Lindblad Expeditions Holdings Inc.

Good morning, everyone, and welcome to the Lindblad Expeditions, Inc. Report's fourth quarter 2021 financial results conference call. All participants will be in a listen-only mode. Should you need assistance, please say no to 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 and then one. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Craig Fallenstein. Sir, please go ahead. Thank you, Jamie.

Good morning, everyone, and thank you for joining us for Lindblad's 2021 fourth quarter and year-end earnings call. With me on the call today is Dolph Burley, Lindblad's Chief Executive Officer. Dolph 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. 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 Duff.

Thanks, Craig. Good morning, and my thanks to all of you for joining us today. In this call, I will recap various highlights from 2021 and also share my thoughts about the increasingly positive outlook we have for the business in the months and years ahead. This story of resilience and resurgence has at its heart a very dedicated team inside our family of companies, and I'm extremely grateful for their perseverance, hard work and passion. 2021 was a year that was defined in great part by the effects of the pandemic. The initial stages of COVID shut down our operations back in March of 2020, and it was June of 2021 when we began to resume sailing. While we were not operational, we focused on taking the necessary steps to reduce costs, fortify our balance sheet, and right-size our cost structure, working to position ourselves for success upon the restart of operations. Once we resumed operations last summer, it was a time of resurgence. However, the business then became more challenging again, first from the Delta variant and then when the Omicron variant swept across the world in the winter months. Our founder, Sven Lindblad, often reminds us of the Darwinian principle regarding the need to adapt in order to survive for species of all kinds. We as a company drew inspiration from this reminder. One aspect of our innovation and adaptation was our approach to health and safety. We developed and continually evolved a series of protocols designed to create the safest environment possible for our guests and crew. 100% vaccination requirements for everyone on board and other measures, including masks, regular testing, and in some instances, the need for quarantine cabins all contributed to our ability to operate effectively in multiple geographies. The needed emphasis on health also highlighted one of our key strategic advantages. which is the size of our ships, which range from 48 to 148 passengers. Aside from enabling us to deliver unmatched guest experiences, the size also enabled us to deal with the challenges of COVID in an effective and efficient manner. Another set of adaptations we made related to restarting our itineraries. Because of our strict health protocols and also our deep relationships with foreign ports and governmental authorities, We were able to launch in June of last year with four ships, including a strong push into Alaskan waters with our US fleet. Shortly thereafter, we launched our new polar ship, the National Geographic Endurance, in Iceland, and we returned to the place we have visited for the last 40 years, the Galapagos Islands of Ecuador. After restarting in these initial geographies, we quickly ramped up additional ships buoyed by guest demand and geographic availability. And I'm happy to say that as of today, we now have nine out of ten ships back fully operational and are taking guests to remarkable destinations such as the Baja, Belize, Costa Rica, Panama, and Antarctica. Some of the most invigorating work we did this past year related to our Antarctica expeditions. 2021 represented the inaugural Antarctic seasons for our two newest state-of-the-art ships, the National Geographic Endurance and the National Geographic Resolution. These sister ships, which represent a 39% increase in guest capacity for our fleet, have an advanced hull design featuring the X bow, enabling a smoother ride through the Drake Passage. Their design also enables guests to explore farther and to more remote places, particularly where there is ice. These new ships have been getting rave reviews from both new and returning guests. Our guests are exploring dramatic ice formations and seeing abundant wildlife. They're interacting with our best-in-class expedition teams while enjoying the premium cabin accommodations, the beauty and functionality of the ship's common spaces, and the top shelf food. Here is a story from the Antarctic that gives you a sense of what these new ships bring to our guest experience. A month ago, the National Geographic Endurance was on its first 30-day long voyage in Antarctica, utilizing its advanced design to comfortably explore where few had gone before. As you may know, the nature of our expeditions is that we work in tune with nature to opportunistically explore what is most breathtaking, epic, and beautiful in the places we sail. On this voyage, the Endurance found itself with good weather and navigable ice near Peter One Island in the Bellinghausen Sea. We believe fewer than 1,000 people in history have set foot on this island. Penguins and seals abound on this volcanic landmass, which is covered in glacier and is usually surrounded by pack ice that make it inaccessible. Landing on Peter One Island was certainly a once-in-a-lifetime experience that our guests will never forget. A few days later, the same group of guests came upon several hundred fin whales in a large pod, something that Sven Lindblad, our founder himself, had not seen since 1977. What our guests were able to witness inspired both a passion for and also a commitment towards these magnificent giants of the sea and the habitat they require to thrive. I tell you these stories to highlight the unique and powerful guest experiences that more than 40 years of Lindblad Expeditions expertise brings to our guests, to shine a light on the advances we are making in our fleet, and also to convey optimism for the future as we ramp up the next season of expeditions, including itineraries in the far north of the Arctic. Turning now to the future, I want to share with you the most recent trends in bookings. The impact of the Omicron variant has been significant over the last two and a half months, both in terms of heightened cancellations and slower bookings, with some guests preferring to postpone their trips with us to later dates in 2022 and 2023. However, the impact of both the Delta and Omicron