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spk08: number one on your telephone keypad. If you'd like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Dyson Dryden, CFO. You may begin.
spk04: Thank you, Mandeep. Appreciate it. Good morning, everyone, and thank you for joining us for the Limblad's 2024 Third Quarter Earnings Call. With me on the call today is Sven Limblad, our founder and CEO. Then we'll begin with some opening comments, and I'll follow with some details on the financial results 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'd like more information on the risks involved in forward-looking statements, please see our SEC filings. In addition, our comments may reference non-GAAP financial measures. 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.
spk02: Thank you, Dyson, and good morning, everyone. We appreciate your joining us today on Election Day. Our record third quarter results set the stage for another year of double digit growth in 2024. Dyson will provide additional color on our financial 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 that momentum in the years ahead. Let's start with the Lindblad business segment. I'm excited to report the bookings to date for future travel in our Lindblad segment increased 26% versus the same period in 2023. During the quarter, all of our 2026 inventory was released for sale, and we also are selling inventory for our own fleet through Q1 of 2027. The key metric, occupancy, is on a positive trajectory, particularly when paired with yield. Available guest nights increased by 7%, and occupancy rose from 81% to 82%, while maintaining price integrity with an increase of 9% in net yield per available guest night compared to 2023. We continue to see significant discounting from competitors. However, we are able to manage through the noise in the market this quarter. Interestingly, the fervor for building new expedition ships seems to have abated. We remain focused as an organization on returning as quickly as possible to our historic occupancies, and based on our current booking trends, we feel confident we are on a path to do exactly that. At the same time, we have stayed committed to price integrity, which is fundamental to our business model. 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 will result in us achieving this goal for the full year in 2026. A key focus for our team is our agreement with National Geographic and Disney to build and significantly grow the company through at least 2040. This long-term agreement is not yet a year old and we are in the beginning stages of capitalizing on its full potential. As a reminder, 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 Distribution. I'm pleased to report that we have made real progress on each of these focus areas since our last earnings call. In September, we debuted our first, our refreshed co-branded identity, National Geographic Lindblad Expeditions, With the launch of our new co-branded identity, we made the strategic decision to lead with the power and name recognition of National Geographic, bolstered by Linbud Expedition's rich heritage as the pioneers of modern expedition cruising. The power of this new co-brand and improved name recognition will be vitally important as we expand our footprint in key growth markets around the world. We believe that this updated co-brand will drive consumer intent search efficiency, and conversation, bringing more discerning travelers on board our growing fleet. The new National Geographic Lindblad Expeditions co-branded identity and logo will be fully implemented across all owned marketing channels by the end of the year. In early 2025, the co-brand will debut a sweeping omnichannel consumer and trade marketing campaign, the largest in our history. powered in part by the reach of the Walt Disney Company. As part of this effort, Disney led the ideation, production, direction, and funded a major commercial shoot in the Galapagos, which we featured in a new multimillion-dollar ad campaign being launched by Disney in the new year. Finally, the implementation of new branding across Leadbed Expedition's growing fleet of 20 owned, leased, and chartered vessels has begun and will continue through 2025. We also announced the inclusion of our trips in the Disney Travel Advisor loyalty program called Earmarked. Coincidentally, with the launch, Disney invited me to keynote the Disney Destinations Earmarked program owners annual summit in October. I had the incredible opportunity to interact with hundreds of owners of travel agencies in the Earmarked program and we are already seeing interest in bookings from some of these agencies. From now on, the benefits agents receive for booking Disney products will be offered when booking ours as well. As we approach 2025, we have plans to ramp up marketing to Disney affinity audience, including Disney Visa card holders, D23, Club 33, Disney Cruise Lines, Disney Vacation Club, and Disney Cashmere. Now that we're able to market and sell with the MG brand internationally, we've been ramping up our international sales effort with our launch in Great Britain in Q3, and we are developing additional sales relationships in several other countries in Europe and Asia. We expect to see several million dollars of sales to customers in Great Britain and Europe this year, with those numbers increasing significantly in 2025 and beyond. We are also working very closely with the National Geographic Society to enhance the connection of travelers to the society itself. A couple of very specific examples of where we see growth opportunities taking full advantage of the branding power. First is the acceleration