary of the grant date or in equal installments over a three-year period, subject to the recipient’s continued employment or service with the Company on the applicable vesting date. The number of shares were determined based upon the closing price of the Company's common stock on the date of the award. 

  

17

 

During the nine months ended September 30, 2020, the Company granted 55,048 restricted shares with a weighted average grant price of $8.26. 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, 2020, the Company awarded 86,783 targeted performance stock units ("PSUs") with a weighted average grant price of $5.42. The PSUs are performance-vesting equity incentive awards that will be earned based on the Company's performance against metrics relating to annual Adjusted EBITDA and annual revenue. Awards 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 our common stock on the date of the award. The PSUs granted during the nine months ended September 30, 2020 represented 50% of the 2020 long-term incentive compensation PSU awards. Due to the circumstances related to the impact of the COVID-19 virus, the compensation committee of the Company's Board of Directors initially approved the deferral of a portion of the PSU awards and during September 2020, awarded market share units in lieu of the remainder of the PSU grants.

 

On September 30, 2020, the Company awarded 98,030 market performance share units (“MSUs”) with a weighted average grant price of $8.51. The MSUs are market-based equity incentive awards based on a performance-multiplier of change in the stock price of the Company’s common stock between the grant date and March 31, 2022. The number of shares that will eventually be earned and vest may be more or less then the number of MSUs that are awarded, depending on the Company's common stock price. The MSUs will vest 50% on March 31, 2022 and 50% on March 31, 2023.

 

Natural Habitat Contingent Arrangement

 

In connection with the acquisition of Natural Habitat, Mr. Bressler, the founder of Natural Habitat, has an equity incentive opportunity to earn an award of options based on the future financial performance of Natural Habitat, where if the Final Year Equity Value of Natural Habitat, as defined in Mr. Bressler's amended employment agreement, exceeds $25.0 million, effective as of December 31, 2023, Mr. Bressler will be granted options with a fair value equal to 10.1% of such excess, subject to certain conditions.

 

 

 

NOTE 9 – RELATED PARTY TRANSACTIONS

 

In May 2016, in connection with the Company's acquisition of Natural Habitat, Natural Habitat issued an unsecured promissory note to Mr. Bressler, the founder of Natural Habitat, with an outstanding principal amount of $2.5 million. The promissory note was amended during May 2020. See Note 5 – Long-term Debt for more information.

 

 

 

NOTE 10 – INCOME TAXES

 

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The measurement of net deferred tax assets is reduced by the amount of any tax benefit that, based on available evidence, is not expected to be realized, and a corresponding valuation allowance is established. The determination of the required valuation allowance against net deferred tax assets was made without taking into account the deferred tax liabilities created from the book and tax differences on indefinite-lived assets.

 

The Company accounts for income taxes using the asset and liability method, under which it recognizes deferred income taxes for the tax consequences attributable to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities, as well as for tax loss carryforwards and tax credit carryforwards. The Company measures deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recoverable or settled. The Company recognizes the effect on deferred taxes of a change in tax rates in income in the period that includes the enactment date. The Company provides a valuation allowance against deferred tax assets if, based upon the weight of available evidence, the Company does not believe it is “more-likely-than-not” that some or all of the deferred tax assets will be realized. The Company will continue to evaluate the deferred tax asset valuation allowance balances in all of our foreign and U.S. companies to determine the appropriate level of valuation allowances.

 

18

 

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, 2020, and December 31, 2019, the Company had a liability for unrecognized tax benefits of $0.0 million. The Company’s policy is to record interest and penalties on uncertain tax positions as a component of income tax expense. During the three and nine months ended September 30, 2020 and 2019, interest and penalties related to uncertain tax positions included in income tax expense are not significant. The Company's effective tax rate for the three and nine months ended September 30, 2020 was a benefit of 9.5% and 9.9%, respectively, versus an expense of 72.9% and 20.6% for the three and nine months ended September 30, 2019, respectively, primarily due to the timing of losses in the first quarter and the expected amount of losses for the full year 2020 due to the impact of COVID-19 on the Company's operations.

 

The Company is subject to tax audits in all jurisdictions for which it files tax returns. Tax audits by their very nature are often complex and can require several years to complete. Currently, there are no U.S. federal, state or foreign jurisdiction tax audits pending. The Company’s corporate U.S. federal and state tax returns for the current year and three prior years remain subject to examination by tax authorities and the Company’s foreign tax returns for the current year and four prior years remain subject to examination by tax authorities.

 

 

 

NOTE 11 – COMMITMENTS AND CONTINGENCIES

 

Fleet Expansion

 

In February 2019, the Company entered into an agreement, which was amended in December 2019, with Ulstein Verft, to construct a second polar ice class vessel, the National Geographic Resolution, with a total purchase price of 1,291.0 million NOK. The purchase price is subject to potential adjustments from contract specifications for variations in speed, dead weight, fuel consumption and delivery date. In March 2019, the Company entered into foreign exchange forward contracts to lock in a purchase price for the second polar ice class vessel of $153.5 million, subject to potential contract specification adjustments. The purchase price is due in installments, with 20% paid shortly after execution of the agreement, 20% paid in September 2019, 20% paid in April 2020 and 10% due in April 2021. The final 30% is due upon delivery and acceptance of the vessel. The vessel is scheduled to be delivered in the fourth quarter of 2021. 

 

Royalty Agreement – National Geographic

 

The Company is party to an alliance and license agreement with National Geographic, which allows the Company to use the National Geographic name and logo. In return for these rights, the Company is charged a royalty fee. The royalty fee is included within selling and marketing expense on the accompanying condensed consolidated statements of operations. The amount is calculated based upon a percentage of certain ticket revenues less travel agent commission, including the revenues received from cancellation fees and any revenues received from the sale of pre- and post-expedition extensions. Royalty expense for the three and nine months ended September 30, 2020 was $0.0 million and $1.3 million, respectively, and for the three and nine months ended September 30, 2019, was $1.7 million and $4.8 million, respectively.

 

The royalty balances outstanding to National Geographic as of September 30, 2020 and December 31, 2019 were $0.0 million and $2.2 million, respectively, and are included in accounts payable and accrued expenses on the accompanying condensed consolidated balance sheets.

 

Royalty Agreement – World Wildlife Fund

 

Natural Habitat has a license agreement with WWF, which allows it to use the WWF name and logo. In return for these rights, Natural Habitat is charged a royalty fee and a fee based on annual gross sales. The fees are included within selling and marketing expense on the accompanying condensed consolidated statements of operations. This royalty fee expense was $0.1 million and $0.1 million for the three and nine months ended September 30, 2020, respectively, and $0.3 million and $0.7 million for the three and nine months ended September 30, 2019, respectively. 

 

19

 

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, 2020 are as follows:

 

For the years ended December 31,

 

Amount

 

(In thousands)

 

(unaudited)

 

2020 (three months)

 $2,168 

2021

  9,435 

2022

  1,850 

Total

 $13,453 

 

Natural Habitat Redeemable Non-Controlling Interest 

 

Mr. Bressler, founder of Natural Habitat, retains a 19.9% noncontrolling interest in Natural Habitat, which is subject to a put/call arrangement. The arrangement between the Company and Mr. Bressler was established in order to provide a formal exit opportunity for Mr. Bressler and a path to 100% ownership for the Company. Mr. Bressler has a put option, amended in May 2020, that under certain conditions and subject to providing notice by January 31, 2024, that enables him, but does not obligate him, to sell his remaining interest in Natural Habitat to the Company, valued as of December 31, 2023. The Company has a call option, but not an obligation, with an expiration of March 31, 2029, under which it can buy Mr. Bressler’s remaining interest at a similar fair value measure as Mr. Bressler’s put option, subject to a call purchase price minimum.

