Lindblad Expeditions (LIND)

Craig Felenstein CFO
Sven Lindblad CEO
Steve Wieczynski Stifel
Spencer Hanus Citi
George Kelly Imperial Capital
Call transcript
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Good morning, and welcome to Lindblad Expeditions Holdings, Incorporated Second Quarter 2019 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Craig Felenstein, Chief Financial Officer. Please go ahead.

Craig Felenstein

Thank you, operator. 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

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

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

non-GAAP comments earnings other most financial comparable our GAAP may addition, contained In the measures. are reference the of A directly disclosures in and reconciliation measures financial associated release. company's

And out Sven. call the let over way, with me of to that turn the

Sven Lindblad

this Craig, us everyone, maintaining growth we and yields. we to sustained thank Lindblad's strong further you, the for have deliver joining quarter high opportunity capacity, our occupancy and while expand as demonstrates second levels Thanks, results net morning.

from to with addition, along has healthy fill guests, In XXXX travel, XX% to base available levels the us demand our points. the authentic and by diverse fleet Geographic expedition Quest berths and our the National at of fleet over enabled addition Venture of price our has increased a for expanded loyal growing

strong case sure has When Alaska the the XXX adding grown a seeing be heading certainly Quest you in is gratifying not Alaska QX. and always cannibalization to has US does materialize QX occupancy from want been that with Venture. reaching throughout to capacity that and region, season in season and in levels, berths XXX the both particularly which fleet, into berths, been has What the

of geographies, maintain explore part South success vessels. also us and and both This allure the strength these the set remarkable time big to pricing Northwest the develop America, A Alaska. the of within and and of diverse have experiences differentiate we the to this has allowed but across a certainly new Pacific is taken itineraries existing

we National of and the towards first the value Quest newbuilds new further vessels of for both right It the headed and maximizing ideas, Remember, Expeditions, new. trial I ever which to Geographic error developing represents were now Venture and and find opportunity. believe a balance, are an older bit the maintain combination took to enormous Lindblad allow but old

considered Arctic it's year, woman to same energized It's a how places her. planned We before has where this example, ice state-of-the-art would really opportunities high the that proves represents voyages out entire expect April, Geographic really, enterprise. the vessel. fleet We went knowing having literally for man add validity can we It And to so the and all vessel take to committed public Endurance have to class diverse fruition, certain vast her where responded, year. the her of filling into of never no National the of also to or have rewarding such really, gone the gratifying to our go before. has the fast. at set able a we new to when times in that see watch outcome to thought come has planning really set of Being next

in It's a aggregate, on itineraries, in months value-added seasons, success, what year, because to. are offerings. is are there promotions, number need a improve is business, results to are where our factors often season are to there An be softer, prices. are dynamic demand shoulder in there a inventory season of add the constantly shoulder key best adjusting to of that reconfiguring we business in many approaches attentive motion shoulder we As that key very example,

instant geography. going New an home run. We but it's always must incorporate geography, not be to new

need building absolutely South experiences. you a here to value, building of example. We the provide best such is an our The story. do invest Sometimes some and in can work finest Pacific

In how amaze fact, Orion is just aboard how positively guests quarter, Polynesia this me I our destination ceases and never in the past to and this was French react National Geographic it remarkable it. to

believe two are potential last the beginning the just over tap this steadily grown years, that region we into to we has Demand and offers.

existing developed of While Costa the of in trips Bay. ability reconfigure different whale-focused new Escapes, the Rica have regions. in growth Wild under to expeditions provide itineraries Coast Islands, now including a Mandalay definition and to Bahis, so XX program is geographies North We Channel opportunities, unique the

