Lindblad Expeditions Holdings Inc.

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Lindblad Expedition's second quarter 2025 earnings conference call. 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, then the number one on your telephone keypad. To withdraw your question, press star one again. We kindly ask that you please limit your initial questions to two. I would now like to turn the conference over to Rick Goldberg. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining us for Lindblad's second quarter 2025 earnings call. With me on today's call is Natalia Leahy, our chief executive officer. Natalia will begin with some opening comments, and I'll follow with details on our Q2 financial results and updated expectations for the full year before we open the call for Q&A. As always, you can find our latest earnings release in the investor relations section of our website. But before we get to all of that, I'd like to 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. With that out of the way, I'll turn the call over to Natalia.

Good morning, everyone, and thank you for joining us to review LeanBlood Expedition's second quarter results. I will start by saying how incredibly proud I am of our team and the very strong performance we delivered this quarter. We're seeing a clear momentum from the strategic initiatives we've implemented to increase occupancy and innovate across our core structure. While we are focused on value creation opportunities ahead, The meaningful progress we've made with the team in a relatively short period gives me and all of us great confidence in the path we are on. Before diving into the quarterly results, I'd like to take a step back and highlight some key milestones from the past six months that have positioned us for continued success. First, we introduced more strategic revenue management capabilities. Through thoughtful pricing architecture aligned with strategic and systemic commercial calendar. Second, we're executing impactful strategic and tactical initiatives with our Disney partners, allowing us access to new channels and audiences, which are already yielding positive outcomes. Third, we've implemented robust cost innovation process across the business. To support these priorities, we adopted an organizational structure better aligned with our long-term goals and made several key additions to our leadership team, bringing deep and diverse expertise. Krista Souza joined us as Chief Revenue Management Officer, bringing extensive experience across revenue management, sales, and marketing in the cruise industry and across multiple brands. Rare Admiral Keith Taylor, U.S. Coast Guard retired, now serving as Chief Maritime Officer. He brings more than 40 years of experience in the Coast Guard, maritime, and cruise industry and is already delivering meaningful results in maintenance optimization and dry dock planning. Janelle Findley was appointed Senior Vice President of Planning and Operations. With her strong operational and financial background, she's leading deployment optimization and robust cost innovation efforts. Sean Choksi came aboard as Senior Vice President of Strategy and Corporate Development, where he will be advancing our programmatic M&A strategy. Sean brings valuable experience from both private equity and industry. These leaders, together with our very talented existing team, reinforce a culture rooted in purpose and performance, giving us full confidence in our ability to capitalize on opportunities that lie ahead. Turning to our second quarter performance, I am pleased to report another outstanding quarter. Revenue increased by 23%. including 19% increase in our Coraline Blood Expedition segment and 41% increase in our land segment. Occupancy rose to 86%, an 11-point gain despite a 5% capacity increase. Net yields grew 13% to $1,241. a historic high for second quarter. Adjusted EBITDA increased 139%, with margins expanding 720 basis points to 14.8%. Our bookings remain strong and tracking ahead of last year, both in 2025 and 2026, across both segments. setting us up well for continued success throughout the year and beyond, and reflecting the strengths of our brand, differentiated experiences, and exceptional service our guests enjoy. Let me now walk you through the progress we've made across our three long-term strategic pillars. Number one, maximizing revenue generation through higher occupancy pricing and deployment optimization. Number two, optimizing financial performance through cost innovations and fixed assets optimization. Number three, exploring and capitalizing on accretive growth opportunities, including additions to our brand portfolio. Let me begin with our first pillar, which focuses on maximizing revenue generation. We are optimizing deployment by focusing on most profitable destinations across both expedition and land segments and reducing non-revenue days. As a result, we have added four voyages in 2026, up from three we announced last quarter. And thanks to improved dry dock and transition voyage planning, we've reduced non-revenue days by 38% between 2025 and 2027. Our onboard sales program pilots that I mentioned during last call will be fully rolled out by the end of August. This initiative allows guests to book their next journey while still immersed in their current expedition. and it's already driving meaningful results in repeat bookings and expanding booking curves. Our partnership with Disney continues to build momentum. Following last quarter's engagement with Disney's earmarked travel advisors, we've conducted multiple follow-up webinars and presentations. As a result, bookings from this group have increased 45%. Additionally, Disney Vacation Club members can now redeem points for expedition cruises, introducing our brand to more than 250,000 members globally. This is a major milestone and a significant cross-lever. National Geographic Reframe Travel Campaign was launched across digital and social media, resulting in search volumes increased by 122%, and we plan to further expand this activation. We also recently relaunched our youth travel program under the new name Explorers in Training, reinforcing our commitment to multigenerational travel. We believe that offering family-friendly options for our most popular itineraries presents a sizable growth opportunity. I had the pleasure of attending a meaningful naming ceremony of our National Geographic Delfina and National Geographic Gemini in the Galapagos, celebrating nearly 60 years of partnership with the local community. This event attracted extensive media coverage and amplified our brand presence in one of our top destinations. Outbound sales also remain a key priority. we nearly doubled quarter to outbound sales delivering strong return on investments thanks to our dedicated focus charters also remain a strategic focus our small ships provide ideal settings for affinity groups high net worth individuals and institutional clients as a result charters now make up a double digit percentage of 2026 bookings Last not least, in our land segment, we are leveraging innovation to align with key consumer trends that drive growth across our portfolio. For instance, Natural Habitat has expanded its Women's Journeys program to tap into the rising demand for female-focused group travel. Similarly, DeWine has enhanced its Chefs on Wheels offering, premium chef-led cycling tours, that combine two passions shared by many, food and cycling. Each tour offers stylish, immersive lodgings that complement the region's character and cuisine. These premium-priced, experience-driven products continue to demonstrate exceptional demand. Moving to our second strategic pillar, which focuses on operational excellence and productivity improvements. We now have more than 20 cost innovation initiatives underway, targeting port cost optimization, procurement, and crew planning. As mentioned earlier, our improved dry dock planning has already added four additional voyages to 2026, enhancing fixed effort utilization and productivity. Our first strategic pillar centers on accretive growth initiatives. Our newly launched European River Cruise Program has been very well received, with 2026 departures already over 50% booked and some voyages sold out. I'm pleased to announce our acquisition of four safari camps in East Africa, which enable vertical integration in our key region for natural habitat adventures and deepen our footprint in Africa. Sustainability remains central to our mission, and we will continue to share meaningful highlights in this area. We are currently preparing our first ever ESG report to be released next quarter, highlighting our environmental and social impact efforts. Natural habitat expanded on the electrification of its vehicle fleet by introducing the first ever electrical vehicle officially permitted for tourism in Peru. It was a meaningful undertaking to build out on the infrastructure, and it is a symbolic example of the company's commitment to greenhouse gas emissions in each region we operate. Given our strong first half performance and growing momentum, we are rising full year guidance for net yields, revenue, and adjusted EBITDA. Rick will cover more on this topic. We remain focused on operational excellence and sustainable growth that will drive long-term shareholders' value. In closing, I want to express my sincere appreciation to our incredible shipboard, shore site, and field teams. Their passion, dedication, and commitment to delivering extraordinary guest experiences while upholding the highest standards of responsibility are truly inspiring. As we move forward, we will remain focused on our three strategic pillars to drive meaningful long-term value. With that, I'll now turn the call over to Rick for a deeper dive into our financial results. Rick?

