UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
For the transition period from to
Commission file number
LINDBLAD EXPEDITIONS HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
| | | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(
(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 | ||
| | | The |
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. ☒
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). ☒
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 | ☐ | | ☒ |
| 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).
As of October 31, 2022,
LINDBLAD EXPEDITIONS HOLDINGS, INC.
Quarterly Report On Form 10-Q
For The Quarter Ended September 30, 2022
Table of Contents
| Page(s) |
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| PART I. FINANCIAL INFORMATION |
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| ITEM 1. |
Financial Statements (Unaudited) |
|
| Condensed Consolidated Balance Sheets as of September 30, 2022 (Unaudited) and December 31, 2021 |
||
| Notes to the Condensed Consolidated Financial Statements (Unaudited) |
||
| ITEM 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
20 |
| ITEM 3. |
34 | |
| ITEM 4. |
34 | |
| PART II. OTHER INFORMATION |
||
| ITEM 1. |
34 | |
| ITEM 1A. |
34 | |
| ITEM 2. |
35 | |
| ITEM 3. |
35 | |
| ITEM 4. |
35 | |
| ITEM 5. |
35 | |
| ITEM 6. |
36 | |
| 37 | ||
| 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)
| September 30, 2022 | December 31, 2021 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Marine operating supplies | ||||||||
| Inventories | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Goodwill | ||||||||
| Intangibles, net | ||||||||
| Deferred tax asset | ||||||||
| Right-to-use lease assets | ||||||||
| Other long-term assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES | ||||||||
| Current Liabilities: | ||||||||
| Unearned passenger revenues | $ | $ | ||||||
| Accounts payable and accrued expenses | ||||||||
| Lease liabilities - current | ||||||||
| Long-term debt - current | ||||||||
| Total current liabilities | ||||||||
| Long-term debt, less current portion | ||||||||
| Lease liabilities | ||||||||
| Other long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Series A redeemable convertible preferred stock, shares authorized; and shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively | ||||||||
| Redeemable noncontrolling interests | ||||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Preferred stock, $ par value, shares authorized; and Series A shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively | ||||||||
| Common stock, $ par value, shares authorized; and issued, and outstanding as of September 30, 2022 and December 31, 2021, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ||||||
| Total stockholders' deficit | ( | ) | ( | ) | ||||
| Total liabilities, mezzanine equity and stockholders' deficit | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)
(unaudited)
| For the three months ended September 30, |
For the nine months ended September 30, |
|||||||||||||||
| 2022 |
2021 |
2022 |
2021 |
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| Tour revenues |
$ | $ | $ | $ | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Cost of tours |
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| General and administrative |
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| Selling and marketing |
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| Depreciation and amortization |
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| Total operating expenses |
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| Operating income (loss) |
( |
) | ( |
) | ( |
) | ||||||||||
| Other (expense) income: |
||||||||||||||||
| Interest expense, net |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Loss on foreign currency |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other (expense) income |
( |
) | ||||||||||||||
| Total other expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Loss before income taxes |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Income tax expense (benefit) |
( |
) | ||||||||||||||
| Net loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Net income (loss) attributable to noncontrolling interest |
( |
) | ||||||||||||||
| Net loss attributable to Lindblad Expeditions Holdings, Inc. |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Series A redeemable convertible preferred stock dividend |
||||||||||||||||
| Net loss available to stockholders |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Weighted average shares outstanding |
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| Basic |
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| Diluted |
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| Undistributed loss per share available to stockholders: |
||||||||||||||||
| Basic |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Diluted |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
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 September 30, |
For the nine months ended September 30, |
|||||||||||||||
| 2022 |
2021 |
2022 |
2021 |
|||||||||||||
| Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Other comprehensive income: |
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| Cash flow hedges: |
||||||||||||||||
| Net unrealized income |
( |
) | ( |
) | ||||||||||||
| Reclassification adjustment, net of tax |
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| Total other comprehensive income |
||||||||||||||||
| Total comprehensive loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Less: comprehensive income (loss) attributive to non-controlling interest |
( |
) | ||||||||||||||
| Comprehensive loss attributable to stockholders |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
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
(In thousands, except share data)
(unaudited)
| Common Stock |
Additional Paid-In |
Accumulated |
Accumulated Other Comprehensive |
Total Stockholders' |
||||||||||||||||||||
| Shares |
Amount |
Capital |
