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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
For the transition period from to
Commission file number
LINDBLAD EXPEDITIONS HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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The
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
As of October 31, 2023,
LINDBLAD EXPEDITIONS HOLDINGS, INC.
Quarterly Report On Form 10-Q
For The Quarter Ended September 30, 2023
Table of Contents
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Page(s) |
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PART I. FINANCIAL INFORMATION |
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ITEM 1. |
Financial Statements (Unaudited) |
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Condensed Consolidated Balance Sheets as of September 30, 2023 (Unaudited) and December 31, 2022 |
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Notes to the Condensed Consolidated Financial Statements (Unaudited) |
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ITEM 2. |
Management ’ s Discussion and Analysis of Financial Condition and Results of Operations |
18 |
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ITEM 3. |
29 | |
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ITEM 4. |
29 | |
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PART II. OTHER INFORMATION |
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ITEM 1. |
30 | |
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ITEM 1A. |
30 | |
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ITEM 2. |
30 | |
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ITEM 3. |
31 | |
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ITEM 4. |
31 | |
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ITEM 5. |
31 | |
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ITEM 6. |
31 | |
| 32 | ||
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PART 1. |
FINANCIAL INFORMATION |
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ITEM 1. |
FINANCIAL STATEMENTS |
LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
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September 30, 2023 |
December 31, 2022 |
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(unaudited) |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
$ |
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$ |
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Restricted cash |
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Short-term securities |
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Marine operating supplies |
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Inventories |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Goodwill |
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Intangibles, net |
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Deferred tax asset |
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Right-to-use lease assets |
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Other long-term assets |
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Total assets |
$ |
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$ |
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LIABILITIES |
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Current Liabilities: |
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Unearned passenger revenues |
$ |
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$ |
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Accounts payable and accrued expenses |
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Long-term debt - current |
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Lease liabilities - current |
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Total current liabilities |
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Long-term debt, less current portion |
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Deferred tax liabilities |
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Lease liabilities |
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Other long-term liabilities |
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Total liabilities |
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Commitments and contingencies |
- | - | ||||||
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Series A redeemable convertible preferred stock, shares authorized; shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively |
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Redeemable noncontrolling interests |
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STOCKHOLDERS’ DEFICIT |
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Preferred stock, $ par value, shares authorized; Series A shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively |
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Common stock, $ par value, shares authorized; and issued, and outstanding as of September 30, 2023 and December 31, 2022, respectively |
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Additional paid-in capital |
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Accumulated deficit |
(
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(
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Total stockholders' deficit |
(
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(
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Total liabilities, mezzanine equity and stockholders' deficit |
$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)
(unaudited)
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For the three months ended September 30, |
For the nine months ended September 30, |
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2023 |
2022 |
2023 |
2022 |
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Tour revenues |
$ |
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$ |
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$ |
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$ |
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Operating expenses: |
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Cost of tours |
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General and administrative |
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Selling and marketing |
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Depreciation and amortization |
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Total operating expenses |
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Operating income (loss) |
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(
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Other (expense) income: |
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Interest expense, net |
(
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(
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(
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(
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(Loss) gain on foreign currency |
(
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(
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Other (expense) income |
(
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Total other expense |
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(
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(
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Income (loss) before income taxes |
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(
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Income tax expense |
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Net income (loss) |
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(
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(
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(
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Net income attributable to noncontrolling interest |
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Net income (loss) attributable to Lindblad Expeditions Holdings, Inc. |
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(
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(
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Series A redeemable convertible preferred stock dividend |
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Net income (loss) available to stockholders |
$ |
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$ |
(
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(
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(
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Weighted average shares outstanding |
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Basic |
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Diluted |
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Undistributed income (loss) per share available to stockholders: |
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Basic |
$ |
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$ |
(
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(
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(
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Diluted |
$ |
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$ |
(
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(
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(
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The accompanying notes are an integral part of these condensed consolidated financial statements.
LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In thousands)
(unaudited)
|
For the three months ended September 30, |
For the nine months ended September 30, |
|||||||||||||||
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2023 |
2022 |
2023 |
2022 |
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Net income (loss) |
$ |
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$ |
(
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) | $ |
(
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) | $ |
(
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Other comprehensive income: |
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Cash flow hedges: |
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Reclassification adjustment, net of tax |
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Total other comprehensive income |
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Total comprehensive income (loss) |
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(
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(
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(
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Less: comprehensive income attributive to non-controlling interest |
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Comprehensive income (loss) attributable to stockholders |
$ |
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$ |
(
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) | $ |
(
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) | $ |
(
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) | |||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders ’ Deficit
(In thousands, except share data)
(unaudited)
|
Common Stock |
Additional Paid-In |
Accumulated |
Total Stockholders' |
|||||||||||||||||
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Shares |
Amount |
Capital |
Deficit |
Deficit |
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Balance as of June 30, 2023 |
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$ |
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$ |
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$ |
(
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) | $ |
(
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) | |||||||||
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Stock-based compensation |
- |
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Net activity related to equity compensation plans |
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(
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) |
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(
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Redeemable noncontrolling interest |
- |
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(
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) |
(
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) | |||||||||||||
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Series A preferred stock dividend |
- | - | - |
(
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) |
(
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) | |||||||||||||
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Net income attributable to Lindblad Expeditions Holdings, Inc |
- |
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Balance as of September 30, 2023 |
|
$ |
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$ |
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$ |
(
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) | $ |
(
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) | |||||||||
|
Common Stock |
Additional Paid-In |
Accumulated |
Total Stockholders' |
|||||||||||||||||
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Shares |
Amount |
Capital |
Deficit |
Deficit |
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Balance as of December 31, 2022 |
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$ |
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$ |
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$ |
(
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) | $ |
(
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) | |||||||||
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Stock-based compensation |
- |
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Net activity related to equity compensation plans |
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(
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(
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Redeemable noncontrolling interest |
- |
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(
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(
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Series A preferred stock dividend |
- |
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(
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) |
(
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Net loss attributable to Lindblad Expeditions Holdings, Inc |
- |
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(
|
) |
(
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) | |||||||||||||
|
Balance as of September 30, 2023 |
|
$ |
|
$ |
|
$ |
(
|
) | $ |
(
|
) | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders ’ Deficit
(In thousands, except share data)
(unaudited)
|
Common Stock |
Additional Paid-In |
Accumulated |
Accumulated Other |
Total Stockholders' |
||||||||||||||||||||
|
Shares |
Amount |
Capital |
Deficit |
Comprehensive Loss |
Deficit |
|||||||||||||||||||
|
Balance as of June 30, 2022 |
$ |
|
$ |
|
$ |
|
$ |
(
|
) | $ |
|
$ |
(
|
) | ||||||||||
|
Stock-based compensation |
- |
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Net activity related to equity compensation plans |
|
|
(
|
) |
|
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(
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) | ||||||||||||||||
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Redeemable noncontrolling interest |
- |
|
|
(
|
) |
|
(
|
) | ||||||||||||||||
|
Series A preferred shares dividend |
- |
|
|
(
|
) |
|
(
|
) | ||||||||||||||||
|
Net loss attributable to Lindblad Expeditions Holdings, Inc. |
- |
|
|
(
|
) |
|
(
|
) | ||||||||||||||||
|
Balance as of September 30, 2022 |
|
$ |
|
$ |
|
$ |
(
|
) | $ |
|
$ |
(
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) | |||||||||||
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Common Stock |
Additional Paid-In |
Accumulated |
Accumulated Other |
Total Stockholders' |
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Shares |
Amount |
Capital |
Deficit |
Comprehensive Loss |
Deficit |
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Balance as of December 31, 2021 |
|
$ |
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$ |
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$ |
(
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) |
(
|
) | $ |
(
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) | |||||||||||
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Stock-based compensation |
- |
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Net activity related to equity compensation plans |
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(
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(
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Issuance of stock for conversion of preferred stock |
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Other comprehensive income, net |
- |
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Redeemable noncontrolling interest |
- |
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(
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) |
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(
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) | ||||||||||||||||
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Series A preferred shares dividend |
- |
|
|
(
|
) |
|
(
