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 March 31, 20212022
☐ 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 April 28, 2021, 50,126,92625, 2022, 50,941,997 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 March 31, 20212022
Table of Contents
Page(s) | ||
PART I. FINANCIAL INFORMATION | ||
ITEM 1. | Financial Statements (Unaudited) | |
Notes to the Condensed Consolidated Financial Statements (Unaudited) | ||
ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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ITEM 3. |
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ITEM 4. |
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PART II. OTHER INFORMATION | ||
ITEM 1. |
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ITEM 1A. |
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ITEM 2. |
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ITEM 3. |
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ITEM 4. |
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ITEM 5. |
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ITEM 6. |
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PART 1. | FINANCIAL INFORMATION |
ITEM 1. | FINANCIAL STATEMENTS |
LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
As of March 31, 2021 | As of December 31, 2020 | |||||||
| (unaudited) | ||||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 163,939 | $ | 187,531 | ||||
Restricted cash | 22,446 | 16,984 | ||||||
Marine operating supplies | 5,850 | 5,473 | ||||||
Inventories | 2,173 | 2,168 | ||||||
Prepaid expenses and other current assets | 21,135 | 17,014 | ||||||
Total current assets | 215,543 | 229,170 | ||||||
Property and equipment, net | 479,240 | 482,673 | ||||||
Goodwill | 33,652 | 22,105 | ||||||
Intangibles, net | 10,963 | 4,817 | ||||||
Deferred tax asset | 8,340 | 5,539 | ||||||
Right-to-use lease assets | 4,786 | 5,082 | ||||||
Other long-term assets | 7,376 | 8,063 | ||||||
Total assets | $ | 759,900 | $ | 757,449 | ||||
LIABILITIES | ||||||||
Current Liabilities: | ||||||||
Unearned passenger revenues | $ | 149,290 | $ | 120,737 | ||||
Accounts payable and accrued expenses | 20,529 | 22,341 | ||||||
Lease liabilities - current | 1,388 | 1,475 | ||||||
Long-term debt - current | 14,128 | 11,255 | ||||||
Total current liabilities | 185,335 | 155,808 | ||||||
Long-term debt, less current portion | 471,027 | 471,359 | ||||||
Lease liabilities | 3,703 | 3,915 | ||||||
Other long-term liabilities | 90 | 90 | ||||||
Total liabilities | 660,155 | 631,172 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
Series A redeemable convertible preferred stock, 165,000 shares authorized; 85,000 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively | 85,125 | 83,825 | ||||||
Redeemable noncontrolling interest | 10,473 | 7,494 | ||||||
| 95,598 | 91,319 | |||||||
STOCKHOLDERS’ EQUITY | ||||||||
Preferred stock, $0.0001 par value, 1,000,000 shares authorized; 85,000 Series A shares issued and outstanding as of March 31, 2021 and December 31, 2020 | 0 | 0 | ||||||
Common stock, $0.0001 par value, 200,000,000 shares authorized; 50,126,926 and 49,905,512 issued, 50,058,718 and 49,818,676 outstanding as of March 31, 2021 and December 31, 2020, respectively | 5 | 5 | ||||||
Additional paid-in capital | 51,367 | 48,127 | ||||||
Accumulated deficit | (46,117 | ) | (11,572 | ) | ||||
Accumulated other comprehensive loss | (1,108 | ) | (1,602 | ) | ||||
Total stockholders' equity | 4,147 | 34,958 | ||||||
Total liabilities, mezzanine equity and stockholders' equity | $ | 759,900 | $ | 757,449 | ||||
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 March 31, | ||||||||
2021 | 2020 | |||||||
Tour revenues | $ | 1,780 | $ | 81,238 | ||||
Operating expenses: | ||||||||
Cost of tours | 8,279 | 42,192 | ||||||
General and administrative | 13,812 | 17,226 | ||||||
Selling and marketing | 2,506 | 12,879 | ||||||
Depreciation and amortization | 8,249 | 6,690 | ||||||
Total operating expenses | 32,846 | 78,987 | ||||||
Operating (loss) income | (31,066 | ) | 2,251 | |||||
Other (expense) income: | ||||||||
Interest expense, net | (5,669 | ) | (3,054 | ) | ||||
Gain (loss) on foreign currency | 70 | (3,443 | ) | |||||
Other income (expense) | 1 | (53 | ) | |||||
Total other expense | (5,598 | ) | (6,550 | ) | ||||
Loss before income taxes | (36,664 | ) | (4,299 | ) | ||||
Income tax benefit | (2,801 | ) | (1,828 | ) | ||||
Net loss | (33,863 | ) | (2,471 | ) | ||||
Net loss attributable to noncontrolling interest | (619 | ) | (537 | ) | ||||
Net loss attributable to Lindblad Expeditions Holdings, Inc. | (33,244 | ) | (1,934 | ) | ||||
Series A redeemable convertible preferred stock dividend | 1,301 | 0 | ||||||
Net loss available to stockholders | $ | (34,545 | ) | $ | (1,934 | ) | ||
Weighted average shares outstanding | ||||||||
Basic | 49,865,234 | 49,625,127 | ||||||
Diluted | 49,865,234 | 49,625,127 | ||||||
Undistributed loss per share available to stockholders: | ||||||||
Basic | $ | (0.66 | ) | $ | (0.04 | ) | ||
Diluted | $ | (0.66 | ) | $ | (0.04 | ) | ||
As of March 31, 2022 | As of December 31, 2021 | |||||||
| (unaudited) | ||||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 154,816 | $ | 150,753 | ||||
Restricted cash | 30,046 | 21,940 | ||||||
Marine operating supplies | 8,037 | 8,275 | ||||||
Inventories | 2,034 | 2,278 | ||||||
Prepaid expenses and other current assets | 32,114 | 27,094 | ||||||
Total current assets | 227,047 | 210,340 | ||||||
Property and equipment, net | 539,177 | 542,418 | ||||||
Goodwill | 42,017 | 42,017 | ||||||
Intangibles, net | 12,830 | 13,235 | ||||||
Deferred tax asset | 7,758 | 7,609 | ||||||
Right-to-use lease assets | 4,085 | 4,402 | ||||||
Other long-term assets | 7,721 | 7,470 | ||||||
Total assets | $ | 840,635 | $ | 827,491 | ||||
LIABILITIES | ||||||||
Current Liabilities: | ||||||||
Unearned passenger revenues | $ | 242,161 | $ | 212,598 | ||||
Accounts payable and accrued expenses | 48,344 | 49,252 | ||||||
Lease liabilities - current | 1,563 | 1,553 | ||||||
Long-term debt - current | 24,072 | 26,061 | ||||||
Total current liabilities | 316,140 | 289,464 | ||||||
Long-term debt, less current portion | 545,099 | 518,658 | ||||||
Lease liabilities | 2,842 | 3,178 | ||||||
Other long-term liabilities | 300 | 247 | ||||||
Total liabilities | 864,381 | 811,547 | ||||||
Commitments and contingencies | - | - | ||||||
Series A redeemable convertible preferred stock, 165,000 shares authorized; 80,000 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively | 85,201 | 83,901 | ||||||
Redeemable noncontrolling interests | 14,458 | 10,626 | ||||||
| 99,659 | 94,527 | |||||||
STOCKHOLDERS’ (DEFICIT) EQUITY | ||||||||
Preferred stock, $0.0001 par value, 1,000,000 shares authorized; 80,000 Series A shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively | 0 | 0 | ||||||
Common stock, $0.0001 par value, 200,000,000 shares authorized; 50,933,471 and 50,800,786 issued, 50,888,231 and 50,755,546 outstanding as of March 31, 2022 and December 31, 2021, respectively | 5 | 5 | ||||||
Additional paid-in capital | 60,307 | 58,485 | ||||||
Accumulated deficit | (183,717 | ) | (136,439 | ) | ||||
Accumulated other comprehensive loss | 0 | (634 | ) | |||||
Total stockholders' deficit | (123,405 | ) | (78,583 | ) | ||||
Total liabilities, mezzanine equity and stockholders' deficit | $ | 840,635 | $ | 827,491 | ||||
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 March 31, | ||||||||
2022 | 2021 | |||||||
Tour revenues | $ | 67,846 | $ | 1,780 | ||||
Operating expenses: | ||||||||
Cost of tours | 57,947 | 8,279 | ||||||
General and administrative | 20,637 | 13,812 | ||||||
Selling and marketing | 12,329 | 2,506 | ||||||
Depreciation and amortization | 11,178 | 8,249 | ||||||
Total operating expenses | 102,091 | 32,846 | ||||||
Operating loss | (34,245 | ) | (31,066 | ) | ||||
Other (expense) income: | ||||||||
Interest expense, net | (8,715 | ) | (5,669 | ) | ||||
Gain on foreign currency | 130 | 70 | ||||||
Other income | 533 | 1 | ||||||
Total other expense | (8,052 | ) | (5,598 | ) | ||||
Loss before income taxes | (42,297 | ) | (36,664 | ) | ||||
Income tax benefit | (149 | ) | (2,801 | ) | ||||
Net loss | (42,148 | ) | (33,863 | ) | ||||
Net loss attributable to noncontrolling interest | (427 | ) | (619 | ) | ||||
Net loss attributable to Lindblad Expeditions Holdings, Inc. | (41,721 | ) | (33,244 | ) | ||||
Series A redeemable convertible preferred stock dividend | 1,298 | 1,301 | ||||||
Net loss available to stockholders | $ | (43,019 | ) | $ | (34,545 | ) | ||
Weighted average shares outstanding | ||||||||
Basic | 50,757,126 | 49,865,234 | ||||||
Diluted | 50,757,126 | 49,865,234 | ||||||
Undistributed loss per share available to stockholders: | ||||||||
Basic | $ | (0.85 | ) | $ | (0.66 | ) | ||
Diluted | $ | (0.85 | ) | $ | (0.66 | ) | ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Loss
(In thousands)
(unaudited)
For the three months ended March 31, | For the three months ended March 31, | |||||||||||||||
2021 | 2020 | 2022 | 2021 | |||||||||||||
Net loss | $ | (33,863 | ) | $ | (2,471 | ) | $ | (42,148 | ) | $ | (33,863 | ) | ||||
Other comprehensive income (loss): | ||||||||||||||||
Other comprehensive income: | ||||||||||||||||
Cash flow hedges: | ||||||||||||||||
Net unrealized gain (loss) | 494 | (13,399 | ) | |||||||||||||
Total other comprehensive income (loss) | 494 | (13,399 | ) | |||||||||||||
Net unrealized loss | 0 | 494 | ||||||||||||||
Reclassification adjustment, net of tax | 634 | 0 | ||||||||||||||
Total other comprehensive income | 634 | 494 | ||||||||||||||
Total comprehensive loss | (33,369 | ) | (15,870 | ) | (41,514 | ) | (33,369 | ) | ||||||||
Less: comprehensive loss attributive to non-controlling interest | (619 | ) | (537 | ) | (427 | ) | (619 | ) | ||||||||
Comprehensive loss attributable to stockholders | $ | (32,750 | ) | $ | (15,333 | ) | $ | (41,087 | ) | $ | (32,750 | ) | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders’ (Deficit) Equity
(In thousands, except share data)
(unaudited)
Common Stock | Additional Paid-In | Accumulated | Accumulated Other Comprehensive | Total Stockholders' | Common Stock | Additional Paid-In | Accumulated | Accumulated Other Comprehensive | Total Stockholders' | |||||||||||||||||||||||||||||||||||||||
Shares | Amount | Capital | Deficit | Loss | Equity | Shares | Amount | Capital | Deficit | Loss | (Deficit) Equity | |||||||||||||||||||||||||||||||||||||
Balance as of January 1, 2021 | 49,905,512 | $ | 5 | $ | 48,127 | $ | (11,572 | ) | $ | (1,602 | ) | $ | 34,958 | |||||||||||||||||||||||||||||||||||
Balance as of December 31, 2021 | 50,800,786 | $ | 5 | $ | 58,485 | $ | (136,439 | ) | $ | (634 | ) | $ | (78,583 | ) | ||||||||||||||||||||||||||||||||||
Stock-based compensation | - | 0 | 1,477 | 0 | 0 | 1,477 | - | 0 | 1,828 | 0 | 0 | 1,828 | ||||||||||||||||||||||||||||||||||||
Issuance of stock for equity compensation plans, net | 139,112 | 0 | (7 | ) | 0 | 0 | (7 | ) | 132,685 | 0 | (6 | ) | 0 | 0 | (6 | ) | ||||||||||||||||||||||||||||||||
Issuance of stock for acquisition | 82,302 | 0 | 1,770 | 0 | 0 | 1,770 | ||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income, net | - | 0 | 0 | 0 | 494 | 494 | - | 0 | 0 | 0 | 634 | 634 | ||||||||||||||||||||||||||||||||||||
Redeemable noncontrolling interest | - | 0 | 0 | (4,259 | ) | 0 | (4,259 | ) | ||||||||||||||||||||||||||||||||||||||||
Series A preferred stock dividend | - | 0 | 0 | (1,301 | ) | 0 | (1,301 | ) | - | - | - | (1,298 | ) | - | (1,298 | ) | ||||||||||||||||||||||||||||||||
Net loss available to stockholders | - | 0 | 0 | (33,244 | ) | 0 | (33,244 | ) | ||||||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2021 | 50,126,926 | $ | 5 | $ | 51,367 | $ | (46,117 | ) | $ | (1,108 | ) | $ | 4,147 | |||||||||||||||||||||||||||||||||||
Net loss attributable to Lindblad Expeditions Holdings, Inc. | - | 0 | 0 | (41,721 | ) | 0 | (41,721 | ) | ||||||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2022 | 50,933,471 | $ | 5 | $ | 60,307 | $ | (183,717 | ) | $ | 0 | $ | (123,405 | ) | |||||||||||||||||||||||||||||||||||
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 | 898 | 0 | 0 | 898 | ||||||||||||||||||
Issuance of stock for equity compensation plans, net | 49,782 | 0 | (134 | ) | 0 | 0 | (134 | ) | ||||||||||||||||
Repurchase of shares and warrants | (8,517 | ) | 0 | (127 | ) | 0 | 0 | (127 | ) | |||||||||||||||
Other comprehensive loss, net | - | 0 | 0 | 0 | (13,399 | ) | (13,399 | ) | ||||||||||||||||
Redeemable noncontrolling interest | - | 0 | 0 | (901 | ) | 0 | (901 | ) | ||||||||||||||||
Net loss available to common stockholders | 0 | 0 | 0 | (1,934 | ) | 0 | (1,934 | ) | ||||||||||||||||
Balance as of March 31, 2020 | 49,758,787 | $ | 5 | $ | 46,908 | $ | 78,820 | $ | (18,080 | ) | $ | 107,653 | ||||||||||||
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 three months ended March 31, | ||||||||
2021 | 2020 | |||||||
Cash Flows From Operating Activities | ||||||||
Net loss | $ | (33,863 | ) | $ | (2,471 | ) | ||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||||||||
Depreciation and amortization | 8,249 | 6,690 | ||||||
Amortization of National Geographic fee | 0 | 727 | ||||||
Amortization of deferred financing costs and other, net | 687 | 486 | ||||||
Amortization of right-to-use lease assets | (3 | ) | 51 | |||||
Stock-based compensation | 1,611 | 898 | ||||||
Deferred income taxes | (2,801 | ) | (1,828 | ) | ||||
(Gain) loss on foreign currency | (70 | ) | 3,443 | |||||
Changes in operating assets and liabilities | ||||||||
Marine operating supplies and inventories | (382 | ) | (239 | ) | ||||
Prepaid expenses and other current assets | (2,080 | ) | 2,339 | |||||
Unearned passenger revenues | 21,438 | 4,770 | ||||||
Other long-term assets | 675 | 621 | ||||||
Other long-term liabilities | 1,798 | (4,411 | ) | |||||
Accounts payable and accrued expenses | (2,179 | ) | 4,356 | |||||
Net cash (used in) provided by operating activities | (6,920 | ) | 15,432 | |||||
Cash Flows From Investing Activities | ||||||||
Purchases of property and equipment | (3,800 | ) | (116,732 | ) | ||||
Acquisition (net of cash acquired) | (6,872 | ) | 0 | |||||
Net cash used in investing activities | (10,672 | ) | (116,732 | ) | ||||
Cash Flows From Financing Activities | ||||||||
Proceeds from long-term debt | 0 | 152,695 | ||||||
Repayments of long-term debt | (500 | ) | (500 | ) | ||||
Payment of deferred financing costs | (31 | ) | (61 | ) | ||||
Repurchase under stock-based compensation plans and related tax impacts | (7 | ) | (134 | ) | ||||
Repurchase of warrants and common stock | 0 | (127 | ) | |||||
Net cash (used in) provided by financing activities | (538 | ) | 151,873 | |||||
Net (decrease) increase in cash, cash equivalents and restricted cash | (18,130 | ) | 50,573 | |||||
Cash, cash equivalents and restricted cash at beginning of period | 204,515 | 109,258 | ||||||
Cash, cash equivalents and restricted cash at end of period | $ | 186,385 | $ | 159,831 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid during the period: | ||||||||
Interest | $ | 4,146 | $ | 3,862 | ||||
Income taxes | 1 | 12 | ||||||
Non-cash investing and financing activities: | ||||||||
Non-cash preferred share dividend | 1,301 | 0 | ||||||
| Shares issued for acquisition | 1,770 | 0 | ||||||
Common Stock | Additional Paid-In | Retained | Accumulated Other Comprehensive | Total Stockholders' | ||||||||||||||||||||
Shares | Amount | Capital | Earnings | Loss | Equity | |||||||||||||||||||
Balance as of December 31, 2020 | 49,905,512 | $ | 5 | $ | 48,127 | $ | (11,572 | ) | (1,602 | ) | $ | 34,958 | ||||||||||||
Stock-based compensation | - | 0 | 1,477 | 0 | 0 | 1,477 | ||||||||||||||||||
Issuance of stock for equity compensation plans, net | 139,112 | 0 | (7 | ) | 0 | 0 | (7 | ) | ||||||||||||||||
Issuance of stock for acquisition | 82,302 | 0 | 1,770 | 0 | 0 | 1,770 | ||||||||||||||||||
Other comprehensive income, net | - | 0 | 0 | 0 | 494 | 494 | ||||||||||||||||||
Series A preferred shares dividend | - | - | (1,301 | ) | - | (1,301 | ) | |||||||||||||||||
Net loss attributable to Lindblad Expeditions Holdings, Inc. | - | 0 | 0 | (33,244 | ) | 0 | (33,244 | ) | ||||||||||||||||
Balance as of March 31, 2021 | 50,126,926 | $ | 5 | $ | 51,367 | $ | (46,117 | ) | $ | (1,108 | ) | $ | 4,147 | |||||||||||
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 three months ended March 31, | ||||||||
2022 | 2021 | |||||||
Cash Flows From Operating Activities | ||||||||
Net loss | $ | (42,148 | ) | $ | (33,863 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 11,178 | 8,249 | ||||||
Amortization of deferred financing costs and other, net | 701 | 687 | ||||||
Amortization of right-to-use lease assets | (9 | ) | (3 | ) | ||||
Stock-based compensation | 1,828 | 1,611 | ||||||
Deferred income taxes | (149 | ) | (2,801 | ) | ||||
Change in fair value of contingent acquisition consideration | 56 | 0 | ||||||
Gain on foreign currency | (130 | ) | (70 | ) | ||||
Write-off of unamortized issuance costs related to debt refinancing | 9,004 | 0 | ||||||
Changes in operating assets and liabilities | ||||||||
Marine operating supplies and inventories | 482 | (382 | ) | |||||
Prepaid expenses and other current assets | (4,890 | ) | (2,080 | ) | ||||
Unearned passenger revenues | 29,563 | 21,438 | ||||||
Other long-term assets | (261 | ) | 675 | |||||
Other long-term liabilities | 845 | 1,798 | ||||||
Accounts payable and accrued expenses | (908 | ) | (2,179 | ) | ||||
Net cash provided by (used in) operating activities | 5,162 | (6,920 | ) | |||||
Cash Flows From Investing Activities | ||||||||
Purchases of property and equipment | (7,522 | ) | (3,800 | ) | ||||
Acquisition (net of cash acquired) | 0 | (6,872 | ) | |||||
Net cash used in investing activities | (7,522 | ) | (10,672 | ) | ||||
Cash Flows From Financing Activities | ||||||||
Proceeds from long-term debt | 360,000 | 0 | ||||||
Repayments of long-term debt | (334,684 | ) | (500 | ) | ||||
Payment of deferred financing costs | (10,781 | ) | (31 | ) | ||||
Repurchase under stock-based compensation plans and related tax impacts | (6 | ) | (7 | ) | ||||
Net cash provided by (used in) financing activities | 14,529 | (538 | ) | |||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 12,169 | (18,130 | ) | |||||
Cash, cash equivalents and restricted cash at beginning of period | 172,693 | 204,515 | ||||||
Cash, cash equivalents and restricted cash at end of period | $ | 184,862 | $ | 186,385 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid during the period: | ||||||||
Interest | $ | 3,613 | $ | 4,146 | ||||
Income taxes | 58 | 1 | ||||||
Non-cash investing and financing activities: | ||||||||
Non-cash preferred stock dividend | $ | 1,298 | $ | 1,301 | ||||
Shares issued for acquisition | 0 | 1,770 | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
Lindblad Expeditions Holdings, Inc.
