LINDBLAD EXPEDITIONS HOLDINGS, INC. (LIND) FY 2024 MD&A
This page reproduces the company's own Item 7 MD&A text from the linked SEC filing. It is filer text, not grepcent analysis, scoring, or investment advice.
Item 7. Management’s Discussion and Analysis of the Results of Operations and Financial Condition
The information contained in this section should be read in conjunction with our consolidated financial statements and related notes and the information contained elsewhere in this Form 10-K under the headings “Risk Factors” and “Business.”
Overview
We provide expedition cruising and land-based adventure travel fostering a spirit of exploration and discovery, using itineraries featuring up-close encounters with wildlife and nature, history and culture, and promote guest empowerment, human connections and interactivity. Our mission is to offer life-enhancing adventures around the world and pioneer innovative ways to allow our guests to connect with exotic and remote places.
We currently operate a fleet of 12 owned expedition ships and seven seasonal charter vessels under the Lindblad Expeditions, LLC. (“Lindblad”) brand. Each 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 to Alaska, the Arctic, Antarctic, the Galápagos Islands, Baja’s Sea of Cortez, the South Pacific, Costa Rica and Panama. We have a longstanding relationship with the National Geographic Society (“National Geographic”) dating back to 2004, which is based on a shared interest in exploration, research, technology and conservation. This relationship, which was recently expanded and extended through 2040, includes a co-selling, co-marketing and global branding arrangement 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 ability to interact with these experts through lectures, excursions, dining and other experiences throughout their voyage.
We also operate land-based adventure travel experiences around the globe, with unique itineraries designed to offer intimate encounters with nature and the planet's remarkable destinations including the animals and people who live there.
Natural Habitat, Inc. (“Natural Habitat”) provides eco-conscious expeditions and nature-focused, small-group experiences 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.
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. Off the Beaten Path offerings include insider national park experiences in the Rocky Mountains, Desert Southwest, and Alaska, as well as unique trips across Central and South America, Oceania, Europe and Africa.
DuVine Cycling + Adventure Company (“DuVine”) provides intimate cycling adventures and travel experiences, led by expert guides, with a focus on connecting with local character and culture, including high-quality local cuisine and accommodations. International cycling tours include the exotic Costa Rican rainforests, the rocky coasts of Ireland and the vineyards of Spain, while cycling adventures in the United States include cycling beneath the California redwoods, pedaling through Vermont farmland and wine tastings in the world-class vineyards of Napa and Sonoma.
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 world. These walking tours are highlighted by luxury boutique accommodations, and handcrafted itineraries that immerse guests into the history and culture of the places they are exploring and the people who live there.
Thomson Group, consisting of Wineland-Thomson Adventures, LLC (“Thomson Family Adventures”), Thomson Safaris Ltd (“Thomson Safaris”), Nature Discovery Ltd (“Nature Discovery”), and the Ngorongoro lodge and farm under the Ngorongoro Safari Lodge Ltd (“Gibb’s Farm”), provides global custom and private tours, family travel experiences, socially responsible and positively impactful light-treading Tanzanian safaris with expert local wildlife guides providing exceptional insight, treks to the summit of Kilimanjaro, the Roof of Africa, with 30 years of experience and a commitment to environmental and social responsibility, and high-end lodging at the award-winning Gibb’s Farm, an 80-acre sanctuary located near the Ngorongoro Crater.
2024 Highlights
During April 2024, we increased our ownership of Natural Habitat from 80.1% to 90.1% for $15.2 million, as Mr. Bressler, President of Natural Habitat, exercised a portion of his put option, and increased our ownership of DuVine from 70% to 75% for $1.5 million, by exercising a portion of our call option on DuVine,
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During June 2024, we announced an agreement and on January 9, 2025, we completed the acquisition of Torcatt Enterprises Limitada, a holding company that owns and operates two vessels in the Galápagos Islands, for $17.0 million. The acquisition expands our vessels and guest capacity in one of our core markets.