Thank you, Natalia. I'm pleased to report another strong quarter of performance, reflecting our continued progress in driving both occupancy and net yield growth, innovating our cost structure to enhance margins, and most importantly, staying true to our commitment to delivering an exceptional guest experience. Total company revenues for Q2 2025 were 167 million, an increase of 31 million, or 23%, versus Q2 2024. Lindblad segment revenues were 111 million, an increase of 18 million, or 19%, compared to the prior year. Occupancy increased eight percentage points from 78% to 86%, in spite of a 5% increase in available guest nights. And net yield per available guest night increased 13%, to 1,241, which is the highest Q2 net yield in company history. Planned experience segment revenues were 57 million, an increase of 13 million, or 31%, compared to Q2 2024, driven by increased trips, higher revenue per guest, and the inclusion of Wineland Thompson Adventures, an adventure travel group that primarily operates African safaris, which was acquired in July 2024. Q2 2025 adjusted EBITDA was $24.8 million, an increase of $14.5 million or 139% versus the prior year. This was driven by a $9.8 million or 150% increase in the Lindblad segment and a $4.7 million or 121% increase in the land experiences segment. This included the impact of $3.4 million of employee retention tax credits realized in Q2 2025. Excluding these, Q2 adjusted EBITDA increased by 11.1 million, or 106% year over year. Looking closer at the cost side of our business, I'm pleased to report that we delivered significant margin improvement this quarter, with adjusted EBITDA margins expanding 720 basis points year over year to 14.8%. Operating expenses before stock-based compensation, transaction-related expenses, depreciation and amortization, interest and taxes increased 17.0 million or 13.5% versus Q2 2024. Specifically, cost of tours increased 8.4 million or 10.2% driven by operating additional voyages and trips and the inclusion of Wineland Thompson Adventures. Fuel costs were 3.8% of Lindblad segment revenues, which is down 230 basis points versus a year ago. Sales and marketing costs increased 8.1 million, or 44.4%, primarily due to higher royalties and commission expense and investments in demand generation efforts, including building out our sales team. General and administrative costs, excluding stock-based compensation and transaction-related expenses, increased 0.4 million, or 1.8%, versus a year ago, driven by higher personnel costs, partially offset by the employee retention tax credit. Total company net loss available to stockholders improved 16.1 million year-over-year to 9.7 million, or 18 cents per diluted share. This result reflects the significant improvements in operations driven by our continued execution on our strategic pillars. Turning to the balance sheet, we ended the quarter with total cash of 247.3 million, an increase of 31.2 million versus the end of 2024. This increase reflects $77.6 million in cash from operations due primarily to the strong results of the business and increased bookings for future travel. We used $44.7 million of cash for investing activities, which reflects the acquisition and refurbishment of two Galapagos vessels and higher capital expenditures on our remaining vessels due to the timing of dry docks compared to last year. As Natalia shared earlier, and in light of our robust balance sheet, The company is actively exploring accretive growth opportunities, including expanding our fleet and further diversifying our portfolio of land experience brands to capitalize on continued growth in the demand for adventure travel. Turning to full year guidance, I'm pleased to share our updated outlook for 2025. Our booking curves continue to pace well ahead of prior year levels for both 2025 and 2026. We also recently opened our 2027 itineraries for sale, and last week we recorded the highest weekly sales in the history of National Geographic Lindblad Expeditions. This reflects continued strong demand for meaningful, immersive travel experiences and the strength of our brand. We are building on this momentum as we prepare to last Q3 2024, which delivered the highest quarterly EBITDA in our history at 46 million, with occupancy reaching 82%. We now expect net yield per available gas night to increase 9% to 11% year over year, up from prior guidance of 7% to 10%. Based on this momentum, we are narrowing our full year revenue guidance from a range of $700 million to $750 million to a range of $725 million to $750 million. We are also raising our full year EBITDA guidance to a range of $108 million to $115 million from prior guidance of 100 million to 112 million. Our outlook reflects our strong business performance and continued confidence executing against our three strategic pillars. Thank you for your continued interest in Lindblad Expeditions. Natalia and I would now be happy to take your questions.