 

Since the redemption of the noncontrolling interest is not solely in the Company’s control, the Company is required to record the redeemable noncontrolling interest outside of stockholders’ equity but after its total liabilities. In addition, if it is probable that the instrument will become redeemable, as such solely due to the passage of time, the redeemable noncontrollable interest should be adjusted to the redemption value via one of two measurement methods.

 

The Company elected the income classification-excess adjustment and accretion methods for recognizing changes in the redemption value of Mr. Bressler’s put option. Under this methodology, a calculation of the present value of the redemption value is compared to the carrying value of the redeemable noncontrolling interest and the carrying value of the redeemable noncontrolling interest is adjusted to the redemption value’s present value. Any adjustments to the carrying value of the redeemable noncontrolling interest, up to the fair value of the noncontrolling interest, are classified to retained earnings. Adjustments in excess of the fair value of the noncontrolling interest, are treated as a decrease to net income available to common stockholders.

 

The fair value of Mr. Bressler’s put option was determined using a discounted cash flow model. The redemption value was adjusted to its present value using the Company’s weighted average cost of capital.

 

The following is a rollforward of redeemable non-controlling interest:

 

  

Three Months Ended September 30,

  

Nine Months Ended September 30,

 
  

(unaudited)

  

(unaudited)

 

(In thousands)

 

2020

  

2019

  

2020

  

2019

 

Beginning balance

 $9,970  $6,771  $16,112  $6,502 

Net income attributable to noncontrolling interest

  (156

)

  565

 

  (956

)

  834 

Fair value adjustment of put option

  (1,874

)

  0   (7,216

)

  0 

Ending balance

 $7,940  $7,336  $7,940  $7,336 

 

Legal Proceedings



From time to time, the Company is party to litigation and regulatory matters and claims. The Company expenses legal fees as incurred. The Company records a provision for contingent losses when it is both probable that a liability will be incurred and the amount or range of the loss can be reasonably estimated. The results of complex proceedings and reviews are difficult to predict and the Company’s view of these matters may change in the future as events related thereto unfold. An unfavorable outcome to any legal or regulatory matter, if material, could have an adverse effect on the Company’s operations or its financial position, liquidity or results of operations.

 

 

 

NOTE 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, or CODM, and management review operating results monthly, and base operating decisions on the total results at a consolidated level, as well as at a segment level. The reports provided to the Board of Directors are at a consolidated level and also contain information regarding the separate results of both segments. While both segments have similar characteristics, the two operating and reporting segments cannot be aggregated because they fail to meet the requirements for aggregation.

 

The Company evaluates the performance of its business segments based largely on tour revenues and operating income, without allocating other income and expenses, net, income taxes and interest expense, net. For the three and nine months ended September 30, 2020 and 2019, operating results were as follows:

 

  

For the three months ended September 30,

  

For the nine months ended September 30,

 
  

2020

  

2019

  

Change

   % 

2020

  

2019

  

Change

   %

(In thousands)

 

(unaudited)

  

(unaudited)

          

(unaudited)

  

(unaudited)

         

Tour revenues:

                                

Lindblad

 $16  $76,581  $(76,565)  NM  $69,533  $217,549  $(148,016)  (68%)

Natural Habitat

  1,003   24,402   (23,399)  NM   12,458   49,745   (37,287)  (75%)

Total tour revenues

 $1,019  $100,983  $(99,964)  NM  $81,991  $267,294  $(185,303)  (69%)

Operating (loss) income:

                                

Lindblad

 $(24,835) $12,570  $(37,405)  NM  $(54,287) $31,514  $(85,801)  NM 

Natural Habitat

  (1,979)  3,089   (5,068)  NM   (5,021)  2,631   (7,652)  NM 

Total operating (loss) income

 $(26,814) $15,659  $(42,473)  NM  $(59,308) $34,145  $(93,453)  NM 

 

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,

 
  

2020

  

2019

  

Change

   % 

2020

  

2019

  

Change

   %

(In thousands)

 

(unaudited)

  

(unaudited)

          

(unaudited)

  

(unaudited)

         

Depreciation and amortization:

                                

Lindblad

 $7,888  $5,812  $2,076   36% $22,075  $17,380  $4,695   27%

Natural Habitat

  597   421   176   42%  1,653   1,223   430   35%

Total depreciation and amortization

 $8,485  $6,233  $2,252   36% $23,728  $18,603  $5,125   28%

 

 

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

 

(In thousands)

 

As of September 30, 2020

  

As of December 31, 2019

 

Total Assets:

 

(unaudited)

     

Lindblad

 $637,913  $471,499 

Natural Habitat

  70,891   77,159 

Total assets

 $708,804  $548,658 
         

Intangibles, net:

        

Lindblad

 $2,781  $3,325 

Natural Habitat

  2,431   3,071 

Total intangibles, net

 $5,212  $6,396 
         

Goodwill:

        

Lindblad

 $0  $0 

Natural Habitat

  22,105   22,105 

Total goodwill

 $22,105  $22,105 

 

21

 

For the three and nine months ended September 30, 2020, there were $0.0 million and $2.2 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, 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.

 

 

 
 

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 26, 2020.

 

Cautionary Note Regarding Forward-Looking Statements

 

Any statements in this Form 10-Q about our expectations, beliefs, plans, objectives, prospects, financial condition, assumptions or future events or performance are not historical facts and are “forward-looking statements” as that term is defined under the federal securities laws. These statements are often, but not always, made through the use of words or phrases such as “believe,” “anticipate,” “should,” “intend,” “plan,” “will,” “expects,” “estimates,” “projects,” “positioned,” “strategy,” “outlook” and similar words. You should read the statements that contain these types of words carefully. Such forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause actual results to differ materially from what is expressed or implied in such forward-looking statements. There may be events in the future that we are not able to predict accurately or over which we have no control. Potential risks and uncertainties include, but are not limited to:

 

 

suspended operations and disruptions to our business and operations related to COVID-19;

 

 

 

 

the impacts of COVID-19 on our financial condition, liquidity, results of operations, cash flows, employees, plans and growth;

 

 

 

 

the impacts of COVID-19 on future travel and the cruise and airline industries in general;

 

 

 

 

unscheduled disruptions in our business due to travel restrictions, weather events, mechanical failures, pandemics or other events; 

 

 

 

 

changes adversely affecting the business in which we are engaged;

 

 

 

 

management of our growth and our ability to execute on our planned growth;

 

 

 

 

our business strategy and plans;

 

 

 

 

our ability to maintain our relationship with National Geographic;

 

 

 

 

compliance with new and existing laws and regulations, including environmental regulations and travel advisories and restrictions;

 

 

 

 

compliance with the financial and/or operating covenants in our debt arrangements;

 

 

 

 

adverse publicity regarding the cruise industry in general; 

 

 

 

 

loss of business due to competition;

 

 

 

 

the result of future financing efforts;

 

 

 

 

delays and costs overruns with respect to the construction and delivery of newly constructed vessels;

 

 

 

 

the inability to meet revenue and Adjusted EBITDA projections; and

 

 

 

 

those risks discussed herein, in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC on February 26, 2020 (the “2019 Annual Report”) and in Item 1A. Risk Factors in our Quarterly Report on Form 10-Q for the period ended March 31, 2020, as filed with the SEC on May 6, 2020.