During July 2024, we acquired Thomson Group to further expand our land-based experiential travel offerings and increase our addressable market, for $24.0 million in cash and $6.0 million in Lindblad common stock, representing 682,593 shares. Thomson Group consists of four adventure travel brands, including the respected Tanzania safari specialists Thomson Safaris, with more than 40 years of experience in the country, was founded on the principles of quality and integrity, with the goal of leading socially responsible and positively impactful light-treading safari tours. In addition to its adventure travel brands, the acquisition includes three leading Tanzania tour operators, the historic award-winning Gibb’s Farm lodge, an 80-acre sanctuary for the senses located near the Ngorongoro Crater, the industry-leading operator of Kilimanjaro treks Nature Discovery Limited, which has more than 30 years of experience and is the recommended Tanzanian partner for over 20 specialist trekking and safari travel agents around the world, and Thomson Safaris Limited.
Financial Presentation
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; | |
|---|---|---|
| ● | a comparable discussion of our consolidated and segment results of operations for the years ended December 31, 2024 and 2023; | |
| ● | 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. |
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 and land-based expeditions; air transportation to and from the ships, goods and services rendered onboard that are not included in guest ticket prices, trip insurance and cancellation fees. |
Cost of Tours
Cost of tours includes the following:
| ● | direct costs associated with revenues, including cost of pre- or post-expedition excursions, hotel accommodations and land-based expeditions, air and other transportation expenses and cost of goods and services rendered onboard; | |
|---|---|---|
| ● | payroll costs and related expenses for shipboard and expedition personnel; | |
| ● | food costs for guests and crew, including complimentary food and beverage amenities for guests; | |
| ● | fuel costs and related costs of delivery, storage and safe disposal of waste; and | |
| ● | other tour expenses, such as land costs, port costs, repairs and maintenance, equipment expense, drydock, ship insurance and charter hire costs. |
Selling and marketing
Selling and marketing expenses include commissions, royalties and a broad range of advertising and promotional expenses.
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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.
Other Income (Expense)
Other income (expense) includes interest income and expense, gains and/or losses on foreign currency, disposal of fixed assets, write-offs of deferred financing costs and fees, and other miscellaneous non-operating items.
Operational and Financial Metrics
We use a variety of operational and financial metrics, including non-GAAP financial measures, such as Net Yields, Occupancy and Net Cruise Cost, to enable us to analyze the performance and financial condition of our ship operations, and measures such as Adjusted EBITDA to analyze the performance and financial condition of our segments and consolidated results. 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, our non-GAAP financial measures 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 results of operations and financial condition together with the consolidated financial statements and the related notes thereto also included in Item 8 of this Annual Report on Form 10-K.
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, and other supplemental adjustments. Other supplemental adjustments include certain non-operating items such as stock-based compensation, reorganization costs, executive severance costs, debt refinancing costs, acquisition-related expenses, (gain) loss on transfer of assets, 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, acquisition-related expenses and other non-recurring charges.
Available Guest Nights is a measurement of capacity available for sale 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 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).
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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 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.
The following metrics apply to our Land Experiences segment:
Number of Guests represents the number of guests that travel with us in a period.
Departures represent the number of trips, tours, treks and safaris completed during the period.
Foreign Currency Translation
The U.S. dollar and Tanzanian shilling are the functional currencies 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 are mildly seasonal, historically larger in the first and third quarters. The seasonality of our operating results fluctuates due to our vessels being taken out of service for scheduled maintenance or drydocking, which is typically during nonpeak demand periods, in the second and fourth quarters. Our drydock schedules are subject to cost and timing differences from year-to-year due to the availability of shipyards for certain work, drydock locations based on ship itineraries, operating conditions experienced especially in the polar regions and the applicable regulations of class societies in the maritime industry, which require more extensive reviews periodically. Drydocking impacts operating results by reducing tour revenues and increasing cost of tours. Our Natural Habitat, Off the Beaten Path, DuVine, Classic Journeys brands and Thomson Group 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, the majority of Off the Beaten Path and DuVine's revenues are recorded during the second and third quarters from their spring and summer season departures, and the majority of Thomson Group’s revenues being recorded during the third quarter from the height of their safari season tours, while Classic Journeys’ revenue is somewhat less seasonal with the majority of revenues recorded during their second, third and fourth quarters.