Notes to the Unaudited 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 nineten owned expedition ships and five seasonal charter vessels under the Lindblad brand, operates land-based, eco-conscious expeditions and active nature focused tours under the Natural Habitat, Inc. (“Natural Habitat”) and Off the Beaten Path, LLC (“Off the Beaten Path”) brands, designs handcrafted walking tours under the Classic Journeys, LLC (“Classic Journeys”) brand and operates luxury cycling and adventure tours under the DuVine Cycling + Adventure Company (“DuVine”) brand.
The Company operates the following two reportable business segments:
Lindblad Segment.The Lindblad segment consists primarily ofprovides ship-based expeditions aboard customized, nimble and intimately-scaled vessels that are able to venture where larger cruise ships cannot, therebythus allowing Lindblad to offer up-close experiences in the planet’s wild and remote places and capitals of culture. ManyEach expedition ship is fully equipped with state-of-the-art tools for in-depth exploration and the majority of these expeditions involve travel to remote places with limited infrastructure and ports, such as Antarctica and the Arctic, or places that are best accessed by a ship, such as the Galápagos Islands, Alaska, Baja’sBaja California’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, LLC (“National Geographic”), which provides for lecturers and National Geographic experts, including photographers, writers, marine biologists, naturalists, field researchers and film crews, to join many of the Company’s expeditions.
Land Experiences Segment. The Land Experiences segment includes our threefour primarily land-based brands, Natural Habitat, DuVine, and Off the Beaten Path.Path and Classic Journeys.
● | Natural Habitat | |
● | DuVine | |
● | Off the Beaten Path | |
● | Classic Journeys offers highly curated active small-group and private custom journeys centered around cinematic walks focused on engaging experiences that immerse guests into the history and culture of the places they are exploring and the people who live there, led by expert local guides in over 50 countries around the world. Classic Journeys’ tours are highlighted by luxury boutique accommodations and handcrafted itineraries curated through years of local connections such as experiencing Tuscan farmhouse kitchens, exploring Minoan ruins in Crete, or eating and dancing around a Berber encampment campfire. |
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, 20202021 contained in the Company’s Annual Report on Form 10-K filed with the SEC on March 12, 2021February 28, 2022 (the “20202021 Annual Report”).
There have been no significant changes to the Company’s accounting policies from those disclosed in the 20202021 Annual Report.
Ramp of Fleet Operations and COVID-19 Business Update
During the first quarter of 2022 the Company continued to ramp up its operations, providing expeditions to guests on nine of its ten owned vessels including trips to Antarctica, Baja California’s Sea of Cortez, Bahamas, Belize, Costa Rica and Panama, and the Galápagos. Due to the spread of the COVID-19 virus and the effects of travel restrictions around the world, the Company hashad previously suspended or rescheduled the majority of its expeditions and trips departing between March 16, 2020 through May 31, 2021. Travel restrictions related to COVID-202119 have diminished dramatically and the Company continues to work with local authorities on plans to operate itineraries in additional geographies during 2022 and has been working2023. Where travel restrictions remain, which now also includes a limited number of itineraries impacted by the Russia-Ukraine conflict, the Company works with guests to reschedule travel plans and refund payments or issue future travel certificates, as applicable. The Company has announced plans to resume ship operations beginning June 2021 with expeditions to Alaska and the Galapagos and is working with local health authorities on plans to operate in additional geographies during the second half of the year. As the Company’s ships are currently not in operations, the majority of the fleet is 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. For those ships that are preparing to resume sailing, we have begun to increase crew levels as needed. In accordance with local regulations, the Company offices are closed, 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 continues to adhere to the comprehensive plan it implemented in March 2020 to mitigate the impact of COVID-19 and preserve and enhance its liquidity position. This plan employs a variety of cost reduction and cash preservation measures including significantly reducing ship and land-based expedition costs such as capital expenditures, crew payroll, land costs, fuel and food, and meaningfully reducing general and administrative expenses through reduced payroll and the elimination of all non-essential travel, office expenses and discretionary spending. The Company has also accessed available capital under existing debt facilities and through the issuance of preferred stock, while continuing to explore additional sources of capital and liquidity.
Return to Fleet Operations
The Company has announced plans to resume operations with vaccinated guests in Alaska and the Galapagos in June 2021 and is working with local health authorities on plans to operate in additional geographies during the second half of the year. The Company believes there are a variety of strategic advantages that enable it to deploy its ships safely and quickly, while mitigating the risk of COVID-19 as travel restrictions are lifted. The most notable is the size of its owned and operated vessels which range from 48 to 148 passengers, allowing for a highly controlled environment that includes stringent cleaning protocols. The small nature of the Company’s ships should also allowallows it to efficiently and effectively test its guests and crew prior to boarding.boarding, or as otherwise needed. Additionally, all guests age five and older, crew and staff are required to be fully vaccinated and the majority of expeditions take place in remote locations where human interactions are limited, so there is less opportunity for external influence.
Balance Sheet and Liquidity
As of March 31, 2021,2022, the Company had $163.9$154.8 million in unrestricted cash and $22.4$30.0 million in restricted cash primarily related to deposits on future travel originating from U.S. ports.ports and credit card reserves. As of March 31, 2021,2022, the Company had a total debt position of $498.4$584.1 million and was in compliance with all of its debt covenants. Following the quarter, in
On April 2021,February 4, 2022, the Company drew down an additional $15.5issued $360.0 million under its secondof 6.75% senior secured notes, maturing 2027, and entered into a new $45.0 million revolving credit agreement��facility, including a letter of credit sub-facility in conjunction with its fourth installment paymentan aggregate principal amount of up to $5.0 million. Proceeds from the senior secured note issuance were used primarily to pay the outstanding borrowings under the Company's prior credit agreement, including the term facility, Main Street Loan and the revolving credit facility. The senior secured notes are guaranteed on a senior secured basis by the National Geographic Resolution, scheduled for delivery inCompany and certain of the fourth quarterCompany’s subsidiaries and are collateralized by certain of 2021.the Company’s assets.
During the last twelve months, the Company has taken a variety of steps to strengthen its balance sheet and increase liquidity including:
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.
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.
During June 2020, the Company amended its export credit agreements to defer approximately $9.0 million in aggregate scheduled amortization payments from June 2020 through March 2021 and to suspend the total net leverage ratio covenant from June 2020 through June 2021.
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 was increased by 125bps, to be paid-in-kind at maturity, a LIBOR floor of 75bps has been added to the term loan 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 Redeemable Convertible Series A Preferred Stock that carries a 6% annual dividend, which is payable in kind for two years and, thereafter, in cash or in-kind at the Company’s option. The preferred stock is convertible into shares of Lindblad common stock at a conversion price of $9.50 per share, representing a premium of 23% to Lindblad’s 30-day trading volume weighted average price on the date of issuance.
During December 2020, the Company amended its term loan and revolving credit facilities and borrowed an incremental $85.0 million under the amended term loan facility through the Main Street Expanded Loan Facility program established by the Board of Governors of the Federal Reserve System. The incremental borrowing carries an interest rate of LIBOR plus 3.0%, without any LIBOR floor, and matures December 2025 with no early payment restrictions.
The Company estimates its current monthly cash usage 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. As the Company implements plans to resume operations, the monthly cash usage will increase as it incurs costs in preparation for returning ships to service, spends to market and advertise upcoming expeditions and reinstates furloughed and part-time office staff as needed. The Company also anticipates a significant increase in guest payments as it receives final payments for upcoming expeditions as well as deposits for new reservations for future travel.
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 pandemic 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 the actions taken to date by the Company, its planned and anticipated actions and its current forecast, the Company believes that it can meet its obligations for the next 12 months from April 30, 2021, the date of this Quarterly Report on Form 10-Q.
Valuation of Goodwill andTrademarks
The effects of the COVID-19 pandemic on the Company’s expected future operating cash flows was an indicator of potential impairment. As a result, the Company performed an analysis of its reporting units’ goodwill for potential impairment as of March 31, 2021. Based on this analysis, there was 0 impairment of goodwill.
Valuation of Long-lived Assets
The effects of COVID-19 on the Company’s expected future operating cash flows was a potential indicator that the carrying value of the Company's long-lived assets may not be recoverable. As a result, the Company performed an undiscounted cash flow analyses of its long-lived assets for potential impairment as of March 31, 2021. Based on this analysis, there was 0 impairment to the Company's long-lived assets.
Recently Adopted Accounting Pronouncements
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes. The amendments of this ASU are intended to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, and early adoption is permitted. The Company adopted this ASU as required, and it has not had, nor is it expected to have, a material impact to the Company’s financial statements.
Recent Accounting Pronouncements
In March 2020, the FASB issued ASU 2020-4, Reference Rate Reform (Topic 848)—Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The guidance of this ASU is designed to provide relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements (e.g., loans, debt securities, derivatives, borrowings) necessitated by reference rate reform. It also provides optional expedients to enable companies to continue to apply hedge accounting to certain hedging relationships impacted by reference rate reform. Application of the guidance is optional, is only available in certain situations, and is only available for companies to apply until December 31, 2022. The Company is currently reviewing its agreements impacted by the reference rate reform and does not expect this ASU to have a material impact to the Company’s financial statements.
In August 2020, the FASB issued ASU 2020-06, Debt–Debt with conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. The amendments in this ASU address issues identified as a result of the complexity associated with applying GAAP for certain financial instruments with characteristics of liabilities and equity. The amendments reduce the number of accounting models for convertible debt instruments and convertible preferred stock, and address convertible instruments with conversion features, as well as other items. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021, early adoption is permitted for fiscal years beginning after December 15, 2020, and must be adopted at the beginning of an entities’ fiscal year. The Company will adopt this ASU as required and does not expect it to have a material impact to the Company’s financial statements.
NOTE 2—EARNINGS PER SHARE
Earnings per Common Share
Earnings (loss) per common share is computed using the two-class method related to its Series A Redeemable Convertible Preferred Stock.Stock, par value of $0.0001 (“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 sharesthe Preferred Stock 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 and shares issuable upon the exercise of stock options, and previously outstanding warrants, using the treasury stock method, and the potential common shares that could be issued from conversion of the Preferred Stock, using the if-converted method. When a net loss occurs, potential common shares have an anti-dilutive effect on earnings per share and such shares are excluded from the diluted earnings per share calculation.
For the three months ended March 31, 20212022 and 2020,2021, the Company incurred a net loss from operations, therefore basic and diluted net loss per share are the same for the periods. As ofFor the three months ended March 31, 2021,2022, 0.9approximately 0.8 million restricted shares, 0.51.5 million shares issuable upon exercise of options and 9.3 million common shares issuable upon the conversion of the Preferred Stock were excluded from dilutive potential common shares for the periodperiods as they were anti-dilutive and basic and diluted net loss per share are the same for the period. As of March 31, 2020, 0.5 million restricted shares and 0.2 million options were excluded from dilutive potential common shares for the period as they were anti-dilutive.
For the three months ended March 31, 2021, 0.9 million restricted shares, 0.5 million shares issuable upon exercise of options and 9.3 million common shares issuable upon conversion of the Preferred Stock were excluded from dilutive potential common shares for the periods as they were anti-dilutive.