 

 

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

 

Unless the context otherwise requires, in this Form 10-Q, “Company,” “Lindblad,” “we,” “us,” “our,” and “ours” refer to Lindblad Expeditions Holdings, Inc., and its subsidiaries.

 

Business Overview

 

We provide expedition cruising and land-based adventure travel 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 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, Alaska, Baja's Sea of Cortez, Costa Rica, Panama, Churchill and Africa. We operate a fleet of nine owned expedition ships and have contracted for a new polar ice class vessel, the National Geographic Resolution, scheduled to be delivered in the fourth quarter of 2021.

 

In addition, 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 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.

 

COVID-19 Business Update 

 

Due to the spread of the COVID-19 virus and the effects of travel restrictions around the world, we have suspended or rescheduled the majority of our expeditions departing March 16, 2020 through December 31, 2020 and have rescheduled our 2020-2021 Antarctica season. We have been working with guests to amend travel plans and refund payments, as applicable. Our ships are currently being maintained with minimally required crew on-board to ensure they comply with all necessary regulations and can be fully put back into service quickly as needed. In accordance with local regulations, we closed our offices and most employees are working remotely to maintain general business operations, to provide assistance to existing and potential guests and to maintain information technology systems. 

 

We moved quickly to implement a comprehensive plan to mitigate the impact of COVID-19 and preserve and enhance our liquidity position. We are employing a variety of cost reduction and cash preservation measures, while accessing available capital under our existing debt facilities and through the issuance of preferred stock, while exploring additional sources of capital and liquidity. These measures include the following operating expense and capital expenditure reductions:

 

 

Significantly reduced ship and land-based expedition costs including crew payroll, land costs, fuel and food. All ships have been safely laid up.

 

 

 

 

Lowered expected annual maintenance capital expenditures by over $10 million, savings of more than 50% from originally planned levels.

 

 

 

 

Meaningfully reduced general and administrative expenses through staff furloughs, payroll reductions and the elimination of all non-essential travel, office expenses and discretionary spending.

 

 

 

 

Suspended the majority of planned advertising and marketing spend. 

 

 

 

 

Suspended all repurchases of common stock under the stock repurchase plan.

 

 

Bookings Trends

 

We were off to a strong start to the year with Lindblad segment bookings at the end of February up 25% for the full year 2020 as compared to the same point a year ago for 2019, and had sold 86% of our originally projected guest ticket revenues for the year. Since that point, we have experienced a substantial impact from the COVID-19 virus including elevated cancellations and softness in near-term demand. As of October 26, 2020, Lindblad segment bookings for travel in 2020 are now 74% below the same point a year ago for 2019 due primarily to the cancelled and rescheduled voyages. We have substantial advanced bookings for travel in 2021 and despite increased cancellations for travel in the first quarter of 2021, total bookings for 2021 are 4% ahead of bookings for 2019 as of the same date in 2018 and only 12% below the same date a year ago for 2020.  For the last nine months of 2021 bookings are 12% ahead of the bookings for the same period in 2020 as of the same date a year ago. We continue to see new bookings for future travel including over $44.0 million since March 1, 2020, and we are receiving deposits and final payments for future travel.

 

For 2020 voyages that have been cancelled or rescheduled, we are providing future travel credits with incremental value or full refunds, as applicable, to our fully paid guests. As of October 26, 2020, the majority of guests have opted for future travel credits. 

 

Balance Sheet and Liquidity

 

As of September 30, 2020, we had $129.6 million in unrestricted cash and $16.5 million in restricted cash primarily related to deposits on future travel originating from U.S. ports. During the first quarter of 2020 we drew down $45.0 million under our revolving credit facility as a precautionary measure for working capital and general corporate purposes given the uncertainty related to the COVID-19 pandemic and borrowed $107.7 million under our first export credit agreement in conjunction with final payment on delivery of the National Geographic Endurance in March 2020. During April 2020, we drew down $30.6 million under our second export credit agreement in conjunction with the third installment payment on the National Geographic Resolution, scheduled for delivery in the fourth quarter of 2021. 

 

During May 2020, we amended our $2.5 million promissory note, changing the maturity date of the principal payments to be due in three equal installments, with the first payment of due on December 22, 2020, the second due on December 22, 2021 and the final payment due on December 22, 2022.

 

During June 2020, the Company amended its export credit agreements to defer approximately $9.0 million in aggregate scheduled amortization payments originally due in June 2020 through March 2021 and to suspend the total net leverage ratio covenant from June 2020 through June 2021. On August 7, 2020, the Company amended its term loan and revolving credit facilities to waive the application of the total net leverage ratio covenant through June 2021. In connection with the amendment, the interest rate of the term loan has been increased 125 basis points, to be paid-in-kind at maturity, a LIBOR minimum of 0.75% has been added to the term loan and revolving credit facilities and certain covenants have been amended to be more restrictive.

 

During August 2020, we raised $85.0 million in gross proceeds through the private placement issuance of 85,000 shares of Series A Redeemable Convertible Preferred Stock, that carries a 6.0% annual dividend, which is payable in kind for two years and thereafter in cash or in-kind at the Company’s option. The redeemable convertible preferred stock is convertible into shares of Lindblad common stock at a conversion price of $9.50 per share, representing a premium of 23% to Lindblad’s 30-trading volume weighted average price on the date of issuance. The holders may request redemption of the Preferred Stock at the six-year anniversary of the issuance.

 

As of September 30, 2020, we had a total debt position of $412.2 million and were in compliance with all of our debt covenants currently in effect. We have no material debt maturities until 2023.

 

We estimate our monthly cash usage while our vessels are not in operations to be approximately $10-15 million including ship and office operating expenses, necessary capital expenditures and interest and principal payments. This excludes guest payments for future travel and cash refunds requested on previously made guest payments. We continue to evaluate additional strategies to enhance our liquidity position which may include, but are not limited to, further reductions in operating expenses, capital expenditures and administrative costs as well as additional financings.

 

In April 2020, we received a U.S. Small Business Administration Loan related to the COVID-19 crisis in the amount of $6.6 million. We subsequently returned the funds received from this loan and, as a result, have made additional adjustments to our cost structure.

 

We have not previously experienced a complete cessation of our operations and, as a consequence, our ability to predict the impact of such cessation on our costs and future prospects is limited. Given the dynamic nature of this situation, we cannot reasonably estimate the impacts of the COVID-19 virus on our financial condition, results of operations, cash flows, plans and growth for the foreseeable future. It is unknown when travel restrictions and various border closures will be lifted and what the demand for expedition travel will be once these restrictions are no longer in place. The estimates for monthly cash usage reflect our current forecast for operating costs, capital expenditures and expected debt and interest payments. Based on current liquidity, the actions taken to date and our current forecast, which assumes rescheduled operations during 2020 with a ramp up in operations throughout 2021, we believe that our liquidity should be adequate to meet our obligations for the next 12 months from October 29, 2020, the date of this Quarterly Report on Form 10-Q. 

 

 

Return to Operations

 

We already have a robust set of operating protocols and, in preparation for the resumption of operations, have been proactively working in close cooperation with various medical policy experts and public health authorities to further augment our procedures and protocols for health and safety onboard our vessels to mitigate the potential impacts of the COVID-19 virus. These protocols encompass, but are not limited to, medical care, screening, testing, social distancing, personal protective equipment, and sanitization during all aspects of an expedition.

