Lindblad Expeditions (LIND) 4 Aug 182018 Q2 Earnings call transcript

Good day, and welcome to the Lindblad Expeditions Second Quarter 2018 Financial Results Conference Call. All participants will be in listen-only mode.[Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Craig Felenstein, Chief Financial Officer. Sir, please go ahead.

Thank you, Steven. thank Earnings joining Call. and Second for everyone XXXX Quarter morning, you us for Lindblad's Good With Sven and Lindblad, on our me the Founder Chief call Executive today is Officer. will some quarter second before we for and begin on call results opening the will some details with then Sven I Q&A. follow open with our comments,

our find our in You earnings can the Investor website. release latest Relations section of

to subject comments to me materially any today forward-looking started, The and performance we let remind Those estimates, accuracy everyone update the expectations the and statements. get any cannot company may are include may such different that and forecast company's risks forward uncertainties obligation expectations. results cause or statements. looking Before undertake that we guarantee of from actual these be to no

more If SEC company's on you see involved the filings. please statements, in like information would forward-looking the risks

comments our the the that comparable the addition, to reconciliation directly measures. financial most let out disclosures In contained the associated Sven. measures over reference of turn And me with may other way, earnings release. are financial A GAAP call of non-GAAP and company's in

this our second moving and speak ahead, some you, opportunity due over the momentum time, versus year this National to Quest in momentum call financial At us results, Similar and to continued by expedition yields quality per high The thanks forward. basis key the we to QX XXX in growth on launch fleet this same night. to the as and points expanded on Thank increased of strong Lindblad's demonstrates results generated pleased sustained ago into authentic XX%, highlight X% large initiatives to part a net $XXXX occupancies across us all that demand enable immersive while July as broader build will the XXXX. to joining add today. to capacity we increasing to was well meet during I'm QX, our growth current Craig, the for quarter, quarter the travel. the Geographic the past for have to and and operational opportunity

increase both returning long we the prospects add reflection see the our term as occupancy same to track to additional well from we as we of well. At ability inventory and a on in new, accelerating the growth will price time, gives a in discuss short Lindblad. us for demand as Our is guests as confidence as term are on deliver in expectations Craig moment,

revenue the strong XXXX, which of Antarctica summer this not as the period one aboard was while Orion quarter transition The too best high the We Geographic destination, from have was slightly well chartered already ticket in itineraries. of our anticipated below the expectations expected with performed growth to year. second we has current Orion, across year diverse year inventory owned for had generate. booked and as one were both much We XX% The for just quite Pacific our of as to our arguably set South in vessels, as XXXX. the since National occupancies

well We a as XXXX next our rebalanced are and in to have result. way this inventory far season year South already ahead our geography Pacific remarkable healthier for a on

demand able the offerings can to well allows XXXX. that we over already established we reducing fleet. have increases mid-June advance be in which always fine we have and high diversification strong add ways another for our order across By will filling Alaska in revenue are be our from good of nimble Northern in voyages amount the Far in Pacific year inventory next how mid-September of to are tune territory potential as year, These up example We new for generate product itineraries, occupancies the maximize and and is a looking of added and we geography opportunities Russian and East the this departures South ships. for a to more to

As key sustain to new we mentioned opportunities geographic ingredient growth. have is previously a creating

Egypt program XXXX we virtually cautiously, the at through this where this sold October further. highly to are year, has we first quarter and beginning out develop how entered Additionally, looking of even popular

who As people we are have more bring simply for our develop ready time into or are the geographic to new guests, not expand the to to continue expeditions try destinations to fold, we order longer. new our shorter adding and in so footprint also speak, something don't

Islands Our of new early West Channel promising. the and California, is Alaska, X-day, X-day demand Galapagos Baja the are in the really And Coast offer California, the on along now sailings Islands.

expedition Venture. based Additionally, design. to excited and for down voyage about this Geographic the only her the She head launch the regions, to be land But add-ons, season shorter to but are be adding December constituencies. which quarter XXXX, idea With for for also of continuing up California we first Endurance with delivery adventure ever next National an is combined polar before Baja inaugural in readily has to for California have National our travel spring. to her innovative also starting extremely shaping to from inventory extremely the is beautiful and Geographic Alaska proven more high-demand most attractive new demand and would for be grow, the ship build, itineraries not will second the new the as can of our on built capable schedule