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Results of Operations – Consolidated
Our reported consolidated results of operations for the years ended December 31, 2024, 2023 and 2022 are shown in the following table:
| For the years ended December 31, | ||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | 2024 | 2023 | Change | % | 2022 | Change | % | |||||||||||||||||||||
| Tour revenues | $ | 644,727 | $ | 569,543 | $ | 75,184 | 13 | % | $ | 421,500 | $ | 148,043 | 35 | % | ||||||||||||||
| Cost of tours | 343,673 | 322,376 | 21,297 | 7 | % | 283,217 | 39,159 | 14 | % | |||||||||||||||||||
| General and administrative | 139,921 | 118,431 | 21,490 | 18 | % | 96,291 | 22,140 | 23 | % | |||||||||||||||||||
| Selling and marketing | 87,018 | 71,426 | 15,592 | 22 | % | 60,996 | 10,430 | 17 | % | |||||||||||||||||||
| Depreciation and amortization | 52,562 | 46,711 | 5,851 | 13 | % | 44,042 | 2,669 | 6 | % | |||||||||||||||||||
| Operating income (loss) | $ | 21,553 | $ | 10,599 | $ | 10,954 | 103 | % | $ | (63,046 | ) | $ | 73,645 | 117 | % | |||||||||||||
| Net loss | $ | (28,195 | ) | $ | (40,876 | ) | $ | 12,681 | 31 | % | $ | (108,160 | ) | $ | 67,284 | 62 | % | |||||||||||
| Undistributed loss per share available to stockholders: | ||||||||||||||||||||||||||||
| Basic | $ | (0.67 | ) | $ | (0.94 | ) | $ | 0.27 | $ | (2.23 | ) | $ | 1.29 | |||||||||||||||
| Diluted | $ | (0.67 | ) | $ | (0.94 | ) | $ | 0.27 | $ | (2.23 | ) | $ | 1.29 |
Comparison of Years Ended December 31, 2024 and 2023 - Consolidated
Tour Revenues
Tour revenues for the year ended December 31, 2024 increased $75.2 million, or 13%, to $644.7 million, compared to $569.5 million for the year ended December 31, 2023. Of the $75.2 million increase, the continuing operations realized a $31.3 million increase due to a 4% increase in guest nights sold and a 7% increase in guests traveled, and a $27.7 million increase due to pricing and the change in mix of itineraries and trips. The $75.2 million increase also includes the results of Thomson Group since its acquisition on July 31, 2024. The Lindblad segment tour revenues increased by $25.9 million, or 7%, and the Land Experiences segment increased $49.3 million, or 29%, inclusive of $15.1 million generated by the Thomson Group since its July 31, 2024 acquisition.
Cost of Tours
Total cost of tours for the year ended December 31, 2024 increased $21.3 million, or 7%, to $343.6 million, compared to $322.4 million for the year ended December 31, 2023, primarily due to the inclusion of Thomson Group within our Land Experiences segment, operating additional trips, and higher operating costs. The Lindblad segment cost of tours decreased by $5.0 million and the Land Experiences segment increased $26.3 million, or 26%, inclusive of $7.0 million related to the Thomson Group since its July 31, 2024 acquisition.
General and Administrative Expenses
General and administrative expenses for the year ended December 31, 2024 increased $21.5 million, or 18%, to $139.9 million, compared to $118.4 million for the year ended December 31, 2023, primarily due to higher personnel expense, credit card commissions due to a strong booking environment, transaction-related costs, the inclusion of the results of Thomson Group and a legal settlement. At the Lindblad segment, general and administrative expenses increased $6.7 million, or 8%, and the Land Experiences segment increased $11.8 million, or 33%.
Selling and Marketing Expenses
Selling and marketing expenses for the year ended December 31, 2024 increased $15.6 million, or 22%, to $87.0 million, compared to $71.4 million for the year ended December 31, 2023, primarily due to higher royalties associated with the new National Geographic agreement, increased marketing spend to support future growth, and the inclusion of the results of Thomson Group. At the Lindblad segment, selling and marketing expenses increased $10.4 million, or 18%, and the Land Experiences segment increased $5.2 million, or 37%.
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Depreciation and Amortization Expenses
Depreciation and amortization expenses increased $5.9 million, or 13%, to $52.6 million for the year ended December 31, 2024 compared to $46.7 million for the year ended December 31, 2023, primarily due to depreciation of assets placed into service to support our vessel fleet and amortization of intangible assets related to the Thomson Group acquisition.