of family program. After all, that's Disney's sweet spot, and we collectively intend to take full advantage. Next, we also continue to look 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 varied testing and campaigns, we will be able to generate meaningful growth as a consequence of our alliance beginning next year. A few words about product and inventory. We recognized last year that we needed to rebalance our inventory in order to have more sailings that would attract new first-time travelers. This is the first quarter where this rebalancing has really taken effect, with particular focus on having increased and changed our approach to Iceland, which is a popular destination for us to attract first-time travelers. We formally announced our two-ship expansion in the Galapagos for 2024, and the response has exceeded our expectations. The variety of both platforms with four ships and itineraries of four, five, and seven nights in the islands, combined with a variety of add-ons in Ecuador and Peru, create the most diverse offerings of any company in the region. Sailings will begin in mid-February for the 16-guest National Geographic Galfina and mid-March for the National Geographic Gemini. Later this month, I'm joining our team to convene a select group of journalists and influencers to go to Antarctica on the inaugural of our new Antarctic programs that offer either one-way flights or both ways from Chile to King George Island in Antarctica, allowing people with less time to fully enjoy Antarctica, eliminating either one or both crossings of the Drake Passage. These itineraries have been well-received, and for the next season, we are adding a second ship dedicated to these itineraries. Now let's turn to an update on our land experiences segment, which continues to thrive and grow. Revenue last quarter was $84.7 million, a 26% increase year over year. I'm excited to report that bookings today for future travel in our land experiences segment increased 20% versus the same period in 2023. The strategy of acquiring best-in-class land-based expedition travel companies that are mission-aligned, extremely well-run, and that can benefit from becoming part of our organization has proven to be of great significance for value creation. At the end of July, we completed the acquisition of our fifth land company, Thompson Safaris, has been focused on the spectacular country of Tanzania for over 40 years and their operation will create synergies with Natural Habitat's East African operation. Integration with Natural Habitat is progressing smoothly, and we are investing in sales and marketing resources to continue to grow the Thompson brand. Each of our land companies is pursuing their stated mission with vigor and aim to be a dominant force in their focus segments. We are thoroughly committed to continuing this strategy of finding compatible companies and expand both diversity and scale in the land segment and fully take advantage of the fact that our travelers are omnivorous in their interest and keeping that interest in the family, so to speak, is a sound and a creative approach. In summation, a very good quarter and one which has seen record growth in future bookings, tangible progress for our new brand, and building out the collective power of National Geographic, Disney, and Lindblad. Dyson will now delve deeply into the numbers.
spk04: Thank you, Sven. Lindblad's strong year-on-year growth continued during the third quarter. We are pleased to report both record revenue and earnings growth, as well as record level of bookings for future travel. As we deliver sustained year-on-year growth, we continue to take the operational and strategic steps necessary to take full advantage of the earnings potential of the company. Turning to the third quarter, total revenue of $206 million increased $30 million or 17% versus the third quarter of 2023. Lindblad segment tour revenue was $121.3 million, which is an increase of $12.5 million or 12% compared to the third quarter a year ago. The increase was driven by a 6% increase in available guest nights, 9% increase in net yield per available guest night to 12.05, and a 1% increase in occupancy to 82%. Land experiences tour revenues were $84.7 million, which is an increase of $17.5 million, or 26%, compared to the third quarter a year ago, led by additional guests and higher pricing. As Sven mentioned, on July 31st, we also closed the acquisition of Wineland Thompson Adventures, and the venture travel group that primarily operates African safaris. This also contributed to the quarter's strong growth. As a reminder, the aggregate purchase price was $30 million, and we financed the purchase through $24 million of cash on hand and the issuance of $6 million in common stock. Third quarter adjusted EBITDA was $45.8 million and increased 35% year over year, driven by a 30% increase at the Lindblad segment and a 42% increase at the land experiences segment. Lindblad segment adjusted EBITDA of $26.2 million, increased $6.1 million as compared to the same period in 2023, primarily due to increased tour revenues, partially offset by increased marketing spend to drive long-term growth initiatives, higher general and administrative costs, primarily due to increased personnel costs, and increased royalties associated with the expanded National Geographic Agreement. Land experiences segment adjusted EBITDA of $19.6 million increased $5.7 million as compared to the same period in 2023 due to increased tour revenues and the addition of the Wineland, Thompson, and Ventures, partially being offset by increased operating and personnel costs, higher marketing spend to drive future growth, credit card fees