additional growing sale officially global initial really board is also will of full that vessel season This the blue our opened have new our the water mapped on advantage dedicated in the travel delivery taking any build for loyal expanding in customer has delivering able unparalleled We world's long XXXX. announcement her our out a of we in us capacity. base that last building of most other By segment adding about demand for month upon next interest class of expeditions record remarkable made for we I'm growth of than the proven ice proportionally marrying excited why track to experience, cruising and with the capitalize of with high-quality and recognize additional adventure the her industry. authorized decades are month. will unparalleled be itineraries is expedition That We travel. these step to we additional in is next more the plenty strategy destinations. an growing term be and capacity

new unprecedented may and future that also I'm prospects, an ships the will at an this We be of affect know entrants question. asked level. often how understandable number new our

inventory. in some things, the First of of will new the -- of scheme buildings all, replace this older

expedition entering the of XXXX in new one cruise the less market new than will market still and XXXX number However, beds ship. aggregate be total mass

growing serve value Secondly, travel a lot of will research, interest. which public in know interested expedition in activate expedition the The will market, there is I is public's that to conceptually which very discerning. us is broadening They do the tend well.

this the deep expedition. of quality to respect and our expedition have leaders of for geography, essence understanding most we expression ship capacity. expedition level easily and qualified That credibility expeditions in many constituents the of -- cruising authentic on deep tangible Perhaps and most equates obtained the an commitment what and are, believe, XX of seek very our understanding We to totally a for navigators, travel been years. people expedition a delivering entrants. know new focused best the best high over and We have of for not is

numbers, own new our builds based on the XXX leaders, research coastal and guests, our currently you diligent your incorporating naturalists, ships. XXX These our and are diminish are and in -- blue Once Our overall guests experience dramatically. opportunities on ships scientists navigators. larger our into water for cross numbers

the You has allowed limited more the example, a at than effect ship now people on remote for Reality that experience -- and potential that. no sensitive would larger the decades suggest economies around not in to XXX Antarctica of just capacity than to They're there's are for Galapagos areas getting XXX. is land more scale just while and suffers. time no numbers,

integrity We have explore. capitalize and guests expedition definitely on comes our of to and exhilaration in added focused for the noise while this continue many it doing clear. is to When minimum we will the the smaller places better the and will no all our damage On we been of providing cases, and discovery, subject, are enhancing at be we on benefit. we loud cruising,

as relationship States we year continue the are be leverage U.S. in XX dominant with The Additionally, same Geographic. opportunity trends globally enormous. into themselves and expansion of many of remains the expedition our United as manifesting the markets will powering National select travel deepening the strategy. international growth the Lindblad's time, a successful will our to company in At travel well, the part expedition in increase

some expose of Development will and pursuing Lindblad our potential an some unique opportunities. provide exciting very guests our are existing Business And hit which also partnerships, running. additional array Head new new believe we with ground travel the of guests to has We

way are of great acquisitions doing from Habitat. of in fit, to growing Habitat Habitat our all are similar becoming excess of of crossover in expand a we a with to popular. it's number strong Natural experienced marketing, original Ben focus We on product Africa, with guests and areas expansion Bressler partnerships our strong manifesting exploring with reliable are brand is traveling and/or Hab's management, variety marketing, potential The and and acquisition deeper which cross-promotion business. what job Lindblad crossover in itself and Nat continues particular offerings across team land-based benefiting a growth key and potential Natural expectations. have unbelievably Natural diverse and

for So another in Lindblad. summation, stellar was quarter QX

deliver we we We most expedition in and interest are value will of remarkable allow start provide ever with and is ahead. to remain and returning the harness experiences or the experiences with unique XXXX our confident and experience off years of beginning shareholder a delivering opportunity us in significant world's extraordinary as ever-increase The to years travel. to new as us guests fascinating are to just front in great in the significant, that geographies in

call me Craig. your for this back morning. thanks the now, And to So let time turn

Sven. Thanks,

delivered and expand making our QX, infrastructure generating marketing the quarter significant As our we Sven another capacity mentioned, investments this strong strategic continued as are returns. sales Lindblad develop are and sustained to

guest for travel. available As also the expanded our fleet, we speaks demand guest the our immersive and and net occupancy of quality the have authentic rates across growing yields increase our we have able expedition been and nights, to experience which to