Other Expense
Other expenses were $46.6 million for the year ended December 31, 2024, compared to other expenses of $48.3 million for the year ended December 31, 2023. The $1.7 million decrease was primarily due to:
| ● | the May 2023 write-off of $3.9 million of deferred financing costs, fees and other expenses related to the repayment of our prior Export Credit Agreements, partially offset by; | |
|---|---|---|
| ● | a $1.8 million higher loss on foreign currency during 2024; and | |
| ● | a $0.7 million increase in interest expense from higher interest rates across our debt facilities and increased borrowings. |
Comparison of Years Ended December 31, 2023 and 2022 - Consolidated
For a comparison of our results from operations for the years ended December 31, 2023 and 2022, see “Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 6, 2024.
Results of Operations – Segments
Selected results for our segments for the years ended December 31, 2024, 2023 and 2022 are below. Percentages that are not meaningful to the change are noted as NM in the table. 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 years ended December 31, | ||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | 2024 | 2023 | Change | % | 2022 | Change | % | |||||||||||||||||||||
| Tour revenues: | ||||||||||||||||||||||||||||
| Lindblad | $ | 423,306 | $ | 397,410 | $ | 25,896 | 7 | % | $ | 278,449 | $ | 118,961 | 43 | % | ||||||||||||||
| Land Experiences | 221,421 | 172,133 | 49,288 | 29 | % | $ | 143,051 | 29,082 | 20 | % | ||||||||||||||||||
| Total tour revenues | $ | 644,727 | $ | 569,543 | $ | 75,184 | 13 | % | $ | 421,500 | $ | 148,043 | 35 | % | ||||||||||||||
| Operating income: | ||||||||||||||||||||||||||||
| Lindblad | $ | (2,928 | ) | $ | (8,692 | ) | $ | 5,764 | 66 | % | $ | (77,871 | ) | $ | 69,179 | 89 | % | |||||||||||
| Land Experiences | 24,481 | 19,291 | 5,190 | 27 | % | $ | 14,825 | 4,466 | 30 | % | ||||||||||||||||||
| Operating income (loss) | $ | 21,553 | $ | 10,599 | $ | 10,954 | 103 | % | $ | (63,046 | ) | $ | 73,645 | NM | ||||||||||||||
| Adjusted EBITDA: | ||||||||||||||||||||||||||||
| Lindblad | $ | 59,400 | $ | 48,456 | $ | 10,944 | 23 | % | $ | (29,154 | ) | $ | 77,610 | 266 | % | |||||||||||||
| Land Experiences | 31,832 | 22,750 | 9,082 | 40 | % | $ | 17,628 | 5,122 | 29 | % | ||||||||||||||||||
| Total adjusted EBITDA | $ | 91,232 | $ | 71,206 | $ | 20,026 | 28 | % | $ | (11,526 | ) | $ | 82,732 | NM |
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Reconciliation of Net Loss to Adjusted EBITDA
| Consolidated | For the years ended December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | 2024 | 2023 | 2022 | |||||||||
| Net loss | $ | (28,195 | ) | $ | (40,876 | ) | $ | (108,160 | ) | |||
| Interest expense, net | 45,738 | 45,014 | 37,495 | |||||||||
| Income tax expense | 3,104 | 3,146 | 6,076 | |||||||||
| Depreciation and amortization | 52,562 | 46,711 | 44,042 | |||||||||
| Loss (gain) loss on foreign currency | 1,065 | (751 | ) | 1,236 | ||||||||
| Other (income) expense | (159 | ) | 4,066 | 307 | ||||||||
| Stock-based compensation | 9,833 | 13,886 | 6,992 | |||||||||
| Transaction-related costs | 3,913 | - | - | |||||||||
| Legal settlement | 3,000 | - | - | |||||||||
| Reorganization costs | 371 | - | - | |||||||||
| Other | - | 10 | 486 | |||||||||
| Adjusted EBITDA | $ | 91,232 | $ | 71,206 | $ | (11,526 | ) |
The following tables outline the reconciliation for each segment from operating income (loss) to Adjusted EBITDA:
| Lindblad Segment | For the years ended December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | 2024 | 2023 | 2022 | |||||||||
| Operating loss | $ | (2,928 | ) | $ | (8,692 | ) | $ | (77,871 | ) | |||
| Depreciation and amortization | 48,433 | 43,351 | 41,275 | |||||||||
| Stock-based compensation | 9,656 | 13,787 | 6,992 | |||||||||
| Legal settlement | 3,000 | - | - | |||||||||
| Transaction-related costs | 868 | - | - | |||||||||
| Reorganization costs | 371 | - | - | |||||||||
| Other | - | 10 | 450 | |||||||||
| Adjusted EBITDA | $ | 59,400 | $ | 48,456 | $ | (29,154 | ) |
Reconciliation of Operating (Loss) Income to Adjusted EBITDA
| Land Experiences Segment | For the years ended December 31, | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | 2024 | 2023 | 2022 | ||||||||
| Operating income | $ | 24,481 | $ | 19,291 | $ | 14,825 | |||||
| Depreciation and amortization | 4,129 | 3,360 | 2,767 | ||||||||
| Transaction-related costs | 3,045 | - | - | ||||||||
| Stock-based compensation | 177 | 99 | - | ||||||||
| Other | - | - | 36 | ||||||||
| Adjusted EBITDA | $ | 31,832 | $ | 22,750 | $ | 17,628 |
Results of Operations – Lindblad Segment
Guest Metrics — Lindblad Segment
The following tables set forth our Guest Metrics for the Lindblad segment. Please refer to our Description of Certain Line Items above for the specific definition by line item and segment. 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.