and commission expense looking closer at the cost side of the business operating expenses before depreciation and amortization interest and taxes increased 18.8 million or 13 percent versus the quarter a year ago cost of tours increased by 8.9 million or 9.3 percent sales and marketing costs increased by 5.6 million or 29 percent versus a year ago Again, primarily due to the increased royalties associated with the expanded National Geographic Agreement and additional marketing spend to drive future bookings. Fuel costs were stable at about 4.5% of revenue in the third quarter, which is down about a half a percent compared to the third quarter a year ago. General and administrative costs, excluding stock-based compensation and transaction-related costs, increased 3.6 million or 13.5% versus a year ago. primarily due to increased payable costs, as well as credit card commissions associated with continued bookings growth. As we highlighted last quarter, we remain focused on improving efficiency throughout the organization. We've identified areas for continuous improvement of existing processes and systems, which we believe will further improve operational efficiency and reduce certain costs. Our North Star is to achieve these objectives while maintaining, or where possible, improving our guest experience. Turning to the balance sheet, our liquidity position remains strong. Total cash was $224.6 million as of September 30, 2024, as compared with $187.3 million as of December 31, 2023. This increase reflects $90.7 million in cash from operations due primarily to increased bookings for future travel. We used $34.4 million of cash for investing activities year-to-date, including $10.7 million used in the Weiland-Thompson Ventures acquisition, net of the cash acquired, as well as $23.6 million for the purchase of property equipment. Closing of our previously announced purchase of two purpose-built Galapagos Expedition vehicles is on track for January of 2025. If the spend is calculated, we've already begun adding additional bookings for the National Geographic Gemini and the National Geographic Delfina ships to effectively use the time we have between signing and closing. And upon closing, the ships will undergo revitalizations before embarking on their inaugural voyages in late the first quarter 2025. Consistent with our stated strategy, we will continue to explore growth opportunities in the years ahead, including further diversifying our product portfolio or opportunistically expanding our fleet to capitalize on the continued growth and the demand for experiential travel. Turning to the full year 2024, we continue to anticipate significant growth driven by higher guest counts and increased net yields across the fleet, as well as additional travelers across the growing land business. We continue to expect tour revenue in 2024 between 610 and 630 million and adjusted EBITDA between 88 and 98 million. The acquisition of Thompson Safari is expected to have a minimal contribution this year due to certain planned investments in the business. However, it's expected to be a more meaningful contributor for the full year 2025. Overall, we're very pleased with the operating momentum across our business.
spk07: Thank you for your interest, and now Sven and I would be happy to answer any questions you may have. Thank you. We will now begin the question and answer session.
spk08: If you dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.
spk07: Again, press star 1 to join the queue.
spk08: Our first question comes from the line of Steve Wyszynski with Steeple. Please go ahead.
spk00: Hey, guys. Good morning. So, Sven, you talked about using your past guest base in order to drive Occupancy back to historical levels. Did I hear you right that you expect to be back to that level by 2026? And I'm guessing there might be some benefit from Disney moving forward. But look, if my math is right, you guys would get back to that kind of, let's call it upper 80s, low 90s in terms of occupancy. And look, you've talked about every occupancy point is about $4 million plus in EBITDA. Just With occupancy, that would kind of get you guys back into that mid-120s called in terms of EBITDA by 2026. And that's going to be without any pricing action or benefit from your land-based operations. So that's kind of a way of me asking if you, from a high level, agree kind of with that math as we think about the EBITDA progression and where this company can really go moving forward.
spk02: Yeah, so... Just to answer the first part of the question, and just to reiterate for anyone else who's listening, the way our itineraries are constructed and the kinds of ships that we have, you are going to be in areas with certain ships at certain times that are particularly dependent on people who have traveled with you before. And having lost basically two years of that community, we were set back. And that has been rebuilt, and by 2026 it will be completely back to, you know, a level which is appropriate for the balancing of our inventory. And so to then get to the numbers you're talking about, Tyson, you may want to clarify in greater detail, but that sounds about right.
spk04: Yeah, I think Steve Great to speak with you. You know, we're not giving long-term guidance on the call or 2025 guidance yet. But I think directionally speaking, you know, the earnings power of the business will increase significantly. And I think you saw a lot of that even without the increased occupancy, you know, meaningful increase in occupancy this quarter, just how much operating leverage we saw in available guest nights and pricing increases. we're excited about the future potential here.