 

While it is uncertain when we will return to operations, we believe there are a variety of strategic advantages that should enable us to deploy our ships safely and quickly once travel restrictions have been lifted. The most notable is the size of our owned and operated vessels which range from 48 to 148 passengers, allowing for a highly controlled environment that includes stringent cleaning protocols. The small nature of our ships should also allow us to efficiently and effectively test our guests and crew prior to boarding. On average, we estimate it will only take a few thousand tests a month to ensure all guests and crew across our entire fleet have been tested. Additionally, the majority of our expeditions take place in remote locations where human interactions are limited, so there is less opportunity for external influence. We also have the ability to be flexible with regards to existing itineraries and are actively investigating additional itinerary opportunities both internationally and domestically. Lastly, our guests are explorers by nature, eager to travel and have historically been very resilient following periods of uncertainty. 

 

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

 

 

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

 

 

 

 

results and a comparable discussion of our consolidated and segment results of operations for the three and nine months ended September 30, 2020 and 2019;

 

 

 

 

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.

 

Cost of tours

 

Cost of tours includes the following:

 

 

Direct costs associated with revenues, including cost of pre- or post-expedition excursions, hotel accommodations, and land-based expeditions, air and other transportation expenses, and cost of goods and services rendered onboard;

 

 

 

 

Payroll costs and related expenses for shipboard and expedition personnel;

 

 

 

 

Food costs for guests and crew, including complimentary food and beverage amenities for guests;

 

 

 

 

Fuel costs and related costs of delivery, storage and safe disposal of waste; and

 

 

 

 

Other tour expenses, such as land costs, port costs, repairs and maintenance, equipment expense, drydock, ship insurance, and charter hire costs.

 

 

Selling and marketing

 

Selling and marketing expenses include commissions, royalties and a broad range of advertising and promotional expenses.

 

General and administrative

 

General and administrative expenses include the cost of shoreside vessel support, reservations and other administrative functions, including salaries and related benefits, credit card commissions, professional fees and rent.

 

Operational and Financial Metrics

 

We use a variety of operational and financial metrics, including non-GAAP financial measures, such as Adjusted EBITDA, Net Yields, Occupancy and Net Cruise Costs, to enable us to analyze our performance and financial condition. We utilize these financial measures to manage our business on a day-to-day basis and believe that they are the most relevant measures of performance. Some of these measures are commonly used in the cruise and tourism industry to evaluate performance. We believe these non-GAAP measures provide expanded insight to assess revenue and cost performance, in addition to the standard GAAP-based financial measures. There are no specific rules or regulations for determining non-GAAP measures, and as such, they may not be comparable to measures used by other companies within the industry.

 

The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. You should read this discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and the related notes thereto also included within.

 

Adjusted EBITDA is net income (loss) excluding depreciation and amortization, net interest expense, other income (expense), income tax (expense) benefit, (gain) loss on foreign currency, (gain) loss on transfer of assets, reorganization costs, and other supplemental adjustments. Other supplemental adjustments include certain non-operating items such as stock-based compensation, executive severance costs, the National Geographic fee amortization, debt refinancing costs, acquisition-related expenses and other non-recurring charges. We believe Adjusted EBITDA, when considered along with other performance measures, is a useful measure as it reflects certain operating drivers of the business, such as sales growth, operating costs, selling and administrative expense, and other operating income and expense. We believe Adjusted EBITDA helps provide a more complete understanding of the underlying operating results and trends and an enhanced overall understanding of our financial performance and prospects for the future. Adjusted EBITDA is not intended to be a measure of liquidity or cash flows from operations or a measure comparable to net income as it does not take into account certain requirements, such as unearned passenger revenues, capital expenditures and related depreciation, principal and interest payments, and tax payments. Our use of Adjusted EBITDA may not be comparable to other companies within the industry.

 

The following metrics apply to our Lindblad segment:

 

Adjusted Net Cruise Cost represents Net Cruise Cost adjusted for Non-GAAP other supplemental adjustments which include certain non-operating items such as stock-based compensation, the National Geographic fee amortization, and acquisition-related expenses.

 

Available Guest Nights is a measurement of capacity and represents double occupancy per cabin (except single occupancy for a single capacity cabin) multiplied by the number of cruise days for the period. We also record the number of guest nights available on our limited land programs in this definition.

 

Gross Cruise Cost represents the sum of cost of tours plus, selling and marketing expenses, and general and administrative expenses.

 

Gross Yield represents tour revenues 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 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 operations.

 

Seasonality

 

Traditionally, 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.

 

Results of Operations - Consolidated
 

  

For the three months ended September 30,

  

For the nine months ended September 30,

 

(In thousands)

 

2020

  

2019

  

Change

   % 

2020

  

2019

  

Change

   %

Tour revenues

 $1,019  $100,983  $(99,964)  NM  $81,991  $267,294  $(185,303)  (69%)
                                 

Cost of tours

  8,075   48,294   (40,219)  (83)%  62,988   124,831   (61,843)  (50%)

General and administrative

  9,145   15,266   (6,121)  (40)%  36,170   47,615   (11,445)  (24%)

Selling and marketing

  2,128   15,531   (13,403)  (86)%  18,413   42,100   (23,687)  (56%)

Depreciation and amortization

  8,485   6,233   2,252   36%  23,728   18,603   5,125   28%

Operating (loss) income

 $(26,814) $15,659  $(42,473)  NM  $(59,308) $34,145  $(93,453)  NM 

Net (loss) income

 $(27,535) $2,726  $(30,261)  NM  $(69,929) $18,656  $(88,585)  NM 

Undistributed (loss) earnings per share available to stockholders

                                

Basic

 $(0.56) $(0.01) $(0.55)     $(1.40) $0.32  $(1.72)    

Diluted

 $(0.56) $(0.01) $(0.55)     $(1.40) $0.31  $(1.71)    

 

 

Comparison of the Three and Nine Months Ended September 30, 2020 and 2019 - Consolidated

 

Tour Revenues

 

Tour revenues for the three months ended September 30, 2020 decreased $100.0 million, or 99%, compared to the same period in 2019 as a result of rescheduling nearly all expeditions due to COVID-19. 

 

Tour revenues for the nine months ended September 30, 2020 decreased $185.3 million, or 69%, to $82.0 million, compared to $267.3 million for the nine months ended September 30, 2019. The Lindblad segment tour revenues decreased by $148.0 million, primarily related to cancelled, disrupted and rescheduled expeditions due to COVID-19. At the Natural Habitat segment, tour revenues decreased $37.3 million over the prior year period, primarily related to cancelled, disrupted and rescheduled expeditions due to COVID-19.

 

 

Cost of Tours

 

Total cost of tours for the three months ended September 30, 2020 decreased $40.2 million, or 83%, to $8.1 million compared to $48.3 million for the three months ended September 30, 2019. At the Lindblad segment, cost of tours decreased $25.5 million, primarily related to rescheduled expeditions due to COVID-19, partially offset by costs incurred while ships are laid up and from the addition of the National Geographic Endurance to our fleet in March 2020. At the Natural Habitat segment, cost of tours decreased $14.7 million due to rescheduled trips directly related to COVID-19.

 

Total cost of tours for the nine months ended September 30, 2020 decreased $61.8 million, or 50%, to $63.0 million, compared to $124.8 million for the nine months ended September 30, 2019. At the Lindblad segment, cost of tours decreased $39.2 million, primarily related to cancelled, disrupted and rescheduled expeditions due to COVID-19, partially offset by costs incurred while ships are laid up, and from the addition of the National Geographic Endurance to our fleet in March 2020. At the Natural Habitat segment, cost of tours decreased $22.6 million, primarily due to cancelled, disrupted and rescheduled trips directly related to COVID-19.