These with land revenue. the also are other add to which X-night as extensions, voyages opportunity additional generate components will

have a lifetime been these XX big age really a this wildly successful suggests the rates younger. years From repeat far, deal perspective, So value that analysis have. the nearly is given and we is preliminary median

to our also on out we strategically itineraries, invest growing developing fleet and enterprise. focus As our to expanding infrastructure building continue in new our we efficiently support

critical on we technology the a front, projects. quarter technology push as new four is to QX implement

a system and reservation fully made website. a marketing marketing the new reservation our CRM on is the well new go create slated personalized omni-channel of will new Once our live quarter, new significant automated in improving systems, Our platform conversion these journeys, engagement with our us and and to as guests during capabilities as provide rates. and complete a various we platform view online, to cloud and providing link third progress XXX-degree

including reservation host management, to frictionless experience. a capabilities other new provide a more pricing provide system reservation of as seamless well allowing yield capabilities more as us our dynamic will Additionally, enable

made as investing also neutral extremely July Lindblad a major are XXXX, On We is In. Live The World carbon company. proud in that announcement of. I'm Expeditions, We of X, a we

taken steps What mean? carbon does that meaningful We've our footprint. mitigate always to

the avoid we cannot use completely we our of However, atmosphere. still carbon into with operation that the in today's technology, release

aggregate, off the in ground ground tons metric energy, all entire that by operation, of XX and areas, are get our not investing activities offices, offsetting clean use and accredited or ships, other otherwise tons, we in reforestation in would activities sequestering carbon. carbon such as diminishing forms employee travel all these For

Why platform are and We to support this? we committed a historically to science doing broad-based conservation. have

We the issues, We between one believed meaningful change annually have face the humanity To support in $X investing always and generally. million the in of million health and visit global that must the and raise warming, we and around largest climate if not of with. to end, work globe. know deal the, environment we are places that $X.X

will statement, that enterprises we and will we responsibility to acknowledging fact, take part for greater by guest-facing, neutral traveling contribution The relationship environmental single in a issues years plastic. catalyze ahead, other believe that. year, problems with believe we many view a of carbon strong use primary as the eliminated solution. Last Becoming a company's choices. firmly I their the all becoming consideration public in to is their

suppliers commitment are public regarding both will packaging, is reward. and our We sourcing sustainable sophisticated the at of we will effective, on food putting behavior continue and to the be that pressure forefront to

growth to competition Expedition is, to I frequently Before I questions asked the online? of the And want what the cruising view of that on most up, take get. discuss a and moment one coming your I is finish

life: University was a if X the article many are a Thing Expedition You Hilary travel consumption interested I the not fastest-growing pursuit experiential Should industry. reasons wrote Psychology sector Happy." at Well, Psychology Professor There this, of is to "The to July wonderful Be White XX cruising happiness." Dr. study Thomas Be fastest the but read Cornell Journal on Consumer definitely for by the Gilovich, Money Spending entitled, of the on She growing, of particularly "A and wrote, called, one in of an

experiences. he important person's as are important sense to be as that as of concludes a it, self, as In might not possessions and they identity a person's

the sum are total of experiences. our We

our sum we but however, known possessions. our the are And they write our not us. If about, it would experiences true. be was important a it We might in not to to well-articulated write we've called article. possession, time, It's long it is of particularly upon our this memoirs, total

a to we that and the about also urgency all world on changes given continue going that natural of through. There's experiencing sense go will the are

vessel, you Think competition, and growth the market clear, less 'XX the Expedition the I've said as beds As the of one. would the all available newbuilds and number well, look than at cruising growth to of in cruise growth, fewer it. that amount beds than it's mass interest in new one past in about if to that 'XX to in service

to And that drive unequivocally we the idea to Expedition the still increased us. will believe exposure people cruising of

is global in platform the the our have diverse geographic unparalleled. We most knowledge industry,

speak ships newbuilds, deeply by are experience number, naturalists, field XXX Our maximizing and experienced of than expedition minimizing leaders, out No teams, the a far size our the impact. captains, while on greater critical, thought guest most volume.

