Lindblad Expeditions has reported its fourth quarter and full year 2020 earnings.

Financial Highlights:

• Ended the year with $187.5 million in unrestricted cash and $17.0 million in restricted cash.
• Raised $85 million in December through borrowings under the Main Street Expanded Loan Facility program.
• Raised $85 million in September through private placement issuance of convertible preferred equity.
• Implemented significant cost reduction measures reducing monthly cash usage to approximately $10-15 million.
• Bookings for 2022 currently 37% ahead of bookings for 2021 at the same point a year ago.
• Amended credit facilities waiving leverage covenants through second quarter of 2021.

Strategic Highlights:

• Delivery of National Geographic Endurance in March 2020 increased Available Guest Nights by nearly 18%.
• Acquired majority stake in leading international luxury cycling and adventure company DuVine Cycling + Adventure in March 2021.
• Acquired majority stake in Off the Beaten Path, a leading active travel operator focused on U.S. National Parks in February 2021.

Sven-Olof Lindblad, President and Chief Executive Officer, said: “As Lindblad moves closer to once again exploring the world’s most remarkable destinations, the cost reductions and targeted capital raises we completed over the past year will enable us to return to operations as a vibrant company. The steps we have taken also provided us the financial flexibility to pursue additional growth opportunities and we recently expanded our platform of high-quality and authentic experiential offerings with the acquisitions of leading travel providers Off the Beaten Path and DuVine.  Just like with our acquisition of Natural Habitat, these businesses are ideal complements to our existing platform, and we look forward to building them into meaningful contributors in the years ahead. There is significant and growing demand for high quality adventure travel, further evidenced by our current booking strength, and we will continue to look for additional opportunities to broaden and deepen our experiential offerings, both organically and through acquisitions, to aggregate larger audiences, generate greater lifetime value from our loyal guests and build additional shareholder value in the years ahead.”

COVID-19 BUSINESS UPDATE

Due to the spread of the COVID-19 virus and the effects of travel restrictions around the world, the company has suspended or rescheduled the majority of its expeditions departing March 16, 2020 through May 31, 2021. The company has been working with guests to amend travel plans and refund payments, as applicable. The company’s ships are currently being maintained with minimally required crew onboard to ensure they comply with all necessary regulations and can be fully and quickly put back into service as needed, according to a statement.

In accordance with local regulations, the company closed its offices and most employees are working remotely to maintain general business operations, to provide assistance to existing and potential guests and to maintain information technology systems. 

The company moved quickly to implement a comprehensive plan to mitigate the impact of COVID-19 and preserve and enhance its liquidity position. The company is employing a variety of cost reduction and cash preservation measures and has accessed available capital under its existing debt facilities and through the issuance of preferred equity, while exploring additional sources of capital and liquidity. These measures include the following operating expense and capital expenditure reductions:

• Significantly reduced ship and land-based expedition costs, including crew payroll, land costs, fuel and food. All ships have been safely laid up.
• Lowered expected annual maintenance capital expenditures by over $15 million, savings of more than 70% from originally planned levels.
• Meaningfully reduced general and administrative expenses through employee furloughs, payroll reductions and the elimination of all non-essential travel, office expenses and discretionary spending.
• Suspended the majority of planned advertising and marketing spend.
• Suspended all repurchases of common stock under the stock repurchase plan.

Bookings Trends

The company was off to a strong start in 2020 with Lindblad segment bookings at the end of February 2020 up 25% for the full year, as compared to the same point a year ago for 2019, and had sold 86% of its originally projected guest ticket revenues for the year. Since that point, the company has experienced a substantial impact from the COVID-19 virus, including elevated cancellations and softness in near-term demand. Despite the COVID-19 impact, the company still has substantial advanced bookings for future travel. Bookings for the second half of 2021 are in-line with bookings for the same period in 2020 as of the same date a year ago and 31% ahead of bookings for the back half of 2019 as of the same date two years ago. Bookings for the full year 2022 are 37% ahead of the bookings for 2021 as of the same date a year ago. We continue to see new bookings for future travel including over $115.0 million since March 1, 2020, and we are receiving deposits and final payments for future travel.

For 2020 and 2021 voyages that have been cancelled or rescheduled, the company is providing future travel credits with incremental value or full refunds, as applicable, to its fully paid guests. As of March 8, 2021, the majority of guests have opted for future travel credits.