Deficit |
Loss |
Deficit |
|||||||||||||||||||
| Balance as of June 30, 2022 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | |||||||||||||||
| Stock-based compensation |
- | |||||||||||||||||||||||
| Net activity related to equity compensation plans |
( |
) | ( |
) | ||||||||||||||||||||
| Redeemable noncontrolling interest |
- | ( |
) | ( |
) | |||||||||||||||||||
| Series A preferred stock dividend |
- | - | - | ( |
) | - | ( |
) | ||||||||||||||||
| Net loss attributable to Lindblad Expeditions Holdings, Inc |
- | ( |
) | ( |
) | |||||||||||||||||||
| Balance as of September 30, 2022 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | |||||||||||||||
| Common Stock | Additional Paid-In | Accumulated | Accumulated Other Comprehensive | Total Stockholders' | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Loss | Deficit | |||||||||||||||||||
| Balance as of December 31, 2021 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||
| Stock-based compensation |
- | |||||||||||||||||||||||
| Net activity related to equity compensation plans |
( |
) | ( |
) | ||||||||||||||||||||
| Issuance of stock for conversion of preferred stock |
||||||||||||||||||||||||
| Other comprehensive income, net |
- | |||||||||||||||||||||||
| Redeemable noncontrolling interest |
- | ( |
) | ( |
) | |||||||||||||||||||
| Series A preferred stock dividend |
- | ( |
) | ( |
) | |||||||||||||||||||
| Net loss attributable to Lindblad Expeditions Holdings, Inc. |
- | ( |
) | ( |
) | |||||||||||||||||||
| Balance as of September 30, 2022 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | |||||||||||||||
LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders’ (Deficit) Equity (continued)
(In thousands, except share data)
(unaudited)
| Common Stock |
Additional Paid-In |
Accumulated |
Accumulated Other |
Total Stockholders' |
||||||||||||||||||||
| Shares |
Amount |
Capital |
Deficit |
Comprehensive Loss |
Equity (Deficit) |
|||||||||||||||||||
| Balance as of June 30, 2021 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||
| Stock-based compensation |
- | |||||||||||||||||||||||
| Net activity related to equity compensation plans |
( |
) | ( |
) | ||||||||||||||||||||
| Other comprehensive income, net |
- | |||||||||||||||||||||||
| Series A preferred shares dividend |
- | ( |
) | - | ( |
) | ||||||||||||||||||
| Net loss attributable to Lindblad Expeditions Holdings, Inc. |
- | ( |
) | ( |
) | |||||||||||||||||||
| Balance as of September 30, 2021 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||
| Common Stock | Additional Paid-In | Accumulated | Accumulated Other | Total Stockholders' | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Comprehensive Loss | Equity (Deficit) | |||||||||||||||||||
| Balance as of December 31, 2020 |
$ | $ | $ | ( |
) | ( |
) | $ | ||||||||||||||||
| Stock-based compensation |
- | |||||||||||||||||||||||
| Net activity related to equity compensation plans |
( |
) | ( |
) | ||||||||||||||||||||
| Issuance of stock for acquisition |
||||||||||||||||||||||||
| Other comprehensive income, net |
- | |||||||||||||||||||||||
| Series A preferred shares dividend |
- | ( |
) | ( |
) | |||||||||||||||||||
| Net loss attributable to Lindblad Expeditions Holdings, Inc. |
- | ( |
) | ( |
) | |||||||||||||||||||
| Balance as of September 30, 2021 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
| For the nine months ended September 30, |
||||||||
| 2022 |
2021 |
|||||||
| Cash Flows From Operating Activities |
||||||||
| Net loss |
$ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
||||||||
| Depreciation and amortization |
||||||||
| Amortization of deferred financing costs and other, net |
||||||||
| Right-of-use lease asset |
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| Stock-based compensation |
||||||||
| Deferred income taxes |
( |
) | ||||||
| Change in fair value of contingent acquisition consideration |
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| Loss on foreign currency |
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| Write-off of unamortized issuance costs related to debt refinancing |
||||||||
| Changes in operating assets and liabilities |
||||||||
| Marine operating supplies and inventories |
( |
) | ( |
) | ||||
| Prepaid expenses and other current assets |
( |
) | ( |
) | ||||
| Unearned passenger revenues |
||||||||
| Other long-term assets |
||||||||
| Other long-term liabilities |
||||||||
| Accounts payable and accrued expenses |
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| Operating lease liabilities |
( |
) | ||||||
| Net cash provided by operating activities |
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| Cash Flows From Investing Activities |
||||||||
| Purchases of property and equipment |
( |
) | ( |
) | ||||
| Acquisition (net of cash acquired) |
( |
) | ||||||
| Net cash used in investing activities |
( |
) | ( |
) | ||||
| Cash Flows From Financing Activities |
||||||||
| Proceeds from long-term debt |
||||||||
| Repayments of long-term debt |
( |
) | ( |
) | ||||
| Payment of deferred financing costs |
( |
) | ( |
) | ||||
| Repurchase under stock-based compensation plans and related tax impacts |
( |
) | ( |
) | ||||
| Net cash provided by financing activities |
||||||||
| Net decrease in cash, cash equivalents and restricted cash |
( |
) | ( |
) | ||||
| Cash, cash equivalents and restricted cash at beginning of period |
||||||||
| Cash, cash equivalents and restricted cash at end of period |
$ | $ | ||||||
| Supplemental disclosures of cash flow information: |
||||||||
| Cash paid during the period: |
||||||||
| Interest |
$ | $ | ||||||
| Income taxes |
||||||||
| Non-cash investing and financing activities: |
||||||||
| Non-cash preferred stock dividend |
$ | $ | ||||||
| Value of shares issued for acquisition |
||||||||
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.’s 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 owned expedition ships and 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’s common stock is listed on the NASDAQ Capital Market under the symbol “LIND”.
