Lindblad Expeditions Holdings Inc.

Good morning and welcome to the Lindblad Expeditions Inc. Fourth Quarter 2020 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw from the question queue, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Craig Fallenstein, Chief Financial Officer. Please go ahead.

Thank you, Kate. Good morning, everyone. Thank you for joining us for Lindblad's 2020 Fourth Quarter and Full Year Earnings Call. With me on the call today is Sven Lindblad, our Founder and Chief Executive Officer. Sven will begin with some opening comments, and then I will follow with some details on our financial results and liquidity before we open the call for Q&A. You can find our latest earnings release in the Investor Relations section of our website along with a presentation regarding the acquisitions that we announced this morning. Before we get started, let me remind everyone that the company's comments today may include forward-looking statements. Those expectations are subject to risks and uncertainties that may cause actual results and performance to be materially different from these expectations. The company cannot guarantee the accuracy of any forecasts or estimates, and we undertake no obligation to update any such forward-looking statements. If you would like more information on the risks involved in forward-looking statements, please see the company's SEC filings. In addition, our comments may reference non-GAAP financial measures, a reconciliation of the most directly comparable GAAP financial measures, and other associated disclosures are contained in the company's earnings release. And with that out of the way, let me turn the call over to Sven.

Thanks, Craig, and good morning to everybody. We appreciate you joining us today. While preparing for this review for 2020, and my thoughts on the future, I look back at my comments from a year ago on our 2019 year-end call. I couldn't have been more wrong as it related to expectations regarding the effects of COVID-19. This turned out to be very different than SARS, 9-11, the 2008-2009 economic crash, and really anything else I or you have ever experienced. This is now an event that has shut down and most other travel businesses globally for a year. And while we are optimistic that we will be sailing again soon, exactly when that will be is still not certain. No one in our lifetimes has experienced such a long-lasting business interruption outside of war. As Charles Darwin suggested in his seminal book, The Origin of Species, it is not the most intellectual that survives, It is not the strongest that survives, but the species that survives is the one that is able best to adapt and adjust to the changing environment in which it finds itself. At Lindblad Expeditions, we are indeed adaptable, and the entire organization is very much focused on how not to let this crisis go to waste. We have done it before over our last 40 years, and we are determined to come out of this pandemic as strong and vibrant a company ready once again to take our guests to the world's most remarkable destinations. So what have we done that ensures that this will be the case? First and foremost, we shored up our capital position. Greg will discuss this further, but it started immediately upon shutting down our operations last March and is still a focal point today. We have been inordinately successful at cutting costs across all facets of the company without destroying the fabric of our enterprise. We also were opportunistic with regards to raising additional capital externally. In August, we added $85 million through a preferred stock offering, and in December, we added an additional $85 million of low-interest funds via the Main Street Lending Program. As a result, we ended the year with over $200 million in total cash, which provides ample runway as we return to operations, which allows us to further invest in augmenting our future. One of the areas that we continue to invest in significantly is building our capabilities across our marketing platform. It was a process that we had started in earnest prior to the pandemic, which we had paused once the pandemic took hold. As you may be aware, we hired a new chief marketing officer at the end of the year, David Goodman, who was previously the head of global marketing and digital media at Sotheby's. and the architect of their online digital platform. He's hit the ground running. We are taking advantage of the current low in operations and redirecting resources, both financial and human, to come out of COVID with a vastly more powerful marketing engine built for growth. We've already grown our social media. followers by 150% over the last quarter. We are planning on launching a new website during the second quarter with our new reservation system to follow. The end result will be a more dynamic platform leveraging data insights to be more efficient and effective with our marketing spend. Aside from investing in our existing operations, we're also using our strong capital position to continue broadening our product platform to serve an omnivorous clientele interested in diverse travel experiences. NADRAV was the first with stunning results prior to the pandemic, having more than doubled its contribution in 2019 from when we acquired the company in 2016. And we are using the lessons learned from that acquisition regarding the expansion of our addressable market, cross-promotion, product marketing, and system integration as a blueprint for the latest additions to our platform. We are extremely pleased to announce the acquisition of two additional companies joining our portfolio that are natural complements to our existing product offerings. Off the beaten path is a Bozeman, Montana company that was founded with the goal of facilitating exclusive recreational possibilities, largely in the American West and the Southwest. It has since expanded its geographic reach, but still remains focused on the core business as originally envisioned. the North American National Parks. I've known and worked with off-beaten passage for the past two decades. When we were ourselves in the land business, we collaborated on a variety of programs, including extensions to some of our ship expeditions with them. Corey Lawrence, the CEO, is an outstanding leader, and he's enthusiastically continuing to lead OBP into this next phase of growth. DuVine Cycling and Adventure Company was founded in 1996 by Andy Levine, who is still the company's CEO. DuVine is a very high-end adventure travel company exploring the world by bicycle. Biking in general is exploding, particularly with greater production and use of e-bikes, which significantly broadens the demographics of potential participants in bicycle touring. I'm extremely excited about bringing this self-powered form of travel into our orbit. As people become more and more health conscious, this business should naturally grow and appeal, and the cross-marketing potential will be significant in accelerating Divine's growth. Together with that, have these businesses dramatically increase our addressable market, and we are at the beginnings of creating a platform that can accommodate multiple interests, and as a consequence, keep travelers and their families, so to speak, safe. We can cross-market and develop technological synergies that smaller companies could never justify or afford. It's very exciting, and when you look at the possibilities that our platform can provide, expedition cruising as far as Africa, exploration of U.S. national parks, biking through Burgundy, to