Balance Sheet and Liquidity

As of December 31, 2020, the company had $187.5 million in unrestricted cash and $17.0 million in restricted cash primarily related to deposits on future travel originating from U.S. ports.  During the first quarter of 2020 the company drew down $45.0 million under its revolving credit facility for working capital and general corporate purposes given the uncertainty related to the COVID-19 pandemic and borrowed $107.7 million under its first export credit agreement in conjunction with final payment on delivery of the National Geographic Endurance in March 2020.

During April 2020, the company drew down $30.6 million under its second export credit agreement in conjunction with its third installment payment on the National Geographic Resolution scheduled for delivery in the fourth quarter of 2021. 

During May 2020, the company amended its $2.5 million promissory note, changing the maturity date of the principal payments to be due in three equal installments, with the first payment due on December 22, 2020, the second due on December 22, 2021 and the final payment due on December 22, 2022.

During June 2020, the company amended its export credit agreements to defer approximately $9.0 million in aggregate scheduled amortization payments from June 2020 through March 2021 and to suspend the total net leverage ratio covenant from June 2020 through June 2021.

During August 2020, the company amended its term loan and revolving credit facilities to waive the application of the total net leverage ratio covenant through June 2021. In connection with the amendment, the interest rate of the term loan has been increased by 125bps, to be paid-in-kind at maturity, a LIBOR floor of 75bps has been added to each facility and certain covenants have been amended to be more restrictive.

During August 2020, the company raised $85.0 million in gross proceeds through the private placement issuance of Redeemable Convertible Series A Preferred Stock that carries a 6% annual dividend, which is payable in kind for two years and, thereafter, in cash or in-kind at the company’s option.  The preferred stock is convertible into shares of Lindblad common stock at a conversion price of $9.50 per share, representing a premium of 23% to Lindblad’s 30-day trading volume weighted average price on the date of issuance.

During December 2020, the company amended its term loan and revolving credit facilities and borrowed an incremental $85.0 million under the amended term loan through the Main Street Expanded Loan Facility program established by the Board of Governors of the Federal Reserve System. The incremental borrowing carries an interest rate of LIBOR plus 3.0% and matures December 2025 with no early payment restrictions. 

As of December 31, 2020, the company had a total debt position of $496.5 million and was in compliance with all of its debt covenants in effect. The company has no material debt maturities until 2023.

The company estimates its monthly cash usage while its vessels are not in operations to be approximately $10-15 million, including ship and office operating expenses, necessary capital expenditures and interest and principal payments. This excludes guest payments for future travel and cash refunds requested on previously made guest payments. The company continues to evaluate additional strategies to enhance its liquidity position which may include, but are not limited to, further reductions in operating expenses, capital expenditures and administrative costs as well as additional financings. 

The company has not previously experienced a complete cessation of its operations and, as a consequence, its ability to predict the impact of such cessation on its costs and future prospects is limited. Given the dynamic nature of this situation, the company cannot reasonably estimate the impacts of the COVID-19 virus on its financial condition, results of operations, cash flows, plans and growth for the foreseeable future. It is unknown when travel restrictions and various border closures will be lifted and what the demand for expedition travel will be once these restrictions are no longer in place. The estimates for monthly cash usage reflect the company’s current forecast for operating costs, capital expenditures and expected debt and interest payments. Based on current liquidity, the actions taken to date and its current forecast, which assumes rescheduled operations starting in June with a ramp up in operations throughout 2021, the company believes that its liquidity should be adequate to meet its obligations for the next 12 months. 

Return to Operations

The company already has a robust set of operating protocols and, in preparation for the resumption of operations, has been continuously and proactively working in close cooperation with various medical policy experts and public health authorities to ensure its procedures and protocols for health and safety onboard its vessels are up-to-date with the latest medical guidelines to mitigate the potential impacts of the COVID-19 virus. These protocols encompass, but are not limited to, medical care, screening, testing, social distancing, personal protective equipment, and sanitization during all aspects of the expedition.

