Lindblad Expeditions Holdings Inc.

Hello, everyone, and welcome to the Lindblad Expeditions fourth quarter and full year financial results. My name is Bruno, and I'll be operating your call today. During this presentation, you can register to ask a question by pressing star followed by one on your telephone keypad. I'll now hand over to your host and chief financial officer, Greg Fallenstein. Please go ahead.

Thank you, Bruno. Good morning, everyone, and thank you for joining us for Lindblad's 2023 fourth quarter and year-end earnings call. With me on the call today is Sven Lindblad, Lindblad's founder and chief executive officer. Sven will begin with some opening comments, and then I will follow with some details on our 2023 financial results and current expectations for 2024 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 forecaster 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, let me turn the call over to Seth.

Thanks, Craig, and good morning, and thank you all for joining us today. When I returned to CEO of Lindblad Expeditions in June of 2023, I laid out for you a variety of priorities that I believed would usher in a new era for our enterprise. With eight months now in the rear view mirror, I would like to take a few minutes to discuss the progress we have made in each of these areas while providing some color on what drove our success this past year and why we are excited about the growth opportunity we have in the months and years ahead. First and foremost, the new era starts with putting the pandemic definitively behind us. The record financial results we delivered in 2023, including 35% revenue growth, and adjusted EBITDA of over $7,400 million are a pretty good indication that we are well on our way to achieving that outcome. Craig will go through our financial results in a moment, but we took nearly 30,000 guests more than ever before to the remarkable destinations we have been visiting for decades. And most importantly, the guest feedback has been nothing short of extraordinary. All the drivers of our business were up this year, led by a 33% increase in guest nights as we began to fully utilize our expanded fleet. As we increased capacity, we also saw meaningful growth in net yield up 12% to $1,097 per guest night and occupancy take up to 77% from 75% a year ago. I know there is a tendency to focus on occupancy, But in isolation, it is a misleading metric, especially in our business. Understandably it's a big cruise lines. There is a commitment to a hundred percent occupancy, even if the last percentage is represent very low or perhaps even no yield. The reason is obvious. The onboard spend is meaningful in the casino shops, spas, bars, land excursions, et cetera. So even if you add guests for free, you would be better off in our case. There is minimal onboard spending, so that approach has absolutely no value. Also, we are extremely committed to maintaining price integrity given long-term ramifications, as there is no benefit in adding occupancy if yield decreases proportionately. So price integrity is a key metric and essential to preserve, even if occupancies move ahead a bit slower in the short term. The second catalyst of our new era is capitalizing on the massive growth of interest in expedition travel the pull to connect authentically with nature and culture is growing by the day and there's no other company in this segment with our track record or with our commitment to providing authentic and immersive itineraries this past november we further solidified our ability to take advantage of this growth with the extension and expansion of our 20-year-old partnership with national geographic one of the world's most respected and beloved brands. This new agreement, which runs through 2040, will enable us to grow our brand on an international scale and reach more citizen explorers than ever before. Beyond enhancing our shared expertise and the onboard experience for our guests, it will increase the earnings potential of the company by opening larger addressable markets through new worldwide audiences. In short, it will further solidify our position as a leader in expedition cruise and experiential adventure travel, a segment we have been leading for more than 50 years. It also brings with it the power of Disney, the world's largest media and entertainment conglomerate. They have so many different capabilities to promote and activate the market. And in past months, our team, along with their marketing and sales teams, have been deep into strategy, and tactical plans on a regular basis, meeting monthly to plan specific initiatives to drive business. By year's end, we will be able to report with far more accuracy the detail about how the anticipated significant National Geographic and Disney effect, about the National Geographic and Disney effect, but harnessing that collective power is extremely exciting at a time where the pull to connect authentically with nature and culture is growing by the day. I firmly believe that this will result in meaningful accelerated growth in terms of occupancy, yield protection, and expansion of the fleet for years to come. Third in this new era is building our technology to support innovative ways to drive the business. In many ways, 2023 was a year of transition on this front as we launched our new reservation system in May, the final building block in our digital stack transformation. which also included a new CRM, a new connect management system, a