XX-plus and anybody is our travelers. an heritage than that Add a to years with meaningful cruise going a to Honestly, of tell our productive have Geographic, other believe of you hearts on story I National my simply and prospective compelling quite heart in expedition this, with alliance a ourselves mistake.

travelers lifetime. right experience takes to of and with We have it an stuff understand a provide what the

please you for now Thank to morning. time turn Craig. this call the let me your And back

Craig Felenstein

the while to to last financial has to Thanks, invest years continue for opportunity given long-term Sven. strong on expand further generating that Lindblad our The strategic made several the adventure the is over demand today, growing capitalize investments capacity results we travel.

in in expanded to delivering infrastructure record capabilities strong environment us and sustain growth capacity, a investments is this provide marketing authentic to strong and high-quality additional the our momentum will to proven upgrading ability with sales experiences, of along for the Our term, our expanding short while booking come. technology inventory, years with and track a deliver combining

second segment. the revenue in Turning Lindblad quarter to the increased year and XX% at versus revenue a increase The second a XX% led XXXX, growth by specifically. Natural Habitat. X% growth adjusted Total at to the company EBITDA contributed the growth quarter by segment at X% Lindblad increased growth XX% led ago, of

fleet the at a prices million XXXX. primarily as the higher while year-on-year The guest included net also nights, Geographic available increase growth million The the revenue of guest to predominantly generated from certain and was well of impact individual Venture compared X% Lindblad quarter segment XXXX. higher Looking other increase per by to the revenue of National night segments, in as strong due XX.X a the remained driven ticket as with launch across to occupancy X% XX%. XX.X December the in X% at $X,XXX of changes quarter during in the from second itineraries, yield mostly

in the year. of was a the primarily tours, of end revenue cost of National prior driven led the by Turning as X% costs to at Fuel Geographic on the the itineraries. of to compared business, fleet to and reported X.X% cost expenses the of increase side fuel as by versus impact revenue by expansion of was offset operating changes the the Lindblad lower of in last increased XXXX. year, Fuel quarter X% segment the of basis XX% declined quarter Venture second a fleet prices the in in X.X% addition

associated costs spend demand our Sales planned discussed systems marketing investments due to increased of Expedition the on revenue higher marketing and look and and as and expense costs our new the a XX% as rollout the growth growing year as reservation we with have increasing to including further ago the versus with capacity travel. associated increased for previously, well capitalize marketing commission CRM from we

in due Ecuador, offset will primarily primarily and X% warrant were costs that related third in lower transaction to decreased be the to higher taxes costs by exchange VAT quarter. expenses which personnel our G&A partially completed

related the also of to X.X The XXXX million amortization, second Venture. the of National included mostly depreciation increased addition of quarter Geographic and

past on X% this X% stock-based its adjusted days the from of Russia investments a compensation, basis to costs, generated quarter amortization XX% East of with Orion night increased operating night revenue adjusted segment primarily XX.X as in increased as to National on Geographic well operating and increased additional the ago. second in itineraries. marketing a expenses ahead Overall, transaction the increase cruise as $XXX transition and Overall, quarter, additional Far net cost the an result Lindblad growth, million, future technology growth per year driving despite EBITDA the leverage some versus X% depreciation initiatives. and a the Including per segment Lindblad costs

marketing mentioned second Natural to of and the At ago as departures increase pricing. loss quarter decreased drive Habitat and was due revenue by timing personnel higher million growth just future Adjusted due offset the associated year expense million in well XX% million XX.X to the a spend operating of grew to growth. to X.X I the as XX% revenues with additional versus EBITDA that costs the to X.X departures segment, as a a

million share offset in The a see of was of to note common Natural XXXX, Natural Habitat Total in combining by the continue per diluted I the foreign reported X.X quarter sales with in the ago. the $X.XX cross-selling million available $X.XX itineraries. by positive including year associated million further nearly share was per the expanding to versus we higher year-to-date that in businesses XX% of and depreciation year-on-year with should stockholders a along Lindblad the $X.X also partially currency second Venture. results increase company the quarter driven operating higher diluted income Lindblad or in Habitat or X increase swing benefits with launch net a

of Including X ago. free flow XX the invest maintenance growth X ended from cash was flow a unrestricted months use the We year-to-date balance our XX% X million, cash a period for was million million of to spent XX in the quarter same primarily an to Free only Turning the on future increase million or reflecting million newbuilds. with year positioned in extremely We year-to-date, well CapEx, opportunities. cash. remain XX sheet.