At this time, I'd like to remind everyone in order to ask a question, simply press star followed by the number one on your telephone keypad. We kindly ask that you please limit your initial questions to two. Our first question will come from the line of Steven Wojcicki with Staple. Please go ahead.

Hey, guys. Good morning. So I'll tell you, Rick, obviously very, very, very strong quarterly results here in the second quarter. So congratulations. If we do some simple math here, you guys have done about $55 million in EBITDA so far in the first half of this year. And kind of based on your revised EBITDA guidance, it's going to imply about $57 million-ish of EBITDA for the second half of the year at the midpoint. So that's actually lower than you guys last year did about $59 million in the second half of the year. So I'm just trying to understand something we need to think about in terms of cost. I don't know if it has anything to do with those tax credits or what the difference is in terms of this second half of the year versus last half, just given the

know how strong demand load factors you know all that stuff seems to be at this point thanks so much steve so what i say is while we remain optimistic about the opportunities in the back half of this year as we've mentioned on previous calls 2025 is an investment year for our organization and many of those investments will occur in the second half of 2025. okay so just to dig in a little bit more i guess we need to be thinking more about

you know, a little bit higher cost and a little bit less flow through in the second half of the year. That's kind of the way we needed to think about it.

That's exactly right, Steve. And I think that we mentioned before that we are really focused on investing in the future growth and international expansions. And as you know, with booking curves, the investments come ahead of booking results. And we are very confident and hope we are seeing by our progress that we're going to be in our occupancy levels ahead or at least consistent with historical labels in 2026. And so a lot of these investments are coming in the second half of 25.

Okay, gotcha. And then second question, another actual guidance question, so I apologize. But I guess what I'm trying to figure out is that normally when you guys and Lindblad gives historically, you know, given guidance back in February, You know, that guidance typically hasn't changed during the year, just given the long booking times and strong book position you guys are normally in at that point. So I guess the question is maybe as you look back at the original guidance that you gave back in February versus, you know, the updated guidance today, you know, what, you know, I don't want to say what did you guys get wrong. I'm just trying to figure out what, you know, what has been kind of the biggest surprise to kind of get that guidance moved higher in the middle of the year.

So, Steve, what I'd say is when Natalia and I first joined back in January, we set out this roadmap of driving occupancy and net yield growth with a focus on near-end bookings for 2025, as well as driving cost innovation. And I think many of those initiatives are ahead of schedule in terms of delivering on their results, which you've seen in the performance in Q1 and Q2. Okay.

Gotcha. Thanks, guys. Appreciate it.

Our next question comes from the line of Eric Deloray with Craig Hallam. Please go ahead.