 

General and Administrative

 

General and administrative expenses for the three months ended September 30, 2020 decreased $6.1 million, or 40%, to $9.1 million compared to $15.3 million for the three months ended September 30, 2019. At the Lindblad segment, general and administrative expenses decreased $3.6 million over the prior year period primarily due to reduced credit card commissions and personnel costs related to the disruption of operations due to COVID-19. At the Natural Habitat segment, general and administrative expenses decreased $2.5 million, primarily due to a decrease in personnel costs related to the disruption of operations due to COVID-19.

 

General and administrative expenses for the nine months ended September 30, 2020 decreased $11.4 million, or 24%, to $36.2 million, compared to $47.6 million for the nine months ended September 30, 2019. At the Lindblad segment, general and administrative expenses decreased $6.8 million primarily due to reduced personnel costs and credit card commissions related to the disruption of operations due to COVID-19. At the Natural Habitat segment, general and administrative expenses decreased $4.6 million, primarily due to a decrease in personnel costs related to the disruption of operations due to COVID-19.

 

Selling and Marketing

 

Selling and marketing expenses for the three months ended September 30, 2020 decreased $13.4 million, or 86%, to $2.1 million compared to $15.5 million for the three months ended September 30, 2019. At the Lindblad segment, selling and marketing expenses decreased $12.1 million, primarily due to lower commission expenses related to the impact of COVID-19 on revenue and decreased advertising expenditures. At the Natural Habitat segment, selling and marketing expenses decreased $1.3 million, primarily driven by a decrease in advertising expenditures.

 

 Selling and marketing expenses for the nine months ended September 30, 2020 decreased $23.7 million, or 56%, to $18.4 million, compared to $42.1 million for the nine months ended September 30, 2019. At the Lindblad segment, selling and marketing expenses decreased $20.9 million, primarily due to lower commission expenses related to the impact of COVID-19 on revenue and decreased advertising expenditures. At the Natural Habitat segment, selling and marketing expenses decreased $2.8 million, primarily driven by a decrease in advertising expenditures.

 

Depreciation and Amortization

 

Depreciation and amortization expenses for the three months ended September 30, 2020 increased $2.3 million, or 36%, to $8.5 million, compared to $6.2 million for the three months ended September 30, 2019, primarily due to the addition of the National Geographic Endurance to the fleet in March 2020.

 

Depreciation and amortization expenses for the nine months ended September 30, 2020 increased $5.1 million, or 28%, to $23.7 million, compared to $18.6 million for the nine months ended September 30, 2019, primarily due to the addition of the National Geographic Endurance to the fleet in March 2020.

 

Other Expense

 

Other expenses, for the three months ended September 30, 2020, decreased $2.0 million to $3.6 million from $5.6 million for the three months ended September 30, 2019, primarily due to the following:

 

 

A $1.0 million gain in foreign currency translation in 2020, related to the strengthening of the U.S dollar primarily in relation to the Canadian dollar, South African Rand and British Pound Sterling, compared to a $2.3 million loss in 2019, primarily due to a loss of $1.6 million loss on the maturity of a foreign currency hedge related to the installment payment for the National Geographic Resolution.

 

 

 

 

A $1.3 million increase in interest expense, net to $4.5 million in 2020 primarily due to increased borrowings related to our new vessel builds, the draw down under the revolving credit facility during the first quarter and increased rates under the term loan and revolving credit facilities.

 

 

Other expenses, for the nine months ended September 30, 2020, increased $7.6 million to $18.3 million from $10.7 million for the nine months ended September 30, 2019, primarily due to the following:

 

 

A $6.3 million loss in foreign currency translation in 2020 due primarily to a loss of $5.3 million on the maturity of a foreign currency hedge related to the installment payment for the National Geographic Resolution, compared to a $1.2 million loss in 2019, primarily due to a loss of $1.6 million on the maturity of a foreign currency hedge related to the installment payment for the National Geographic Resolution.

 

 

 

 

A $2.4 million increase in interest expense, net to $11.8 million in 2020, primarily due to increased borrowings related to our new vessel builds, the draw down under the revolving credit facility during the first quarter and an increase in rates under the term loan and revolving credit facilities. 

 

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)

 

2020

  

2019

  

Change

   % 

2020

  

2019

  

Change

   %

Tour revenues:

                                

Lindblad

 $16  $76,581  $(76,565)  NM  $69,533  $217,549  $(148,016)  (68%)

Natural Habitat

  1,003   24,402   (23,399)  NM   12,458   49,745   (37,287)  (75%)

Total tour revenues

 $1,019  $100,983  $(99,964)  NM  $81,991  $267,294  $(185,303)  (69%)

Operating (loss) income:

                                

Lindblad

 $(24,835) $12,570  $(37,405)  NM  $(54,287) $31,514  $(85,801)  NM 

Natural Habitat

  (1,979)  3,089   (5,068)  NM   (5,021)  2,631   (7,652)  NM 

Total operating (loss) income

 $(26,814) $15,659  $(42,473)  NM  $(59,308) $34,145  $(93,453)  NM 

Adjusted EBITDA:

                                

Lindblad

 $(16,088) $20,600  $(36,688)  NM  $(29,001) $54,802  $(83,803)  NM 

Natural Habitat

  (1,382)  3,510   (4,892)  NM   (3,368)  3,854   (7,222)  NM 

Total adjusted EBITDA

 $(17,470) $24,110  $(41,580)  NM  $(32,369) $58,656  $(91,025)  NM 

 

Results of Operations – Lindblad Segment

 

The following table sets forth our Available Guest Nights, Guest Nights Sold, Occupancy, Maximum Guests, Number of Guests and Voyages for the three and nine months ended September 30, 2020 and 2019:

 

  

For the three months ended September 30,

  

For the nine months ended September 30,

 
  

2020

  

2019

  

2020

  

2019

 

Available Guest Nights

  -   63,386   51,624   176,038 

Guest Nights Sold

  -   59,682   46,050   161,511 

Occupancy

  -   94%  89%  92%

Maximum Guests

  -   7,721   6,512   21,863 

Number of Guests

  -   7,294   5,564   20,095 

Voyages

  -   98   85   278 

 

 

 

The following table shows the calculations of Gross Yield and Net Yield for the three and nine months ended September 30, 2020 and 2019. Gross Yield is calculated by dividing Tour Revenues by Available Guest Nights and Net Yield is calculated by dividing Net Revenue by Available Guest Nights:

 

  

For the three months ended September 30,

  

For the nine months ended September 30,

 

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

 

2020

  

2019

  

2020

  

2019

 

Guest ticket revenues

 $-  $70,319  $60,351  $195,845 

Other tour revenue

  16   6,262   9,182   21,704 

Tour Revenues

  16   76,581   69,533   217,549 

Less: Commissions

  (818)  (5,716)  (8,080)  (16,475)

Less: Other tour expenses

  (308)  (4,051)  (7,021)  (14,155)

Net Revenue

 $(1,110) $66,814  $54,432  $186,919 

Available Guest Nights

  -   63,386   51,624   176,038 

Gross Yield

  NM  $1,208  $1,347  $1,236 

Net Yield

  NM   1,054   1,054   1,062 

 

 

The following table shows the calculations of Gross Cruise Cost per Available Guest Night and Net Cruise Costs per Available Guest Night for the three and nine months ended September 30, 2020 and 2019:

 

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)

 

2020

  

2019

  

2020

  

2019

 

Cost of tours

 $7,534  $33,031  $55,237  $94,470 

Plus: Selling and marketing

  1,678   13,804   16,862   37,767 

Plus: General and administrative

  7,751   11,364   29,646   36,416 

Gross Cruise Cost

  16,963   58,199   101,745   168,653 

Less: Commissions

  (818)  (5,716)  (8,080)  (16,475)