The Company operates the following reportable business segments:
Lindblad Segment. The Lindblad segment primarily provides ship-based expeditions aboard customized, nimble and intimately-scaled vessels that are able to venture where larger cruise ships cannot, thus allowing Lindblad to offer up-close experiences in the planet’s wild and remote places and capitals of culture. Each expedition ship is fully equipped with state-of-the-art tools for in-depth exploration, and the majority of 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 California’s Sea of Cortez and Panama, and foster active engagement by guests. 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 four primarily land-based brands, Natural Habitat, DuVine, Off the Beaten Path and Classic Journeys.
| ● | Natural Habitat specializes in conservation-oriented adventures, providing life-enhancing forays into the natural world that feature wild habitats and the animals and people who live there. Natural Habitat’s travel adventures provide unparalleled access to the planet's most extraordinary wildlife, landscapes and cultures. Natural Habitat’s unique itineraries include access to private wildlife reserves, remote corners of national parks and distinctive, secluded, and remote lodges and camps situated where wildlife viewing is best, such as 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 specializes in luxury cycling and adventure tours around the world, providing immersive cultural and culinary experiences through thoughtfully designed itineraries led by expert local guides. Offerings primarily include tours throughout Europe, the United States and South America. Examples of DuVine’s tours include cycling and culinary tours throughout the Bordeaux and Burgundy wine making regions, Tuscan truffle, porcini and chestnut harvest regions, Napa and Sonoma wine making regions and lakes and volcanos throughout Patagonia. DuVine’s trips include top-quality gear and support and are tailored to riders of all abilities with an emphasis on exceptional food and wine experiences, along with boutique accommodations. | |
| ● | Off the Beaten Path provides active small-group and private custom journeys around the world with a long-standing focus on offering unique adventures and experiences throughout United States (“U.S.”) National Parks. In addition to other U.S.-based adventures such as ranch vacations and fly-fishing expeditions, Off the Beaten Path’s small-group product offerings include international expeditions across Europe, Africa, Australia, Central and South America and the South Pacific, such as hiking through the Dolomites, family adventures in Patagonia’s Lake District and experiencing the culture of Morocco. All Off the Beaten Path expeditions are defined by a focus on outdoor activity led by experienced, friendly guides. | |
| ● | 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. |
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 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, 2021 contained in the Company’s Annual Report on Form 10-K filed with the SEC on February 28, 2022 (the “2021 Annual Report”).
There have been no significant changes to the Company’s accounting policies from those disclosed in the 2021 Annual Report.
Ramp of Fleet Operations
The Company resumed operation in June 2021 and, since then, has continually ramped its operations, providing immersive expeditions in 2022 across all ten of its owned vessels. During the third quarter of 2022, operations included trips to Alaska, the Arctic, the Pacific Northwest, British Columbia, Canada's Northwest Passage, the Galápagos Islands, Greenland, Iceland, Norway and South America. Travel restrictions related to COVID-19 have diminished dramatically, and the Company will resume operations in additional geographies in the remainder of 2022 and throughout 2023. Where travel restrictions remain, which primarily includes a limited number of itineraries impacted by the Russia-Ukraine conflict, the Company is adjusting itineraries where possible, and working with guests to reschedule travel plans and refund payments or issue future travel certificates, as applicable. Previously, due to the spread of the COVID-19 virus and the effects of travel restrictions around the world, the Company had suspended or rescheduled the majority of its expeditions departing between March 16, 2020 through May 31, 2021.