For the three months ended March 31, 2022 and 2020,2021, the Company calculated earnings (loss) per share as follows:
For the three months ended March 31, | For the three months ended March 31, | |||||||||||||||
2021 | 2020 | 2022 | 2021 | |||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
(In thousands, except share and per share data) | ||||||||||||||||
Net loss attributable to Lindblad Expeditions Holdings, Inc. | $ | (33,244 | ) | $ | (1,934 | ) | $ | (41,721 | ) | $ | (33,244 | ) | ||||
Series A redeemable convertible preferred stock dividend | 1,301 | 0 | 1,298 | 1,301 | ||||||||||||
Undistributed loss available to stockholders | $ | (34,545 | ) | $ | (1,934 | ) | $ | (43,019 | ) | $ | (34,545 | ) | ||||
Weighted average shares outstanding: | ||||||||||||||||
Total weighted average shares outstanding, basic | 49,865,234 | 49,625,127 | 50,757,126 | 49,865,234 | ||||||||||||
Total weighted average shares outstanding, diluted | 49,865,234 | 49,625,127 | 50,757,126 | 49,865,234 | ||||||||||||
Undistributed loss per share available to stockholders: | ||||||||||||||||
Basic | $ | (0.66 | ) | $ | (0.04 | ) | $ | (0.85 | ) | $ | (0.66 | ) | ||||
Diluted | $ | (0.66 | ) | $ | (0.04 | ) | $ | (0.85 | ) | $ | (0.66 | ) | ||||
NOTE 3—REVENUES
Customer Deposits and Contract Liabilities
The Company’s guests remit deposits in advance of tour embarkation. Guest deposits consist of guest ticket revenues as well as revenues from the sale of pre- and post-expedition excursions, hotel accommodations, land-based expeditions and air transportation to and from the ships. Guest deposits represent unearned revenues and are reported as unearned passenger revenues in the condensed consolidated balance sheets when received and are subsequently recognized as tour revenue over the duration of the trip. Accounting Standards Codification, Revenue from Contracts with Customers (Topic 606) defines a “contract liability” as an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration from the customer. The Company does not consider guest deposits to be a contract liability until the guest no longer has the right, resulting from the passage of time, to cancel their reservation and receive a full refund. In conjunction with the suspension or rescheduling of expeditions, the Company provided guests an option of either a refund or future travel certificates, which in some instances exceeded the original cash deposit. The Company has recorded liabilities up to the amount of cash deposits. The additional value of any future travel certificates are being recognized as a discount when applied to future expeditions. The change in contract liabilities within unearned passenger revenues presented in our condensed consolidated balance sheets are as follows:
Contract Liabilities | ||||
(In thousands) | ||||
Balance as of January 1, 2021 | $ | 73,267 | ||
Recognized in tour revenues during the period | (1,009 | ) | ||
Additional contract liabilities in period | 15,999 | |||
Balance as of March 31, 2021 | $ | 88,257 | ||
Contract Liabilities | ||||
(In thousands) | (unaudited) | |||
Balance as of December 31, 2021 | $ | 147,783 | ||
Recognized in tour revenues during the period | (66,112 | ) | ||
Additional contract liabilities in period | 64,017 | |||
Balance as of March 31, 2022 | $ | 145,688 | ||
The following table disaggregates our tour revenues by the sales channel it was derived from:
For the three months ended March 31, | For the three months ended March 31, | |||||||||||||||
2021 | 2020 | 2022 | 2021 | |||||||||||||
Guest ticket revenue: | (unaudited) | |||||||||||||||
| Direct | 57 | % | 41 | % | 45 | % | 57 | % | ||||||||
| National Geographic | 0 | % | 18 | % | 16 | % | 0 | % | ||||||||
| Agencies | 13 | % | 24 | % | 20 | % | 13 | % | ||||||||
| Affinity | 0 | % | 5 | % | 9 | % | 0 | % | ||||||||
Guest ticket revenue | 70 | % | 88 | % | 90 | % | 70 | % | ||||||||
| Other tour revenue | 30 | % | 12 | % | 10 | % | 30 | % | ||||||||
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:
For the three months ended March 31, | For the three months ended March 31, | |||||||||||||||
2021 | 2020 | 2022 | 2021 | |||||||||||||
| (In thousands) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
Cash and cash equivalents | $ | 163,939 | $ | 137,040 | $ | 154,816 | $ | 163,939 | ||||||||
Restricted cash | 22,446 | 22,791 | 30,046 | 22,446 | ||||||||||||
Total cash, cash equivalents and restricted cash as presented in the statement of cash flows | $ | 186,385 | $ | 159,831 | $ | 184,862 | $ | 186,385 | ||||||||
Restricted cash consistconsists of the following:
As of March 31, 2021 | As of December 31, 2020 | As of March 31, 2022 | As of December 31, 2021 | |||||||||||||
| (In thousands) | (unaudited) | (unaudited) | ||||||||||||||
Credit card processor reserves | $ | 13,894 | $ | 10,536 | ||||||||||||
Federal Maritime Commission escrow | $ | 16,924 | $ | 13,856 | 14,796 | 9,814 | ||||||||||
Certificates of deposit and other restricted securities | 1,345 | 1,183 | 1,356 | 1,590 | ||||||||||||
Credit card processor reserves | 4,177 | 1,945 | ||||||||||||||
Total restricted cash | $ | 22,446 | $ | 16,984 | $ | 30,046 | $ | 21,940 | ||||||||
The Company’sAs of March 31, 2022 and December 31, 2021, prepaid tour revenues of $20.6 million and $10.3 million, respectively, are the only items of prepaid expenses and other current assets consistin excess of the following:5% of current assets.
As of March 31, 2021 | As of December 31, 2020 | |||||||
| (In thousands) | (unaudited) | |||||||
Prepaid tour expenses | $ | 10,173 | $ | 5,630 | ||||
Prepaid marketing, commissions and other expenses | 3,792 | 3,504 | ||||||
Prepaid client insurance | 2,814 | 2,283 | ||||||
Prepaid air expense | 2,910 | 3,817 | ||||||
Prepaid port agent fees | 738 | 530 | ||||||
Prepaid corporate insurance | 563 | 1,105 | ||||||
Prepaid income taxes | 145 | 145 | ||||||
Total prepaid expenses | $ | 21,135 | $ | 17,014 | ||||
The Company’sAs of March 31, 2022 and December 31, 2021, accounts payable of $20.2 million and $9.7 million, respectively, are the only items of accounts payable and accrued expenses consistin excess of the following:5% of current liabilities.
As of March 31, 2021 | As of December 31, 2020 | |||||||
(unaudited) | ||||||||
(In thousands) | ||||||||
Accounts payable | $ | 6,729 | $ | 5,285 | ||||
Employee liability | 3,613 | 3,495 | ||||||
Accrued other expense | 4,418 | 5,645 | ||||||
Bonus compensation liability | �� | 1,445 | 2,963 | |||||
Foreign currency forward contract liability | 1,782 | 2,008 | ||||||
Refunds and commissions payable | 1,400 | 1,803 | ||||||
Travel certificate liability | 870 | 870 | ||||||
Accrued travel insurance expense | 270 | 270 | ||||||
Income tax liabilities | 2 | 2 | ||||||
Total accounts payable and accrued expenses | $ | 20,529 | $ | 22,341 | ||||
In 2021, the Company received a $27.0 million grant under the CERTS Act, which provided grants to eligible motorcoach, school bus, passenger vessel, and pilotage companies that have experienced annual revenue losses of 25 percent or more as result of COVID-19. The priority use of grant funds was required to be for payroll costs, though grants could be used for operating expenses and the repayment of debt accrued to maintain payroll. The Company accounted for the grant as a current liability on its balance sheet, as any amounts not appropriately used within one year of the grant date would have to be returned to the U.S. Treasury and recognized the grant in other income on the income statement as permitted expenses for the grant were incurred. During the three months ended March 31, 2022, the Company recognized $11.6 million of the CERTS grant in other income for permitted payroll costs and ship operating expenses.
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 March 31, 2022. 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 0 allowance for loan loss for the three months ended March 31, 2022. The following is a rollforward of the loan receivable balance:
For the three months ended March 31, 2021 | Loan Receivable | |||||||
(In thousands) | (unaudited) | (unaudited) | ||||||
Balance as of January 1, 2021 | $ | 4,220 | ||||||
| Adjustment for ship building expense | (390 | ) | ||||||
Balance as of December 31, 2021 | $ | 3,964 | ||||||
Accrued interest | 36 | 35 | ||||||
Amortization of deferred costs | (6 | ) | (9 | ) | ||||
Balance as of March 31, 2021 | $ | 3,860 | ||||||
Balance as of March 31, 2022 | $ | 3,990 | ||||||
NOTE 5—LONG-TERM DEBT
As of March 31, 2022 | As of December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
As of March 31, 2021 | As of December 31, 2020 | (unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | Principal | Deferred Financing Costs, net | Balance | Principal | Deferred Financing Costs, net | Balance | Principal | Deferred Financing Costs, net | Balance | Principal | Deferred Financing Costs, net | Balance | ||||||||||||||||||||||||||||||||||||
6.75% Notes | $ | 360,000 | (10,447 | ) | $ | 349,553 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||||||||||||||||||||
First Export Credit Agreement | 104,470 | (2,025 | ) | 102,445 | 107,695 | (2,090 | ) | 105,605 | ||||||||||||||||||||||||||||||||||||||||
Second Export Credit Agreement | 117,722 | (2,407 | ) | 115,315 | 120,281 | (2,473 | ) | 117,808 | ||||||||||||||||||||||||||||||||||||||||
Note payable | $ | 1,684 | $ | 0 | $ | 1,684 | $ | 1,684 | $ | 0 | $ | 1,684 | 842 | 0 | 842 | 842 | 0 | 842 | ||||||||||||||||||||||||||||||
Other | 1,016 | 0 | 1,016 | 1,034 | 0 | 1,034 | ||||||||||||||||||||||||||||||||||||||||||
Credit Facility | 0 | 0 | 0 | 284,170 | (9,050 | ) | 275,120 | |||||||||||||||||||||||||||||||||||||||||
Revolving Facility | 45,000 | (303 | ) | 44,697 | 45,000 | (341 | ) | 44,659 | 0 | 0 | 0 | 44,500 | (190 | ) | 44,310 | |||||||||||||||||||||||||||||||||
Credit Facility | 281,796 | (9,138 | ) | 272,658 | 280,993 | (9,492 | ) | 271,501 | ||||||||||||||||||||||||||||||||||||||||
1st Senior Secured Credit Agreement | 107,695 | (1,734 | ) | 105,961 | 107,695 | (1,784 | ) | 105,911 | ||||||||||||||||||||||||||||||||||||||||
2nd Senior Secured Credit Agreement | 61,120 | (2,046 | ) | 59,074 | 61,120 | (2,261 | ) | 58,859 | ||||||||||||||||||||||||||||||||||||||||
| Other | 1,081 | 0 | 1,081 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||
Total long-term debt | 498,376 | (13,221 | ) | 485,155 | 496,492 | (13,878 | ) | 482,614 | 584,050 | (14,879 | ) | 569,171 | 558,522 | (13,803 | ) | 544,719 | ||||||||||||||||||||||||||||||||
Less current portion | (14,128 | ) | 0 | (14,128 | ) | (11,255 | ) | 0 | (11,255 | ) | (24,072 | ) | 0 | (24,072 | ) | (26,061 | ) | 0 | (26,061 | ) | ||||||||||||||||||||||||||||
Total long-term debt, non-current | $ | 484,248 | $ | (13,221 | ) | $ | 471,027 | $ | 485,237 | $ | (13,878 | ) | $ | 471,359 | $ | 559,978 | $ | (14,879 | ) | $ | 545,099 | $ | 532,461 | $ | (13,803 | ) | $ | 518,658 | ||||||||||||||||||||
For the three months ended March 31, 20212022 and 2020,2021, deferred financing costs charged to interest expense were $0.7was $0.5 million and $0.5$0.8 million, respectively. During the three months ended March 31, 2022, $9.0 million of deferred financing costs related to the repayment of the Company’s prior credit agreement, including the term facility, Main Street Loan and revolving credit facility were written-off to other expense.
6.75% Notes
On February 4, 2022, the Company issued $360.0 million aggregate principal amount of 6.75% senior secured notes due 2027 (the “Notes”) in a private offering. The Notes bear interest at a rate of 6.75% per year, accruing from February 4, 2022 and interest on the Notes is payable semiannually in arrears on February 15 and August 15 of each year, beginning on August 15, 2022. The Notes will mature on February 15, 2027, subject to earlier repurchase or redemption. The Company used the net proceeds from the offering to prepay in full all outstanding borrowings under its prior credit agreement, including the term facility, Main Street Loan, and revolving credit facility, to pay any related premiums and to terminate in full its prior credit agreement and the commitments thereunder. The Notes are senior secured obligations of the Company and are guaranteed on a senior secured basis by the Company and certain of the Company’s subsidiaries (collectively, the “Guarantors”) and secured by first-priority pari passu liens, subject to permitted liens and certain exceptions, on substantially all the assets of the Company and the Guarantors. The Notes may be redeemed by the Company, at set redemption prices and premiums, plus accrued and unpaid interest, if any.
The Notes contain covenants that, among other things, restrict the Company’s ability, and the ability of the Company’s restricted subsidiaries, to incur certain additional indebtedness and issue preferred stock and make certain dividend payments, distributions, investments and other restricted payments. These covenants are subject to a number of important exceptions and qualifications set forth in the Notes.
New Revolving Credit Facility
InOn March 2018,February 4, 2022, the Company entered into the Third Amended and Restated Credit Agreement (the “Amended Credit Agreement”) providing for a $200.0 million senior secured term facility (the “Term Facility”), maturing March 2025, and a $45.0 millionnew senior secured revolving credit facility (the “Revolving“New Revolving Credit Facility”), which provides for an aggregate principal amount of commitments of $45.0 million, maturing March 2023,February 2027, which includesincluding a $5.0 million letter of credit sub-facility. In March 2020, sub-facility in an aggregate principal amount of up to $5.0 million. The obligations under the New Revolving Credit Facility are guaranteed by the Company drew $45.0 million againstand the Revolving Facility as a reserve for general corporate purposesGuarantors and other expense needs dueare secured by first-priority pari passu liens, subject to permitted liens and certain exceptions, on substantially all the uncertainty related to the COVID-19 pandemic.
In August 2020, assets of the Company amended the Amended Credit Agreement to waive the application of the total net leverage ratio covenant through June 2021. In connection with the amendment, the interest rate of the Term Facility was increased 125 basis points, to be paid-in-kind at maturity, a LIBOR minimum of 0.75% was added to the Term Facility and certain covenants were amended to be more restrictive.
In December 2020, the Company amended the Amended Credit Agreement to provide for the borrowing of a new tranche of incremental term loans under the Amended Credit Agreement in an amount of $85.0 million, maturing December 2025, made under the Main Street Expanded Loan Facility (the “Main Street Loan”). Interest on the Main Street Loan shall be paid-in-kind for the first year and the principal shall amortize at a rate of 15% in each of the third and fourth years, with the remaining amounts to be paid at maturity. The Company may voluntarily prepay the Main Street Loan at any time and from time to time, without premium or penalty, other than customary “breakage costs” and fees for LIBOR-based loans.
The Term Facility, as amended, bears interest at an adjusted Intercontinental Exchange (“ICE”) Benchmark administration LIBOR with a minimum of 0.75%, plus a spread of 4.75%, for an aggregated rate of 5.50% as of December 31, 2020. 125 basis points of the spread are to be paid-in-kind at maturity.Guarantors. Borrowings under the New Revolving Credit Facility, as amended, bears interest at an adjusted ICE Benchmark administration LIBOR, plus a spread of 3.00%, for an aggregated rate of 3.12% as of March 31, 2020. The Main Street Loan bearsif any, will bear interest at a rate per annum equal to, at the Company’s option, an adjusted ICE Benchmark administration LIBOR for an interest periodSecured Overnight Financing Rate (“SOFR”) rate plus a spread or a base rate plus a spread.
The New Revolving Credit Facility contains customary affirmative and negative covenants, as well as financial covenants and event of 3-months plus 3.00%, for an aggregated rate of 3.20% as of March 31, 2021. default provisions.
Senior Secured Credit Agreement
In January 2018, the Company entered into a senior secured credit agreement (the “Export“First Export Credit Agreement”) with Citibank, N.A., London Branch and Eksportkreditt Norge AS, to makemaking 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. , delivered in March 2020. During March 2020,June 2021, the Company took possession of the National Geographic Endurance and borrowed $107.7 million under theamended its First Export Credit Agreement for final payment.to, among other things, extend the deferral of scheduled amortization payments through December 2021 in the aggregate amount of $15.7 million, extend the waiver of its total net leverage ratio covenants through March 31, 2022, increase the interest rate spread by 50 basis points and annualize EBITDA used in its covenant calculation through December 31, 2022. The deferred principal payments began amortizing quarterly over three years starting March 2022. Certain other covenants continue to be more restrictive during the extended covenant waiver period. The First Export Credit Agreement, as amended, bears interest at a floatingvariable interest rate equal to three-month LIBOR plus a margin of 3.00%3.50% per annum, for an aggregated rate of 3.18% as of4.33% over the borrowing period covering March 31, 2021.2022.
In April 2019, the Company entered into a senior secured credit agreement (the “Second Export Credit Agreement”) with Citibank, N.A., London Branch and Eksportkreditt Norge AS, to make available to the Company at the Company's option and subject to certain conditions, a loan in an aggregate principal amount not to exceed $122.8 million for the purpose of providing pre- and post-delivery financing for up to 80% of the purchase price of the Company’s new expedition ice-class cruise vessel, the National Geographic Resolution, scheduled to be delivered in the fourth quarter of 2021. In September 2019, April 20202021 and borrowed $122.8 million under the Second Export Credit Agreement. During AprilJune 2021, the Company drew approximately $30.5 million, $30.6 million and $15.5 million, respectively, against theamended its Second Export Credit Agreement for contracted installment payments onto, among other things, extend the National Geographic Resolution.waiver of its total net leverage ratio covenants through March 31, 2022, increase the interest rate spread by 50 basis points and annualize EBITDA used in its covenant calculation through December 31, 2022. Certain other covenants continue to be more restrictive during the extended covenant waiver period. The Second Export Credit Agreement, as amended, bears a variable interest rate equal to three-month LIBOR plus a margin of 3.00%3.50% per annum, or 3.19% asfor an aggregated rate of 4.43% over the borrowing period covering March 31, 2021. After completion of the vessel, the Second Export Credit Agreement, at the Company’s option, will bear an interest rate of either a fixed rate of 6.36% or a variable rate equal to three-month LIBOR plus a margin of 3.00% per annum.
In 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 2021.2022.