During the growth increase segment ago, million. Lindblad million, led million $XX.X a XXXX, to XX% quarter XX% adjusted $X.X revenue growth at XX% to revenue quarter XXX% or year of EBITDA at second Habitat. contributed growth versus Lindblad The the of and a second growth in by of $XX.X the delivered Natural

in due the million a to of XX% second increase increase current Guest XX% the the a National July an $XX.X of from Quest timing to the Geographic of segments, year. $XX.X year mostly from segment Turning primarily of quarter and an the growth in in Lindblad extent, ago. Available XXXX, or of This million, Nights, to the revenues launch the of each was generated lesser versus drydocks

mentioned this second quarter growth yield quarter, X% across for from the drydocks revenue a Lindblad pricing National the occupancy to I the will across were of primarily entire the the Orion while and and in increase to reflects in in demand The past broad-based to QX. due the due Geographic Endeavour to end Orion, last in QX Endeavour XX% night during net most XX% $X,XXX a itineraries drydock and the higher As fleet. and also quarter, both be National growth per during beginning completed of XXXX Geographic XXXX, the

operating cost the business, mainly by Geographic of in Lindblad a the Turning XX%, National expenses Quest XX% side of driven the the to cost increased timing drydocks. nights primarily increase due to operating to additional of launch the tours, segment due and the of

XXXX personnel due the ago lower higher second X% by options to The shares the expense, revenue expensed related plan X% costs majority mostly XXXX. increased of of growth. and commissions stock-based quarter outstanding due allocation being a at of end compensation under sales primarily CEO also fully G&A the increase the associated offset were and granted year to a in to increased an expenses included with marketing, as

to Fuel doubled the commission from large the Excluding and operating mostly Quest, the Lindblad XX% to increased the part expenses expense versus days, in year, segment higher compensation, depreciation second additional due as pricing of costs, remainder stock-based year-on-year in on year. revenue for and prior are on expect last year-on-year. operating year, leverage this a versus the as well per growth was Geographic the nights, the and and well to to X.X% increase and Fuel operating the year. seeing night second of of the to to additional addition quarter and the this the reorganization during due we amortization, due generating quarter expenses, we quarter sales versus second we XXXX, of X.X% cruise due drydocks are as as the higher revenue marketing the costs a National G&A in in costs ago. the quarter basis declined continue to $XXX net year due the quarter Adjusted

and it days, in per basis. During the Habitat adjusted the drydocks, in increase declined we the marketing for expense the due as $X.X initiatives and with a tours At a to to by night expenses costs no which the $X.X XX% negatively segment, drive cost slightly incur higher to million. so on growth departures grew million costs to $XX cost Adjusted additional Overall due outpaced the revenues growth far EBITDA increase, pricing. departures. was personnel higher increase offset million corresponding segment, long-term growth XX% operating additional EBITDA Lindblad a revenue to revenue operating XX% revenue higher impacts of at drove and Natural

to the timing a a of to a refinancing available operating reported by the results net As associated tours. losses. the facility, of the to versus D&A of bear reminder, the stockholders with the interest Natural a and year, were of our foreign offset costs $X.X was Total due is a the million share of or year compensation in partially income generated common adjusted million credit launch lower second company improved Quest, currency $X.XX during quarter loss EBITDA Habitat's stock-based half share the polar or ago, increased $X.XX second and higher $X.X increased quarter in majority as the related

we the remain new-builds. opportunities. June the well-positioned in of balance ended Turning $XX $X for unrestricted flow $XX Free use million ended cash. including in the a quarter future extremely growth invest months to XX on sheet, million to six our million, was cash with We spent

year cash free If six only was the include a months million maintenance $X.X you ago. $XX from increase the million, an CapEx, flow period for of same

full-year time XXXX, a of to year XX% ticket of also point of Turning the inventory same currently million already at the launching ago, XXXX the XX% and National the we We the additional our pacing projected segment at Geographic XXXX, full-year $XX from a ahead full-year revenue ago. at ticket are for is despite of the Quest. Lindblad were revenues same year

to negative for of $XX to current and the Also, $X.X drydocks. the previously, positive expect and company the and the adjusted launch XX% XX% quarter XXXX associated discussed anticipate fourth please between trends, results start-up will Given sustained be booking as revenue National and and environment or scheduled EBITDA impact under We a total rules $XX be XXXX to growth recognition in revenue million new we timing below versus Venture and due $XXX for have. tour results planned will of continue million happy to of XXXX. operating between the morning, the XX% December XXXX, million would with in $XXX ASC you third million, your XX% versus XXXX to remember, growth any and adoption we include million, and full-year Geographic costs XXX. now this may Sven questions the I to time due answer Thank do you

you. Thank

Bank. Please comes session. [Operator go Deutsche Chris with Woronka We will question-and-answer the Instructions] question Our from now first begin ahead.