The Company believes there are a variety of strategic advantages that enabled it to deploy its ships safely and quickly as travel restrictions were lifted. Most notably, the size of its owned and operated vessels, which range from 48 to 148 passengers, allows for a highly controlled environment that includes stringent cleaning protocols. The small nature of the Company’s ships also allowed it to efficiently and effectively test its guests and crew prior to boarding, or as otherwise needed. Additionally, 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 September 30, 2022, the Company had $
As of September 30, 2022, the Company had a total debt position of $
During May 2022, the Company further amended its senior secured export credit agreements to extend the waiver of its net leverage coverage ratio from March 2022 through December 31, 2022.
On February 4, 2022, the Company issued $
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, par value of $
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, 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 and nine months ended September 30, 2022 and 2021, the Company incurred net losses from operations, therefore basic and diluted net loss per share are the same for each period. For the three and nine months ended September 30, 2022, approximately
Loss per share was calculated as follows:
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
| (In thousands, except share and per share data) | ||||||||||||||||
| Net loss attributable to Lindblad Expeditions Holdings, Inc. | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Series A redeemable convertible preferred stock dividend | ||||||||||||||||
| Undistributed loss available to stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding: | ||||||||||||||||
| Total weighted average shares outstanding, basic | ||||||||||||||||
| Total weighted average shares outstanding, diluted | ||||||||||||||||
| Undistributed loss per share available to stockholders: | ||||||||||||||||
| Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
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 is 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) | (unaudited) | |||
| Balance as of December 31, 2021 | $ | |||
| Recognized in tour revenues during the period | ( | ) | ||
| Additional contract liabilities in period | ||||
| Balance as of September 30, 2022 | $ | |||
The following table disaggregates our tour revenues by the sales channel it was derived from:
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Guest ticket revenue: | (unaudited) | (unaudited) | ||||||||||||||
| Direct | % | % | % | % | ||||||||||||
| National Geographic | % | % | % | % | ||||||||||||
| Agencies | % | % | % | % | ||||||||||||
| Affinity | % | % | % | % | ||||||||||||
| Guest ticket revenue | % | % | % | % | ||||||||||||
| Other tour revenue | % | % | % | % | ||||||||||||
| Tour revenues | % | % | % | % | ||||||||||||
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 nine months ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| (In thousands) | (unaudited) | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Total cash, cash equivalents and restricted cash as presented in the statement of cash flows | $ | $ | ||||||
Restricted cash consists of the following:
| As of September 30, 2022 | As of December 31, 2021 | |||||||
| (In thousands) | (unaudited) | |||||||
| Credit card processor reserves | $ | $ | ||||||
| Federal Maritime Commission and other escrow | ||||||||
| Certificates of deposit and other restricted securities | ||||||||
| Total restricted cash | $ | $ | ||||||
Amounts within prepaid expenses and other current assets in excess of 5% of current assets as of September 30, 2022 were prepaid tour expenses of $
As of September 30, 2022 and December 31, 2021, no individual amounts within accounts payable and accrued expenses were in excess of 5% of current liabilities.
In 2021, the Company received a $
Loan Receivable
The Company’s loan receivable is recorded at amortized cost within other current assets. The Company reviewed its loan receivable for credit losses in connection with the preparation of its condensed consolidated financial statements for the period ended September 30, 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
| Loan Receivable | ||||
| (In thousands) | (unaudited) | |||
| Balance as of December 31, 2021 | $ | |||
| Accrued interest | ||||
| Amortization of deferred costs | ( | ) | ||
| Balance as of September 30, 2022 | $ | |||
NOTE 5—LONG-TERM DEBT
| As of September 30, 2022 | As of December 31, 2021 | |||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||
| (In thousands) | Principal | Deferred Financing Costs, net | Balance | Principal | Deferred Financing Costs, net | Balance | ||||||||||||||||||
| 6.75% Notes | $ | ( | ) | $ | $ | $ | $ | |||||||||||||||||
| First Export Credit Agreement | ( | ) | ( | ) | ||||||||||||||||||||
| Second Export Credit Agreement | ( | ) | ( | ) | ||||||||||||||||||||
| Note payable | ||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||
| Credit Facility | ( | ) | ||||||||||||||||||||||
| Revolving Facility | ( | ) | ||||||||||||||||||||||
| Total long-term debt | ( | ) | ( | ) | ||||||||||||||||||||
| Less current portion | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Total long-term debt, non-current | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||
For the three and nine months ended September 30, 2022, deferred financing costs charged to interest expense was $
6.75% Notes
On February 4, 2022, the Company issued $
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 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
On February 4, 2022, the Company entered into a new senior secured revolving credit facility (the “New Revolving Credit Facility”), which provides for an aggregate principal amount of commitments of $
The New Revolving Credit Facility contains customary affirmative and negative covenants, as well as financial covenants and event of default provisions.