COVID variants is starting to subside. We are once again seeing strong reservations for future travel and have a great base of business looking ahead. Bookings, are up nearly 20% for the second half of 2022 and up 54% for 2023 versus comparable periods at the same point in the year in 2020 prior to the pandemic. This is really encouraging. As additional countries open their borders to tourists and as public perception of the dangers and inconveniences related to COVID soften, we expect this trend to continue. I also want to update you on our progress in diversifying our adventure travel platform. As you may recall, we have been an owner since 2016 of best-in-class nature travel company, Natural Habitat, which is focused on land-based itineraries and is a great complement to the Lindblad ships. Star performer in the fourth quarter for Natural Habitat is the polar bear season in Churchill, Canada, and they returned to this amazing destination in the fourth quarter which resulted in positive earnings contributions. In large part due to the success we have had via the acquisition of Natural Habitat, last year we further diversified our product portfolio and expanded our addressable market with the addition of Off the Beaten Path and Divine Cycling and Adventure during the first quarter of 2021 and Classic Journeys in October 2021. With these acquisitions, we now have a family of adventure-based travel companies which can serve all our collective guests. Our approach to these already successful companies is to maintain the individual brands and the teams who are running them, and then to maximize the synergies inherent in having them together as a group. These best-in-class companies share a similar ethos to Lindblad, and we are excited to grow them following the model used with the natural habitat business. Through focused product development and shared marketing initiatives, Natural Habitat's EBITDA more than doubled in the timeframe between when it was acquired in 2016 and the beginning of the pandemic. Looking forward further, it is our intention to continue to scan the marketplace for acquisitions which could be meaningful additions to our family of brands and be accretive from a value creation standpoint. Another area of growth for the company is our journey to become more technology forward. This work includes upgrades to our website, our booking system, creation of more advanced CRM capabilities, advances towards more dynamic pricing, exciting video content and its distribution to broader and also more targeted audiences, and significantly enhanced reporting and analytics which can drive better business decisions. We are on that journey today and will continue to make advances in these areas as a way of life in the future of our company. To underscore this commitment, we are pleased to share that Alex Schultz, VP of Analytics and Chief Marketing Officer for Meta, has just recently joined our board of directors. Notable technology achievements in 2021 were the creation of a new website and booking flow, which has expanded our audience and deepened our guest engagement online. We are excited about the increased time guests are spending on the site, the conversions that are occurring into bookings, the doubling of the number of potential guests who have signed up for our digital newsletter, the increase in requests for hard copy as well as digital brochures, and the strong response to fresh video content generated on our ships, which we are receiving on social media. The next major milestones we will achieve relate to the new booking and reservation system, which we anticipate coming online later this year. This upgrade will yield a dramatic improvement to our pre-voyage guest experience and allow our team to have much greater agility in booking and adjusting itineraries for guests as needed. From a financial standpoint, I do want to highlight the fact that we delivered positive operating cash flow performance in Q4 and showed year-over-year improvements in both revenue and EBITDA. Just as important, in Q4, we were very pleased regarding the issuance of our senior secured notes, which will provide additional financial flexibility for the company. Craig will be covering this in more detail in a few moments. Finally, I would like to say that 2021 was a year where we continued to live our mission as a company and as a team. Something fundamental to our work is the desire to expose guests to nature and educate them on what is happening with our planet from an environmental standpoint. We were thrilled to reach a larger audience than ever before when ABC Network's Good Morning America chose Lindblad as their partner to voyage to Antarctica. Their mission was to tell the stories of expedition travel to that southernmost continent and to share the impact that global warming is having on that region and how changes in Antarctica affect the planet as a whole. As a result of the great interest in the Antarctica episodes, Good Morning America contacted us to do a similar environmentally focused series on the Galapagos. They are on an expedition with us there right now and these shows are airing this week. More generally, we continue to be a carbon neutral company, as we have been since 2019, and continue to pioneer new programs, such as the Green Benefits Program for our staff with our partner Rare, and a program called Artisans Helping Artisans, which features women creators from the communities we partner with and creates an online vehicle for their goods. Our company has been delivering the joy of exploration for over four decades. We are tremendously excited to once again be providing immersive experiences in the world's most remarkable destinations. The exhilaration we see from our guests as they return to these remote geographies is truly inspiring and a daily reminder of the opportunity Lindblad has in front of it. In the short term, there is certainly pent-up demand for high-quality experiential travel. And while there is likely to be continued choppiness during the first half of 2022, Guest demand for future travel remains strong, with bookings pacing well ahead of pre-pandemic levels. Over the long term, the strategic steps we have taken throughout the pandemic to expand our fleet with the delivery of two new polar ships and to diversify our product portfolio with the addition of three unique land-based travel offerings has us well positioned to deliver results significantly above pre-pandemic levels and will allow us to build additional shareholder value in the years ahead. And now, let me turn the call over to Craig.