encouraging close-in to inventory too to pricing, a morning, Hey, and do that? bit is, are you yields booking on so capture to hold forward, guys. does that the little elongated is you want Good the even potentially you and pricing, able the or Pretty that question numbers look try my for window make more more as and back

Given months, there, with company book do it's the us don't -- already. guests window about them. If to to inventory the today, for We we're the XXXX cases want some and for is the booking average plenty is come travel in stuff that, to nine booking to our hold like availability of we back. want we not tend

our time. to over So intention any yields back in hold high-demand inventory. really is no and We'll areas raise grow there the to prices continue

you sounds that's part business? us data pretty Okay, Can the been a of two story, give and great. it's gaining like core point on repeat know it traction. more I or maybe the a

a there around the way data some recurring part to new? is customer put versus is of So what base

Yes, sure.

to a say, We continue from see repeat with very our, traveled have high us that business previously. legacy guests

we moving guests That's were you pretty in we're the repeat or the that add our XX% look year-to-date, over. continue more as close travel and to times to fluctuate If become would more year to new join so. us, of at guests all, guests, our do customers. once as expect all years. the in continue been And customers to, to consistent But repeat the in in anticipate mid-XX%s kind they they'll forward. XX% of we leverage repeat tend to current current those We guests fold, -- to following inventory and the with several

as anything guys Okay, general XXXX, new we recently of been on the any in any And you inflation? for with announced there as then there or kind announced construction based think about increase associated is just the water development -- -- you the budget just out, has costs that vessel great. blue for have

at When materials any vessel, the design certainly of by we at given you forward. each that time. And the our I as move cost the fluctuates we vessels, of cost at the look moment of look the it is mean what of in

finalized. for XXXX the design has of this So been vessel yet not

that as not answer me we that we've built. of because we're building already question yet. something have decided the exactly So what same to that's it's hard for Obviously, not to

ways talk what we're doing build cost be, will of design from lower of the we are cost we for vessel, capital So can to know the a certainly always looking perspective. we the to once what the

So certainly the to once we're be we'll back opportunities we'll you where this And of on building to get explore to vessel, expectations do size finalize with continue that. would our we vessel, cost. the what

Okay. Very good. Thanks guys.

you. Thank

next George go Imperial ahead. comes Our Capital. from with Kelly Please question

for Hey, taking guys. Thanks questions. my

Geographic with a past So new you them you've means -- kind have has if now or agreement just start, had and much if worked before? your to with experience National owner. of any Wondering to that Disney, anything

anything going kind from obviously but asset, perspective, agreement going by the overall, National any Geographic. The that comment happen to would on our itself with most any be to with with not National National agreement regards relationship would Geographic change regards has that's change not with to our to It's XXXX. impacted a of been I'm what's for holds true, the time, been see relationship reason that why since forward. and and don't we around moving us importantly, extended fostered over and with Geographic

to Sven color. a wants little So give more

morning. exciting Yes. broadly, imagine Geographic, that Good cruise the in only can and Disney because, ships acquisition obviously have very National the entertainment business, business, implications of if of I in they such. Fox has well, more -- anything, the the in is involved course, incorporates which movie

have and to one seem And so one equals me it network that they so huge would -- and a and three here.

Great. other helpful. That's couple ones. And then, a Interesting. quick

the impact with will costs mentioned that? Venture quarter, quantify fourth can You you start-up that the

it relate Yes, some to of does timings.

the the going single is, to what in the get It But training when get through. depending the go digits would to in on have crew to million in the to going launches to related have costs before the anticipation some too some $X fourth or we the launch on it not we going certainly hiring timing ultimately operations. dollars, million year, I'm and see it. crew of of that this of you're $X quarter you're protocols through millions probably So of low be terms of of definitely specific in

but vessels, as You're costs exactly will so. -- of it the finalized inventories so or going cost predominantly such in $X to is, the will we and to what be related related non-capitalizable and my things roll guess things that through quarter million haven't that fourth somewhere around would nature, have be, to those

Okay.

guidance? $X So you're adjusting in That's included, all-in and that million guidance. out though, that's of something all not

fourth you but the quarter out have look Correct, year of change growth right. at the negatives or two year-on-year versus a you ago, when quarter, year-on-year going

itineraries with So in the whole then costs the you the recognition associated and the have policy. lot quarter, a of revenue a losses in because lot not start-up of whole and because in the not Venture, the there's revenue you changes quarter you have have

hurdle, create in top two timing So things the more certainly those of a has which some on in days drydock this additional year-on-year year QX.