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| For the years ended December 31, | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2022 | ||||||||||
| Available Guest Nights | 323,691 | 316,091 | 236,784 | |||||||||
| Guest Nights Sold | 253,941 | 243,269 | 177,521 | |||||||||
| Occupancy | 78 | % | 77 | % | 75 | % | ||||||
| Maximum Guests | 38,964 | 37,339 | 29,095 | |||||||||
| Number of Guests | 31,489 | 29,719 | 22,347 | |||||||||
| Voyages | 475 | 454 | 393 |
| Calculation of Gross and Net Yield per Available Guest Night | For the years ended December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands, except for Available Guest Nights, Gross and Net Yield per Available Guest Night) | 2024 | 2023 | 2022 | |||||||||
| Guest ticket revenues | $ | 373,055 | $ | 345,871 | $ | 240,592 | ||||||
| Other tour revenue | 50,251 | 51,539 | 37,857 | |||||||||
| Tour Revenues | 423,306 | 397,410 | 278,449 | |||||||||
| Less: Commissions | (17,157 | ) | (25,787 | ) | (19,149 | ) | ||||||
| Less: Other tour expenses | (27,306 | ) | (24,952 | ) | (27,780 | ) | ||||||
| Net Yield | $ | 378,843 | $ | 346,671 | $ | 231,520 | ||||||
| Available Guest Nights | 323,691 | 316,091 | 236,784 | |||||||||
| Gross Yield per Available Guest Night | $ | 1,308 | $ | 1,257 | $ | 1,176 | ||||||
| Net Yield per Available Guest Night | 1,170 | 1,097 | 978 |
The following table reconciles operating loss to our Net Yield Guest Metric for the Lindblad Segment.
| For the years ended December 31, | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | 2024 | 2023 | 2022 | |||||||||
| Operating loss | $ | (2,928 | ) | $ | (8,692 | ) | $ | (77,871 | ) | |||
| Cost of tours | 217,408 | 222,413 | 201,255 | |||||||||
| General and administrative | 92,662 | 83,004 | 67,564 | |||||||||
| Selling and marketing | 67,731 | 57,334 | 46,226 | |||||||||
| Depreciation and amortization | 48,433 | 43,351 | 41,275 | |||||||||
| Less: Commissions | (17,157 | ) | (25,787 | ) | (19,149 | ) | ||||||
| Less: Other tour expenses | (27,306 | ) | (24,952 | ) | (27,780 | ) | ||||||
| Net Yield | $ | 378,843 | $ | 346,671 | $ | 231,520 |
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| Calculation of Gross and Net Cruise Cost | For the years ended December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands, except for Available Guest Nights, Gross and Net Cruise Cost per Avail. Guest Night) | 2024 | 2023 | 2022 | |||||||||
| Cost of tours | $ | 217,408 | $ | 222,413 | $ | 201,255 | ||||||
| Plus: Selling and marketing | 67,731 | 57,334 | 46,226 | |||||||||
| Plus: General and administrative | 92,662 | 83,004 | 67,564 | |||||||||
| Gross Cruise Cost | 377,801 | 362,751 | 315,045 | |||||||||
| Less: Commissions | (17,157 | ) | (25,787 | ) | (19,149 | ) | ||||||
| Less: Other tour expenses | (27,306 | ) | (24,952 | ) | (27,780 | ) | ||||||
| Net Cruise Cost | 333,338 | 312,012 | 268,116 | |||||||||
| Less: Fuel Expense | (26,648 | ) | (27,913 | ) | (31,135 | ) | ||||||
| Net Cruise Cost Excluding Fuel | 306,690 | 284,099 | 236,981 | |||||||||
| Non-GAAP Adjustments: | ||||||||||||
| Stock-based compensation | (9,656 | ) | (13,787 | ) | (6,992 | ) | ||||||
| Legal settlement | (3,000 | ) | - | - | ||||||||
| Transaction-related costs | (868 | ) | - | - | ||||||||
| Reorganization costs | (371 | ) | - | - | ||||||||
| Other | - | (10 | ) | (450 | ) | |||||||
| Adjusted Net Cruise Cost Excluding Fuel | $ | 292,795 | $ | 270,302 | $ | 229,539 | ||||||
| Adjusted Net Cruise Cost | $ | 319,443 | $ | 298,215 | $ | 260,674 | ||||||
| Available Guest Nights | 323,691 | 316,091 | 236,784 | |||||||||