Senior Secured Credit Agreements
In January 2018, the Company entered into a senior secured credit agreement (the “First Export Credit Agreement”) making available to the Company a loan in an aggregate principal amount not to exceed $
In April 2019, the Company entered into a senior secured credit agreement (the “Second Export Credit Agreement”), to make available to the Company and subject to certain conditions, a loan in an aggregate principal amount not to exceed $
Notes Payable
In connection with the Natural Habitat acquisition in May 2016, Natural Habitat issued a $
Other
The Company’s Off the Beaten Path subsidiary has a loan maturing September 2023 for the purchase of guest transportation vehicles. The loan’s original principal was $
The Company’s Off the Beaten Path subsidiary has a $
The Company’s DuVine subsidiary has a EUR
Covenants
The Company’s Notes, New Revolving Credit 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. The net leverage ratio covenant of the Company’s First Export Credit Agreement and Second Export Credit Agreement have been waived through December 31, 2022. On October 11, 2022, the Company amended the covenants of its Senior Secured Credit Agreements to use an annualized EBITDA calculation in its net leverage ratio covenant for the periods from March 31, 2023 through September 30, 2023. The Company was in compliance with its covenants in effect as of September 30, 2022 and believes that it will be in compliance for the next 12 months.
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.
Interest Rate Risk. The Company previously used interest rate caps to manage the risk related to its previously existing variable rate corporate debt.
The Company recorded the effective portion of changes in the fair value of its cash flow hedges to other comprehensive income (loss), net of tax, and subsequently reclassified these amounts into earnings in the period during which the hedged transaction was 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. The Company reclassified $
The Company held the following derivative instruments with absolute notional values as of September 30, 2022:
| (In thousands) | Absolute Notional Value | |||
| Interest rate caps | $ | |||
| Foreign exchange contracts | ||||
Estimated fair values (Level 2) of derivative instruments were as follows:
| As of September 30, 2022 | As of December 31, 2021 | |||||||||||||||
| (unaudited) | ||||||||||||||||
| (In thousands) | Fair Value, Asset Derivatives | Fair Value, Liability Derivatives | Fair Value, Asset Derivatives | Fair Value, Liability Derivatives | ||||||||||||
| Derivative instruments designated as cash flow hedging instruments: | ||||||||||||||||
| Interest rate cap (a) | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Derivative instruments not designated as cash flow hedging instruments: | ||||||||||||||||
| Interest rate cap (a) | $ | $ | $ | $ | ||||||||||||
| Foreign exchange forward (a) | 753 | |||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| (a) | 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. The effects of derivatives recognized in the Company’s condensed consolidated financial statements were as follows:
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| (In thousands) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
| Derivative instruments designated as cash flow hedging instruments: | ||||||||||||||||
| Interest rate cap (a) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Foreign exchange forward (b) | ( | ) | ( | ) | ||||||||||||
| Derivative instruments not designated as cash flow hedging instruments: | ||||||||||||||||
| Interest rate cap (a) | ||||||||||||||||
| Foreign exchange forward (c) | ( | ) | ( | ) | ||||||||||||
| Total | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||
| (a) | For the three months ended September 30, 2022, recognized as income in interest expense, net. For the nine months ended September 30, 2022, $ | |
| (b) | For the three and nine months ended September 30, 2021, $ | |
| (c) | Gains (losses) related to derivative instruments are expected to be largely offset by (losses) gains on the underlying exposures being hedged and recognized in gain (loss) on foreign currency. |
In 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
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 Company estimates the approximate fair value of its long-term debt to be $
NOTE 7—STOCKHOLDERS’ EQUITY
Stock 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 $
Preferred Stock
In August 2020, the Company issued and sold
NOTE 8—STOCK BASED COMPENSATION
The Company is authorized to issue up to
As of September 30, 2022 and December 31, 2021, options to purchase an aggregate of
The Company recorded stock-based compensation expense of $
2022 Long-Term Incentive Compensation
During the nine months ended September 30, 2022, the Company granted
During the nine months ended September 30, 2022, the Company awarded
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 $
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 5—Long-term Debt for more information.
