Lindblad Expeditions Holdings Inc.

Good day and welcome to the Lindblad Expeditions Incorporated first quarter 2022 financial results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists 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 touchtone phone. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Craig Fellenstein, Please go ahead, sir.

Thank you, Chuck. Good morning, everyone, and thank you for joining us for Lindblad's 2022 first quarter 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 Delph.

Thanks, Craig. And good morning, everyone, and thanks for joining us today. I recently penned the letter to our shareholders for our annual report, and I started with an expression of gratitude. Gratitude is the leading sentiment that I feel for our tremendously hardworking team I also want to express gratitude to our many partners in the travel industry across the world who help us execute our business. And perhaps most importantly, I want to convey thanks to our guests who have been so loyal and steadfast in their zeal for expedition travel with Lindblad Expeditions as we navigate this final phase of ramping back up to full operations as a company. You may recall that at the end of 2021, we had nine of our 10 owned ships back in action. And I'm happy to report that starting with the Orion's April trips to French Polynesia, all of our ships are back to taking guests to the world's remarkable destinations. Having all our owned ships sailing and all of our land companies back to operating in nearly all their key geographies is something that we have worked for a long time to achieve. This accomplishment, combined with the strength of future bookings, which I will describe further in a few minutes, are sources of great optimism for our team. Q1 was, metaphorically, a tale of two cities quarter for us. Let me begin with some very positive highlights. The Antarctica season was a great success. Unlike many other companies, we were able to complete all voyages in our schedule despite the rapid spread of the Omicron variant at the time. We maintained our strict protocols with regard to vaccination requirements, pre-embarkation testing, daily symptom checks, onboard crew testing, cleaning routines, and mask requirements in common areas. And as a result, we saw very few cases of COVID on our ships, and those that did occur were mild. Our new state-of-the-art polar ships, the National Geographic Endurance and the National Geographic Resolution, performed even better than we expected from a marine and technical perspective. We have been particularly excited about what the XBOW design has meant for handling the sometimes tumultuous Drake Passage, and the ship's Polar Ice Class 5 rating has allowed us to explore deeper into the ice than ever before. This provides our expedition staff opportunities to deliver even more exciting guest experiences from an expedition content standpoint. Also, guest feedback has been extremely positive with regard to the quality of food, beverage, and hotel accommodations aboard these ships. The very positive PR and social media commentary associated with these new ships meant that we saw booking levels increase over the course of last season, and we're well on our way to completely booking these ships for the upcoming 2022-2023 Antarctic season. There's perhaps no better way to cap off the comments related to these new ships than to share with you a couple of examples of what their advanced capabilities have meant and will mean for the future. You may recall that, as I described in the last earnings call, our guests were able to disembark onto the almost-never-visited Peter One Island in Antarctica and also see a large pod of fin whales from the Endurance. These were phenomena that were previously almost unheard of in our long history, and they were the direct result of the PolarPLAS-5 capabilities, which have broadened the range of environments in which the ship can operate. A further demonstration of these capabilities is now underway. as we find that we are able to explore deeper along routes in the Northwest Passage in the Arctic, given the ability of these ships to handle the ice. What these new ships mean for our guests is that they will have the ability to see more wildlife and experience these polar regions in the different light, snow, and ice conditions that are inherent in the different phases of the polar seasons. For wildlife and photographic enthusiasts, this presents a range of new possibilities and thrills. While it was a very successful quarter across our ships operationally, the Omicron variant did impact our overall occupancy and financial results. Craig will provide some more color in a moment, but we did see a meaningful number of guests in Q1, and to a lesser extent in Q2, opt to move their trips to later in 2022 or 2023. While cancellation rates and cash refunds were relatively low, a fair amount of revenue was rescheduled to later dates. Speaking of future booking levels, we continue to be very pleased with the pace of bookings for both the back half of 2022 and the full year 2023. When compared with the same date in 2019, which is most relevant given it was pre-pandemic, Bookings for the back half of 2022 are 50% ahead of