Notes Payable
In connection with the Natural Habitat acquisition in May 2016, Natural Habitat issued a $2.5 million unsecured promissory note, amended in May 2020, to Benjamin L. Bressler, the founder of Natural Habitat, with an outstanding principal amount of $1.7$0.8 million as of March 31, 2021.2022. The promissory note accrues interest at a rate of 1.44% annually, with interest payable every six months and the remaining principal payments to bepayment due in equal installments on December 22, 20212022.
Other
The Company’s Off the Beaten Path subsidiary has a loan maturing June 2023 for the purchase of guest transportation vehicles. The loan’s original principal was $0.3 million, is collateralized by the vehicles and bears an interest rate of 4.77% annually.
The Company’s Off the Beaten Path subsidiary has a $0.8 million loan under the Main Street Expanded Loan Facility, originated on December 11, 2020. For the first12 months, interest is not payable and accrued to the principal balance, thereafter, monthly interest payments are required. The outstanding balance will amortize at a rate of 15% on both December 2023 and December 2024, with the remaining balance due December 2025. The loan bears a variable interest rate equal to one-month LIBOR plus a spread of 3.00%, or 3.45% as of March 31, 2022.This loan may be voluntarily prepaid at any time and from time to time, without premium or penalty, other than customary “breakage costs” and fees for LIBOR-based loans.
The Company’s DuVine subsidiary has a EUR 0.1 million State Assistance Loan related to the financial consequences of the COVID-19 pandemic, for the purpose of employment preservation. This loan matures August 2025, with monthly payments, and bears an interest rate of 0.53% annually.
Covenants
The Company’s AmendedNotes, New Revolving Credit Agreement,Facility, First Export Credit Agreement and Second Export Credit Agreement contain financial and restrictive covenants that include among others, net leverage ratios, limits on additional indebtedness and limits on certain investments. As of March 31, 2021,2022, the net leverage ratio covenant of the Company’s AmendedFirst Export Credit Agreement hasand Second Export Credit Agreement have been waived through June 2021. waived. The Company was in compliance with its covenants in effect as of March 31, 2021.2022.
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 forward 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 economically hedges a portion of its current-year currency exposure 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 12 — 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 usespreviously used interest rate caps designated as cash flow hedges, to manage the risk related to its floatingpreviously existing variable rate corporate debt.
The Company recordsrecorded the effective portion of changes in the fair value of its cash flow hedges to other comprehensive income (loss), net of tax, and subsequently reclassifiesreclassified these amounts into earnings in the period during which the hedged transaction iswas 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 andThe Company reclassified $0.6 million from other comprehensive income (loss) to earnings for the period ended March 31, 2021.2022, The Company estimates that approximately $1.8 million of losses currently recorded in accumulated other comprehensive income (loss) will be recognized in earnings over the next 12 months due to maturitythe termination of thea cash flow hedge relationship between the Company’s interest rate caps and the hedged item. The Company will continue to assess the effectiveness of the hedges on an ongoing basis.Company’s underlying corporate variable rate debt, which was repaid during February 2022.
The Company held the following derivative instruments with absolute notional values as of March 31, 2021:2022:
(in thousands) | Absolute Notional Value | |||||||
(In thousands) | Absolute Notional Value | |||||||
Interest rate caps | $ | 100,000 | $ | 100,000 | ||||
Foreign exchange contracts | 83,516 | 8,892 | ||||||
Estimated fair values (Level 2) of derivative instruments were as follows:
As of March 31, 2021 | As of December 31, 2020 | As of March 31, 2022 | As of December 31, 2021 | |||||||||||||||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||||||||||||||||
(In thousands) | Fair Value, Asset Derivatives | Fair Value, Liability Derivatives | Fair Value, Asset Derivatives | Fair Value, Liability Derivatives | 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 | $ | 1,782 | $ | 0 | $ | 2,008 | ||||||||||||||||||||||||
Interest rate cap (a) | $ | 0 | $ | 0 | $ | 9 | $ | 0 | ||||||||||||||||||||||||
Total | $ | 0 | $ | 1,782 | $ | 0 | $ | 2,008 | $ | 0 | $ | 0 | $ | 9 | $ | 0 | ||||||||||||||||
Derivative instruments not designated as cash flow hedging instruments: | ||||||||||||||||||||||||||||||||
Interest rate cap (a) | $ | 192 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||||||||
Foreign exchange forward (b) | $ | 1,023 | $ | 0 | $ | 953 | $ | 0 | 794 | 0 | 664 | 0 | ||||||||||||||||||||
Total | $ | 1,023 | $ | 0 | $ | 953 | $ | 0 | $ | 986 | $ | 0 | $ | 664 | $ | 0 | ||||||||||||||||
(a) | Recorded in | |
(b) | Recorded in prepaid expenses and other current assets. |
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.
income. The effects of derivatives recognized in the Company’s condensed consolidated financial statements were as follows:
For the three months ended March 31, | ||||||||||||||||
(unaudited) | For the three months ended March 31, | |||||||||||||||
(In thousands) | 2021 | 2020 | 2022 | 2021 | ||||||||||||
| (unaudited) | ||||||||||||||||
Derivative instruments designated as cash flow hedging instruments: | ||||||||||||||||
Foreign exchange forward (a) | $ | (417 | ) | $ | 13,277 | |||||||||||
Interest rate cap (a) | (77 | ) | 122 | $ | 0 | $ | (77 | ) | ||||||||
Foreign exchange forward (b) | 0 | (417 | ) | |||||||||||||
Derivative instruments not designated as cash flow hedging instruments: | ||||||||||||||||
Foreign exchange forward (b) | (70 | ) | (3,443 | ) | ||||||||||||
Interest rate cap (a) | (451 | ) | 0 | |||||||||||||
Foreign exchange forward (c) | 130 | (70 | ) | |||||||||||||
Total | $ | (564 | ) | $ | 9,956 | $ | (321 | ) | $ | (564 | ) | |||||
(a) |
| |
(b) | For the three months ended March 31, 2021, $0.4 million was 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 months ended March 31, |
Fair Value MeasurementsIn connection with the acquisition of Classic Journeys, the purchase agreement includes a contingent consideration earnout, see Note 11—Acquisitions, which is required to be recorded at fair value at each period. The possible contingent acquisition consideration earnout is either 0 or $0.6 million, depending on the achievement of certain average annual net profits targets for the years ended December 31, 2022 and 2023 by the acquired operation. As of March 31, 2022, the contingent liability had a value of $0.2 million using a Level 3 valuation method, which was recorded in other long-term liabilities.
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 agreements were comparable to the market as of March 31, 2021.2022. As of March 31, 20212022 and December 31, 2020,2021, the Company had no other significant liabilities that were measured at fair value on a recurring basis.
NOTE 7—STOCKHOLDERS’ EQUITY
Stock and Warrant Repurchase Plan
The Company’s Board of Directors approved a stock and warrant repurchase plan (“Repurchase Plan”) in November 2015 and increased the repurchase plan to $35.0 million in November 2016. The Repurchase Plan authorizes the Company to purchase, from time to time, the Company’s outstanding common stock and previously outstanding warrants. Any shares purchased will be retired. The Repurchase Plan has no time deadline and will continue until otherwise modified or terminated at the sole discretion of the Company’s Board of Directors. These repurchases exclude shares repurchased to settle statutory employee tax withholding related to the exercise of stock options and vesting of stock awards. All repurchases were made using cash resources. In March 2020, the Repurchase Plan was suspended due to the uncertain impact of the COVID-19 pandemic and our borrowings throughit remains suspended due to restrictions related to the Main Street Expanded Loan Facility program places restrictions on stock repurchases.program. The Company has cumulatively repurchased 875,218 shares of common stock for $8.3 million and 6,011,926 warrants for $14.7 million, since plan inception. The remaining balance for the Repurchase Plan was $12.0 million as of March 31, 2021.2022.
Preferred Stock
OnIn 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. During the year ended December 31, 2021, 5,000 shares of Preferred Stock and related accumulated dividends were converted by the holder into 566,364 shares of the Company’s common stock. 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 Preferred Stock is convertible at any time, at the holder’s election, into a 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.price of $9.50. The Preferred Stock deferred issuance costs waswere approximately $2.9$2.7 million as of March 31, 2022. The Company recorded accrued dividends for Preferred Stock of $1.3 million for the three months ended March 31, 2022 and 2021. As of March 31, 2022, the 80,000 shares of Preferred Stock could be converted at the option of the holders into approximately 9.3 million shares of the Company’s common stock.
NOTE 8—STOCK BASED COMPENSATION
The Company is authorized to issue up to 2.54.7 million shares of common stock under the 20152021 Long-Term Incentive Plan to key employees, and as(“the Plan”) which was approved by shareholders in June 2021. As of March 31, 2021,2022, approximately 0.13.6 million shares were available to be granted. The Company has proposed a new long-term incentive plan for approval atgranted under the 2021 annual meeting. Plan.
As of March 31, 20212022 and December 31, 2020,2021, options to purchase an aggregate of 510,0001.5 million and 1.5 million shares of the Company’s common stock, respectively, with a weighted average exercise price of $14.37 and $10.30, respectively, were outstanding. As of March 31, 2021,2022, 200,000265,500 options were exercisable.
The Company recorded stock-based compensation expense of $1.6 million and $0.9$1.8 million during the three months ended March 31, 20212022, and $1.6 million during the 2020,three respectively.months ended March 31, 2021.
20212022Long-Term Incentive Compensation
During the three months ended March 31, 2021,2022, the Company granted 109,921212,066 restricted stock units ("RSUs") with a weighted average grant price of $18.74.$15.27. The RSUs will primarily vest equally over three years on the anniversary of the grant date, subject to the recipient’s continued employment or service with the Company on the applicable vesting date. The number of shares were determined based upon the closing price of our common stock on the date of the award.
During the three months ended March 31, 2021,2022, the Company awarded 50,07256,209 market performance share units (“MSUs”) with a weighted average grant price of $18.90.$15.08. 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, 2024.2025. The number of shares that will eventually be earned and vest may be more or less thenthan the number of MSUs that are awarded, depending on the Company's common stock price, at a level ranging from 0% to 150%. The number of MSUs earned shall be determined and shall vest on March 31, 2024.2025.
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$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.
Other
Mr. Lawrence, President of Off the Beaten Path, was issued 1,007 profit interest units in the equity of Off the Beaten Path as part of the overall acquisition structure. The profit interest units had a $132.86 per share grant date fair value and are considered vested upon issuance. The Company recorded $0.1 million in stock-based compensation expense related to the value of these profit units for the three months ended March 31, 2021.
NOTE 9—RELATED PARTY TRANSACTIONS
In May 2016, in connection with the Company's acquisition of Natural Habitat, Natural Habitat issued an unsecured promissory note, amended May 2020, to Mr. Bressler, the founder of Natural Habitat. See Note 55—Long — Long-term-term Debt for more information.
NOTE 10—INCOME TAXES
Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The measurement of net deferred tax assets is reduced by the amount of any tax benefit that, based on available evidence, is not expected to be realized, and a corresponding valuation allowance is established. The determination of the required valuation allowance against net deferred tax assets was made without taking into account the deferred tax liabilities created from the book and tax differences on indefinite-lived assets.
The Company accounts for income taxes using the asset and liability method, under which it recognizes deferred income taxes for the tax consequences attributable to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities, as well as for tax loss carryforwards and tax credit carryforwards. The Company measures deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recoverable or settled. The Company recognizes the effect on deferred taxes of a change in tax rates in income in the period that includes the enactment date. The Company provides a valuation allowance against deferred tax assets if, based upon the weight of available evidence, the Company does not believe it is “more-likely-than-not” that some or all of the deferred tax assets will be realized. The Company will continue to evaluate the deferred tax asset valuation allowance balances in all of our foreign and U.S. companies to determine the appropriate level of valuation allowances.
The Company is subject to income taxes in both the U.S. and the non-U.S. jurisdictions in which it operates. The Company regularly assesses the potential outcome of current and future examinations in each of the taxing jurisdictions when determining the adequacy of the provision for income taxes. The Company has only recorded financial statement benefits for tax positions which it believes reflect the “more-likely-than-not” criteria of FASB’s authoritative guidance on accounting for uncertainty in income taxes, and it has established income tax reserves in accordance with this guidance where necessary. Once a financial statement benefit for a tax position is recorded or a tax reserve is established, the Company adjusts it only when there is more information available or when an event occurs necessitating a change. While the Company believes that the amount of the recorded financial statement benefits and tax reserves reflect the more-likely-than-not criteria, it is possible that the ultimate outcome of current or future examinations may result in a reduction to the tax benefits previously recorded on its condensed consolidated financial statements or may exceed the current income tax reserves in amounts that could be material. As of March 31, 2021,2022, and December 31, 2020,2021, the Company had a liability for0 unrecognized tax benefits of $0.0 million.recorded. The Company’s policy is to record interest and penalties on uncertain tax positions as a component of income tax expense. During the three months ended March 31, 2021 and 2020, interest and penalties related to uncertain tax positions included in income tax expense are not significant. The Company's effective tax rate for the three months ended March 31, 20212022 was a benefit of 7.6%0.4% versus a benefit of 42.5%7.6% for the three months ended March 31, 2020,2021, primarily due to the timing of losses inexpected results for 2022 compared to the first quarter and the expected amount of income for the full year 2021 as compared to 2020 due to the impact of the COVID-19 pandemic on the Company's operations.
The Company is subject to tax audits in all jurisdictions for which it files tax returns. Tax audits by their very nature are often complex and can require several years to complete. Currently, there are no U.S. federal, state or foreign jurisdiction tax audits pending. The Company’s corporate U.S. federal and state tax returns for the current year and three prior years remain subject to examination by tax authorities and the Company’s foreign tax returns for the current year and four prior years remain subject to examination by tax authorities.
NOTE 11—ACQUISITIONS
To further expand the Company’s land-based experiential travel offerings and increase its addressable market, onthe Company completed three acquisitions during 2021. On February 1, 2021,the Company acquired through its Natural Habitat subsidiary, 90.1%80.1% of the outstanding common stock of Off the Beaten Path, LLC, a land-based travel operator specializing in authentic national park experiences, and on March 3, 2021, the Company acquired 70% of the outstanding common stock of DuVine, Cycling + Adventure LLC, an international luxury cycling and adventure company focused on exceptional food and wine experiences.experiences, and on October 13, 2021, the Company acquired 80.1% of Classic Journeys, a leading luxury walking tour company.
The acquisitions had an aggregate purchase price of $10.6$23.6 million, including $1.8 million in Company stock at closing.and $0.2 million in deferred contingent consideration. The deferred contingent consideration has an earnout potential between 0 and $0.6 million. The acquisitions were accounted for under purchase accounting and are included in ourthe Company's consolidated results fromfinancial statements since the acquisition dates. Acquisition related cost were approximately $0.4 million and are included in general and administrative expenses in the condensed consolidated statements of operations for the three months ended March 31, 2021. The financial resultsdate of the acquired businesses are immaterial to the Company's financial statements individually or in aggregate. The purchase accounting valuations for the acquisitions are ongoing and have not been completed as of this report date and is subject to change as third-party valuations are finalized.acquisitions. The Company preliminarily recorded approximately $6.5$10.4 million in intangible assets related to tradenames and customer lists and approximately $11.5$19.9 million in goodwill related to these acquisitions. The revenue and operating income contributed by the acquisitions during the three months ended March 31, 2021 were immaterial. Following are the pro forma revenue and net loss available to stockholdersamount recorded for the three months ended March 31, 2021 intangible assets and 2020, hadgoodwill is subject to possible adjustment when the Company had completed the acquisitions on January 1, 2020. valuation of Classic Journeys is finalized.
| For the three months ended March 31, | ||||||||
| 2021 | 2020 | |||||||
(in thousands) | (unaudited) | |||||||
| Revenue | $ | 1,833 | $ | 82,764 | ||||
| Net loss available to stockholders | (34,848 | ) | (2,774 | ) | ||||
NOTE 12—COMMITMENTS AND CONTINGENCIES
Fleet ExpansionRedeemable Non-Controlling Interest
In February 2019, The Company has controlling interests in its Natural Habitat, Off 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.Beaten Path, DuVine and Classic Journeys consolidated subsidiaries. The purchase price isnoncontrolling interests are 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% paid in April 2021. The final 30% is due upon delivery and acceptance of the vessel. In December 2019, the Company and Ulstein Verft amended the National Geographic Resolution construction agreement, providing for an expedited delivery schedule for the vessel and a loan agreement for which all or a portion may be considered as a delivery bonus and forgiven, as determined by the expedited delivery schedule per the agreement. The vessel is scheduled to be delivered in the fourth quarter of 2021.
Redeemable Non-Controlling Interest
Mr. Bressler, founder of Natural Habitat, retains a 19.9% noncontrolling interest in Natural Habitat, which is subject to a put/call arrangement, amended inagreements. The put options enable the minority holders, but do May 2020. notThe arrangement between obligate them, to sell the Company and Mr. Bressler was established in orderremaining interests to provide a formal exit opportunity for Mr. Bressler and a path to 100% ownership for the Company. Mr. BresslerThe Company has a put option that under certain conditions, and subject to providing notice by January 31, 2024, that enables him,call options which enable it, but does not obligate him,it, to sell hisacquire the remaining interestinterests 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,subsidiaries, subject to a callcertain dates, expirations and similar redemption value purchase price minimum.measurements as the put options.