Less: Other tour expenses

  (308)  (4,051)  (7,021)  (14,155)

Net Cruise Cost

  15,837   48,432   86,644   138,023 

Less: Fuel Expense

  (1,026)  (2,251)  (4,350)  (7,397)

Net Cruise Cost Excluding Fuel

  14,811   46,181   82,294   130,626 

Non-GAAP Adjustments:

                

Stock-based compensation

  (310)  (917)  (1,911)  (2,671)

National Geographic fee amortization

  -   (727)  (727)  (2,181)

Warrant exchange and debt refinancing costs

  (438)  (504)  (438)  (970)

Other

  (111)  (70)  (135)  (86)

Adjusted Net Cruise Cost Excluding Fuel

 $13,952  $43,963  $79,083  $124,718 

Adjusted Net Cruise Cost

 $14,978  $46,214  $83,433  $132,115 

Available Guest Nights

  -   63,386   51,624   176,038 

Gross Cruise Cost per Available Guest Night

  NM  $918  $1,971  $958 

Net Cruise Cost per Available Guest Night

  NM   764   1,678   784 

Net Cruise Cost Excluding Fuel per Available Guest Night

  NM   729   1,594   742 

Adjusted Net Cruise Cost Excluding Fuel per Available Guest Night

  NM   694   1,532   708 

Adjusted Net Cruise Cost per Available Guest Night

  NM   729   1,616   750 

 

 

Comparison of Three and Nine Months Ended September 30, 2020 and 2019

 

Tour Revenues

 

Tour revenues for the three months ended September 30, 2020 decreased $76.6 million, or 100%, to $0.0 million compared to $76.6 million for the three months ended September 30, 2019. The decrease was a result of rescheduling all expeditions due to COVID-19. 

 

Tour revenues for the nine months ended September 30, 2020 decreased $148.0 million, or 68%, to $69.5 million, compared to $217.5 million for the nine months ended September 30, 2019. The decrease was primarily driven by cancelled, disrupted and rescheduled expeditions due to COVID-19.

 

 

Operating Income

 

Operating income decreased $37.4 million to a loss of $24.8 million for the three months ended September 30, 2020, compared to $12.6 million operating income for the three months ended September 30, 2019. The decrease was primarily a result of rescheduling all expeditions due to COVID-19.

 

Operating income decreased $85.8 million to a loss of $54.3 million for the nine months ended September 30, 2020, compared to operating income of $31.5 million for the nine months ended September 30, 2019. The decrease was primarily driven by lower revenue from cancelled, disrupted and rescheduled voyages due to COVID-19 and costs associated with adding the National Geographic Endurance to the fleet in March 2020.

 

Results of Operations – Natural Habitat Segment

 

Comparison of Three and Nine Months Ended September 30, 2020 and 2019

 

Tour Revenues

 

Tour revenues for the three months ended September 30, 2020 decreased $23.4 million, compared to $24.4 million for the three months ended September 30, 2019, as a result of cancelled and rescheduled expeditions due to COVID-19. 

 

 Tour revenues for the nine months ended September 30, 2020 decreased $37.3 million, or 75%, to $12.4 million compared to $49.7 million for the nine months ended September 30, 2019, due primarily to cancelled, disrupted and rescheduled expeditions due to COVID-19.

 

Operating Income

 

Operating income for the three months ended September 30, 2020 decreased $5.1 million to a loss of $2.0 million compared to income of $3.1 million for the three months ended September 30, 2019. The decrease was primarily a result of cancelled and rescheduled expeditions due to COVID-19.

 

 Operating income for the nine months ended September 30, 2020 decreased $7.6 million to a loss of $5.0 million compared to income of $2.6 million for the nine months ended September 30, 2019. The decrease was primarily a result of cancelled, disrupted and rescheduled expeditions due to COVID-19.

 

Adjusted EBITDA

 

The following table outlines the reconciliation to net income and calculation of consolidated Adjusted EBITDA for the three and nine months ended September 30, 2020 and 2019. 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)

 

2020

  

2019

  

2020

  

2019

 

Net (loss) income

 $(27,535) $2,726  $(69,929) $18,656 

Interest expense, net

  4,529   3,214   11,763   9,391 

Income tax (benefit) expense

  (2,893)  7,351   (7,664)  4,838 

Depreciation and amortization

  8,485   6,233   23,728   18,603 

(Gain) loss on foreign currency

  (989)  2,338   6,334   1,181 

Other expense

  74   30   188   79 

Stock-based compensation

  310   917   1,911   2,671 

National Geographic fee amortization

  -   727   727   2,181 

Warrant exchange and financing costs

  438   504   438   970 

Other

  111   70   135   86 

Adjusted EBITDA

 $(17,470) $24,110  $(32,369) $58,656 

 

 

The following tables outline the reconciliation for each segment from operating income to Adjusted EBITDA for the three and nine months ended September 30, 2020 and 2019.

 

Lindblad Segment

 

For the three months ended September 30,

  

For the nine months ended September 30,

 

(In thousands)

 

2020

  

2019

  

2020

  

2019

 

Operating (loss) income

 $(24,835) $12,570  $(54,287) $31,514 

Depreciation and amortization

  7,888   5,812   22,075   17,380 

Stock-based compensation

  310   917   1,911   2,671 

National Geographic fee amortization

  -   727   727   2,181 

Warrant exchange and financing costs

  438   504   438   970 

Other

  111   70   135   86 

Adjusted EBITDA

 $(16,088) $20,600  $(29,001) $54,802 

 

Natural Habitat Segment

 

For the three months ended September 30,

  

For the nine months ended September 30,

 

(In thousands)

 

2020

  

2019

  

2020

  

2019

 

Operating loss

 $(1,979) $3,089  $(5,021) $2,631 

Depreciation and amortization

  597   421   1,653   1,223 

Adjusted EBITDA

 $(1,382) $3,510  $(3,368) $3,854 

 

Liquidity and Capital Resources

 

Due to the spread of the COVID-19 virus and the effects of travel restrictions around the world, we suspended or rescheduled the majority of expeditions and fleet operations departing March 16, 2020 through November 30, 2020 and have been working with guests to reschedule travel plans and refund payments, as applicable. The COVID-19 pandemic has already had a material negative impact on our operations and financial results and we expect the evolving pandemic to have ongoing material negative effects on operations, financial results and liquidity. Given the dynamic nature of this situation, we cannot reasonably estimate the impacts of the COVID-19 virus on our financial condition, results of operations, cash flows, plans and growth for the foreseeable future. It is unknown when travel restrictions and various border closures will be lifted and what the demand for expedition travel will be once these restrictions are no longer in place.

 

As of September 30, 2020, we had approximately $412.2 million in long-term debt obligations, including the current portion of long-term debt. We estimate that our monthly cash usage while our vessels are not in operations is approximately $10-15 million, excluding guest payments for future travel and cash refunds requested on previously made guest payments. To date, the majority of guests on rescheduled voyages have requested future travel credits. Additionally, we continue to see deposits for future travel. We believe that our cash on hand, our Second Export Credit Agreement and expected future operating cash inflows will be sufficient to fund operations, debt service requirements, and necessary capital expenditures. However, there can be no assurance that we will commence operating in the near term or if we do commence operations, that the level of initial demand will generate cash flows from operations will be sufficient enough to fund future obligations. We are continuing to evaluate additional strategies to enhance our liquidity position. These strategies may include, but are not limited to, pursuing additional financing from both the public and private markets through the issuance of equity and/or debt. The timing and structure of any transaction, if completed, will depend on market conditions. There can be no assurance that debt or equity financing will be available to us on favorable terms or at all.

