Lindblad Expeditions Holdings has reported results for the second quarter ended June 30, 2016.
Financial Highlights for the Second Quarter of 2016
- Consolidated tour revenues for the second quarter of 2016 were $53.9 million, an increase of $4.4 million or 8.9% as compared with the prior year quarter, reflecting the May 4, 2016 acquisition of Natural Habitat, Inc. ("Natural Habitat").
- Results for the second quarter of 2016 were a net loss of $4.5 million as compared with net income of $8.8 million for the 2015 quarter. The 2015 quarter includes $12.5 million of pretax income and $5.5 million of pretax expenses related to the July 2015 merger with Capitol Acquisition Corp. II.
- Consolidated Adjusted EBITDA for the second quarter of 2016 was $5.2 million as compared with $12.0 million in the prior year quarter.
- Net Yield for the Lindblad segment of the business for the second quarter of 2016 was $999 as compared with $963 in the prior year quarter, an increase of 3.7%.
- Occupancy for the Lindblad segment of the business for the second quarter of 2016 was 92.0% compared with 91.9% in the prior year quarter.
On May 4, 2016, the Company completed its acquisition of 80.1% of the outstanding common stock of Natural Habitat. As a result of the acquisition, the Company updated its operating and reporting segments structure. The Company now has two reporting segments – Lindblad and Natural Habitat.
Second Quarter 2016 Results
"The Company's second quarter results were in line with our expectations for the period. We grew net yield by 3.7% over last year and maintained a strong occupancy level at 92%. Revenue and EBITDA in the second quarter this year were impacted by a planned reduction in operating days for the owned fleet due to vessel drydocking. In 2016, both of our blue water vessels, the Explorer and the Orion were drydocked in contrast to 2015 when only one vessel was wet docked for a much shorter period. 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. The combined effect of lower revenue from fewer operating days and the operating costs of these planned drydocks is the key factor with regard to the year-over-year comparison of revenue and EBITDA in the period." said Sven-Olof Lindblad, President and Chief Executive Officer of Lindblad.
Consolidated tour revenues in the second quarter amounted to $53.9 million, as compared with $49.5 million in the second quarter of 2015, which represents an increase of $4.4 million or 8.9%. The increase was due to $5.7 million of additional revenue from the acquisition of Natural Habitat, partially offset by $1.3 million lower revenue at the Lindblad segment due to the planned reduction in operating days for the owned fleet.
Net Yield in the quarter for the Lindblad segment amounted to $999 as compared with $963 in the second quarter of 2015. The increase in Net Yield was primarily related to price increases. The Lindblad segment had 41,213 Available Guest Nights in the second quarter of 2016 compared with 44,193 in the prior year quarter, and an occupancy rate of 92.0% in the second quarter of 2016 compared with 91.9% in the 2015 quarter.
Adjusted Net Cruise Cost per Available Guest Night for the Lindblad segment amounted to $858 in the second quarter of 2016, as compared with $691 for the same period in the prior year. The increase was primarily driven by higher cost of tours due to the additional drydock days and more extensive maintenance work during the drydocks, as well as an increase in charter hire expense related to additional voyages. These added costs were partially offset by a decrease in fuel costs. As the Company has transitioned to the public market and is fully engaged in executing on its transformational long-range growth plan, additional infrastructure required to support these efforts has increased general and administrative expense as compared to last year. This includes the addition of talent both at the executive level and across the organization, public company accounting and compliance costs, rating agency fees and incremental insurance.
In total, the Company reported a net loss of $4.5 million for the second quarter 2016, as compared with $8.8 million of net income in the 2015 quarter. The 2015 quarter includes $12.5 million of pretax income and $5.5 million of pretax expenses related to the July 2015 merger with Capitol Acquisition Corp. II. (The $12.5 million of pretax income includes a $5.0 million success fee for the debt financing in May 2015 and a $7.5 million gain on the disposal of assets related to the junior debt. See the Company's Form 10-Q for the quarter ended June 30, 2016, which will be filed with the Securities and Exchange Commission for additional information.) Consolidated Adjusted EBITDA was $5.2 million in the second quarter of 2016 as compared with $12.0 million in the same period in 2015, a decrease of $6.8 million. The lower results in 2016 are primarily due to the planned increase in drydock activities for the quarter, with its corresponding decrease in revenues and increase in expenses, and an increase in G&A expenses, as discussed above. Additionally, the 2016 second quarter includes a small, seasonal operating loss at Natural Habitat from the date of its acquisition, May 4, 2016, which is consistent with the historical performance of the Company.
Mr. Lindblad also added: "We are currently at 94% of projected guest ticket revenues for 2016 as of July 31, 2016, compared to 103% in the same time in 2015 for the 2015 fiscal year, a reduction of approximately $5.3 million. The reduction is primarily for voyages during the fourth quarter. We have employed a variety of tactical marketing opportunities for this period to counteract effects seen in specific geographies relating to concerns over the Zika virus and a slowdown in activity on the National Geographic Endeavour, where segments of our audience are waiting for the introduction of our new vessel, the Endeavour II, for our Galápagos operation. We have historically been adept at isolating challenges and developing an effective tactical response while staying focused on our long-term objectives. However, we may be unable to fully eliminate all the effects of the various challenges we face in the short term.
Lindblad Fleet Activities
Work proceeds on schedule for the fourth quarter delivery of the National Geographic Endeavour II, formerly the Via Australis. The vessel will operate year-round in the Galápagos Islands and will replace the National Geographic Endeavour. The vessel has been undergoing significant renovation and refurbishment since its April 25, 2016 acquisition. In December 2016, the Company will also expand its travel offerings with new expeditions in Cuba aboard the 42-guest Panorama II, which will be the fifth chartered vessel in Lindblad's fleet. The vessel is chartered for two years and will operate on a seasonal basis from December through March.
Additionally, the Company has two new coastal vessels on order and the build is proceeding on schedule. The first vessel, which has been named the National Geographic Quest, is expected to be delivered in the second quarter of 2017 and will sail in Alaska and British Columbia during the summer of 2017 before voyaging to Costa Rica and Panama to provide expeditions for the Northern Hemisphere winter season. The second new build vessel is expected to be delivered in the second quarter of 2018.