-- more your capacity XXXX becoming competitive -- talking have capacity Okay. Is on just you bookings? pricing seen remarks; kind And and prepared then if any shift? XXXX on wondering of it new new about in

Sven, here.

very, the convinced because for We is repeat, prices lower, that itself to-date borne have but not believe and to and are of the places, really this continue pricing. the as to and certainly people or and Antarctica I going that very out a Arctic viewing what will have think the greatest so are are to seen which that doing the but who that likelihood day, there there remarkable ultimately any -- on once-in-a-lifetime imagine it experience. effect Galapagos, going anything them interesting, the a of of to very, certainly number the it in experience, represents do It's they future, I'm an I thing time of of will end material that's out cognizant it I kind having have at would are like at they are absolutely or a people doing

negative for downward have not have have our prices relates we to pricing. our been we as it so And lowering compensate people's certainly any affect. or to prices seen And a anticipated effect other -- adjusting

Okay. me. last And from then question

Do you for next yields operating that impact year? your kind of have customers. of destination any itineraries attract You mentioned expect or some on shorter much to shorter an or to different metrics

the instances, we in reasons, produce of land. on like example, doing days three to so the give Number and ship on an or -- you Island, for four just itinerary that three or be four I'll one, couple just days certain Galapagos a are for it's days this. then clear there like shorter the Well, new

you're fact more value from in So the also on benefit through a getting and people the funneling ship you're land.

rejiggering to fact, seasons, you producing are where if be shorter we they're reason as increasing than between period reconfiguring. add prime in so might these though, would doing In for more So proves are. in able they this has certain implications in money who that an bring by just to because The we vehicle they value an areas, it's it's they is, that can spend try main result. try, as effect or being the in increase to wish softer long new something what what time before a trips fully to to the a going too a would aggregate, shoulder not model, very, interesting and value maybe fold, understand very into consequence instances, people that otherwise what be total, or at will call otherwise a that on

not but components will term, the to add we long of that only in believe a multitude has the value it certainly it So in short term.

Thank you.

[Operator comes question Pendy Instructions] ahead. our go Please from Greg with And Sidoti. next

taking Hi my Thanks for guys. questions.

fact you the I I can ahead sort can how that the given of looking some showing from with Natural to buy, momentum? Habitat guess, be us, tell us a seems versus XXXX to you build vessel, at you -- a in guess, the world remind go with XXth Just Thanks. are decision

Sure. Thanks question, for the Greg.

to it are when relatively comes agnostic. growth So, opportunities, I would -- our say we are

would to vessel opportunity growth, We more see demand perspective whether a organic are capture avenues from capacity. all where it build at be additional with additional looking opportunities of we

We valuation an same out buy are it a our the At also opportunities. we're M&A that time, space, in there vessels a into the opportunity are and vessel to at own. there at looking public is at attractive buying if looking make

of upon, to on our kind As terms marine we scale of about growth touched but the business quiet in Sven to expand business side. that both have side, that existing augment our also on marine the continue opportunity would been not desire any

have other, next looking everything ways one but that on we're years. for wouldn't focused growth increase several the at the So say the and we we're anything I versus to opportunities and over

speak bit to I at, helpful. anything Could a that there, a or light then year-over-year bit? other that That's just the other follow-up. look And despite to additional there ship. it you anything revenues? one and higher was any occupancy just maybe Is pressure guess,

that trips, people we Yes, -- other there's goes up cancel existing the items stuff encompasses ultimately and it encompasses in on do happen of would folks extension it people insurance that -- the that real add to It's any it insurance. don't take encompasses stuffs year. real when cancellations upcoming reason and say like the on when think really when down revenues, insurance revenues to like revenue revenues, what travel, have -- course throughout quarter, I no tends fluctuations no have the or given to

certain are itineraries don't the Sometimes they the [ph] due mirror offering of prior in years; voyages. changes to timing sometimes it we

wouldn't is say the keep an on, year-on-year it that So results for It but something not something that dramatically drive is eye that. would a change would into read of anything year. I we I full

lot. a Thanks helpful. That's Okay.

call and gentlemen, no attending further thank today. showing for Ladies question-and-answer I'm our our session. concludes presentation. also you This today's conference This for questions. concludes

now may You disconnect.