Lindblad Expeditions Holdings Inc.

Ladies and gentlemen, thank you for standing by. My name is Desiree and I will be your conference operator today. At this time, I would like to welcome everyone to the Lindblad Expedition Holding Inc. Reports 2024 Second Quarter Financial Results. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star 1. I would now like to turn the conference over to Dyson Dryden, Chief Financial Officer. Please go ahead.

Thank you, Desiree. Good morning, everyone, and thank you for joining us for Limblad's 2024 Second Quarter Earnings Call. With me on the call today is Sven Limblad, founder and CEO. Sven will begin with some opening comments, and then I will follow with some details from the financial results and our 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. But 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 encourage undertake no obligation to update such forward-looking statements. If you'd 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 please turn the call over to Sven. Sven?

Thanks, Tyson, and thank you for stepping in and doing such a spectacular job as interim CFO while we consider our CFO search. Good morning, everyone, and thank you all for joining us today. Wimbled's strong second quarter results set the stage for another year of double-digit growth and record results for 2024. Dyson 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 the steps we are taking to sustain the momentum in the years ahead. First, I would like to emphasize how delighted we are with two new additions to our Board of Directors. Annette Levis currently serves as Chief People Officer at CrossFit, Throughout her career, she has served as a strategic partner for people in business operations and organizational design. Perhaps her most defining role was a decade at Meta, where she served as VP of Human Resources, playing an integral role in the company's growth from 1,400 to over 40,000 employees. Andy Stewart is a celebrated cruise industry titan. He served as president and chief executive officer and held several other executive-level positions over his 31-year tenure at Norwegian Cruise Line Holdings. These two additions to our board add a significant diversity of key experiences, which will help tremendously in navigating the company's future. And I would like to thank Bernie Aronson for his significant wisdom and insight during his tenure on our board. Now turning to our quarterly results. Bookings to date for future travel were up 17% versus the same period in 2023. And our in-year bookings expanded to 6% over the same point in 2023. It's important to note that 2023 benefited significantly from carryover business from prior cancellations during the pandemic. If you remove those from the equation, In-year bookings would be up 29% in 2024, and cancellation rates have stabilized to historic levels. Second quarter occupancy increased from 74% in 23 to 78%. Each percentage point increased on an annual basis depending on itinerary sold as between $4 and $5 billion in additional EBITDA. So clearly, as I've consistently said, the single biggest opportunity is to return as quickly as possible to our historic occupancies. At the same time, we have stayed committed to price integrity, which is fundamental to our business model. Many of our competitors continue to compete on price in pursuit of occupancy gains. This, without doubt, is a flawed, unsustainable strategy. To reliably return to the occupancy levels we historically have enjoyed, we are building back our past guest base. This customer cohort is the backbone for a segment of our itineraries, those that are longer and more esoteric. We believe this strategy, barring external influences, will result in us achieving this goal for the full year in 2026. Speaking of external influences, They have had an impact in 2024 and will likely continue to impact future years. The ongoing Middle East conflict has had a significant effect on our Egypt program and we also cancelled two long Mediterranean voyages as one of our ships had to be rerouted at short notice from transiting the Red Sea. Certain of our Galapagos voyages were affected by concerns about stability in mainland Ecuador but this is largely stabilized as people realize that the issue was very localized. Just as an aside, I just spent 10 days in Ecuador, in part, meeting with the government, including with President Noboa. I was very impressed with his vision for the country and his commitment to the imperative of security. Recently, A reality is that since I started this business, there have always been periodic disruptions due to world events, some more dramatic than others. Our business model, within reason, takes this into consideration. One of the most significant developments for the company is our agreement with National Geographic and Disney to build and significantly grow the company through at least 2040. To be clear, this agreement was only realized in November last year, so we are still in the early stages. There are a number of initiatives I cannot speak to here at this time due to competitive reasons. However, there are several that I can. First of all, the rallying cry within the three organizations that have chosen to deeply collaborate, Lindblad, National Geographic, and Disney, is the power of three. On the surface, the key ingredients each brings is Lindblad Expedition Execution, National Geographic Brand Strength, and Disney Distributions. Aside from these critical components, there is a lot more. Let's focus on primary benefits. We have spent dozens of hours together unearthing how and where we expand our reach with a goal of attracting new travelers. We have determined together to update our consumer brand, and this will be launched by the end of September. The updated brand, National Geographic Lindblad Expeditions, leads with the power and name recognition of National Geographic. Our research and experimentation has demonstrated the power of this new brand, increasing consumer intent, search efficiency, and conversion. This is especially important as we begin to market internationally, where the National Geographic brand has far more awareness today than the name Lindblom. We have begun to leverage Disney's ad buying power with our joint marketing fund and have just committed to a new domestic marketing campaign to support the launch of our new co-brand. Featuring radio, connected TV, digital and print advertising, this campaign will reach our target households across the country. We are also working together to create a full suite of new co-branded advertising assets to appeal to a diverse audience of potential guests. Our first cross-selling campaigns to Disney affinity audiences will launch this year, reaching millions of consumers with strong Disney affinity and a love of travel. With our