spk00: Okay, great. Thanks for that, guys. And then second question, Dyson or Sven, whoever wants to take this. I mean, look, you guys are now building a pretty healthy cash position at this point. And just wondering what's your Your updated thoughts are in terms of free cash flow uses moving forward. I would assume continuing to drive down your debt levels does remain a priority. But Sven, you made a comment about how your peers don't seem to be building as much in the out years. So does that change your view of maybe starting to think about order ships again in order to capture longer-term demand?
spk02: Well, there are two pathways, right? And remember how the company was originally built. The company was originally built by purchasing ships that had failed in other enterprises at very, very reasonable rates. And so I would imagine that in the future, there is going to be, again, inventory available, i.e. ships available, because certain companies will will not have found that business successful. And so we then will have, you know, our job is to look at the future from the perspective of building new or acquiring ships that have already been built. And we, you know, we've had a good deal of experience in both those lanes. And so we're kind of excited about the opportunity to think about ships that have already been built that may become available.
spk00: Okay, gotcha. Thanks, guys. Congrats on a very solid quarter.
spk08: Thanks.
spk00: Thank you.
spk08: Our next question comes from the line of Eric Wolfe with B.E. Riley. Please go ahead.
spk06: Thanks. Good morning. Thanks for taking my questions. I guess, Dyson, a couple questions around kind of the numbers, I guess. One, can you give us an update on what percentage of your tool revenues have been booked? uh for this year and then you gave 98 um on the last quarter call so maybe an update to that and then um maybe talk about the decision to maintain 2024 guidance if i if i if i look at it you're reaching the high end of the range at 630 would have the lowest growth rate of the of any quarter this year even with kind of strengthening bookings and the acquisition with the land segment is there any incremental headwinds you should think about for Q4 that maybe have come up? And then, you know, second part of that is what would need to happen to actually reach the low end at 610 million at this point in the year?
spk04: Yeah, no, thank you for the questions. Let me hit a couple points here. I think the first, just on seasonality, it is, as you know, but maybe for some that may be new to the company, you know, our quarterly results do fluctuate due to seasonality. And the third quarter benefited from you know, more complete fleet usage and peak seasons across really our fleet and our land businesses. And conversely, the fourth quarter will be impacted by less available guest nights due to heavy dry dock and transit time across the marine fleet. And there's more shoulder season inventory and seasonality across our land businesses. So, you know, there is a natural ebb and flow to the results. And I think that's an important factor. To your question on the guidance range, and I'll talk about, you know, the booking position, you know, we haven't seen anything significant that would change our revenue or EBITDA guidance. You know, I'd note that kind of the Wall Street analyst estimates have us on the lower end of the guidance, I'm sure you've seen, and we don't think that's, you know, inappropriate given we've had some voyage cancellations earlier in the year and we've continued to ramp sales and marketing investments which we believe will benefit future years. And I think you've already seen that given the record booking position that we're in today. We're currently sitting in a booking position that accounts for approximately 99% of full year projected revenue for 2024 on the marine side. And, you know, any new revenue could be offset by cancellations. We are in a normal kind of cancellation environment. But, you know, that can ebb and flow and can be difficult to predict even in the last few months of the year. So, you know, we feel confident that we're in a good position here. And that's why we've reiterated the range. But, you know, between those factors, that's why we haven't increased guidance at this point. Hopefully that's helpful.
spk06: No, that's very helpful. My last question. Dive into the meaningful increase in net yields in the quarter of 8.5% year to year. Aim to call out as the major driver there, I guess. I know you talked about holding price in a competitive environment, but does that actually reflect taking price where you can versus maybe how much of that was driven by mix of expeditions, voyages?
spk07: Go ahead, Zach.
spk02: Well, just to say part of that is, you know, this is really the first year where we are beginning to see the effects of dynamic pricing so that, for example, if you take an area like Alaska, already now for next year, we've changed prices like five or six times. And for this year, I can't remember exactly how many times we've changed it, but we were able to raise the prices as the season went on and the demand showed. the strength that he showed. So that is certainly part of the reason. Dyson?
spk04: Yeah, I was going to say the same thing. So I think that's the dynamic pricing and really full implementation of our new technology systems. I mean, we still, you know, the team refers to, you know, we have a Ferrari and I don't think we're we're professional drivers yet, but we're getting pretty close. And so that's a real benefit to the company. And we think that's helping. I wouldn't forecast, you know, net yield growth going forward at that level. You know, we've talked about the overall environment. You know, there is still a lot of discounting out there. We're in a really good position. But, you know, going forward, And we can talk more when we do guidance early next year. But I think there's a good opportunity here to take more occupancy gains going forward. So this, I wouldn't extrapolate out sort of this type of pricing, you know, increases going forward necessarily. But we do think we're in a good position relatively speaking.