bookings for what was the back half of 2019, and bookings for the full year 2023 are 32% ahead of bookings for what was the full year 2020. These strong growth numbers reflect our increased capacity, the positive impact of guests who have been rescheduled from prior periods, and a robust booking environment with particular strength in Alaska and Antarctica across both new and existing ships. The growth in bookings during the second half of the year would have been even stronger if not for the impact of the Russian invasion of Ukraine. Over the course of Q2, Q3, and Q4, we had eight voyages scheduled to touch Russia, with most nearly sold out at strong pricing levels. including several high-demand trips to the Northeast Passage. We canceled all of these voyages, and in keeping with our tradition of staying nimble, we rerouted these expeditions to other itineraries. I'm happy to say that the majority of our guests opted to remain booked with us either rescheduling for alternative trips, such as the Northwest Passage, or waiting to see what future travel opportunities might appeal to them. We are also seeing really strong booking momentum across our land companies, as guests want to explore all the world has to offer after being limited these past several years. We dramatically increased our addressable market last year with the acquisitions that combined cycling and adventure, off the beaten path, and classic journeys, and the pent-up demand to travel with these companies, as well as natural habitat, is evident. Growing these land companies is an important part of our strategy towards becoming the leading adventure travel platform company in the world. An important part of reaching our expanded adventure company platform goal are the digital initiatives we are driving inside the company. Since the beginning of the year, we have made significant strides forward in our progress towards launching our new reservation system, and it's targeted for completion by the end of this year. This transition, along with our new CRM and new website and marketing analytics capabilities, will bring our marketing sophistication to a whole new level. Since launching our new website last year, we have installed a suite of analytical tools which helps monitor website search, paid search, and social media performance. Although we are still in the initial phases of utilizing this array of tools, I am confident that we will be able to drive incremental guest traffic to our ships and land companies and do so in a more cost-effective manner as the full power of this technology investment is realized. I'm also excited about some recent developments for our Galapagos itineraries. First, I'm pleased to announce that we have successfully renewed the cupos permits that allow us to operate our ships in this unique geography for a period of 20 more years. We have a long history with the Galapagos, having first taken guests there back in 1967, and I couldn't be happier to be able to continue to visit and also support the islands and its people for decades to come. The other big development for the Galapagos this past quarter was the marketing launch of the National Geographic Islander II. A significant portion of her renovation was completed in Denmark last month, and she is on her way to the Galapagos, where she will welcome her first guests in August. This replacement for the National Geographic Islander represents a meaningful upgrade in comfort, cabin accommodations, and food and beverage capabilities for our guests. This is our first all-suite ship and it will provide spacious and elegant accommodations along with highly functional expedition capabilities for our guests. The initial response to our marketing of this new vessel from guests and travel agents has been very enthusiastic. Before finishing, I always like to tell you something about what we're doing towards our mission, which includes educating guests about the planet, pristine environments, and the importance of our efforts related to environmental sustainability. In Q1, we had a highlight, which was to once again welcome the Good Morning America news crew onto one of our ships, in this case, the National Geographic Endeavour 2. She became the host ship for their series in the Galapagos on climate change and biodiversity. The opportunity to be part of educating nearly 4 million people about this remarkable place and our part in helping preserve it was a proud moment for our brand. In closing, I would like to reiterate the optimism that I have for the adventure travel industry and our company particularly. Guests on our ships and across our land adventures continue to have exhilarating and educational experiences across a variety of offerings. On these trips, one can feel their enthusiasm to be back out in the world in remote and remarkable places and with others who are like-minded. With a strong booking base that is a familiar mix of repeat and new guests, an expanded fleet, and a diverse family of product offerings, we are poised to capitalize on this enthusiasm in the months and years ahead. I began this call with a theme of gratitude, and in closing my portion, now I would like to thank you for listening. And now, turn the call over to Craig.