Lindblad Expeditions Holdings Inc.

Good morning, everyone, and welcome to the Lynn Black Expedition's 2024 First Quarter Financial Results. My name is Angela, and I'll be coordinating your call today. During the presentation, you can register to ask a question by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by T. I will now hand you over to your host, Craig Fallenstein, Chief Financial Officer, to begin. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining us for Linblad's 2024 first quarter earnings call. With me on the call today is Sven Linblad, Linblad's founder and chief executive officer. Sven will begin with some opening comments, and then I will follow up with some details on our financial results, balance sheet, and current 2024 expectations 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 forecast 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 Seth.

Thank you, Craig, and good morning, and thank you all for joining us today. If I sound a little odd periodically, I've been hit hard by allergies, so I might cough now and then. I'm sure that's true for many of you with all of the flowering trees around. In any case, Lindblad's first quarter results set the stage for another year of double digit growth and record results in 2024. Craig will provide additional color on our performance this past quarter, But before he does, let me take a few minutes to discuss some of the drivers of the continued growth this year, as well as some of the steps we are taking to sustain that momentum in the years ahead. First and foremost, the booking strength we experienced throughout 2023 has continued into this year as more and more guests want to explore the remarkable destinations we visit. The pull to connect authentically with nature and culture is continually growing, and there's no other company in this segment with our track record or with our commitment to providing authentic and immersive travel itineraries. Bookings this year to date for future travel were up 20% versus the same period in 2023, and we expanded our overall in-year bookings growth to 4% ahead of where we were at the same point in 2023. Now, it's worth reminding that 2023 benefited from significant carry over business from cancellations during coded, excluding excluding these carry over bookings. The reservations for twenty four travel would be well over twenty percent of that a year ago. These carryover bookings were also one of the primary reasons for occupancies below the first quarter a year ago. Excluding carryover bookings, the occupancy would have increased versus the first quarter of 2023. The majority of the carryover bookings for 2023 were early in the year, so the impact of these guests on occupancy growth will diminish as the year progresses. Lastly, it is important to remember, as I discussed last quarter, that a key contributor to current occupancy levels is a two year loss of generating new guests during COVID, drying up the pipeline of the key past guest constituency. This effect is diminishing by the day and occupancies will move higher as the pipeline again refills. At the same time, there are a couple of external headwinds that we continue to deal with. The first is geopolitical. events across the globe. Reality is that they've always played a role, ebbing and flowing through the years, and we are currently dealing with two specific events that certainly depressed revenue and occupancy in the first quarter. The Israeli-Hamas war and events in Ecuador in early January both caused cancellations and short-term softening of future business. These kinds of events can also affect costs. Fuel, for example, has increased significantly, hopefully temporarily, due to the instability in the Middle East. Periodic disruptions may have a distorting effect on quarters, but as we continue to scale our business, they will have less and less impact on overall results. The other headwind is the discounting taking place with our competition in the expedition space. As 2023 evolved through the summer and fall, we started seeing more and more dramatic price actions, sometimes even two-for-one offerings for prime seasons in places like Antarctica. Clearly, the relationship of inventory and demand is out of balance for some of our peers, as well as some desperation coming out of COVID. Rather than joining the flag, given the potential long-term ramifications to the value proposition we deliver, We have remained committed not to buy occupancy and maintain price integrity, which you can see with our net yield up slightly versus the first quarter a year ago. There is little to no benefit in adding occupancy if yield decreases proportionately. So price integrity is key, is a key long-term metric and essential to preserve, even if occupancies move ahead of it slower in the short term. Given the opportunity and experiential travel, our thesis is that brand is now and will become even more important than ever. That is why we are so excited about the recent extension and expansion of our brand partnership with National Geographic until two thousand and forty. With the power of both our brands, now combined with the distribution clout of Disney, we believe we can leverage our collective strengths to really take advantage of the increased demand while distinguishing ourselves from competition. We just came off a five-day off-site on one of our expedition ships with high-level participation from all three entities. The purpose was to build understanding and to surface meaningful ideas that will propel us all into the future with a core theme being the power of three. This was just another step towards maximizing the opportunity