| Gross Cruise Cost per Available Guest Night | $ | 1,167 | $ | 1,148 | $ | 1,331 | ||||||
| Net Cruise Cost per Available Guest Night | 1,030 | 987 | 1,132 | |||||||||
| Net Cruise Cost Excluding Fuel per Available Guest Night | 947 | 899 | 1,001 | |||||||||
| Adjusted Net Cruise Cost Excluding Fuel per Available Guest Night | 905 | 855 | 969 | |||||||||
| Adjusted Net Cruise Cost per Available Guest Night | 987 | 943 | 1,101 |
Comparison of Years Ended December 31, 2024 and 2023
Tour Revenues
Tour revenues for the year ended December 31, 2024 increased $25.9 million, to $423.3 million compared to $397.4 million for the year ended December 31, 2023. Of the $25.9 million increase, $17.8 million is related to a 4% increase in guest nights sold and $8.1 million is related to a 2% increase in revenue per guest nights sold as compared to the prior year period. Net yield per available guest night increased 7% to $1,170, from $1,097 in 2023, reflecting higher pricing and a one-percentage point increase in occupancy compared with 2023.
Operating Loss
We incurred an operating loss of $2.9 million for the year ended December 31, 2024 compared to a loss of $8.7 million for the year ended December 31, 2023. The $5.8 million decrease in operating loss was due to the increased revenue, partially offset by higher operating expenses, primarily due to expenses associated with increased revenue, including higher sales and marketing costs driven by increased royalties associated with the new National Geographic agreement and marketing spend to drive future booking growth, and higher general and administrative costs, driven by increased personnel costs, higher credit card commissions due to the revenue and bookings growth, transaction-related costs and a legal settlement.
Results of Operations – Land Experiences Segment
Guest Metrics — Land Experiences Segment
The following tables set forth our Guest Metrics for the Land Experiences segment. Please refer to our Description of Certain Line Items above for the specific definition by line item and segment. 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.
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| For the years ended December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2022 | |||||||||
| Guests | 21,638 | 18,704 | 16,536 | ||||||||
| Departures | 2,565 | 2,274 | 2,116 |
Comparison of Years Ended December 31, 2024 to December 31, 2023
Tour Revenues
Tour revenues for the year ended December 31, 2024 increased $49.3 million, or 29%, to $221.4 million compared to $172.1 million in 2023, primarily as a result of operating additional trips, and higher pricing. 2024 also includes the results of Thomson Group since its acquisition on July 31, 2024. Of the $49.3 million increase, $19.6 million is due to an 11% increase in average revenue per guest, which is a combination of pricing increases and changes to trip and tour itinerary mix, and $13.6 million is related to a 7% increase in guests traveled for the continuing operations.
Operating Income
Operating income increased $5.2 million, or 27%, to $24.5 million for the year ended December 31, 2024 compared to $19.3 million in 2023. The increase was driven by higher revenues from the existing businesses, the inclusion of the results of Thomson Group since its acquisition, partially offset by higher operating and personnel costs related to operating additional departures, higher marketing spend to drive future growth, higher credit card commissions related to revenue growth and transaction-related costs.