name a few, and the opportunity to combine packages using the expertise of all the companies is endless. These two new additions are relatively small but very focused on what they do and are at the top of the food chain in terms of quality and trust. Each in isolation may not be overly contributed financially today. However, much like NetHab, we see real opportunity to grow them in the years ahead and certainly they will add value to our brand more broadly as a diverse high-end travel aggregator. We are the ideal company to aggregate unique small brands and make them into a bigger whole. We know how to energize the key elements that made them attractive. We are insiders. We understand their worlds. We respect and value founders. We know where we can help and learn to not get in the way. You can find more information regarding these acquisitions in the presentation we have posted to our website this morning. As we integrate off the beaten path in design, we continue to look for additional opportunities to broaden and deepen our product platform, while also evaluating a variety of options to further increase the capacity of our fleet. Since 2017, we have added three new builds to the fleet with a fourth, the National Geographic Resolution, anticipated for delivery in Q4 this year. With the addition of the resolution, we will have increased our available guest nights by more than 70% over the last four years, and thus far, we have been able to maintain occupancy levels and expand our nightly rooms at the same time. There is certainly a growing demand for expedition travel, and our long track record of delivering authentic and immersive experiences positions us well to capitalize on this trend in a thoughtful manner. This balanced strategy of focus on expanding our existing operations while responsibly adding to our current fleet and acquiring companies which broaden our platform is, in my belief, a solid approach to growing Lindblad Expeditions for the long term, and we believe our offerings are particularly well-suited for the times. These recent articles are just two which reinforce our value proposition. Nature, wellness, and giving back are trending for 2021 travel. Forbes magazine, February 7th, 2021. Nature, wellness, and giving back, having space to breathe is the new luxury. Travelers are seeking remote destinations and open spaces. Second article, how we'll travel in 2021 from the Financial Times. Quote, a post-lockdown yearning for open space, along with anxiety about crowded spaces, has brought remote, empty destination to the top of many wish lists for 2021. And there are more and more articles out there every day talking about this phenomenon. People want to travel, there's pent-up demand, and they want very often to go to places that are not crowded. While we are well-positioned for sustained long-term growth, we are obviously focused on returning to operations. Nearly 12 months with suspended sailings has been far longer than anyone would have anticipated last March. Our startup team continues to work diligently on our robust set of stringent protocols. We are in constant dialogue with local authorities where we have longstanding relationships, and guest demand remains strong from both returning travelers as well as new audiences. We have canceled all voyages through the end of May, but remain optimistic that we will return to operation in June with a focus on Alaska, Galapagos, and Iceland. By June, it looks like most, if not all, adult Americans will have had the opportunity to be vaccinated, which clearly will accelerate demand. Looking ahead, we are already well-positioned with strong bookings for the back half of the year and throughout 2022. and the pent-up demand we are seeing in the market will build upon that strength. Before I finish up, let me speak for the idea of giving back, and I'm happy to see that the business community and media are beginning to recognize the importance of this more broadly. The human brain is wired with definite priorities. We are extremely well-suited to swerve out of the way of an oncoming vehicle. We react swiftly and with urgency with a threat, is a day or a second away. In other words, we are wired to respond to clear and imminent threats, not so much those that unfold over time, like climate change or the potential collapse of biodiversity. These are real challenges that, if not directly and urgently faced, will create an unbelievably big future for generations to come. I believe that the travel industry has both an opportunity and a responsibility to engage our audiences with not only the wonder of what we provide them, but also with an understanding of the challenges these places face and ways in which they can, as a consequence of having experienced the place, help with support. We have used our unique position to enhance and support the places we have come to love and which has given us so much joy and business value. In 2019, we committed as a company to go carbon neutral. meaning that we went deep into all our activities in order to find creative ways to reduce emissions. Those that remain have been offset 100%, all our ships, our offices, and staff and crew travel. Our guests appreciate this and perhaps look a bit differently at their own energy use. Each year, we part as part of the Lindblad Expeditions National Geographic Fund, raised between $1.5 and $2 million from our guests to support conservation, science, education, and exploration. 100% of these funds directly support specific projects. Our guests really appreciate being able to participate. This year, we launched the Galapagos Island Relief Fund. In the Galapagos, over 80% of all employment relies on tourism. They have been devastated. Their health and well-being are critical to the health and protection of the ecosystem, a global jewel. The fund is a microloan program with an initial goal of $500,000. Between the company, our board of directors, and me and my wife personally, we offered a challenge grant of $150,000 and gave our Galapagos travelers an opportunity to participate. To date, the fund, together with the matches, has raised over $300,000, and we will easily reach our goal in the second round of fundraising. Our guests really appreciate this opportunity, and the people of Galapagos even more so. Why is this important in an earnings call? Because success is made up of many parts, and social responsibility is an important component. It matters. Guests appreciate the efforts. Personnel value what we do. and the people in places where we travel appreciate our efforts as well. And our cumulative efforts are meaningful in terms of the work done. I'm totally convinced that these sensibilities are core to our success as a brand and our reputation. We've been at this for decades. We built the business based on respect and understanding of geography, the same for the aspirations of our guests. We offer something that people deeply, deeply want and perhaps even need, a connection with wonder, authenticity, and the opportunity to explore. We represent optimism in a troubled world. We are ready to emerge from this traumatic, dark time and build and grow and capitalize on the frustration that people have had in being restricted. We are ready with open arms to provide adventure, inspiration, exploration, and joy to the millions who have been denied all this for over a year. We will thrive in a post-COVID world, we will grow in a post-COVID world, and we will succeed in a post-COVID world. Thank you for your time today, and now let me turn the call over to Craig.