NOTE 10—INCOME TAXES
As of September 30, 2022 and December 31, 2021, the Company had
NOTE 11—ACQUISITIONS
To further expand the Company’s land-based experiential travel offerings and increase its addressable market, the Company completed three acquisitions during 2021. On February 1, 2021, the Company acquired
The acquisitions had an aggregate purchase price of $
NOTE 12—COMMITMENTS AND CONTINGENCIES
Redeemable Non-Controlling Interest
The Company has controlling interests in its Natural Habitat, Off the Beaten Path, DuVine and Classic Journeys consolidated subsidiaries. The noncontrolling interests are subject to put/call agreements. The put options enable the minority holders, but do not obligate them, to sell the remaining interests to the Company. The Company has call options which enable it, but does not obligate it, to acquire the remaining interests in the subsidiaries, subject to certain dates, expirations and similar redemption value purchase measurements as the put options.
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 redemption value of the noncontrolling interest, are classified to retained earnings. Adjustments in excess of the redemption value of the noncontrolling interest, are treated as a decrease to net income available to common stockholders.
The redemption 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 September 30, | For the nine months ended September 30, | |||||||||||||||
| (In thousands) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
| Beginning balance | $ | $ | $ | $ | ||||||||||||
| Net income (loss) attributable to noncontrolling interest | ( | ) | ||||||||||||||
| Redemption value adjustment of put option | ||||||||||||||||
| Acquired businesses' noncontrolling interest | ( | ) | ||||||||||||||
| Ending balance | $ | $ | $ | $ | ||||||||||||
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 fee is calculated based upon a percentage of certain ticket revenues less travel agent commission, including the revenues received from cancellation fees and any revenues received from the sale of pre- and post-expedition extensions. Royalty expense for the three and nine months ended September 30, 2022 was $
The royalty balance payable to National Geographic as of September 30, 2022 and December 31, 2021 was $
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 million and million for the three and nine months ended September 30, 2022, respectively, and $
Charter Commitments
From time to time, the Company enters into agreements to charter vessels onto which it holds its tours and expeditions. Future minimum payments on its charter agreements as of September 30, 2022 are as follows:
| For the years ended December 31, | Amount | |||
| (In thousands) | (unaudited) | |||
| 2022 (three months) | $ | |||
| 2023 | ||||
| Total | $ | |||
NOTE 13—SEGMENT INFORMATION
The Company is primarily a specialty cruise and experiential travel operator with operations in
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. Operating results for the Company’s reportable segments were as follows:
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||||||||||||||||||
| 2022 | 2021 | Change | % | 2022 | 2021 | Change | % | |||||||||||||||||||||||||
| (In thousands) | (unaudited) | (unaudited) | ||||||||||||||||||||||||||||||
| Tour revenues: | ||||||||||||||||||||||||||||||||
| Lindblad | $ | $ | $ | % | $ | $ | $ | % | ||||||||||||||||||||||||
| Land Experiences | % | % | ||||||||||||||||||||||||||||||
| Total tour revenues | $ | $ | $ | % | $ | $ | $ | % | ||||||||||||||||||||||||
| Operating income (loss): | ||||||||||||||||||||||||||||||||
| Lindblad | $ | ( | ) | $ | ( | ) | $ | % | $ | ( | ) | $ | ( | ) | $ | % | ||||||||||||||||
| Land Experiences | % | ( | ) | NM | ||||||||||||||||||||||||||||
| Total operating income (loss) | $ | $ | ( | ) | $ | % | $ | ( | ) | $ | ( | ) | $ | % | ||||||||||||||||||
Depreciation and amortization are included in segment operating income as shown below:
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||||||||||||||||||
| 2022 | 2021 | Change | % | 2022 | 2021 | Change | % | |||||||||||||||||||||||||
| (In thousands) | (unaudited) | (unaudited) | ||||||||||||||||||||||||||||||
| Depreciation and amortization: | ||||||||||||||||||||||||||||||||
| Lindblad | $ | $ | $ | % | $ | $ | $ | % | ||||||||||||||||||||||||
| Land Experiences | % | % | ||||||||||||||||||||||||||||||