Mr. Lawrence, in a combination
Since the redemption of the noncontrolling interests are not solely in the Company’s control, the Company is required to record the redeemable noncontrolling interest outside of stockholders’ equity but after its total liabilities. In addition, if it is probable that the instrument will become redeemable, as such solely due to the passage of time, the redeemable noncontrollable interest should be adjusted to the redemption value via one of two measurement methods. The Company elected the income classification-excess adjustment and accretion methods for recognizing changes in the redemption value of the put options. Under this methodology, a calculation of the present value of the redemption value is compared to the carrying value of the redeemable noncontrolling interest and the carrying value of the redeemable noncontrolling interest is adjusted to the redemption value’s present value. Any adjustments to the carrying value of the redeemable noncontrolling interest, up to the fairredemption value of the noncontrolling interest, are classified to retained earnings. Adjustments in excess of the fairredemption value of the noncontrolling interest, are treated as a decrease to net income available to common stockholders.
The fairredemption value of the put options were determined using a discounted cash flow model. The redemption values were adjusted to their present value using the Company’s weighted average cost of capital.
The following is a rollforward of redeemable non-controlling interest:
For the three months ended March 31, | For the three months ended March 31, | |||||||||||||||
(In thousands) | 2021 | 2020 | 2022 | 2021 | ||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
Beginning balance | $ | 7,494 | $ | 16,112 | $ | 10,626 | $ | 7,494 | ||||||||
Net loss attributable to noncontrolling interest | (619 | ) | (537 | ) | (427 | ) | (619 | ) | ||||||||
| Acquired businesses' noncontrolling interest | 3,598 | 0 | 0 | 3,598 | ||||||||||||
Fair value adjustment of put option | 0 | 901 | ||||||||||||||
Balance March 31, | $ | 10,473 | $ | 16,476 | ||||||||||||
Redemption value adjustment of put option | 4,259 | 0 | ||||||||||||||
Ending balance | $ | 14,458 | $ | 10,473 | ||||||||||||
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 amountfee 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 months ended March 31, 20212022 was $1.2 million and2020 was $0.0 million and $1.2 million, respectively.for the three months ended March 31, 2021.
The royalty balancesbalance payable to National Geographic as of March 31, 20212022 and December 31, 20202021 were each $0.0 million. If there were any royalty balances they would have beenwas $1.5 and $0.9 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 $0.0$0.2 million and $0.2$0.0 million for the three months ended March 31, 20212022 and 2020,2021, respectively.
Charter Commitments
From time to time, the Company enters into agreements to charter vessels onto which it holds its tours and expeditions. Future minimum payments on its charter agreements as of March 31, 20212022 are as follows:
For the years ended December 31, | Amount | |||
(In thousands) | ||||
2021 | $ | 5,421 | ||
2022 | 3,984 | |||
Total | $ | 9,405 | ||
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.
For the years ended December 31, | Amount | |||
(In thousands) | (unaudited) | |||
2022 (nine months) | $ | 8,178 | ||
2023 | 10,156 | |||
Total | $ | 18,334 | ||
NOTE 13—SEGMENT INFORMATION
The Company is primarily a specialty cruise and experiential travel operator with operations in two2 reportable segments, Lindblad and Land Experiences. The Company evaluates the performance of the business based largely on the results of its operating segments. The chief operating decision maker and management review operating results monthly, and base operating decisions on the total results at a consolidated level, as well as at a segment level. The reports provided to the Board of Directors are at a consolidated level and also contain information regarding the separate results of both segments. While both segments have similar characteristics, the two operating and reporting segments cannot be aggregated because they fail to meet the requirements for aggregation.
The Company evaluates the performance of its business segments based largely on tour revenues and operating income, without allocating other income and expenses, net, income taxes and interest expense, net. For the three months ended March 31, 20212022 and 2020,2021, operating results for the Company’s reportable segments were as follows:
For the three months ended March 31, | For the three months ended March 31, | |||||||||||||||||||||||||||||||
2021 | 2020 | Change | % | 2022 | 2021 | Change | % | |||||||||||||||||||||||||
| (In thousands) | (unaudited) | (unaudited) | ||||||||||||||||||||||||||||||
Tour revenues: | ||||||||||||||||||||||||||||||||
Lindblad | $ | 484 | $ | 69,539 | $ | (69,055 | ) | (99 | %) | $ | 50,274 | $ | 484 | $ | 49,790 | NM | ||||||||||||||||
Land Experiences | 1,296 | 11,699 | (10,403 | ) | (89 | %) | 17,572 | 1,296 | 16,276 | NM | ||||||||||||||||||||||
Total tour revenues | $ | 1,780 | $ | 81,238 | $ | (79,458 | ) | (98 | %) | $ | 67,846 | $ | 1,780 | $ | 66,066 | NM | ||||||||||||||||
Operating (loss) income: | ||||||||||||||||||||||||||||||||
Operating loss: | ||||||||||||||||||||||||||||||||
Lindblad | $ | (27,296 | ) | $ | 2,189 | $ | (29,485 | ) | NM | $ | (33,569 | ) | $ | (27,296 | ) | $ | (6,273 | ) | (23 | )% | ||||||||||||
Land Experiences | (3,770 | ) | 62 | (3,832 | ) | NM | (676 | ) | (3,770 | ) | 3,094 | 82 | % | |||||||||||||||||||
Total operating (loss) income | $ | (31,066 | ) | $ | 2,251 | $ | (33,317 | ) | NM | |||||||||||||||||||||||
Total operating loss | $ | (34,245 | ) | $ | (31,066 | ) | $ | (3,179 | ) | (10 | )% | |||||||||||||||||||||
Depreciation and amortization are included in segment operating income as shown below:
For the three months ended March 31, | For the three months ended March 31, | |||||||||||||||||||||||||||||||
2021 | 2020 | Change | % | 2022 | 2021 | Change | % | |||||||||||||||||||||||||
| (In thousands) | (unaudited) | (unaudited) | ||||||||||||||||||||||||||||||
Depreciation and amortization: | ||||||||||||||||||||||||||||||||
Lindblad | $ | 7,867 | $ | 6,248 | $ | 1,619 | 26 | % | $ | 10,741 | $ | 7,867 | $ | 2,874 | 37 | % | ||||||||||||||||
Land Experiences | 382 | 442 | (60 | ) | (14 | %) | 437 | 382 | 55 | 14 | % | |||||||||||||||||||||
Total depreciation and amortization | $ | 8,249 | $ | 6,690 | $ | 1,559 | 23 | % | $ | 11,178 | $ | 8,249 | $ | 2,929 | 36 | % | ||||||||||||||||
The following table presents our total assets, intangibles, net and goodwill by segment:
(In thousands) | As of March 31, 2021 | As of December 31, 2020 | As of March 31, 2022 | As of December 31, 2021 | ||||||||||||
| Total Assets: | (unaudited) | (unaudited) | ||||||||||||||
Lindblad | $ | 677,920 | $ | 698,420 | $ | 714,926 | $ | 724,873 | ||||||||
Land Experiences | 81,980 | 59,029 | 125,709 | 102,618 | ||||||||||||
Total assets | $ | 759,900 | $ | 757,449 | $ | 840,635 | $ | 827,491 | ||||||||
Intangibles, net: | ||||||||||||||||
Lindblad | $ | 2,418 | $ | 2,599 | $ | 1,746 | $ | 1,874 | ||||||||
Land Experiences | 8,545 | 2,218 | 11,084 | 11,361 | ||||||||||||
Total intangibles, net | $ | 10,963 | $ | 4,817 | $ | 12,830 | $ | 13,235 | ||||||||
Goodwill: | ||||||||||||||||
Lindblad | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||
Land Experiences | 33,652 | 22,105 | 42,017 | 42,017 | ||||||||||||
Total goodwill | $ | 33,652 | $ | 22,105 | $ | 42,017 | $ | 42,017 | ||||||||
For the three months Endedended March 31, 20212022 and 20202021, there werewas $1.6 million and $0.0 million, and $2.2 millionrespectively, in intercompany tour revenues between the Lindblad and Land Experiences reportable segments eliminated in consolidation, respectively.
consolidation.
NOTE 14 — SUBSEQUENT EVENT
On April 1, 2021, the Company drew down an additional $15.5 million under its Second Export Credit Agreement in conjunction with its fourth installment payment on the National Geographic Resolution, scheduled for delivery in the fourth quarter of 2021.
On April 26, 2021, the Company amended its Amended Credit Agreement to, among other things, extend the waiver of its total net leverage ratio covenant through March 31, 2022, adjust the annualized EBITDA used in its covenant calculation through December 31, 2022 and increase the interest rate spreads of the Term Facility, excluding the Main Street Loan, and the Revolving Facility by 50bps, such additional interest to be paid in cash. Certain other covenants under the Amended Credit Agreement continue to be more restrictive during the extended covenant waiver period.
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 March 12, 2021.February 28, 2022.
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, cancelling or rescheduling of voyages and other potential disruptions to our business and operations related to the | |
● | the impacts of the | |
● | adverse worldwide economic, geopolitical or other conditions could reduce the | |
● | adverse publicity regarding the cruise | |
● | 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 | |
● | our business strategy and plans; | |
● | our ability to maintain our relationship with National Geographic; | |
● | compliance with | |
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| |
● |
| |
● | loss of business due to competition; | |
● | the result of future financing efforts; | |
● |
| |
| ● | the loss of key employees, our inability to recruit or retain qualified shoreside and shipboard employees and increased labor costs; | |
| ● | the inability to meet or achieve our sustainability related goals, aspirations, initiatives, and our public statements and disclosures regarding them; | |
● | our common stock ranks junior to our Series A Preferred Stock with respect to dividends and amounts payable in the | |
● | those risks discussed herein and in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, |
We urge you not to place undue reliance on these forward-looking statements, which speak only as of the date of this Form 10-Q. We do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or uncertainties after the date hereof or to reflect the occurrence of unanticipated events.
Unless the context otherwise requires, in this Form 10-Q, “Company,” “Lindblad,” “we,” “us,” “our,” and “ours” refer to Lindblad Expeditions Holdings, Inc., and its subsidiaries.
Business Overview
We provide expedition cruising and land-based adventure travel fostering a spirit of exploration and cycling touring experiences,discovery, using itineraries that featurefeaturing up-close encounters with wildlife and nature, history and culture and promote guest empowerment, human connections and interactivity. Our mission is offeringto offer life-changing adventures around the world and pioneering innovative ways to allow our guests to connect with exotic and remote places.
We currently operate a fleet of nineten 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, and operate five seasonal charter vessels under the Lindblad Expeditions, Holdings, Inc.LLC. (“Lindblad”) brand. OurEach expedition ship is fully equipped with state-of-the-art tools for in-depth exploration and the majority of our expeditions involve travel to remote places, such as voyages include destinations such asto the Arctic, Antarctic, the Galápagos Islands, Alaska, and Baja'sBaja’s Sea of Cortez.Cortez, the South Pacific, Costa Rica and Panama. We have a longstanding relationship with the National Geographic Society dating back to 2004, which is based on a shared interest in exploration, research, technology and conservation. This relationship includes a co-selling, co-marketing and branding arrangement with National Geographic Partners, LLC (“National Geographic”), whereby our owned vessels carry the National Geographic name and National Geographic sells our expeditions through its internal travel division. We collaborate with National Geographic on voyage 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 abilityare able to interface with these experts through lectures, excursions, dining and other experiences throughout their voyage. We deploy chartered vessels for various seasonal offerings and continually seek to optimize our charter fleet to balance our inventory with demand and maximized yields. We use our charter inventory as a mechanism to both increase travel options of our existing and prospective guests and also to test demand for certain areas and seasons to understand the potential for longer term deployments and additional vessel needs.
We operate land-based nature adventure travel expeditions around the globe, with unique itineraries designed to offer intimate encounters with nature and the planet'splanet’s wild destinations and the animals and people who live there.
Natural Habitat, Inc. (“Natural Habitat”) creates opportunities for adventure and discovery that transform lives withprovides eco-conscious expeditions and nature-focused, small-group toursexperiences that include polar bear tours in Churchill, Canada, Alaskan grizzly bear adventures, small-group Galápagos Islands tours and African safaris. Natural Habitat has partnered with World Wildlife Fund (“WWF”) to offer conservation travel, which is sustainable travel that contributes to the protection of nature and wildlife.
DuVine Cycling + Adventure Company (“DuVine”) provides internationalintimate cycling adventures and unforgettable travel experiences, led by expert guides, with a focus on connecting with local character and culture, on small, intimate groupincluding high-quality local cuisine and accommodations. International cycling tours aroundinclude the world withexotic Costa Rican rainforests, the rocky coasts of Ireland and the vineyards of Spain, while cycling experts as guides, immersion in local cuisine, accommodations and history. Cycling tours includeadventures in the United States frominclude cycling beneath the shadow of majestic California redwoods, to pedaling through Vermont farmland on a Vermont bike tour,and wine tastings in the world-class vineyards of Napa and Sonoma or farm-to-table renaissance dining, cycling through exotic Costa Rican rainforests, the rocky coasts of Ireland, deep in the vineyards of Spain, or high in the Swiss Alps, exploring the roads of ancient cities and trek the Atlas desert by camel, to bamboo forests and Buddhist temples or pedaling past tea plantations in Kyoto.Sonoma.
Off the Beaten Path, LLC (“Off the Beaten Path”) provides small group travel, led by local, experienced guides, with distinct focus on wildlife, hiking national parks and culture, to change people's lives through exceptional travel.culture. Off the Beaten Path is known for providing distinctiveofferings include insider national park experiences in the Rocky Mountains, Desert Southwest, and Alaska, and includesas well as unique trips across Europe, Africa, Australia, Central and South America and the South Pacific, for connectingPacific.
Classic Journeys, LLC (“Classic Journeys”) offers highly curated active small-group and private custom journeys centered around cinematic walks led by expert local guides in over 50 countries around the heartworld. These walking tours are highlighted by luxury boutique accommodations and handcrafted itineraries that immerse guests into the history and culture of the traveler withplaces they are exploring and the soul of the place.people who live there.
The Company operatesWe operate two segments including the Lindblad segment, which consists of the operations of our Lindblad brand, and the Land Experiences segment, consisting of our Natural Habitat, DuVine, and Off the Beaten Path and Classic Journeys brands.
2022 First Quarter Highlights
During the first quarter of 2021, we completed2022 the acquisitionsCompany continued to ramp its operations, providing expeditions to guests on nine of Offits ten owned vessels including trips to Antarctica, Baja California’s Sea of Cortez, Bahamas, Belize, Costa Rica and Panama, and the Beaten Path, a land-based travel operator specializing in authentic national park experiences, and DuVine, an international luxury cycling and adventure company focused on exceptional food and wine experiences.Galápagos.
On February 4, 2022, we issued $360.0 million of 6.75% senior secured notes due 2027 and entered into a new $45.0 million revolving credit facility, which remains undrawn and matures February 2027. We used the proceeds from the notes to prepay in full all outstanding borrowings under our prior term loan, including the Main Street Loan, and revolving credit facility, and paid all related premiums, terminating in full our existing credit agreement and the commitments thereunder.
On February 25, 2022, our cupos necessary for tours in the Galápagos Islands were contractually renewed for a 20-year period.
Ramp of Fleet Operations and COVID-19 Business Update
During the first quarter of 2022, we continued to ramp up our operations, providing expeditions to guests on nine of our ten owned vessels including trips to Antarctica, Baja California’s Sea of Cortez, Bahamas, Belize, Costa Rica and Panama, and the Galápagos. Due to the spread of the COVID-19 virus and the effects of travel restrictions around the world, we havehad previously suspended or rescheduled the majority of Lindblad’sour expeditions and trips departing between March 16, 2020 through May 31, 20212021. Travel restrictions related to COVID-19 have diminished dramatically and have been workingwe continue to work with local authorities on plans to operate itineraries in additional geographies during 2022 and 2023. Where travel restrictions remain, which now also includes a limited number of itineraries impacted by the Russia-Ukraine conflict, we work with guests to reschedule travel plans and refund payments or issue future travel certificates, as applicable. We have announced plans to resume ship operations beginning June 2021 with expeditions to Alaska and the Galapagos and are working with local health authorities on plans to operate in additional geographies during the second half of the year. As our ships are currently not in operations, the majority of our fleet is 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. For those ships that are preparing to resume sailing, we have begun to increase crew levels as needed. In accordance with local regulations, our offices are closed, 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 continue to adhere to the comprehensive plan we implemented in March 2020 to mitigate the impact of COVID-19 and preserve and enhance our liquidity position. This plan employs a variety of cost reduction and cash preservation measures including significantly reducing ship and land-based expedition costs such as capital expenditures, crew payroll, land costs, fuel and food, and meaningfully reducing general and administrative expenses through reduced payroll and the elimination of all non-essential travel, office expenses and discretionary spending. We have also accessed available capital under existing debt facilities and through the issuance of preferred stock, while continuing to explore additional sources of capital and liquidity.