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) | ||||||||||||||||
|
Net loss attributable to Lindblad Expeditions Holdings, Inc. |
- |
|
|
(
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) |
|
(
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) | ||||||||||||||||
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Balance as of September 30, 2022 |
|
$ |
|
$ |
|
$ |
(
|
) | $ |
|
$ |
(
|
) | |||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
LINDBLAD EXPEDITIONS HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
|
For the nine months ended September 30, |
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2023 |
2022 |
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Cash Flows From Operating Activities |
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Net loss |
$ |
(
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) | $ |
(
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Adjustments to reconcile net loss to net cash provided by operating activities: |
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Depreciation and amortization |
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Amortization of deferred financing costs and other, net |
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Amortization of right-to-use lease assets |
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Stock-based compensation |
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Deferred income taxes |
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Change in fair value of contingent acquisition consideration |
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(Gain) loss on foreign currency |
(
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) |
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Write-off of unamortized issuance costs related to debt refinancing |
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Changes in operating assets and liabilities |
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Marine operating supplies and inventories |
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(
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) | |||||
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Prepaid expenses and other current assets |
(
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) |
(
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) | ||||
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Unearned passenger revenues |
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Other long-term assets |
(
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) |
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Other long-term liabilities |
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Accounts payable and accrued expenses |
(
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) |
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Operating lease liabilities |
(
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) |
(
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) | ||||
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Net cash provided by operating activities |
|
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Cash Flows From Investing Activities |
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Purchases of property and equipment |
(
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) |
(
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) | ||||
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Sale of short-term securities |
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Net cash used in investing activities |
(
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) |
(
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) | ||||
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Cash Flows From Financing Activities |
||||||||
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Proceeds from long-term debt |
|
|
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Repayments of long-term debt |
(
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) |
(
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) | ||||
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Payment of deferred financing costs |
(
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) |
(
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) | ||||
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Repurchase under stock-based compensation plans and related tax impacts |
(
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) |
(
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) | ||||
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Net cash provided by financing activities |
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Net increase (decrease) in cash, cash equivalents and restricted cash |
|
(
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) | |||||
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Cash, cash equivalents and restricted cash at beginning of period |
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|
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Cash, cash equivalents and restricted cash at end of period |
$ |
|
$ |
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||||
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Supplemental disclosures of cash flow information: |
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Cash paid during the period: |
||||||||
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Interest |
$ |
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$ |
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||||
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Income taxes |
|
|
||||||
|
Non-cash investing and financing activities: |
||||||||
|
Non-cash preferred stock dividend |
|
|
||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
Lindblad Expeditions Holdings, Inc.
Notes to the Unaudited Condensed Consolidated Financial Statements
(Unaudited)
NOTE 1 — BUSINESS AND BASIS OF PRESENTATION
Business
Lindblad Expeditions Holdings, Inc.’s and its consolidated subsidiaries’ (collectively, the “Company” or “Lindblad”) mission is offering life-changing adventures around the world and pioneering innovative ways to allow its guests to connect with exotic and remote places. The Company currently operates a fleet of owned expedition ships and seasonal charter vessels under the Lindblad brand, operates land-based, eco-conscious expeditions and active nature focused tours under the Natural Habitat, Inc. (“Natural Habitat”) and Off the Beaten Path, LLC (“Off the Beaten Path”) brands, designs handcrafted walking tours under the Classic Journeys, LLC (“Classic Journeys”) brand and operates luxury cycling and adventure tours under the DuVine Cycling + Adventure Company (“DuVine”) brand.
The Company’s common stock is listed on the NASDAQ Capital Market under the symbol “LIND”.
The Company operates the following reportable business segments:
Lindblad Segment. The Lindblad segment primarily provides ship-based expeditions aboard customized, nimble and intimately-scaled vessels that are able to venture where larger cruise ships cannot, thus allowing Lindblad to offer up-close experiences in the planet’s wild and remote places and capitals of culture. Each expedition ship is fully equipped with state-of-the-art tools for in-depth exploration, and the majority of expeditions involve travel to remote places with limited infrastructure and ports, such as Antarctica and the Arctic, or places that are best accessed by a ship, such as the Galápagos Islands, Alaska, Baja California’s Sea of Cortez and Panama, and foster active engagement by guests. The Company has an alliance with National Geographic Partners, LLC (“National Geographic”), which provides for lecturers and National Geographic experts, including photographers, writers, marine biologists, naturalists, field researchers and film crews, to join many of the Company’s expeditions.