Liquidity and Capital Resources
As of December 31, 2024, we had $183.9 million in cash and cash equivalents, including $32.2 million in restricted cash, which is primarily related to deposits on future travel originating from U.S. ports and credit card reserves. As of December 31, 2024, we had $635.0 million in long-term debt obligations, including the current portion of long-term debt, which is insignificant.
We continually assess our available liquidity and our expected cash requirements. We believe we have access to financing sources to fund our operations and our long-term capital needs, including debt service and necessary capital expenditures. We expect to meet these needs by using a combination of the following: cash on hand, expected cash flow from operations, borrowings from our revolving credit facility, and when the capital markets are favorable, proceeds from the sale of equity securities or the issuance of new debt.
Sources and Uses of Cash
Net cash provided by operating activities was $92.4 million in 2024 compared to $25.4 million cash used in operations in 2023. The $67.0 million increase was primarily due to higher guest deposits for future travel and increased operating results.
Net cash used in investing activities was $44.1 million in 2024 compared to $14.8 million in 2023. 2024 primarily included the acquisition of Thomson Group and capital expenditures on our vessels. 2023 included capital expenditures on our vessels and our digital transformation initiatives, partially offset by a sale of marketable securities.
Net cash used by financing activities was $19.8 million in 2024 compared to $60.7 million cash provided by financing activities in 2023. 2024 primarily included expenditures for the acquisition of an additional 9.95% of Natural Habitat and 5% of DuVine related to the respective puts and calls of the redeemable non-controlling interests, and income tax withholdings for stock-based compensation. 2023 primarily included the issuance of $275.0 million of 9.00% senior secured notes which were used mainly to repay our prior Export Credit Agreements.
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Contractual Obligations
| Payments due by period | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | Total | Current | 2-3 years | 4-5 years | Thereafter | ||||||||||||||
| Operating Activities: | |||||||||||||||||||
| Operating lease obligations | $ | 3,453 | $ | 1,845 | $ | 922 | $ | 32 | $ | 654 | |||||||||
| Charter commitments | 28,259 | 16,692 | 11,567 | - | - | ||||||||||||||
| Investing Activities: | |||||||||||||||||||
| Purchase obligations | 17,000 | 17,000 | - | - | - | ||||||||||||||
| Financing Activities: | |||||||||||||||||||
| Long-term debt obligations | 635,029 | 29 | 360,000 | 275,000 | - | ||||||||||||||
| Interest on long-term debt obligations | 136,217 | 49,050 | 75,824 | 11,343 | - | ||||||||||||||
| Total | $ | 819,958 | $ | 84,616 | $ | 448,313 | $ | 286,375 | $ | 654 |
Funding Sources and Needs
Debt Facilities
6.75% Senior Secured Notes due 2027
On February 4, 2022, we issued $360.0 million aggregate principal amount of 6.75% senior secured notes (the “6.75% Notes”). We used the proceeds from the 6.75% Notes to prepay in full all outstanding borrowings under our former term loan, including the Main Street Expanded Loan Facility, and former revolving credit facility, and paid all related premiums, terminating in full our credit agreement and the commitments thereunder. Interest on the 6.75% Notes is payable semiannually in arrears on February 15 and August 15 of each year. The 6.75% Notes mature February 15, 2027, subject to earlier repurchase or redemption.
Revolving Credit Facility
On February 4, 2022, we entered into a revolving credit facility, which includes an aggregate principal amount of $45.0 million maturing February 2027, including a letter of credit sub-facility in an aggregate principal amount of up to $5.0 million (the “Revolving Credit Agreement”). Borrowings under the facility will bear interest at a rate per annum equal to, at our option, an adjusted Secured Overnight Financing Rate plus a spread or a base rate plus a spread. As of December 31, 2024, no amounts were outstanding under the Revolving Credit Agreement.