spk06: Perfect. Thank you both.
spk08: Our next question comes from the line of Alex Furman with Craig Callum Capital Group. Please go ahead.
spk05: Hey, guys. Thanks for taking my question. It sounds like you're starting to see some pretty strong demand from travelers in the UK and Europe. I know historically your business has mostly been focused on American travelers. Curious where those British and European travelers travelers are booking? Are they mostly booking the Arctic and your European itineraries, or are they venturing over to the Western Hemisphere as well?
spk02: Yeah, in terms of the real beginnings of the European bookings are coming out of Great Britain, where we put in a particular effort to begin the signing of GSA. And so it's very, very early stages in terms of It's not going to be, as we said earlier, very, very much this year, but we believe that it's going to increase dramatically next year. And there's a lot of testing going on at the moment to try and figure out which of our programs are most attractive and cost effective to market. But we have an enormous belief that the National Geographic brand, this is one of the key elements going forward in terms of the long term agreement we made with Disney and National Geographic was that the National Geographic brand in Europe is really, really important and we believe will help us a great deal. We suspect that polar regions will be very, very popular. The Galapagos, certainly. Alaska, absolutely. And so we see quite a diverse, we see in all likelihood, quite a diverse participation.
spk05: Okay, that's really helpful. Thank you. And then can you talk a little bit about just the timeline of going after additional international markets, including Asia over time? When you talk about getting to something resembling normalized occupancy in 26, you know, is international going to be a big part of that? Or is that perhaps an even longer tail opportunity down the road?
spk02: Yeah, you know, we look upon the international opportunity as potentially being significant over time, but we haven't sort of baked that into our thinking in any significant degree yet. In other words, we believe that the traditional mechanisms that we have had in place will get us to where we were talking about 426, and the international business would be on top of that, which is great and would accelerate our ability to grow. I would say this is very much an experimental phase still as it relates to Europe. We literally just signed on a GSA in Britain a couple of months ago. There's a lot of interest in Holland, Belgium, Switzerland, for example, as there are large English-speaking populations, and we feel that that's probably the best way for us to go at the moment. We've started doing some work in India, which is, you know, I know for a fact that more and more people without us even having made an effort are joining our expeditions from India. We have some charters in China that we're beginning to experiment with. So, you know, I think by next year we will be able to be much more specific in terms of how we feel this is going to develop.
spk07: Okay, that's really helpful. Thank you very much. Thank you.
spk08: Our next question comes from the line of David Hargraves with Sparkways. Please go ahead.
spk03: Thanks very much. Great quarter. I was curious as to what happened with the tax inflection. Maybe I missed it. I didn't hear. What happened there?
spk04: um yeah David I'll have to follow up with you on that uh post the call let me let me get that data in front of me and I'll give you a call it doesn't look like there's a write-down or anything of that nature I'm just wondering um and then it when we look at the market we only I mean our cash taxes it's all sort of you know accounting our cash taxes you know this year will be you know a couple million dollars um you know one to two million dollars so We have significant NOLs, but I'll get to the accounting answer on that.
spk03: Okay. And when we look at your margins now with the commissions and royalties under the new contract, is that fully reflected or are we going to see that being implemented over time?
spk04: You'll see it being implemented over time. It's not fully reflected. So I think we've talked about on past calls that the Disney National Geographic agreement, there's step ups in part because the benefits that we're going to be fully receiving from all the activities take, you know, with a nine month booking window, it takes some time to come to fruition. So the step ups happen next year. There's a more modest step up and then there's another step up in 2026. But we haven't, for strategic reasons, disclosed what those amounts are.
spk03: Okay, I'm just wondering where we are, inning-wise. Thank you very much.
spk08: Thank you. That concludes today's Q&A session. I would now like to turn the call back to Dyson for closing remarks.
spk04: Thank you again, everyone, for joining the call today. We're really pleased with the momentum we have across the business, and if you have any further questions for Our team, Sven and I would be happy to answer them. Just reach out.
spk02: Thank you, everybody.
spk04: This concludes today's call.
spk08: You may now disconnect.
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