Land Experiences Segment. The Land Experiences segment includes our four primarily land-based brands, Natural Habitat, DuVine, Off the Beaten Path and Classic Journeys.
|
● |
Natural Habitat specializes in conservation-oriented adventures, providing life-enhancing forays into the natural world that feature wild habitats and the animals and people who live there. Natural Habitat’s travel adventures provide unparalleled access to the planet's most extraordinary wildlife, landscapes and cultures. Natural Habitat’s unique itineraries include access to private wildlife reserves, remote corners of national parks and distinctive, secluded, and remote lodges and camps situated where wildlife viewing is best, such as polar bear tours in Churchill, Canada, Alaskan grizzly bear adventures, small-group Galápagos Islands tours and African safaris. Natural Habitat has partnered with World Wildlife Fund (“WWF”) to offer conservation travel, which is sustainable travel that contributes to the protection of nature and wildlife. |
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|
● |
DuVine specializes in luxury cycling and adventure tours around the world, providing immersive cultural and culinary experiences through thoughtfully designed itineraries led by expert local guides. Offerings primarily include tours throughout Europe, the United States and South America. Examples of DuVine’s tours include cycling and culinary tours throughout the Bordeaux and Burgundy wine making regions, Tuscan truffle, porcini and chestnut harvest regions, Napa and Sonoma wine making regions and lakes and volcanos throughout Patagonia. DuVine’s trips include top-quality gear and support and are tailored to riders of all abilities with an emphasis on exceptional food and wine experiences, along with boutique accommodations. |
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|
● |
Off the Beaten Path provides active small-group and private custom journeys around the world with a long-standing focus on offering unique adventures and experiences throughout United States (“U.S.”) National Parks. In addition to other U.S.-based adventures such as ranch vacations and fly-fishing expeditions, Off the Beaten Path’s small-group product offerings include international expeditions across Europe, Africa, Australia, Central and South America and the South Pacific, such as hiking through the Dolomites, family adventures in Patagonia’s Lake District and experiencing the culture of Morocco. All Off the Beaten Path expeditions are defined by a focus on outdoor activity led by experienced, friendly guides. |
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● |
Classic Journeys offers highly curated active small-group and private custom journeys centered around cinematic walks focused on engaging experiences that immerse guests into the history and culture of the places they are exploring and the people who live there, led by expert local guides in over 50 countries around the world. Classic Journeys’ tours are highlighted by luxury boutique accommodations and handcrafted itineraries curated through years of local connections such as experiencing Tuscan farmhouse kitchens, exploring Minoan ruins in Crete, or eating and dancing around a Berber encampment campfire. |
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements and notes to the unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding unaudited interim financial information and include the accounts and transactions of the Company. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial statements for the periods presented. Operating results for the periods presented are not necessarily indicative of the results of operations to be expected for the full year due to seasonality and other factors. Certain information and note disclosures normally included in the consolidated financial statements in accordance with GAAP have been omitted in accordance with the rules and regulations of the SEC for interim reporting. All intercompany balances and transactions have been eliminated in these unaudited condensed consolidated financial statements. These unaudited condensed consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto for the year ended December 31, 2022 contained in the Company’s Annual Report on Form 10 -K filed with the SEC on March 10, 2023 ( the “2022 Annual Report”).
There have been no significant changes to the Company’s accounting policies from those disclosed in the 2022 Annual Report.
NOTE 2 — EARNINGS PER SHARE
Earnings (loss) per Common Share
Earnings (loss) per common share is computed using the
two
-class method related to its Series A Redeemable Convertible Preferred Stock, par value of $
Diluted earnings per share is computed using the weighted average number of common shares outstanding and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the dilutive incremental common shares associated with restricted stock awards and shares issuable upon the exercise of stock options, using the treasury stock method, and the potential common shares that could be issued from conversion of the Preferred Stock, using the if-converted method. When a net loss occurs, potential common shares have an anti-dilutive effect on earnings per share and such shares are excluded from the diluted earnings per share calculation.