While it is uncertain when the company will return to operations, it believes there are a variety of strategic advantages that should enable it to deploy its ships safely and quickly once travel restrictions have been lifted. The most notable is the size of its owned and operated vessels which range from 48 to 148 passengers, allowing for a highly controlled environment that includes stringent cleaning protocols. The small nature of the company’s ships should also allow it to efficiently and effectively test its guests and crew prior to boarding. On average, the company estimates it will take only a few thousand tests a month to test all guests and crew across its entire fleet. Additionally, the majority of expeditions take place in remote locations where human interactions are limited, providing less opportunity for external influence. The company also has flexibility with regards to existing itineraries and is continually investigating additional itinerary opportunities both internationally and domestically. Lastly, the company’s guests are explorers by nature, eager to travel and have historically been very resilient following periods of uncertainty.

FULL YEAR RESULTS

Tour Revenues

Full year tour revenues decreased $260.7 million, or 76%, as compared to the same period in 2019. The decline was driven by a $202.8 million decrease at the Lindblad segment and a $57.9 million decrease at Natural Habitat as a result of rescheduling nearly all expeditions due to COVID-19.   

Net Income

Net loss available to stockholders for 2020 was $100.4 million, $2.01 per diluted share, as compared with net income available to stockholders of $13.7 million, $0.28 per diluted share, in 2019. The $114.1 million decrease primarily reflects the impact of COVID-19 on operations, a $6.3 million increase in depreciation and amortization versus the same period a year ago, primarily due to the addition of the National Geographic Endurance to the fleet in March 2020 and a $4.8 million foreign currency loss in the current year versus a $0.1 million foreign currency gain in 2019.  The year over year decline was partially offset by a tax benefit of $9.8 million, primarily due to the operating losses in the current year, versus a tax expense of $2.2 million in prior year.

Adjusted EBITDA

Full year Adjusted EBITDA loss of $52.2 million decreased $118.8 million as compared to the same period in 2019. The decrease was driven by a $102.5 million decline at the Lindblad segment and a $16.4 million decrease at Natural Habitat.

Lindblad segment Adjusted EBITDA loss of $44.4 million decreased $102.4 million as compared to a year ago due primarily to the revenue impact of rescheduling all expeditions as a result of COVID-19 and costs associated with the National Geographic Endurance following its March 2020 delivery.  The current year also included lower operating costs for the fleet while laid up, a reduction in commissions from the impact of COVID-19 on revenues and reduced marketing and personnel spend.

Natural Habitat Adjusted EBITDA loss of $7.8 million decreased $16.4 million versus a year ago primarily due to the lower revenue as a result of COVID-19, partially offset by lower operating costs due to rescheduled departures and a reduction in marketing and personnel spend.

FOURTH QUARTER RESULTS

Tour Revenues

Fourth quarter tour revenues decreased $75.4 million, or 100%, as compared to the same period in 2019. The decline was driven by a $54.8 million decrease at the Lindblad segment and a $20.7 million decrease at Natural Habitat as a result of rescheduling nearly all expeditions due to COVID-19.   

Net Income

Net loss available to stockholders for the fourth quarter was $31.0 million, $0.59 per diluted share, as compared with net loss available to stockholders of $1.5 million, $0.03 per diluted share, in the fourth quarter of 2019. The $29.5 million decrease primarily reflects the impact of COVID-19 on operations and a $1.2 million increase in depreciation and amortization versus the same period a year ago, primarily due to the addition of the National Geographic Endurance to the fleet in March 2020. 

Adjusted EBITDA

Fourth quarter Adjusted EBITDA loss of $19.8 million decreased $27.8 million as compared to the same period in 2019. The decrease was driven by a $18.6 million decline at the Lindblad segment and a $9.2 million decrease at Natural Habitat.

Lindblad segment Adjusted EBITDA loss of $15.4 million decreased $18.6 million as compared to the fourth quarter a year ago due primarily to the revenue impact of rescheduling all expeditions as a result of COVID-19 and costs associated with the National Geographic Endurance following its March 2020 delivery.  The current quarter also included lower operating costs for the fleet while laid up, a reduction in commissions from the impact of COVID-19 on revenues and reduced marketing and personnel spend.

Natural Habitat Adjusted EBITDA loss of $4.4 million decreased $9.2 million versus the fourth quarter a year ago primarily due to the lower revenue as a result of COVID-19, partially offset by lower operating costs due to rescheduled departures and a reduction in marketing and personnel spend.