9.00% Senior Secured Notes due 2028
On May 2, 2023, we issued $275.0 million aggregate principal amount of 9.00% senior secured notes due 2028 (the “9.00% Notes”) in a private offering. We used the net proceeds of the 9.00% Notes to prepay in full all outstanding borrowings under our prior senior secured credit agreements, to pay any related premiums and to terminate in full the prior senior secured credit agreements and the commitments thereunder. The 9.00% Notes bear interest at a rate of 9.00% per year, and interest is payable semiannually in arrears on May 15 and November 15 of each year. The 9.00% Notes mature on May 15, 2028, subject to earlier repurchase or redemption.
Covenants
The 6.75% Notes, 9.00% Notes and Revolving Credit Facility contain covenants that, among other things, restrict our ability and the ability of our restricted subsidiaries to incur certain additional indebtedness 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 6.75% Notes, 9.00% Notes and Revolving Credit Facility. As of December 31, 2024, we were in compliance with the covenants currently in effect.
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Equity
Preferred Stock
On August 31, 2020, we sold and issued 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 December 31, 2024, 62,000 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 were required to 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. During 2024, we have continued to pay Preferred Stock dividends in-kind. At any time, 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 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 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. During the year ended December 31, 2022, 18,000 shares of Preferred Stock and related accumulated dividends were converted by the holders into 2,109,561 shares of our common stock. As of December 31, 2024, the outstanding Preferred Stock and related accumulated dividends could be converted into approximately 8.4 million shares of our common stock.
Funding Needs
We generally rely on a combination of cash flows provided by operations and the issuance of debt or equity financings 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 debt, make long-term investments or any other use of cash. We traditionally run a working capital deficit due primarily to a large balance of unearned passenger revenues and as of December 31, 2024 and 2023, we had working capital deficit of $114.0 million and $74.7 million, respectively.
Our Board of Directors approved a stock repurchase plan (“Repurchase Plan”) in November 2015 and increased the repurchase plan to $35.0 million in November 2016. The Repurchase Plan authorizes us to purchase from time to time our outstanding common stock. Any shares purchased will be retired. The Repurchase Plan has no time deadline and will continue until otherwise modified or terminated at the sole discretion of our Board of Directors at any time. These repurchases exclude shares repurchased to settle statutory employee tax withholding related to the exercise of stock options and vesting of stock awards. We have cumulatively repurchased 875,218 shares of common stock for $8.3 million and 6,011,926 previously outstanding 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 December 31, 2024. No shares were repurchased under the Repurchase Plan during 2024.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, the reported amounts of revenues and expenses during the reporting periods and the related disclosures in the consolidated financial statements and accompanying footnotes. Out of our significant accounting policies, which are described in Note 2—Summary of Significant Accounting Policies of our consolidated financial statements included elsewhere in this Form 10-K, certain accounting policies are deemed “critical,” as they require management’s highest degree of judgment, estimates and assumptions. While management believes its judgments, estimates and/or assumptions are reasonable, they are based on information presently available and actual results may differ significantly from those estimates under different assumptions and conditions.
Ship Accounting
Ships, including ship improvements, are our most significant assets. We make accounting estimates with respect to our ship accounting related to estimating the useful life of each of our ships as well as their residual values, which are based on industry norms. If conditions relating to industry norms or where we will use a ship change, we may need to change our assumptions of ship useful lives and residual values, which could impact future depreciation expense and loss on retirement of ship and/or components. We believe we have made reasonable estimates for ship accounting purposes.
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Intangible Assets
Our Intangible assets include tradenames, customer lists and operating rights. Tradenames are words, symbols, or other devices used in trade or business to indicate the source of products and to distinguish it from other products and are registered with government agencies and are protected legally by continuous use in commerce. Customer lists are established relationships with existing customers that resulted in repeat purchases and customer loyalty. Operating rights relate to our cupos (licenses) required to operate within the Galápagos National Park in Ecuador. We make accounting estimates, with respect to our intangible assets related to estimating their initial value from acquisitions, their useful lives as well as their residual values. In event conditions change in our ability to recover the carrying value of our intangible assets, which is determined by using the asset’s estimated undiscounted future cash flows, an impairment charge would be recognized for the excess, if any, of the asset’s carrying value over its estimated fair value. A significant amount of judgment is required in estimating the future cash flows and fair values of our tradenames, customer lists and operating rights.
Future Application of Accounting Standards
Refer to Note 2—Summary of Significant Accounting Policies-Recent Accounting Pronouncements included in our consolidated financial statements elsewhere in this Form 10-K for further information on Recent Accounting Pronouncements.