 

Sources and Uses of Cash for the Nine Months Ended September 30, 2020 and 2019

 

Net cash used by operating activities was $71.7 million in 2020 compared to $41.6 million provided by operations in 2019, primarily due to the rescheduling of expeditions due to COVID-19 pandemic.

 

Net cash used in investing activities was $152.8 million in 2020 compared to $76.7 million in 2019. The $76.1 million increase was primarily due to the final payment for the completion of the National Geographic Endurance, and a $30.6 million contracted installment payment for the National Geographic Resolution during the current year, partially offset by the $30.2 million initial down-payment for the National Geographic Resolution in the first quarter of 2019 and other capital expenditures. 

 

Net cash provided by financing activities was $261.4 million in 2020 compared to $25.1 million in 2019. The $236.3 million increase in cash provided was primarily due to borrowing $107.7 million under the first senior secured credit agreement for the final contracted payment of the National Geographic Endurance, $85.0 million generated from the issuance of Preferred Stock, borrowing $30.6 million under the second senior secured credit agreement for a contracted installment payment on the National Geographic Resolution and a $45.0 million drawdown of our revolving credit facility, partially offset by the 2019 borrowing of $30.5 million under the second senior secured credit agreement for a contracted installment payment on the National Geographic Resolution.

 

 

Funding Sources

 

Debt Facilities 

 

Revolving Credit Facility

 

Our Third Amended and Restated Credit Agreement (the “Amended Credit Agreement”), provides a $200.0 million senior secured first lien term loan facility (the “Term Facility”), maturing March 2025, and a $45.0 million senior secured incremental revolving credit facility (the “Revolving Facility”), which includes a $5.0 million letter of credit sub-facility. During March 2020, we drew $45.0 million on our Revolving Facility, maturing March 2023. The Term Facility bears interest at an adjusted Intercontinental Exchange (“ICE”) Benchmark administration LIBOR, with a minimum of 0.75%, plus a spread of 4.50%, or 5.25% as of September 30, 2020, and the Revolving Facility bears interest at ICE LIBOR, with a minimum of 0.75%, plus a spread of 3.00%, or 3.75% as of September 30, 2020. In 2018, we entered into interest rate cap agreements to hedge our exposure to interest rate movements and manage our interest rate expense related to the Term Facility. 

 

Senior Secured Credit Agreements

 

Our senior secured credit agreement (the “Export Credit Agreement”) made available a loan in an aggregate principal amount not to exceed $107.7 million for the purpose of providing financing for up to 80% of the purchase price of our new polar ice class vessel, the National Geographic Endurance. During March 2020, we took possession of the National Geographic Endurance and borrowed the $107.7 million under the Export Credit Agreement for the final payment. The Export Credit Agreement bears interest at a floating interest rate equal to three-month LIBOR plus a margin of 3.00% per annum, or 3.25% for the period covered as of September 30, 2020.

 

Our senior secured credit agreement (the “Second Export Credit Agreement”) makes available to us a loan in an aggregate principal amount not to exceed $122.8 million for the purpose of providing pre- and post- delivery financing for up to 80% of the purchase price of Company’s new expedition ice-class vessel, the National Geographic Resolution, scheduled to be delivered in the fourth quarter of 2021. The Second Export Credit Agreement bears a variable interest rate equal to three-month LIBOR plus a margin of 3.00% per annum, or 3.23% for the period covered as of September 30, 2020. After completion of the vessel, the Second Export Credit Agreement, at our option, will bear an interest rate of either a fixed rate of 6.36% or a variable rate equal to three-month LIBOR plus a margin of 3.00% per annum. In September 2019 and April 2020, we drew approximately $30.5 million and $30.6 million, respectively, under the Second Export Credit Agreement for the second and third contracted payments, respectively, on the National Geographic Resolution

 

During June 2020, we amended our export credit agreements to defer approximately $9.0 million in aggregate scheduled amortization payments originally due June 2020 through March 2021 and to suspend the total net leverage ratio covenant from June 2020 through June 2021.

 

On August 7, 2020, we amended our term loan and revolving credit facilities to waive the application of the total net leverage ratio covenant through June 2021. In connection with the amendment, the interest rate of the term loan has been increased 125 basis points, to be paid-in-kind at maturity, a LIBOR minimum of 0.75% has been added to our term loan and revolving credit facilities and certain covenants have been amended to be more restrictive.

 

The Amended Credit Agreement, the Export Credit Agreement and the Second Export Credit Agreement contain financial and restrictive covenants. As of September 30, 2020, we were in compliance with our covenants.

 

Equity

 

Preferred Stock

 

On August 31, 2020, we issued and sold 85,000 shares of Series A Redeemable Convertible Preferred Stock, par value of $0.0001, (“Preferred Stock”) for $1,000 per share for gross proceeds of $85.0 million. The Preferred Stock has senior and preferential ranking to our common stock. The Preferred Stock is entitled to cumulative dividends of 6.00% per annum, and for the first two years, the dividends will be paid-in-kind. After the second anniversary of the issuance date, the dividends may be paid-in-kind or be paid in cash at our option. The Preferred Stock is convertible at any time, at the holder’s election, into a number of shares of our common stock equal to the quotient obtained by dividing the then-current accrued value by the conversion price of $9.50. At any time after the third anniversary of the issuance, we may, at our option, convert all, but not less than all, of the Preferred Stock into common stock if the closing price of shares of common stock is at least 150% of the conversion price for 20 out of 30 consecutive trading days. The number of shares of common stock received in such conversion shall be equal to the quotient obtained by dividing the then-current accrued value by the conversion price. At the six-year anniversary of the closing date, each investor has the right to request that we repurchase their Preferred Stock and any Preferred Stock not requested to be repurchased shall be converted into our common shares equal to the quotient obtained by dividing the then-current accrued value by the conversion price.

 

 

Funding Needs 

 

We generally rely on a combination of cash flows provided by operations and the incurrence of additional debt to fund obligations. A vast majority of guest ticket receipts are collected in advance of the applicable expedition date. These advance passenger receipts remain a current liability until the expedition date and the cash generated from these advance receipts is used interchangeably with cash on hand from other cash from operations. The cash received as advanced receipts can be used to fund operating expenses for the applicable future expeditions or otherwise, pay down credit facilities, make long-term investments or any other use of cash. As of September 30, 2020 and December 31, 2019, we had working capital of $14.6 million and a working capital deficit of $36.3 million, respectively. As of September 30, 2020 and December 31, 2019, we had $129.6 million and $101.6 million, respectively, in cash and cash equivalents, excluding restricted cash.

 

Our Board of Directors approved a stock and warrant repurchase plan (“Repurchase Plan”) in November 2015 and increased the repurchase plan to $35.0 million in November 2016. The Repurchase Plan authorizes us to purchase from time to time our outstanding common stock and our previously outstanding warrants. Any shares and warrants purchased will be retired. The Repurchase Plan has no time deadline and will continue until otherwise modified or terminated at the sole discretion of our Board of Directors. These repurchases exclude shares repurchased to settle statutory employee tax withholding related to the exercise of stock options and vesting of stock awards. During March 2020, the Repurchase Plan was suspended due to the uncertain impact of the COVID-19 virus. Prior to its suspension, we repurchased 8,517 shares of common stock for approximately $127,000 during 2020. We have cumulatively repurchased 875,218 shares of common stock for $8.3 million and 6,011,926 warrants for $14.7 million, since plan inception. All repurchases were made using cash resources. The balance for the Repurchase Plan was $12.0 million as of September 30, 2020.