Return to Fleet Operations
We have announced plans to resume operations with vaccinated guests in Alaska and the Galapagos in June 2021 and are working with local health authorities on plans to operate in additional geographies during the second half of the year. We believe there are a variety of strategic advantages that enable us to deploy our ships safely and quickly, while mitigating the risk of COVID-19 as travel restrictions are lifted. The 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 allowallows us to efficiently and effectively test our guests and crew prior to boarding.boarding, or as otherwise needed. Additionally, all guests age five and older, crew and staff are required to be fully vaccinated and the majority of our expeditions take place in remote locations where human interactions are limited, so there is less opportunity for external influence. Lastly, our guests are explorers by nature, eager to travel and have historically been very resilient following periods of uncertainty.
Bookings Trends
We have experienced a substantial advanced reservations for future travel despite some continued impact from the COVID-19 virus, including elevated cancellations and softness in near-term demand. Despitedemand, as well as some impact related to itinerary changes due to the COVID-19 impact, we still have substantial advanced reservations for future travel.Russia-Ukraine conflict. Bookings for the full yearsecond half of 2022 are 39%50% ahead of the bookings for 2021 asthe second half of 2019 at the same date a yearpoint three years ago and 32% ahead of the bookings for 2020 as of the same date two years ago. We continue to see new bookings for future travel including over $92.0 million since the beginning of 2021 and are receiving significant deposits and final payments for future travel.
For 2021 voyages that have been cancelled or rescheduled, we are offering future travel credits with incremental value or full refunds to our fully paid guests. As of April 24, 2021, the majority of guests have opted for future travel credits.
Balance Sheet and Liquidity
As of March 31, 2021,2022, we had $163.9$154.8 million in unrestricted cash and $22.4$30.0 million in restricted cash primarily related to deposits on future travel originating from U.S. ports. As of March 31, 2021, we had aports and credit card reserves. Our total debt position of $498.4was $584.1 million, and we were in compliance with all of our debt covenants. Following the quarter,covenants currently in April 2021, we drew down an additional $15.5 million under our second senior secured credit agreement in conjunction with the fourth installment payment on the National Geographic Resolution, scheduled for delivery in the fourth quarter of 2021. effect.
During the last twelve months, we have taken a variety of steps to strengthen our balance sheet and increase liquidity including:
During April 2020, we drew down $30.6 million under our second export credit agreement in conjunction with our third installment payment on the National Geographic Resolution.
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 due on December 22, 2020, the second due on December 22, 2021 and the final payment due on December 22, 2022.
During June 2020, we amended our export credit agreements to defer approximately $9.0 million in aggregate scheduled amortization payments from June 2020 through March 2021 and to suspend the total net leverage ratio covenant from June 2020 through June 2021.
During August 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 by 125bps, to be paid-in-kind at maturity, a LIBOR floor of 75bps has been added to the term loan facility and certain covenants were amended to be more restrictive.
During August 2020, we raised $85.0 million in gross proceeds through the private placement issuance of Redeemable Convertible Series A Preferred Stock that carries a 6% annual dividend, which is payable in kind for two years and, thereafter, in cash or in-kind at our option. The preferred stock is convertible into shares of Lindblad common stock at a conversion price of $9.50 per share, representing a premium of 23% to Lindblad’s 30-day trading volume weighted average price on the date of issuance.
During December 2020, we amended our term loan and revolving credit facilities and borrowed an incremental $85.0 million under the amended term loan facility through the Main Street Expanded Loan Facility program established by the Board of Governors of the Federal Reserve System. The incremental borrowing carries an interest rate of LIBOR plus 3.0%, without any LIBOR floor, and matures December 2025 with no early payment restrictions.
We estimate our current monthly cash usage 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. As we implement planscontinue to resumeramp operations, theour monthly cash usage will increase as we incur costs in preparationoperating expeditions, preparing additional ships for returning shipsreturn to service, spendsspending to market and advertise upcoming expeditions and reinstates furloughed and part-time office staff as needed.trips. We also anticipate a significant increase in guest payments as we receive final payments for upcoming expeditions as well as deposits for new reservations for future travel.
We haveHowever, there can be no assurance that cash flows from operations will be available to fund future obligations or that we will not previously experienced a complete cessationexperience delays or cancellations with respect to the resumption 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 pandemic 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. Our estimates for monthly cash usage reflect our current forecast for operating costs, capital expenditures and expected debt and interest payments. Based on the actions we have taken to date, our planned and anticipated actions and our current forecast, we believe that we can meet our obligations for the next 12 months from April 30, 2021, the date of this Quarterly Report on Form 10-Q.operations.
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 months ended March 31, | |
● | a discussion of our liquidity and capital resources, including future capital and contractual commitments and potential funding sources; and | |
● | a review of our critical accounting policies. |
Financial Presentation
Description of Certain Line Items
Tour revenues
Tour revenues consist of the following:
● | Guest ticket revenues recognized from the sale of guest tickets; and | |
● | Other tour revenues from the sale of pre- or post-expedition excursions, hotel accommodations, air transportation to and from the ships and excursions, goods and services rendered onboard that are not included in guest ticket prices, trip insurance, and cancellation fees. |
Cost of tours
Cost of tours includes the following:
● | Direct costs associated with revenues, including cost of pre- or post-expedition excursions, hotel accommodations, and land-based expeditions, air and other transportation expenses, and cost of goods and services rendered onboard; | |
● | Payroll costs and related expenses for shipboard and expedition personnel; |
● | Food costs for guests and crew, including complimentary food and beverage amenities for guests; | |
● | Fuel costs and related costs of delivery, storage and safe disposal of waste; and | |
● | Other tour expenses, such as land costs, port costs, repairs and maintenance, equipment expense, drydock, ship insurance, and charter hire costs. |
Selling and marketing
Selling and marketing expenses include commissions, royalties and a broad range of advertising and promotional expenses.
General and administrative
General and administrative expenses include the cost of shoreside vessel support, reservations and other administrative functions, including salaries and related benefits, credit card commissions, professional fees and rent.
Operational and Financial Metrics
We use a variety of operational and financial metrics, including non-GAAP financial measures, such as Adjusted EBITDA, Net Yields, Occupancy and Net Cruise Costs, to enable us to analyze our performance and financial condition. We utilize these financial measures to manage our business on a day-to-day basis and believe that they are the most relevant measures of performance. Some of these measures are commonly used in the cruise and tourism industry to evaluate performance. We believe these non-GAAP measures provide expanded insight to assess revenue and cost performance, in addition to the standard GAAP-based financial measures. There are no specific rules or regulations for determining non-GAAP measures, and as such, they may not be comparable to measures used by other companies within the industry.
The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. You should read this discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and the related notes thereto also included within.
Adjusted EBITDA is net income (loss) excluding depreciation and amortization, net interest expense, other income (expense), income tax (expense) benefit, (gain) loss on foreign currency, (gain) loss on transfer of assets, reorganization costs, and other supplemental adjustments. Other supplemental adjustments include certain non-operating items such as stock-based compensation, executive severance costs, the National Geographic fee amortization, debt refinancing costs, acquisition-related expenses and other non-recurring charges. We believe Adjusted EBITDA, when considered along with other performance measures, is a useful measure as it reflects certain operating drivers of the business, such as sales growth, operating costs, selling and administrative expense, and other operating income and expense. We believe Adjusted EBITDA helps provide a more complete understanding of the underlying operating results and trends and an enhanced overall understanding of our financial performance and prospects for the future. Adjusted EBITDA is not intended to be a measure of liquidity or cash flows from operations or a measure comparable to net income as it does not take into account certain requirements, such as unearned passenger revenues, capital expenditures and related depreciation, principal and interest payments, and tax payments. Our use of Adjusted EBITDA may not be comparable to other companies within the industry.
The following metrics apply to our Lindblad segment:
Adjusted Net Cruise Cost represents Net Cruise Cost adjusted for Non-GAAP other supplemental adjustments which include certain non-operating items such as stock-based compensation, the National Geographic fee amortization, and acquisition-related expenses.
Available Guest Nights is a measurement of capacity and represents double occupancy per cabin (except single occupancy for a single capacity cabin) multiplied by the number of cruise days for the period. We also record the number of guest nights available on our limited land programs in this definition.
Gross Cruise Cost represents the sum of cost of tours plus, selling and marketing expenses, and general and administrative expenses.
Gross Yield per Available Guest Night represents tour revenues less insurance proceeds divided by Available Guest Nights.
Guest Nights Sold represents the number of guests carried for the period multiplied by the number of nights sailed within the period.
Maximum Guests is a measure of capacity and represents the maximum number of guests in a period and is based on double occupancy per cabin (except single occupancy for a single capacity cabin).
Net Cruise Cost represents Gross Cruise Cost excluding commissions and certain other direct costs of guest ticket revenues and other tour revenues.
Net Cruise Cost Excluding Fuel represents Net Cruise Cost excluding fuel costs.
Net Yield represents tour revenues less insurance proceeds, commissions and direct costs of other tour revenues.
Net Yield per Available Guest Night represents Net Yield divided by Available Guest Nights.
Number of Guests represents the number of guests that travel with us in a period.
Occupancy is calculated by dividing Guest Nights Sold by Available Guest Nights.
Voyages represent the number of ship expeditions completed during the period.
Foreign Currency Translation
The U.S. dollar is the functional currency in our foreign operations and re-measurement adjustments and gains or losses resulting from foreign currency transactions are recorded as foreign exchange gains or losses in the condensed consolidated statements of operations.
Seasonality
Traditionally, our Lindblad brand tour revenues from the sale of guest tickets are mildly seasonal, historically larger in the first and third quarters. The seasonality of our operating results fluctuates due to our vessels being taken out of service for scheduled maintenance or drydocking, which is typically during nonpeak demand periods, in the second and fourth quarters. Our drydock schedules are subject to cost and timing differences from year to yearyear-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. Our Natural Habitat, DuVine, and Off the Beaten Path and Classic Journeys brands are seasonal businesses, with the majority of Natural Habitat’s tour revenue recorded in the third and fourth quarters from its summer season departures and polar bear tours, while the majority of Off the Beaten Path, DuVine and DuVine’sClassic Journeys’ revenues are recorded during the second and third quarters from their spring and summer season tours and cycling adventures.departures.
Results of Operations - Consolidated
For the three months ended March 31, | For the three months ended March 31, | |||||||||||||||||||||||||||||||
(In thousands) | 2021 | 2020 | Change | % | 2022 | 2021 | Change | % | ||||||||||||||||||||||||
Tour revenues | $ | 1,780 | $ | 81,238 | $ | (79,458 | ) | (98 | %) | $ | 67,846 | $ | 1,780 | $ | 66,066 | NM | ||||||||||||||||
Cost of tours | 8,279 | 42,192 | (33,913 | ) | (80 | %) | 57,947 | 8,279 | 49,668 | NM | ||||||||||||||||||||||
General and administrative | 13,812 | 17,226 | (3,414 | ) | (20 | %) | 20,637 | 13,812 | 6,825 | 49 | % | |||||||||||||||||||||
Selling and marketing | 2,506 | 12,879 | (10,373 | ) | (81 | %) | 12,329 | 2,506 | 9,823 | NM | ||||||||||||||||||||||
Depreciation and amortization | 8,249 | 6,690 | 1,559 | 23 | % | 11,178 | 8,249 | 2,929 | 36 | % | ||||||||||||||||||||||
Operating (loss) income | $ | (31,066 | ) | $ | 2,251 | $ | (33,317 | ) | NM | |||||||||||||||||||||||
Operating loss | $ | (34,245 | ) | $ | (31,066 | ) | $ | (3,179 | ) | 10 | % | |||||||||||||||||||||
Net loss | $ | (33,863 | ) | $ | (2,471 | ) | $ | (31,392 | ) | NM | $ | (42,148 | ) | $ | (33,863 | ) | $ | (8,285 | ) | 24 | % | |||||||||||
Undistributed loss per share available to stockholders: | ||||||||||||||||||||||||||||||||
Basic | $ | (0.66 | ) | $ | (0.04 | ) | $ | (0.62 | ) | $ | (0.85 | ) | $ | (0.66 | ) | $ | (0.19 | ) | ||||||||||||||
Diluted | $ | (0.66 | ) | $ | (0.04 | ) | $ | (0.62 | ) | $ | (0.85 | ) | $ | (0.66 | ) | $ | (0.19 | ) | ||||||||||||||
Comparison of the Three Months Ended March 31, 20212022 to Three Months Ended March 31, 20202021 - Consolidated
Tour Revenues
Tour revenues for the three months ended March 31, 2021 decreased $79.52022 increased $66.1 million, or 98%, to $1.8$67.8 million, compared to $81.2$1.8 million for the three months ended March 31, 2020.2021. The Lindblad segment tour revenues decreasedincreased by $69.1$49.8 million and the Land Experiences segment decreased $10.4increased $16.3 million, primarily as a resultdue to the ramp of rescheduling nearly all expeditions and trips due to COVID-19trips. The Land Experiences segment also includes a full quarter of results for Off the Beaten Path and DuVine, which were acquired during the first quarter of 2021, and Classic Journeys which was acquired during the fourth quarter of 2021.
Cost of Tours
Total cost of tours for the three months ended March 31, 2021 decreased $33.92022 increased $49.7 million, or 80%, to $8.3$57.9 million compared to $42.2$8.3 million for the three months ended March 31, 2020. At the2021. The Lindblad segment cost of tours decreased $27.9increased by $40.0 million due to rescheduled expeditions due to COVID-19, partially offset by costs incurred while ships are laid up. Atand the Land Experiences segment cost of tours decreased $6.0increased $9.7 million, primarily due to rescheduled trips directly related to COVID-19the ramp of expeditions and trips. The Land Experiences segment also includes a full quarter of results for Off the Beaten Path and DuVine, which were acquired during the first quarter of 2021, and Classic Journeys which was acquired during the fourth quarter of 2021.
General and Administrative
General and administrative expenses for the three months ended March 31, 2021 decreased $3.42022 increased $6.8 million, or 20%49%, to $13.8$20.6 million, compared to $17.2$13.8 million for the three months ended March 31, 2020.2021. At the Lindblad segment, general and administrative expenses decreased $3.0increased $4.6 million from the prior year period primarily due to decreasedhigher personnel costs associated with the ramp in operations and higher credit card commissions partially offset by higherdue to the strong booking environment and increased stock-based compensation expense. At the Land Experiences segment, general and administrative expenses decreased $0.4increased $2.2 million, primarily due to increased personnel costs related to operating additional trips, higher credit card commissions due to the strong booking environment and the inclusion of a decrease in personnel costs.full quarter of the results of Off the Beaten Path and DuVine, which were acquired during the first quarter of 2021, and Classic Journeys which was acquired during the fourth quarter of 2021.
Selling and Marketing
Selling and marketing expenses for the three months ended March 31, 2021 decreased $10.42022 increased $9.8 million or 81%, to $2.5$12.3 million, compared to $12.9$2.5 million for the three months ended March 31, 2020.2021. At the Lindblad segment, selling and marketing expenses decreased $10.3increased $8.6 million primarily due to lower commission expenseshigher commissions related to the impact of the COVID-19 on revenue.ramp in operations and increased advertising spend to drive future growth. At the Land Experiences segment, selling and marketing expenses decreased $0.1 million.increased $1.2 million, primarily due to increased marketing spend associated with the ramp up in operations and the inclusion of the results of Off the Beaten Path and DuVine, which were acquired during the first quarter of 2021, and Classic Journeys which was acquired during the fourth quarter of 2021.
Depreciation and Amortization
Depreciation and amortization expenses for the three months ended March 31, 20212022 increased $1.6$2.9 million, or 23%36%, to $8.2$11.2 million, compared to $6.7$8.2 million for the three months ended March 31, 2020,2021, primarily due to the addition ofdepreciation for the National Geographic EnduranceResolution placed into service in September 2021, depreciation of technology assets placed into service to support our digital initiatives, accelerated depreciation for the fleetNational Geographic Islander, which will be replaced later in March 2020.2022, and the amortization of acquired intangibles.