ahead. Since the day the new agreement was signed in November, our team, along with their marketing and sales teams, have been deep into strategy and tactical plans on a regular basis to energize collective goals and build specific initiatives to drive business. Collaboratively, we have made significant progress, including a new brand strategy that incorporates a new co-branded logo with National Geographic, which we will begin rolling out later this year. The brand changes are subtle, but more fully harness the National Geographic brand to capitalize on one of the world's largest social media followings and their extremely high awareness, trust, and credibility. As we focus on maximizing the brand opportunity, we are also updating our website on both National Geographic Expeditions and Expeditions.com domains to create a seamless, unified booking experience. Last summer, we launched a completely redesigned online booking flow on the Expeditions.com website and have since seen a near doubling of the percentage of our direct bookings made online. We're now actively working on the development needed to enable all those same digital features on the National Geographic Expeditions website, and we'll launch those enhancements later in this year. A key component of the new arrangement is the ability to leverage the powerful Disney sales network. Our teams are focused and energized on developing coordinated sales strategies B2B marketing tactics and events and activating high potential Disney distribution channels. The expanded license agreement also gives us the ability to sell globally. Our consumer and trade sales efforts will launch in our first new market by the end of the summer, and more will follow based on market opportunity. While we continue to lay these foundational blocks, we're already leveraging the power of Disney's Synergy machine to execute high visibility on brand activations today. Over the course of the last few months, Disney has leaned on their marketing engine to place the co-brand in some of their most valuable visible media assets, including the Wheel of Fortune, Good Morning America, Disney+, National Geographic, and even on the homepage of Disney.com to celebrate Earth Month. Bookings in the year for travel in 2024 are up 35% versus 2023 and the Disney and National Geographic marketing efforts has contributed to that result. These are just a few highlights where we're working together to create both the top of funnel demand and lower funnel performance for years to come. We anticipate really benefiting from this new arrangement starting in 2025. as we reach more citizen explorers than ever before by opening larger addressable markets through new worldwide audiences. As we look to maximize the opportunity with National Geographic and Disney, we have become even more focused on itinerary development and innovating the ways we immerse our guests in parts of the world we have been visiting for years. We have made some major changes for this year and into the future, balancing our inventory to accommodate both past and new guests. Two of the most significant are a focus on Iceland, which attracts a greater level of new guests, and new itineraries in Antarctica that provide flights either one way or both ways from South America to the continent, avoiding either one or both crossings of the Drake Passage and allowing people with less available time to participate. These programs from November 24 through February 25 sold out faster than anything we have ever, ever offered And for the twenty five, twenty six season, we will add another ship, the National Geographic Orion, fully dedicated to this approach, allowing us to connect with more travelers who wouldn't have considered this type of expedition before. This also speaks to our ability to be nimble with regard to our product offerings. As we focus on driving higher returns across the fleet, we also continue to broaden and deepen our land based portfolio. with this morning's announcement of our signing a deal to acquire Wineland Thompson Adventures, which includes respected Tanzania safari specialist Thompson Safaris with more than forty years of experience in the country. Their portfolio also includes the historic award-winning Gibbs Farm Lodge, an eighty-acre sanctuary that was my favorite lodge when I was a guide in East Africa. Tanzania is one of the finest places in Africa for wildlife viewing, including famed national parks like the Serengeti and Ngorongoro Crater. And African safaris have exploded in recent years as evidenced by natural habitats growth in the region. Similar to the acquisitions of natural habitat, divine cycling, off the beaten path, classic journeys, Lindblad will leverage its experience and resources to further accelerate the growth of the wineland Thompson brands and capitalize on the growing demand for authentic and immersive adventure travel and safaris. We do need regulatory approval in Tanzania and expect the transaction to close early in the second half of 2024. Once it does, Wineland Thompson Adventures will create additional value for our guests and for our shareholders. Before I finish up, I would be remiss not to mention this is Craig's last earnings call with us. He has been our valued CFO for seven and a half years and has been a true partner to me, the board, and the entire organization. We will miss him a great deal and wish him well on his new non-competitive opportunity. We are working on the transition and expect to have news on this front before Craig leaves at the end of the month. Many thanks for your time. For the last time, Craig, and now I will turn the call back over to you.