new digital asset management system, and a new customer data platform. Not surprisingly, the rollout of the reservation system was complex with numerous challenges that had to be solved. It was certainly a distraction for various parts of our organization, but we kept our focus on our guests and have put most of those challenges behind us. We still have a ways to go before we finally exploit the possibilities that these systems provide, but we are already seeing record bookings coming through our website. We are achieving higher conversion rates across all parts of the funnel, and we are delivering stronger guest service metrics at our contact center. A fourth pillar in this new era is reconnecting with our community in creative ways and creating the most modern marketing and sales platform to propel growth. The new agreement with National Geographic and our upgraded technology platform will certainly be a big part of that moving forward. But we are already reaching new audiences with an expanded sales team and upgraded digital lead generation capabilities. We have been focusing on driving first timer bookings through elevated search campaigns to capture and convert more prospects than ever before. Growing first timers is critical. in that repeat behavior is significant and they become a key community to propel growth. A new era also means bringing R&D back to the forefront in terms of new geographies, new experiences, and parts of the world we have been visiting for years and innovating the ways we immerse our guests in these remarkable destinations. For 2024, we have developed a variety of new itineraries specifically designed to attract new guests. Most are of shorter duration in order to get people into the system for the first time. Examples are a multi-month commitment in Iceland this summer, and our recently launched collaboration with Food & Wine magazine pairing 14 trips along the Colombian Snake Rivers in Washington and Oregon with programming elements, wine selections, and specials of guests selected by the editorial staff of Food & Wine. One of our biggest initiatives The biggest new initiative is a fly-in component for one of our Antarctic ships, creating itineraries that avoid crossing the Drake Passage on some voyages and just one way on others. It also allows for people with more limited time to visit Antarctica. These offerings have literally flown off the shelves and are allowing us to connect with new travelers who wouldn't have considered this kind of expedition before. The last component of the new era I mentioned was maximizing our diverse portfolio of land businesses while looking for additional expansion opportunities, either through new capacity or further diversification of land offerings. The investments we have made thus far in broadening the land portfolio has proven wildly successful, marrying the vision of expertise and entrepreneurial spirit of the founders with the operating and marketing power of Lindblad has grown our land portfolio from EBITDA of just over $3 million when we first acquired natural habitat to nearly $23 million in 2023, including nearly 30% growth year on year. This has not only created significant value for our guests and shareholders, but also is a great calling card as we strategically look to find additional companies to join our families. So as you can see, the new era has clearly begun for Lindblad expeditions, and we are excited to further accelerate that new era in 2024. We start the year with a strong foundation of future bookings, with the Lindblad segment pacing 2% ahead of where we were at the same point in 2023. Despite having significantly less carryover business and cancellations during COVID, excluding these carryover bookings, we would be 21%. ahead of a year ago. There are a couple of headwinds to point out for the upcoming year. Due to the gang violence that erupted in Ecuador on January 10th, we canceled two voyages out of precaution in the first quarter and there was some booking instability. Fortunately, Ecuador's young, energetic president seems to have quelled the violence and for all practical purposes, the country has largely stabilized. We certainly are feeling no disruption of activity and bookings are returning to a more normal pattern. Another potential headwind in Q2 is the possible rerouting of one of our ships around the tip of Africa to avoid the Red Sea due to the recent attacks from Yemen. We do not operate with guests in the Red Sea, but if we reroute to transit, there would likely be a couple of voyages impacted. While these isolated events are certainly frustrating, we have come to expect a certain amount of external disruption, and these short-term headwinds pale in comparison to the broader opportunity. As to expedition travel more broadly and incorporating adventure travel, this still represents one of, if not the largest growth segment in the travel industry. I get why nature and particularly the concern over its long-term future is fueling interest. And while there is much more competition than ever, I believe that a very strong brand will inevitably be elevated by expanding interest. So I'm really excited about the next years as we, together with our partners at National Geographic and Disney, build and grow our business, expand our ideas, our relevance, and supporting necessary strategies that help protect environments, communities, and history. So many thanks for your time, and now I will turn it back to Craig.