Other ExpenseIncome (Expense)
Other expenses for the three months ended March 31, 2021, decreased $1.02022, increased $2.5 million to $5.6$8.1 million from $6.6$5.6 million for the three months ended March 31, 2020,2021, primarily due to the following:
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Results of Operations – Segments
Selected information for our reportable segments is below. The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
For the three months ended March 31, | For the three months ended March 31, | |||||||||||||||||||||||||||||||
(In thousands) | 2021 | 2020 | Change | % | 2022 | 2021 | Change | % | ||||||||||||||||||||||||
Tour revenues: | ||||||||||||||||||||||||||||||||
Lindblad | $ | 484 | $ | 69,539 | $ | (69,055 | ) | (99 | %) | $ | 50,274 | $ | 484 | $ | 49,790 | NM | ||||||||||||||||
Land Experiences | 1,296 | 11,699 | (10,403 | ) | (89 | %) | 17,572 | 1,296 | 16,276 | NM | ||||||||||||||||||||||
Total tour revenues | $ | 1,780 | $ | 81,238 | $ | (79,458 | ) | (98 | %) | $ | 67,846 | $ | 1,780 | $ | 66,066 | NM | ||||||||||||||||
Operating (loss) income: | ||||||||||||||||||||||||||||||||
Operating loss: | ||||||||||||||||||||||||||||||||
Lindblad | $ | (27,296 | ) | $ | 2,189 | $ | (29,485 | ) | NM | $ | (33,569 | ) | $ | (27,296 | ) | $ | (6,273 | ) | (23 | )% | ||||||||||||
Land Experiences | (3,770 | ) | 62 | (3,832 | ) | NM | (676 | ) | (3,770 | ) | 3,094 | 82 | % | |||||||||||||||||||
Total operating (loss) income | $ | (31,066 | ) | $ | 2,251 | $ | (33,317 | ) | NM | $ | (34,245 | ) | $ | (31,066 | ) | $ | (3,179 | ) | (10 | )% | ||||||||||||
Adjusted EBITDA: | ||||||||||||||||||||||||||||||||
Lindblad | $ | (17,952 | ) | $ | 10,074 | $ | (28,026 | ) | NM | $ | (20,981 | ) | $ | (17,952 | ) | $ | (3,029 | ) | 17 | % | ||||||||||||
Land Experiences | (2,868 | ) | 504 | (3,372 | ) | NM | (239 | ) | (2,868 | ) | 2,629 | 92 | % | |||||||||||||||||||
Total adjusted EBITDA | $ | (20,820 | ) | $ | 10,578 | $ | (31,398 | ) | NM | $ | (21,220 | ) | $ | (20,820 | ) | $ | (400 | ) | (2 | )% | ||||||||||||
Comparison of Three Months Ended March 31, 2022 to Three Months Ended March 31, 2021 at the Lindblad Segment
ResultsTour Revenues
Tour revenues for the three months ended March 31, 2022 increased $49.8 million to $50.3 million, compared to $0.5 million for the three months ended March 31, 2021. The increase was a result of Operationsthe ramp in expeditions compared with cancelling, disrupting and rescheduling all expeditions due to COVID-19 in the first quarter of 2021.
Operating Loss
Operating loss increased $6.3 million to $33.6 million for the three months ended March 31, 2022 compared to an operating loss of $27.3 million for the three months ended March 31, 2021 as the increase in tour revenues was more than offset primarily by higher cost of tours and personnel costs due to the ramp in operations, increased commissions related to the revenue and bookings growth and higher marketing costs to drive future growth.
Comparison of Three Months Ended March 31, 2022 to Three Months Ended March 31, 2021 at the Land ExperiencesSegment
Tour Revenues
Tour revenues for the three months ended March 31, 2022 increased $16.3 million to $17.6 million compared to $1.3 million for the three months ended March 31, 2021, primarily as a result of operating additional trips during the first quarter 2022 and the inclusion of a full quarter of results for Off the Beaten Path and DuVine, which were acquired during the first quarter of 2021, and Classic Journeys which was acquired during the fourth quarter of 2021.
Operating Loss
Operating loss improved by $3.1 million to a loss of $0.7 million for the three months ended March 31, 2022, compared to an operating loss of $3.8 million for the three months ended March 31, 2021. The lower operating loss was primarily a result of operating additional trips during the first quarter of 2022 and the inclusion of a full quarter of results for Off the Beaten Path and DuVine, which were acquired during the first quarter of 2021, and Classic Journeys which was acquired during the fourth quarter of 2021.
Adjusted EBITDA – Consolidated
The following table outlines the reconciliation of net loss to consolidated Adjusted EBITDA for the three months ended March 31, 2022 and 2021. 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 March 31, | |||||||
(In thousands) | 2022 | 2021 | ||||||
Net loss | $ | (42,148 | ) | $ | (33,863 | ) | ||
Interest expense, net | 8,715 | 5,669 | ||||||
Income tax benefit | (149 | ) | (2,801 | ) | ||||
Depreciation and amortization | 11,178 | 8,249 | ||||||
Gain on foreign currency | (130 | ) | (70 | ) | ||||
Other income | (533 | ) | (1 | ) | ||||
Stock-based compensation | 1,828 | 1,611 | ||||||
Other | 19 | 386 | ||||||
Adjusted EBITDA | $ | (21,220 | ) | $ | (20,820 | ) | ||
The following tables outline the reconciliation for each reportable segment from operating income to Adjusted EBITDA for the three months ended March 31, 2022 and 2021.
Lindblad Segment | For the three months ended March 31, | |||||||
(In thousands) | 2022 | 2021 | ||||||
Operating loss | $ | (33,569 | ) | $ | (27,296 | ) | ||
Depreciation and amortization | 10,741 | 7,867 | ||||||
Stock-based compensation | 1,828 | 1,477 | ||||||
Other | 19 | - | ||||||
Adjusted EBITDA | $ | (20,981 | ) | $ | (17,952 | ) | ||
Land Experiences Segment | For the three months ended March 31, | |||||||
(In thousands) | 2022 | 2021 | ||||||
Operating loss | $ | (676 | ) | $ | (3,770 | ) | ||
Depreciation and amortization | 437 | 382 | ||||||
Stock-based compensation | - | 134 | ||||||
Other | - | 386 | ||||||
Adjusted EBITDA | $ | (239 | ) | $ | (2,868 | ) | ||
Guest Metrics – Lindblad Segment
The following table sets forth our Available Guest Nights, Guest Nights Sold, Occupancy, Maximum Guests, Number of Guests and Voyages for the three months ended March 31, 20212022 and 2020:2021:
For the three months ended March 31, | For the three months ended March 31, | |||||||||||||||
2021 | 2020 | 2022 | 2021 | |||||||||||||
Available Guest Nights | - | 51,624 | 48,546 | - | ||||||||||||
Guest Nights Sold | - | 46,050 | 32,184 | - | ||||||||||||
Occupancy | - | 89 | % | 66 | % | - | ||||||||||
Maximum Guests | - | 6,512 | 5,414 | - | ||||||||||||
Number of Guests | - | 5,564 | 3,661 | - | ||||||||||||
Voyages | - | 85 | 83 | - | ||||||||||||
The following table shows the calculations of Gross Yield and Net Yield for the three months ended March 31, 20212022 and 2020.2021. Gross Yield is calculated by dividing Tour Revenues by Available Guest Nights and Net Yield is calculated by dividing Net Revenue by Available Guest Nights:
Calculation of Gross Yield per Available Guest Night and Net Yield per Available Guest Night | For the three months ended March 31, | |||||||||||||||
Calculation of Gross and Net Yield per Available Guest Night | For the three months ended March 31, | |||||||||||||||
(In thousands, except for Available Guest Nights, Gross and Net Yield per Available Guest Night) | 2021 | 2020 | 2022 | 2021 | ||||||||||||
Guest ticket revenues | $ | - | $ | 60,362 | $ | 45,502 | $ | - | ||||||||
Other tour revenue | 484 | 9,177 | 4,772 | 484 | ||||||||||||
Tour Revenues | 484 | 69,539 | 50,274 | 484 | ||||||||||||
Less: Commissions | (29 | ) | (5,427 | ) | (4,405 | ) | (29 | ) | ||||||||
Less: Other tour expenses | (634 | ) | (5,761 | ) | (9,989 | ) | (634 | ) | ||||||||
Net Yield | $ | (179 | ) | $ | 58,351 | $ | 35,880 | $ | (179 | ) | ||||||
Available Guest Nights | - | 51,624 | 48,546 | - | ||||||||||||
Gross Yield per Available Guest Night | NM | $ | 1,347 | $ | 1,036 | NM | ||||||||||
Net Yield per Available Guest Night | NM | 1,130 | 739 | NM | ||||||||||||
The following table reconciles operating income to our Net Yield Guest Metric for the Lindblad Segment:
For the three months ended | For the three months ended March 31, | |||||||||||||||
(In thousands) | 2021 | 2020 | 2022 | 2021 | ||||||||||||
Operating (loss) income | $ | (27,296 | ) | $ | 2,189 | |||||||||||
Operating loss | $ | (33,569 | ) | $ | (27,296 | ) | ||||||||||
Cost of tours | 7,604 | 35,521 | 47,571 | 7,604 | ||||||||||||
General and administrative | 10,613 | 13,598 | 15,248 | 10,613 | ||||||||||||
Selling and marketing | 1,696 | 11,983 | 10,283 | 1,696 | ||||||||||||
Depreciation and amortization | 7,867 | 6,248 | 10,741 | 7,867 | ||||||||||||
Less: Commissions | (29 | ) | (5,427 | ) | (4,405 | ) | (29 | ) | ||||||||
Less: Other tour expenses | (634 | ) | (5,761 | ) | (9,989 | ) | (634 | ) | ||||||||
Net Yield | $ | (179 | ) | $ | 58,351 | $ | 35,880 | $ | (179 | ) | ||||||
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 months ended March 31, 20212022 and 2020:2021:
Calculation of Gross Cruise Cost and Net Cruise Cost | For the three months ended March 31, | |||||||
(In thousands, except for Available Guest Nights, Gross and Net Cruise Cost per Avail. Guest Night) | 2021 | 2020 | ||||||
Cost of tours | $ | 7,604 | $ | 35,521 | ||||
Plus: Selling and marketing | 1,696 | 11,983 | ||||||
Plus: General and administrative | 10,613 | 13,598 | ||||||
Gross Cruise Cost | 19,913 | 61,102 | ||||||
Less: Commissions | (29 | ) | (5,427 | ) | ||||
Less: Other tour expenses | (634 | ) | (5,761 | ) | ||||
Net Cruise Cost | 19,250 | 49,914 | ||||||
Less: Fuel Expense | (512 | ) | (2,392 | ) | ||||
Net Cruise Cost Excluding Fuel | 18,738 | 47,522 | ||||||
Non-GAAP Adjustments: | ||||||||
Stock-based compensation | (1,477 | ) | (898 | ) | ||||
National Geographic fee amortization | - | (727 | ) | |||||
Other | - | (12 | ) | |||||
Adjusted Net Cruise Cost Excluding Fuel | $ | 17,261 | $ | 45,885 | ||||
Adjusted Net Cruise Cost | $ | 17,773 | $ | 48,277 | ||||
Available Guest Nights | - | 51,624 | ||||||
Gross Cruise Cost per Available Guest Night | NM | $ | 1,184 | |||||
Net Cruise Cost per Available Guest Night | NM | 967 | ||||||
Net Cruise Cost Excluding Fuel per Available Guest Night | NM | 921 | ||||||
Adjusted Net Cruise Cost Excluding Fuel per Available Guest Night | NM | 889 | ||||||
Adjusted Net Cruise Cost per Available Guest Night | NM | 935 | ||||||
Comparison of Three Months Ended March 31, 2021 to Three Months Ended March 31, 2020 at the Lindblad Segment
Tour Revenues
Tour revenues for the three months ended March 31, 2021 decreased $69.1 million, or 99%, to $0.5 million compared to $69.5 million for the three months ended March 31, 2020. The decrease was a result of rescheduling all expeditions in the first quarter of 2021 due to COVID-19.
Operating Income
Operating income decreased $29.5 million to loss of $27.3 million for the three months ended March 31, 2021 compared to operating income of $2.2 million for the three months ended March 31, 2020. The decrease was a result of rescheduling all expeditions in the first quarter of 2021 due to COVID-19.
Results of Operations – Land ExperiencesSegment
Comparison of Three Months Ended March 31, 2021 to Three Months Ended March 31, 2020
Tour Revenues
Tour revenues for the three months ended March 31, 2021 decreased $10.4 million, or 89%, to $1.3 million compared to $11.7 million for the three months ended March 31, 2020, as a result of cancelled and rescheduled trips in the first quarter 2021 due to COVID-19.
Operating Income
An operating loss of $3.8 million was incurred for the three months ended March 31, 2021, compared to operating income of $0.1 million for the three months ended March 31, 2020. The decrease was primarily a result of cancelled and rescheduled expeditions in the first quarter 2021 due to COVID-19.
Adjusted EBITDA – Consolidated
The following table outlines the reconciliation to net income (loss) and calculation of consolidated Adjusted EBITDA for the three months ended March 31, 2021 and 2020. The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
Consolidated | For the three months ended March 31, | |||||||
(In thousands) | 2021 | 2020 | ||||||
Net loss | $ | (33,863 | ) | $ | (2,471 | ) | ||
Interest expense, net | 5,669 | 3,054 | ||||||
Income tax benefit | (2,801 | ) | (1,828 | ) | ||||
Depreciation and amortization | 8,249 | 6,690 | ||||||
Loss (gain) on foreign currency | (70 | ) | 3,443 | |||||
Other expense | (1 | ) | 53 | |||||
Stock-based compensation | 1,611 | 898 | ||||||
National Geographic fee amortization | - | 727 | ||||||
Other | 386 | 12 | ||||||
Adjusted EBITDA | $ | (20,820 | ) | $ | 10,578 | |||
The following tables outline the reconciliation for each segment from operating income to Adjusted EBITDA for the three months ended March 31, 2021 and 2020.
Lindblad Segment | For the three months ended March 31, | |||||||
(In thousands) | 2021 | 2020 | ||||||
Operating (loss) income | $ | (27,296 | ) | $ | 2,189 | |||
Depreciation and amortization | 7,867 | 6,248 | ||||||
Stock-based compensation | 1,477 | 898 | ||||||
National Geographic fee amortization | - | 727 | ||||||
Other | - | 12 | ||||||
Adjusted EBITDA | $ | (17,952 | ) | $ | 10,074 | |||
Land Experiences Segment | For the three months ended March 31, | |||||||
(In thousands) | 2021 | 2020 | ||||||
Operating (loss) income | $ | (3,770 | ) | $ | 62 | |||
Depreciation and amortization | 382 | 442 | ||||||
| Stock-based compensation | 134 | - | ||||||
| Other | 386 | - | ||||||
Adjusted EBITDA | $ | (2,868 | ) | $ | 504 | |||
Calculation of Gross and Net Cruise Cost | For the three months ended March 31, | |||||||
(In thousands, except for Available Guest Nights, Gross and Net Cruise Cost per Avail. Guest Night) | 2022 | 2021 | ||||||
Cost of tours | $ | 47,571 | $ | 7,604 | ||||
Plus: Selling and marketing | 10,283 | 1,696 | ||||||
Plus: General and administrative | 15,248 | 10,613 | ||||||
Gross Cruise Cost | 73,102 | 19,913 | ||||||
Less: Commissions | (4,405 | ) | (29 | ) | ||||
Less: Other tour expenses | (9,989 | ) | (634 | ) | ||||
Net Cruise Cost | 58,708 | 19,250 | ||||||
Less: Fuel Expense | (5,924 | ) | (512 | ) | ||||
Net Cruise Cost Excluding Fuel | 52,784 | 18,738 | ||||||
Non-GAAP Adjustments: | ||||||||
Stock-based compensation | (1,828 | ) | (1,477 | ) | ||||
Other | (19 | ) | - | |||||
Adjusted Net Cruise Cost Excluding Fuel | $ | 50,937 | $ | 17,261 | ||||
Adjusted Net Cruise Cost | $ | 56,861 | $ | 17,773 | ||||
Available Guest Nights | 48,546 | - | ||||||
Gross Cruise Cost per Available Guest Night | $ | 1,506 | NM | |||||
Net Cruise Cost per Available Guest Night | 1,209 | NM | ||||||
Net Cruise Cost Excluding Fuel per Available Guest Night | 1,087 | NM | ||||||
Adjusted Net Cruise Cost Excluding Fuel per Available Guest Night | 1,049 | NM | ||||||
Adjusted Net Cruise Cost per Available Guest Night | 1,171 | NM | ||||||
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 May 31, 2021 and have been working with guests to reschedule travel plans and refund payments, as applicable. Although our Land Experiences segment has operated limited tours during the first quarter 2021 and we are planning to resume ship operations beginning June 2021 with expeditions to Alaska and the Galapagos, theThe COVID-19 pandemic has already had a material negative impact on our operations and financial results and, while we expect the evolving pandemic to have ongoing material negative effects onsubstantially resumed operations, financial results and liquidity. Givengiven the dynamic nature of this situation, we cannot reasonably estimate the impacts of the COVID-19 pandemic on our financial condition, results of operations, cash flows, plans and growth for the foreseeable future. It is unknown when travel restrictions and various border closures will be completely lifted and what the demand for expedition travel will be once these restrictions are no longer in place.
As of March 31, 2021,2022, we had approximately $498.4$584.1 million in long-term debt obligations, including the current portion of long-term debt. 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, assuming that our operations resume on the timelinecontinue to ramp as we currently expect.
As we continue to ramp up operations, our monthly cash usage will increase as we incur costs in operating additional expeditions and trips, prepare additional ships for return to service, and spending to market and advertise upcoming expeditions and trips. We also anticipate a significant increase in guest payments as we receive final payments for upcoming expeditions and trips, as well as deposits for new reservations for future travel. However, there can be no assurance that cash flows from operations will be available to fund future obligations or that we will not experience delays or cancellations with respect to the resumption of our operations.
We estimate our current monthly cash usage 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. As we implement plans to resume operations, the monthly cash usage will increase as it incurs costs in preparation for returning ships to service, spends to market and advertise upcoming expeditions and reinstates furloughed and part-time office staff as needed. We also anticipate a significant increase in guest payments as we receive final payments for upcoming expeditions as well as deposits for new reservations for future travel.