Great. Thanks for taking my questions and congrats on a very strong quarter here. First one for me, just wondering if you could expand a bit more on the increase in sales and marketing this quarter and just kind of how to think about that going forward. You obviously called out some increased investments for the second half. In terms of sales and marketing for this quarter, obviously there were some commissions related to the higher revenues, but kind of stripping that out, how to think of the sales and marketing build-out or investments that you guys are making now and over the next few quarters here?

So we're continuing to invest in new sales channels, our partnership with Disney, international expansion, all with the goal of driving occupancy and net yield growth. I'd also note that there was a step up in royalties associated with our agreement with national geographic that happened in 2025 and there will be a subsequent step up to the long-term run rate in 2026 as that was designed to match the impact of the initiatives that we have in place with national geographic and disney to help us drive sales and marketing all right that's very helpful um and then uh you mentioned

I believe it was a 38% reduction in non-revenue days from 2025 to 2027, mostly on dry dock optimization. Just wondering if you could expand a bit more on that. How should we think about the timing or the pace of that 38% reduction? Is that kind of steady from now until 2027? Is there any periods of more or less reduction to call out? Thank you.

Yeah, thank you, Eric. It's a great question. I think, first of all, we are looking at the deployment kind of generally 12 months ahead. So we just recently deployed our 27 plan, and that plan reflects about 38% reduction in non-revenue days compared to our current 25 deployment. So that's kind of static year over 25 comparisons, and that was done by optimizing our scheduling, transition voyages, and planning ahead. We also, in addition to that, as I mentioned on the call, found additional optimization opportunities in 26. So we added now, cumulatively, four voyages to 26, increasing revenue days in 26 as well. And I'm pleased to see that these voyages are booking really, really well already, despite the shorter window for deployment.

All right. I appreciate the clarity. Thanks for taking my questions.

Again, to ask a question, simply press star 1. Our next question will come from the line of Eric Wold with Texas Capital Securities. Please go ahead.

Thank you. Good morning. A couple questions as well. I guess, first off, I know it might be a little bit early. We talked to kind of some of the benefits you're already seeing from the Disney relationship and kind of working with the Disney sales channel. Any way to talk about kind of the average demographic profile of the customers you're seeing booking through the Disney sales channel versus what you may have seen from the average profile previously? Kind of, you know, that customer you're tapping into now that you may not have been able to tap into. before and kind of the difference between the two?

Yeah, I think that this is a great question. Like you said, I think we continue to monitor and we'll report on how the demographic changes. Our core guest demographic remains the same because these are very curious, sophisticated travelers who are looking for enriching, authentic experiences. And so I think our brand so well to that demographic and the focus of the brand will continue to remain the same. What we are obviously seeing with tapping into Disney demographic is more increase in multi-generational travel and our brand is very well positioned to serve multi-generations. Therefore, you just have seen last week we did a press release on our newly expanded explorers and training program which is targeted to serve younger travelers and through again providing very enriching educational experience it's not a kids club it's really a educational program that is very much on our brand and have frankly been developing over a year we just expanding and naming it so what we are seeing is is an increase in multi-generation travel for sure In some of our popular destinations, especially during the holidays time, like summer in Iceland and Galapagos, we are seeing almost quarter of our travelers 16 years and below. And the product is very well received by families.

Perfect. Thank you. And then the follow-up question. Obviously, there are some issues with kind of overcapacity coming immediately out of the pandemic. But as the cruise industry continues to strengthened in general in recent years and hope is that continues to do so. Does that diminish your opportunity to find used boats in the market to acquire if you wanted to? And if that is the case, when do you start needing to consider ordering new vessels for future delivery? And if you do start looking at new vessels construction, you know, What are you hearing in terms of backlog for what you would want in terms of timing for delivery into the future?

So couple answers to your question. One is, yes, we continue to see expanded demand in our product and general experiential travel, both across our expedition segment as well as land segment. So we continue to look for growth opportunities. These growth opportunities don't have to necessarily come through new builds. As you have seen, we just added capacity through adding National Geographic Gemini, National Geographic Delfina to our Galapagos. Those are ships we acquired and rebranded and they're launched and serving our brand now. We're also expanding quite rapidly through chartering different ships. Last quarter, I talked about launching River Cruises Charter, which is a long-term three-year charter that helps us expand into European river cruising. That's been a very successful expansion, and we're getting ready to deploy 27 river plants, which will be again an expansion on 26 capacities, so we're very excited about that. We're looking across multiple different opportunities. Yes, we are considering potentially

new built options as well but that's just one of many options we are considering to expand thank you and that will conclude our question and answer session i'll hand the call back to rick for any closing remarks just want to thank everybody for your interest in lynn blatt expeditions and we hope that you have a great week this concludes today's call thank you all for joining you may now disconnect