 

In February 2019, we entered into an agreement with Ulstein Verft to construct a polar ice-class vessel, the National Geographic Resolution, with a total purchase price of 1,291.0 million Norwegian Kroner (NOK). In 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 20% paid shortly after execution of the agreement, 20% paid in September 2019 and 20% paid in April 2020, with a future payment of 10% due in April 2021 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. In September 2019 and April 2020, we drew approximately $30.5 million and $30.6 million, respectively, under the Second Export Credit Agreement for the contracted installment payments. The remaining purchase price of the vessel is expected to be funded through a combination of cash available on our balance sheet, our Second Export Credit Agreement and excess cash flows generated by our existing operations.

 

During March 2020, we borrowed the $107.7 million under the Export Credit Agreement for the final contracted payment of the National Geographic Endurance and drew $45.0 million on our Revolver Facility. During April 2020, we drew $30.6 million under the Second Export Credit Agreement for a contracted installment payment on the National Geographic Resolution. During May 2020, we amended the maturity dates of the note payable and during June 2020, we amended the senior secured credit agreements. The additional borrowings and amendments created material changes in our future obligations from those reported in our 2019 Annual Report. The additional or amended related obligations as of September 30, 2020 are as follows:

 

(In thousands)

 

Total

  

Current

  

2-3 years

  

4-5 years

  

Thereafter

 

Export Credit Agreement

 $107,695  $5,609  $22,436  $38,815  $40,835 

Second Export Credit Agreement

  30,644   -   -   -   30,644 

Revolver

  45,000   -   45,000   -   - 

Note Payable

  2,525   842   1,683   -   - 

 

Off-Balance Sheet Arrangements

 

In 2019, we entered into a Second Export Credit Agreement as described above.

 

Critical Accounting Policies

 

For a detailed discussion of the Critical Accounting Policies, please see our 2019 Annual Report.

 

 

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 2019 Annual Report.

 

 

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 in interest rates. For additional information regarding our long-term borrowings see Note 5 to our Condensed Consolidated Financial Statements. As of September 30, 2020, 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, 2020 was $100.0 million. Based on our September 30, 2020 outstanding variable rate debt balance, a hypothetical 1.0% change in the six-month LIBOR interest rates would impact our annual interest expense by approximately $1.0 million.

 

As of September 30, 2020, we had foreign currency forward contracts to hedge our exposure to foreign currency exchange rate risk related to our ship construction contracts denominated in NOK. For the nine months ended September 30, 2020, we recorded a loss of approximately $2.3 million in other comprehensive income related to these foreign exchange derivatives. The strengthening of the NOK at September 30, 2020 by a hypothetical 10%, would result in an approximately $6.1 million gain being recorded in other comprehensive income. The weakening of the NOK at September 30, 2020 by a hypothetical 10%, would result in an approximately $5.0 million loss being recorded in other comprehensive income.

 

 

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, 2020, 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 during the period covered by this report, 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 II.

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 our 2019 Annual Report filed on February 26, 2020, and those discussed in Item 1A. Risk Factors in our Quarterly Report on Form 10-Q for the period ended March 31, 2020, as filed on May 6, 2020.

 

 

Item 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

Recent Sales by the Company of Unregistered Securities

 

On August 31, 2020, we issued and sold 85,000 shares of Preferred Stock at $1,000 per share, for $85.0 million in gross proceeds. See Note 7 to the Condensed Consolidated Financial Statements for more information about the Preferred Stock.  The offer and sale of the shares of Preferred Stock were made in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.

 

 

There were no other unregistered sales of equity securities during the quarter ended September 30, 2020.

 

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 and previously outstanding warrants. Any shares purchased will be retired. The Repurchase Plan has no time deadline and will continue until otherwise modified or terminated at the sole discretion of the Company’s Board of Directors. These repurchases exclude shares repurchased to settle statutory employee tax withholding related to the exercise of stock options and vesting of stock awards. Since March 2020, the Repurchase Plan has been suspended due to the uncertain impact of the COVID-19 virus. Prior to its suspension, the Company repurchased 8,517 shares of common stock for approximately $127,000 during 2020. The Company has cumulatively repurchased 875,218 shares of common stock for $8.3 million and 6,011,926 warrants for $14.7 million since plan inception. All repurchases were made using cash resources. The remaining balance for the Repurchase Plan was $12.0 million as of September 30, 2020.

 

No shares were repurchased under the Repurchase Plan during the three months ended September 30, 2020. The following table represents information with respect to shares of common stock repurchased under the Repurchase Plan as well as shares withheld from vesting of stock-based compensation awards for employee income taxes, for the periods indicated:

 

Period

 

Total number of shares purchased

  

Average price paid per share

  

Dollar value of shares purchased as part of publicly announced plans or programs

  

Maximum dollar value of warrants and shares that may be purchased under approved plans or programs

 

July 1 through July 31, 2020 (a)

  189  $8.16  $-  $11,974,787 

August 1 through August 31, 2020 (a)

  144   8.54   -   11,974,787 

September 1 through September 30, 2020 (a)

  3,397   11.64   -   11,974,787 

Total

  3,730      $-     

 

________ 

(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.

 

 

 

 

 

Item 6.

exhibits

 

Number

 

Description

 

Included

 

Form

 

Filing Date

3.1

 

Registration Rights Agreement by and between Lindblad Expeditions Holdings, Inc. and The Investors Party Hereto.

 

Incorporated by reference

 

8-K

 

August 31, 2020

4.1

 

Certificate of Designations of 6.0% Series A Convertible Preferred Stock of Lindblad Expeditions Holdings, Inc.

 

Incorporated by reference

 

8-K

 

August 31, 2020

10.1

 

Amendment No 2 to the Senior Secured Credit Agreement dated January 8, 2018 among the Company and LEX Endurance Ltd. with Citibank, N.A. and Eksportkreditt Norge AS.

 

Incorporated by reference

 

8-K

 

June 15, 2020

10.2

 

Amendment No 1 to the Senior Secured Credit Agreement dated April 8, 2019 among the Company and Bluewater II Limited with Citibank, N.A. and Eksportkreditt Norge AS.

 

Incorporated by reference

 

8-K

 

June 15, 2020

10.3

 

Investment Agreement Dated as of August 26, 2020 by and among Lindblad Expeditions Holdings, Inc. and The Purchasers.

 

Incorporated by reference 

 8-K 

August 27, 2020

10.4

 

Form of Market Stock Unit Award Agreement.

 

Incorporated by reference 

 

8-K

 

October 5, 2020

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

 

Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

      

101.SCH

 

Inline XBRL Taxonomy extension schema document

 

Herewith

 

 

 

 

101.CAL

 

Inline XBRL Taxonomy extension calculation link base document

 

Herewith

 

 

 

 

101.DEF

 

Inline XBRL Taxonomy Extension Definition Link base

 

Herewith

 

 

 

 

101.LAB

 

Inline XBRL Taxonomy extension label link base document

 

Herewith

 

 

 

 

101.PRE

 

Inline XBRL Taxonomy extension presentation link base document

 

Herewith

 

 

 

 

104

 

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

      

 

 

 

 

 

 

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 29, 2020.

 

 

LINDBLAD EXPEDITIONS HOLDINGS, INC.

 

(Registrant)

 

 

 

 

By

/s/ Sven-Olof Lindblad

 

 

Sven-Olof Lindblad

 

 

Chief Executive Officer and President

 

 

 

 

 

 


 

 

 

 

 

39