Sources and Uses of Cash for the Threethree Months Ended March 31, 20212022 and 20202021
Net cash used inprovided by operating activities was $6.9$5.2 million in 20212022 compared to net cash provided byused in operating activities of $15.4$6.9 million in 2020,2021. The $12.1 million increase is primarily due to the reschedulingramp in operations and guest final payments and deposits for upcoming expeditions and trips, partially offset by the costs of operations due to the COVID-19 pandemic.operations.
Net cash used in investing activities was $7.5 million in 2022 compared to $10.7 million in 2021 comparedas increased capital expenditures primarily from routine vessel maintenance across the fleet and renovations to $116.7 million in 2020. The $106.1 million decrease was primarily due to payments for the completion of the National Geographic EnduranceIslander II during the first quarter 2020, partiallyahead of its launch later this year was more than offset by the net cash used in 2021 for the acquisitions of Off the Beaten Path and DuVine during 2021.DuVine.
Net cash used inprovided by financing activities was $0.5$14.5 million in 20212022 compared to net cash provided byused in financing activities in 2021 of $151.9$0.5 million in 2020. The $152.4 million decrease in cash provided by financing activities was primarily due to borrowing $107.7 million under the issuance of new senior secured notes which were used to repay the prior credit agreement, forincluding the final contracted paymentterm facility, including the Main Street Loan and the revolving facility.
Funding Sources
Debt Facilities
6.75% Notes
The Notes contain covenants that, among other things, restrict our ability and the ability of our restricted subsidiaries to incur certain additional indebtedness and issue preferred stock and make certain dividend payments, distributions, investments and other restricted payments. These covenants are subject to a number of important exceptions and qualifications set forth in the Notes.
New Revolving Credit Facility
Our Third Amended and Restated Credit Agreement (the “Amended Credit Agreement”), providesOn February 4, 2022, we entered into a $200.0 million senior secured first lien term loan facility (the “Term Facility”), maturing March 2025, and a $45.0 millionnew senior secured revolving credit facility (the “Revolving“New Revolving Credit Facility”), which includesprovides for an aggregate principal amount of commitments of $45.0 million, maturing February 2027, including a $5.0 million letter of credit sub-facility. In March 2020, we drew $45.0 millionsub-facility in an aggregate principal amount of up to $5.0 million. The obligations under the New Revolving Credit Facility are guaranteed by us and the Guarantors and are secured by first-priority pari passu liens, subject to permitted liens and certain exceptions, on our Revolving Facility, which matures in March 2023. The Amended Credit Agreement was amended in August 2020 to waivesubstantially all the applicationassets of the total net leverage ratio covenant through June 2021Company and in December 2020 to provide for the borrowing of a new tranche of incremental term loansGuarantors. Borrowings under the AmendedNew Revolving Credit Agreement in an amount of $85.0 million, maturing December 2025, made under the Main Street Expanded Loan Facility, (the “Main Street Loan”). In connection with the amendments, the interest rate of the Term Facility was increased 125 basis points, to be paid-in-kind at maturity, a LIBOR minimum of 0.75% was added to the Term Facility and certain covenants were amended to be more restrictive.
The Term Facility (excluding the Main Street Loan), as amended as of March 31, 2021, bears interest at an adjusted Intercontinental Exchange (“ICE”) Benchmark administration LIBOR, with a minimum of 0.75%, plus a spread of 4.75%, for an aggregated rate of 5.50% as of March 31, 2021, and the Revolving Facility bears interest at an adjusted ICE Benchmark administration LIBOR plus a spread of 3.00%, for an aggregated rate of 3.12% as of March 31, 2021. The Main Street Loan bearsif any, will bear interest at a rate per annum ofequal to, at our option, an adjusted ICE Benchmark administration LIBOR for an interest period of 3-monthsSOFR rate plus 3.00%, for an aggregateda spread or a base rate of 3.20% as of March 31, 2021.plus a spread.
In 2018, we entered into interest rate cap agreements to hedge our exposure to interest rate movementsThe New Revolving Credit Facility contains customary affirmative and manage our interest rate expense related to the Term Facility.negative covenants, as well as financial covenants and event of default provisions.
Senior Secured Credit Agreements
Our first senior secured credit agreement (the “Export“First Export Credit Agreement”) makesmade 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 borrowed the $107.7 million under the First Export Credit Agreement for the final contracted payment of the National Geographic Endurance. 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 3.18% as of March 31, 2021, with interest and principal payments due every 90 days from borrowing date, with final principal due January 2032.
Our second senior secured credit agreement (the “Second Export Credit Agreement”) makesmade available to us a loan in an aggregate principal amount not to exceed $122.8 million for the purpose of providing pre- and post- deliverypost-delivery financing for up to 80% of the purchase price of the National Geographic ResolutionResolution., 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 3.19% as of March 31, 2021. After completion of the vessel, We borrowed $122.8 million under the Second Export Credit Agreement, at our option, will bear an interest rate of either a fixed rate of 6.36% or a variable rate equal to three-month LIBOR plus a margin of 3.00% per annum. In September 2019, April 2020 and April 2021, we drewdrawing approximately $30.5 million in 2019, $30.6 million in 2020 and $15.5$61.7 million respectively, againstin 2021, with the Secondship delivered in September 2021.
During June 2021, we amended our export credit agreements to, among other things, extend the deferral of scheduled amortization payments of the First Export Credit Agreement for contracted installment payments onthrough December 2021 in the National Geographic Resolution. The final 30% is due upon delivery and acceptanceaggregate amount of $15.7 million, extend the waiver of the vessel.
During 2019, we entered into foreign exchange forward contracts, designated as cash flow hedges, to hedge our exposure to the Norwegian kroner (“NOK”), related to our installment payments under the contract to purchase the National Geographic Resolution.
The Amended Credit Agreement, the Export Credit Agreement and the Second Export Credit Agreement contain financial and restrictive covenants, which were amended in June 2020. Astotal leverage ratio covenant through March 31, 2021,2022, increase interest rate spreads of the total net leverage ratio covenants of ourexport credit agreements have been waivedby 50 basis points and annualize EBITDA used in the covenant calculations through June 2021.December 31, 2022. The deferred principal payments will amortize quarterly over three years starting March 2022. Certain other covenants continue to be more restrictive during the extended covenant waiver period. We were in compliance with our covenants in effect as of March 31, 2021.2022.
The First Export Credit Agreement, as amended, bears interest at a variable interest rate equal to three-month LIBOR plus a spread of 3.50% per annum, or 4.33% over the borrowing period covering March 31, 2022. The Second Export Credit Agreement, as amended, bears a variable interest rate equal to three-month LIBOR plus a spread of 3.50% per annum, or 4.43% over the borrowing period covering March 31, 2022.
Notes Payable
In connection with the Natural Habitat acquisition in May 2016, Natural Habitat issued a $2.5 million unsecured promissory note, amended in May 2020, to Benjamin L. Bressler, the founder of Natural Habitat, with an outstanding principal amount of $0.8 million as of March 31, 2022. The promissory note accrues interest at a rate of 1.44% annually, with interest payable every six months and the remaining principal payment due on December 22, 2022.
Other
Our Off the Beaten Path subsidiary has a loan maturing June 2023 for the purchase of guest transportation vehicles. The loan’s original principal was $0.3 million, is collateralized by the vehicles and bears an annual interest rate of 4.77%.
Our Off the Beaten Path subsidiary has a $0.8 million loan under the Main Street Expanded Loan Facility, originated on December 11, 2020. For the first 12 months, interest is not payable and accrued to the principal balance, thereafter, monthly interest payments are required. The outstanding balance will amortize at a rate of 15% on both December 2023 and December 2024, with the remaining balance due December 2025. The loan bears a variable interest rate equal to one-month LIBOR plus a spread of 3.00%, or 3.45% as of March 31, 2022. This loan may be voluntarily prepaid at any time and from time to time, without premium or penalty, other than customary “breakage costs” and fees for LIBOR-based loans.
Our DuVine subsidiary has a EUR 0.1 million State Assistance Loan related to the financial consequences of the COVID-19 pandemic, for the purpose of employment preservation. This loan matures August 2025, with monthly payments, and bears an annual interest rate of 0.53%.
Equity
Preferred Stock
In August 2020, we issued and sold 85,000 shares of Series A Redeemable Convertible Preferred Stock, par value of $0.0001, (“Preferred Stock”) for $1,000 per share for gross proceeds of $85.0 million. As of March 31, 2022, 80,000 shares of Preferred Stock were outstanding. 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,debt, make long-term investments or any other use of cash. While traditionallyTraditionally we run a working capital deficit asdue primarily to a large balance of March 31, 2021 and December 31, 2020, we had working capital of $30.2 million and $73.4 million, respectively.unearned passenger revenues. As of March 31, 20212022, we had a working capital deficit of $89.1 million, and as of December 31, 2020,2021, we had $163.9 million and $187.5 million, respectively, in cash and cash equivalents, excluding restricted cash.a working capital deficit of $79.1 million.
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 pandemic and our borrowings through the Main Street Expanded Loan Facility program places restrictions on stock repurchases. We have cumulatively repurchased 875,218 shares of common stock for $8.3 million and 6,011,926 warrants for $14.7 million since plan inception. All repurchases were made using cash resources. The balance for the Repurchase Plan was $12.0 million as of March 31, 2021.
In February 2019, we entered into an agreement with Ulstein Verft to construct a polar ice-class vessel, the National Geographic Resolution, a sister ship of the National Geographic Endurance, with a total purchase price of 1,291.0 million NOK, which was amended in December 2019 to (i) provide a $4 million loan to the builder, to be repaid at 112% of the principle balance on maturity in December 2023, and (ii) an expedited delivery incentive that, if the National Geographic Resolution is delivered early, as determined by the expedited delivery schedule per the agreement, that all or a portion of the of the loan will be considered as a delivery bonus and forgiven. The purchase price is due in installments, with the first 20% paid shortly after execution of the agreement, 50% being paid over the duration of the build and the final 30% due upon delivery and acceptance of the vessel. The vessel is scheduled to be delivered in the fourth quarter of 2021. The new-build process exposes us to certain risks typically associated with new ship construction which we manage through detailed planning and close monitoring by our internal marine team. In September 2019, April 2020, and April 2021, we drew approximately $30.5 million, $30.6 million and $15.5 million, respectively, against the Second Export Credit Agreement for contracted installment payments on the National Geographic Resolution. The final 30% is due upon delivery and acceptance of the vessel. The remaining purchase price will be funded through a combination of available cash, borrowing under our Second Export Credit Agreement and our Revolving Facility and excess cash flows generated by our existing operations.
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 20202021 Annual Report.
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 20202021 Annual Report.
We are exposed to a market risk for interest rates related to our variable rate debt.debt instruments. We assess our market risks based on changes in interest rates utilizing a sensitivity analysis that measures the potential impact on earnings and cash flows based on a hypothetical 1.0%100 basis point change in interest rates. For additional information regarding our long-term borrowings see Note 5 to our Condensed Consolidated Financial Statements included herein. As of March 31, 2021, we had interest rate cap agreements to hedge a portion of our exposure to interest rate movements of our variable rate debt and to manage our interest expense. The notional amount of outstanding debt associated with interest rate cap agreements as of March 31, 2021 was $100.0 million. Based on our March 31, 20212022 outstanding variable rate debt balance, a hypothetical 1.0% change100 basis point increase in the six-month LIBOR interest rates related to our variable interest rate debt instruments would impact our annual interest expense by approximately $1.0$2.3 million.
As of March 31, 2021, we had foreign currency forward contracts to hedge our exposure to foreign currency exchange rate risk related to our ship construction contracts denominated in NOK. For the three months ended March 31, 2021, we recorded a loss of approximately $0.4 million in other comprehensive income related to these foreign exchange derivatives. The strengthening of the NOK at March 31, 2021 by a hypothetical 10%, would result in an approximately $6.7 million gain being recorded in other comprehensive income. The weakening of the NOK at March 31, 2021 by a hypothetical 10%, would result in an approximately $5.5 million loss being recorded in other comprehensive income.
CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that our receipts and expenditures are being made only in accordance with authorizations of our management and our directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting, as of March 31, 2021,2022, using the criteria described in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the evaluation under the updated internal control framework in Internal Control-Integrated Framework (2013), management concluded that there was a material weakness in internal control over financial reporting as described below under “Description of Material Weakness,” and as a result that our disclosure controls and procedures were notwas effective as of March 31, 2021.
Management has taken and is taking steps, as described below under “Remediation Plan,” to remediate the material weakness in our internal control over financial reporting. Notwithstanding this material weakness, management believes that the financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.
Description of Material Weakness
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
During our assessment of our internal controls in connection with the preparation of our Annual Report on Form 10-K for the year ended December 31, 2020, management identified a material weakness in internal controls over financial reporting related to having inadequate documentation to evidence the review over certain accounting journal entries and account reconciliations. These control deficiencies, if not remediated, could result in a misstatement to the annual or interim consolidated financial statements that would not be prevented or detected. Accordingly, our management has determined that these control deficiencies constitute material weaknesses.
RemediationPlan
Management has previously established a comprehensive set of controls and procedures over financial reporting. However, in several instances during the past year we noted a lack of complete compliance with these controls and procedures, specifically related to the required documentation of certain review procedures performed. Management is taking additional steps to ensure consistent compliance with those controls and procedures as well as to ensure appropriate documentation of reviews that have taken place. Measures we have taken and are taking to address the material weakness described above include:
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We are committed to maintaining a strong internal control environment, and we believe the measures described above will strengthen our internal control over financial reporting and remediate the material weakness we have identified. As we continue to evaluate and work to improve our internal control over financial reporting, management may determine to take additional measures to strengthen controls or to modify the remediation plan described above, which may require additional implementation time.2022.
Changes in Internal Control over Financial Reporting
Except as described above under Remediation Plan, thereThere was no change in our internal control over financial reporting that occurred during the quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART 2. | OTHER INFORMATION |
ITEM 1. |
The Company is involved in various claims, legal actions and regulatory proceedings arising from time to time in the ordinary course of business. We have protection and indemnity insurance that would be expected to cover any damages.
ITEM 1A. |
We operate in a rapidly changing environment that involves a number of risks that could materially affect our business, financial condition or future results, some of which are beyond our control. The risks and uncertainties that we believe are most important for you to consider are discussed under the heading “Risk Factors” in the 20202021 Annual Report.
ITEM 2. |
Recent Sales by the Company of Unregistered Securities
There were no unregistered sales of equity securities during the quarter ended March 31, 2021.2022.
Repurchases of SecuritiesStock and Warrant Repurchase Plan
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 pandemic, and our borrowings throughit remains suspended due to restrictions related to the Main Street Expanded Loan Facility program places restrictions on stock repurchases. We have cumulatively repurchased 875,218 shares of common stock for $8.3 million and 6,011,926 warrants for $14.7 million, since plan inception. All repurchases were made using cash resources. The balance for the Repurchase Plan was $12.0 million as of March 31, 2021. 2022.
Repurchases of Securities
The following table represents information with respect to shares of common stock repurchased under the Repurchase Plan as well as shares withheld from vestingvesting's of stock-based compensation awards for employee income taxes,tax withholding 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 | ||||||||||||
January 1 through January 31, 2021 (a) | 387 | $ | 17.64 | $ | - | $ | 11,974,787 | |||||||||
February 1 through February 28, 2021 (a) | - | - | - | 11,974,787 | ||||||||||||
March 1 through March 31, 2021 (a) | 86,937 | 18.87 | - | 11,974,787 | ||||||||||||
Total | 87,324 | $ | - | |||||||||||||
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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 | ||||||||||||
January 1 through January 31, 2022 | 387 | $ | 15.35 | $ | - | $ | 11,974,787 | |||||||||
February 1 through February 28, 2022 | - | - | - | 11,974,787 | ||||||||||||
March 1 through March 31, 2022 | 38,238 | 15.11 | - | 11,974,787 | ||||||||||||
Total | 38,625 | $ | - | |||||||||||||
ITEM 3. |
Not applicable.
ITEM 4. |
Not applicable.
ITEM 5. |
Item 1.01 Entry into a Material Definitive Agreement.Not applicable.
On April 26, 2021, Lindblad Expeditions Holdings, Inc. (the “Company”) amended its Third Amended and Restated Credit Agreement entered into that certain Fifth Amendment to Third Amended and Restated Credit Agreement (the “Amendment”), by and among the Company, the subsidiaries of the company party thereto, as borrowers, the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent, which amends that certain Third Amended and Restated Credit Agreement, dated as of March 27, 2018 (the “Amended Credit Agreement”), in order to, among other things, extend the waiver of the total net leverage ratio covenant through March 31, 2022, adjust the annualized EBITDA used in the covenant calculation through December 31, 2022 and increase the interest rate spreads of certain tranches of term loans and of revolving borrowings thereunder (such additional interest to be paid in cash). Pursuant to the Amendment, certain other covenants under the Amended Credit Agreement continue to be more restrictive during the extended covenant waiver period.
ITEM 6. |
Number | Description | Included | Form | Filing Date | ||||
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101.INS | Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | Herewith | ||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | Herewith | ||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | Herewith | ||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | Herewith | ||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | Herewith | ||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | Herewith | ||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on April 30, 2021.May 4, 2022.
LINDBLAD EXPEDITIONS HOLDINGS, INC. | ||
(Registrant) | ||
By | /s/ | |
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Chief Executive Officer | ||