During second September by margin blue-water loan LIBOR credit or next approximately fixed and our are second also installment regard of year. financial the rate to either $XX Norwegian water This further bear in a paid option is our payment anticipated when at with flexibility quarter, build. this available we an our expanded X.XX% our be plus will floating of installment rate for of to securing of is equal interest payments blue agreement vessel due The X%. a a million to export

of simplified warrant X.XXX the of further each of part Each and the to permitting of anticipate X.XXXXX completing we future warrants outstanding the part warrants offer of exchange converted we'll million to an outstanding exchange of quarter, company. later warrant shares. received capital amendment the be redeem of potential the stock. shares of all warrant. structure offer the as an require offer warrants common and approved exchanged exchange were agreement common XX.X% approximately dilution all Following to our reduced the the for and ultimately the the outstanding shares as remaining stock also X.X holders today, existing our that the through warrants into for We company redeem

full driven year yields. of already regards as additional by point our revenues same we pacing continue the full XXXX growth ticket to year well as increased revenue Lindblad expansion for Turning significant for to with ago the we ticket XX% time to XX% XXXX, capacity a ahead as bookings, our currently with expectations and The year anticipate projected net of year despite of inventory year at XXXX are the same compared full segment the a ago. at is XX%

tour expect versus versus we and Given and in and growth XX% or to XXXX. operating the XXX XXXX, XXX company total between XX% million, sustained revenue EBITDA to million current and results the trends, million booking between the to million XX% XX XX% environment, adjusted year-to-date XX continue growth XXXX

for Thank now you very would to any your time questions and morning, you happy Sven this much I answer might be have. and


The first Instructions] Wieczynski of Stifel. comes Steve [Operator from question

Steve Wieczynski

you've the half now is in which of XXs guys half the far. in the But well. the kind asked your quarter are So of you the and which guess, approximately -- we mean Craig year, expecting growth to guidance so XX out the range. I question, I EBITDA this basically, kind unchanged, the if as think Sven, guys at look of in million done back second I last first I or you remains we for year,

EBITDA marketing growth here? I I that question So growth guess back confidence we'll tough goes you I much And guess much -- the I gives side. guess, the year? right to, what of to very that be of so able -- get what is now That growth in am kind on spend the that well of the half growth as top on the the seems to missing very, see increased

Craig Felenstein


the thanks Steve. So question, for

inventory fleet, bulk the I QX, was going the with to exactly the the So or towards coming think advantage the that QX expect with first the end of important off, of on benefit to Venture, tail the we be way where this are very QX. year-to-date was really point year. take the you When and place new it to throughout that results line through bulk at look of in note the at that to it's

So expecting larger in half see benefit the fully a year. the that were of we portion of back to

existing higher a operations. our set half year, notably, the generate the Last itineraries. of Orion same year. the more the Pacific. with in time, has the certain South this of she predominantly diverse And back we're to was she year, vessels, At in expecting yields Most her of

So that the was well. of always back half the anticipated year in as

those driving pretty So when you feel look forces, confident. at we two

We the also year. how of much back the half we've taken already for know bookings

combine half, you so for guidance in second double-digit that available second and on yields confident guest of half, in much increase we a already the our books, the when the So XXXX. feel nights in very in higher

Steve Wieczynski

dropped slight reading first into to second too I it's the this, I'm the -- and be of to the the focused but the ask it's function that how itineraries much bring market. introduced? too you are some or a guys something is into to guys And of brought reading much have shorter could that on market a just Maybe given I'm in we're the and capacity much you then And continuing to this about in occupancy, dip wanted metric quarter. a time, here it question, while has the

Craig Felenstein


action seeing reason bunch shoulder this seeing significant it said, and look that When at where at you're in of inventory, to is Sven yields current growing X% we've the touched flat, for the added that certainly quarter in see we or item that added I you're down normal upon the his year. season all of wouldn't the a in inventory matter. the an a on occupancy or this slightly you comments, in course that's drop business. fact Venture item a because the we a focus occupancy That it as added So we're with for