new ability to market together with the NG brand internationally, we are launching sales in Great Britain this quarter and plan further expansions into Europe later this year. We are also looking at a variety of new charter products that we believe will be uniquely successful under the new co-brand, including possible expansion of river cruising. So we believe that through committed and various testing and campaigns, we will be able to generate meaningful growth as a consequence of our lines beginning next year. A few words on inventory and its importance. First, we are working on new thematic content creation, which we hope to articulate soon, harnessing the creative forces within both National Geographic and Disney. A good example of this is our renewed focus on family travel. For those familiar with our current products, you know we have different ships designed for very different missions, operating in different geographies, and attracting very different guests. Our voyages range from four days to 30 days in length. Certain itineraries are more suited to bring in new guests, Galapagos, Alaska, for example. Some particularly esoteric itineraries largely attract past guests. Examples include places like Papua New Guinea and the Northwest Passage, and somewhere there is a balance, Antarctica and Iceland, for example. We have always worked on calibrating inventory to have the right balance. For many years, we achieved this optimal balance, hence our 90-plus or minus percent occupancies. With COVID, we basically lost two years of adding to the funnel, basically 30,000-plus guests. Inventory... is planned several years out, so a beautiful, essentially perfect formula was disrupted for a time. We have responded by increasing first-timer itineraries and culling those for past guests. Examples are increasing our presence in Iceland and reducing more of our esoteric Arctic itinerary. Another is our fly-in program to Antarctica, making it possible to have a shorter experience by flying from Chile to Antarctica to board our ships, which has opened up an entirely new market. We have also just signed an agreement to acquire two additional ships for Galapagos, critical for bringing in new guests, the National Geographic Gemini and the National Geographic Delfina, with 48 and 16 passengers respectively. Galapagos is a closed market for ships with a defined number of licenses, so the overall market is not increased, but our inventory has by 45%. These two additional ships are expected to begin operation late Q1 next year, and the effects on accelerating first-time travelers by upwards of 3,000 people a year will be felt across the fleet over time. A few operational highlights. Our first 10 governing principles is to ensure that everything we do adds value to the guest experience. This is sacrosanct, and I'm very happy to be able to report to the guest satisfaction this quarter was the highest level since before the pandemic. Our new IT systems, while still being improved, have begun to streamline our internal processes and improve the guest experience. We believe there is more we can do on this front. For some months now, we have made a concerted effort to further improve efficiency, looking at the organizational structure broadly and how we can modernize, improve, and eliminate unnecessary costs. Our land experience sectors continues to perform and grow at exceptional levels. Revenue last quarter was $43.4 million, a 16% increase year over year. Natural habitat, the largest of our land subsidiaries, has current bookings over 20% greater than at the same period in 2023. The theory from the beginning that our kind of travelers are omnivorous in their interest and engage in a diverse set of experiences has absolutely proven to be true. The more people that travel with our land companies, the better as they provide best-in-class experiences and travelers stay in the family, so to speak. Think of what this diversity represents. Natural habitat adventures focus on land-based itineraries in natural remote places. Examples include viewing polar bears in the high Arctic or safaris in Africa. Ben Bresler, the founder and CEO, and he also, Ben Bresler is the founder and CEO, and he also oversees all of our land companies. NADAM's mission is entirely consistent with our own. Conservation through exploration, protecting our planet by inspiring travelers, supporting local communities, and boldly influencing the entire travel industry. Classic Journeys focus on cultural walking tours all over the world. Think Italy, Spain, South America, and beyond. Its founders and leaders, Edward and Susan Pigazza, are really driving and expanding this business. And talk about a minimal capital, it's largely two feet at a time. The line offers luxury bike tours that offer immersive experiences in some of the world's most scenic and culturally rich destinations. It's an exciting company, really capitalizing on a growing interest in fitness and cycling. Add to that the advent of e-bikes, which massively grows the category, and voila, you have quite a growth story, which in Devine's case is largely fed by love of Italy and France. Founder and CEO Andy Levine turned a personal interest, biking, culture, and wine, into a perfect enterprise, and we are thrilled to support his team and their growth. Off the beaten path is in the process of extending its strong presence in North American national parks and other lesser travel destinations globally. With 30-party development of new and exciting hotels, lodges, and the expansion of glamorous camping, OBP is in the right market. CEO Corey Lawrence is ideally suited to lead this growth platform for us. And just last week, we closed the acquisition of our fifth land company, Thompson Safaris. which has been focusing on the spectacular country of Tanzania for over 40 years, and their operation will create synergies with Natural Habitat's East African operation. The level of focus and expertise in one of Africa's most desirable countries for safari travelers unmatched and included in the transaction is a spectacular lodge called Gibbs Farm, named East Africa's best hotel by Conde Nast in 2023. Gibbs is a place with a deep history. It actually was my favorite lodge back in the 1970s when I was living in East Africa, and it's consistently related as one of Africa's top lodges today. Each of our land companies is pursuing their stated mission with vigor and aims to be a dominant force in their focus segments. We're excited to continue to expand by adding additional best-in-class companies to this valuable portfolio. Companies where we are mission aligned and whereby joining our family, we can add value and propel meaningful growth. In summation, 2024 is shaping up nicely, and we remain optimistic about the future. Now, Dyson will delve deeply into the numbers.