And seasons. lower that's bit of would call, going than have a the, little what to I always occupancy peak

at looking our June, off was So season if year-on-year. was up occupancy in example, Alaska in occupancy, for is kicked I just the earnest, which

I is timing are in QX. given matter think, just should and really, course anything strong it very of So the than where a see we year, more of else, you the occupancy in


The comes next from Greg of Citi. question Badishkanian

Spencer Hanus

Hanus Spencer on actually for is This Greg.

just cruises? the What sense on And response have your these customers what do been these cruises. shorter a then I quick So response any looks of taking question repeat to we for has the had the itinerary shorter there? like rate

Sven Lindblad

Yes. have, new. -- mentioned, brand of The so are some I Yes. new we which as XX itineraries,

So not data we very yet, that long. on been have of going and -- they in a haven't lot

rates have yet. indications so for launched is the that's while this very, been ones in far, sold repeat completely sort the and so But not Galapagos of The we've on is going And the been from has one that audience clear out. very positive. been a

ships their XXXX, construct. we're terms of And we're in one in of entirely in migrating it entirely into programs into -- in fact, shorter these moving the our

about little they're is factor a a very lot it's months selling good that The of health. more is so, six the or people, So to a and bit understand future -- to very, they're take before what next in we well, which rate key time really repeat younger of going indication very selling to learn is. going the we're and

Spencer Hanus

from sourced your update not you then any And non-US would update on know of there that part seeing trends passengers? a any sourcing, but great. guys I huge are that's Great. be

Craig Felenstein


surface. that in outside our you very, haven't is say, enormous with the over we Today, significant from amount ways. of in see US, look travelers an years. at that scratching When States. still consistent here United But of opportunity guests that US, still majority I the expand the and of the just spend for to really we're are We fleet just So familiar, that looked XX,XXX aren't And been time. internationally, yet the think who at we focused you will for has over the XX,XXX, look us over would take we're what guests Part a US those when -- still think time course and very year, of we the a last is of another that ultimately be. about today, in XX% can across US, XX% our we guests. the start several and our we the of the change

to will internationally. we our our So grow, in at guests, be look expand can outreach when you think the lion's we marketing share of do the programs our still future, the that US but efforts anticipate and starting

We that have but relatively some minor are thus we aspect. done in far,

coming not States, I change increase you'll So time. number international see think United here to the guests dramatically. We sources look too left see there's so in of percentage the that over start think I our growth but much we forward because from absolute will


next [Operator George of Capital. comes Instructions] question The Kelly Imperial from

George Kelly

just testing dynamic is for pricing any seeing? system the you. reservation to you if could what and so kind And far, So talk few that? And the you've been of for start, new wondering pricing. about you're timeline if what dynamic Wondering a

Craig Felenstein


terms or the system of the is, year answer end start new first rollout, of the at next that of functional in reservation question be me the will Let timing we expect this our year. of which first, either

XXXX. That probably fourth not system around pricing. that we to for waiting late experiment certainly, quarter impact to will So, XXXX. felt sitting implications the pricing the the end dynamic tail first said, in And launch towards of and quarter. in in the of we're be the Once or bulk with then that, sometime dynamic do

pricing raise think some selling we on itineraries dramatically. out to opportunities taken are that have We

fits would much a and It's of very I been, starts say, kind effort.

for significant we very do And response has an the when take wide We positive. rate look but for have see yields done been demand individual to not we advantage it of scale, itinerary. opportunities

pricing, is automated, much We as to of now seen raise when falloff forward process. to I very would whole say look mechanically a have automating not we the But we opportunity good. done and it's lot the which opposed to

George Kelly


Okay. underway, are -- the and of, quarter, you technology you initiatives and in kind then CRM specific be said live there's in it's Great. what that mean? what I then marketing does those And that marketing the initiatives additional -- coming marketing third some there's about later? think I other last goes initiatives the Can cloud, think marketing more

Craig Felenstein


vast the well, So majority the third of the CRM quarter. in will go live

start We within starting very to The flows CRM a our are to have is the actually understanding we started that are And XXX roll still come would great. certain I guest our see Viewpoint, ultimate already. the pieces two which platform out functionality are, piece to customer And and say, the those nice of launch launch done, the of be marketing into technology we're obviously cloud. that's website want of next because obsolete going really tie tied system, to a to come year. that what the are and reservation them don't they're we of the to going to

So we're off that But able design. are all, we -- website, you'll on do of improved to on first when those. holding have mobile the

it that, certainly itineraries in marketing be on really our of mail cloud, guest looking what marketing on marketing their targeted in by pieces productivity on off effectively, board, or see access have ROI cloud efforts, increase the greater more much website interest will geographies, our information gets to so will And generate wants which can and agents overall the what and travel that efforts third-party we we who up running. once items bookings, capture direct direct improve allows can experience, us onboard at for allow You'll to the from to which like the there. and

help also will see out demand will where needed. digital the sending e-mail again, us with our and to tie directly we're to our our when is into website guests, ultimately But most it performance that communications

of reservation that there's are and get once the additional tied the So again, the But website a to very system. much launch. productivity we'll launch the of these systems new lot cloud

George Kelly


just couple staff Okay. -- the sort new and And change questions. ship does for you recent margin just as making overinvest will launched is then or two? These Like, you've the a in vessels higher of as modeling What the experience fleet Do that years. in how matures? over optimize matures? of the perfect the having first margins sure year time -- contribution

Craig Felenstein

on it's that margins first broad think where you would reasons, ahead so launch how have it's going and market going or going I at But each depending stroke to see to And a what launch. typically, look to to lower being, perspective, individually is from the Sure. voyage. vessel kind of be any year would a of one the of variety certainly for you're in you

So obviously, down. your margins bring that's going to,

you launch years onboard to certainly. you usually And going and to into office ultimately the additional a year, guest to the terms bit then first the a year or that ideal to also want as for that little vessel. a point, some experience fit things takes fine-tuning over staff that start see the You're you staff, -- to so. of half both vessel, that change your And a as invest you vessel, in could well of the staff as

So in year vessel three, achieving by efficiencies margins. by would peak year optimizing, you're two, say, I on certainly certainly, that your

George Kelly


Okay. just And then last about to me, question EBITDA for that your back topic. guidance

can then, there's this what of some marketing generally new of lot Can And one-time-ish believe what I sort know the vessel new out the your out there's ship but things -- don't major incremental costs a and well. you -- those? back For are EBITDA, year. as the of marketing-related remind you I year, me marketing you quantify

Craig Felenstein


in would and that spend relates buckets predominantly our marketing onetime So the call, there's items, of, we I to increased three really what year. --

going we're we thought year, guidance be marketing would year. guidance we We spend of increased the in additional our haven't spend the EBITDA And exactly halfway spending to that what the through for marketing is quantified specifically, and what on the included that's our side but things.

And to spend we dollars. increase getting decrease the as depending can we're that be return that, those we on fair, or

to the regard the a marketing So that that bookings with of seeing spend. be will byproduct we're

Now obviously, see and on marketing in the XXXX. will spend we help XXXX that us booking do that

quantified an so one-off the So is spent projects The well not in two new it new related Endurance. company. it to expenses in have the the XXXX, as the for said, spend that as of the associated well the the launch impact money growth of will future past, the but of operating as between items new much with IT have that certainly we we

of things compare be the when you $X vessel million like things need costs, year. was second be $X those ahead the ultimately items. half spend predominantly the in in the half and half of in would be from second on IT That crew would spend of of you are some things And first year, about the launch, the things year. will it those the bulk Endurance operate the of buying There but to million to primary combined, of Those the the an perspective. two that the hiring spend, will onetime that expense


over This closing remarks. to question-and-answer the I for conference back turn Felenstein Mr. concludes would our session. like to

Craig Felenstein

us a have you feel us We And give joining you in future. the Thank Thank to to additional this call. questions, look everybody. forward morning, for speaking free you. if to you


for attending has conference you concluded. now today's The Thank presentation.

now You disconnect. may