For the
nine
months ended
September 30, 2023
and
three
and
nine
months ended
September 30, 2022,
the Company incurred net losses available to stockholders, therefore basic and diluted net loss per share are the same in each respective period. For the
nine
months ended
September 30, 2023,
Earnings (loss) per share was calculated as follows:
|
For the three months ended September 30, |
For the nine months ended September 30, |
|||||||||||||||
|
2023 |
2022 |
2023 |
2022 |
|||||||||||||
|
(unaudited) |
(unaudited) |
|||||||||||||||
|
(In thousands, except share and per share data) |
||||||||||||||||
|
Net income (loss) attributable to Lindblad Expeditions Holdings, Inc. |
$ |
|
$ |
(
|
) | $ |
(
|
) | $ |
(
|
) | |||||
|
Series A redeemable convertible preferred stock dividend |
|
|
|
|
||||||||||||
|
Undistributed income (loss) available to stockholders |
$ |
|
$ |
(
|
) | $ |
(
|
) | $ |
(
|
) | |||||
|
Weighted average shares outstanding: |
||||||||||||||||
|
Total weighted average shares outstanding, basic |
|
|
|
|
||||||||||||
|
Dilutive potential common shares |
|
|
|
|
||||||||||||
|
Dilutive potential options |
|
|
|
|
||||||||||||
|
Total weighted average shares outstanding, diluted |
|
|
|
|
||||||||||||
|
Undistributed income (loss) per share available to stockholders: |
||||||||||||||||
|
Basic |
$ |
|
$ |
(
|
) | $ |
(
|
) | $ |
(
|
) | |||||
|
Diluted |
$ |
|
$ |
(
|
) | $ |
(
|
) | $ |
(
|
) | |||||
NOTE 3 — REVENUES
Customer Deposits and Contract Liabilities
The Company’s guests remit deposits in advance of tour embarkation. Guest deposits consist of guest ticket revenues as well as revenues from the sale of pre- and post-expedition excursions, hotel accommodations, land-based expeditions and certain air transportation. Guest deposits represent unearned revenues and are reported as unearned passenger revenues when received and are subsequently recognized as tour revenue over the duration of the expedition. Contract liabilities represent the Company's obligation to transfer goods or services to a customer for which the Company has received consideration from the customer. The Company does
not
consider guest deposits to be a contract liability until the guest
no
longer has the right, resulting from the passage of time, to cancel their reservation and receive a full refund. In conjunction with the suspension or rescheduling of expeditions primarily related to the COVID-
19
pandemic, the Company provided guests an option of either a refund or future travel certificates, which in some instances exceeded the original cash deposit. The value of future travel certificates in excess of cash received is being recognized as a discount to tour revenues at the time the related expedition occurs. Future travel certificates are valued based on the Company’s expectation that a guest will travel again. As of
September 30, 2023
and
December 31, 2022,
the Company has $
|
Contract Liabilities |
||||
|
(In thousands) |
||||
|
Balance as of December 31, 2022 |
$ |
|
||
|
Recognized in tour revenues during the period |
(
|
) | ||
|
Additional contract liabilities in period |
|
|||
|
Balance as of September 30, 2023 |
$ |
|
||
The following table disaggregates our tour revenues by the sales channel it was derived from:
|
For the three months ended September 30, |
For the nine months ended September 30, |
|||||||||||||||
|
2023 |
2022 |
2023 |
2022 |
|||||||||||||
|
Guest ticket revenue: |
(unaudited) |
(unaudited) |
||||||||||||||
|
Direct |
|
% |
|
% |
|
% |
|
% | ||||||||
|
National Geographic |
|
% |
|
% |
|
% |
|
% | ||||||||
|
Agencies |
|
% |
|
% |
|
% |
|
% | ||||||||
|
Affinity |
|
% |
|
% |
|
% |
|
% | ||||||||
|
Guest ticket revenue |
|
% |
|
% |
|
% |
|
% | ||||||||
|
Other tour revenue |
|
% |
|
% |
|
% |
|
% | ||||||||
|
Tour revenues |
|
% |
|
% |
|
% |
|
% | ||||||||
NOTE 4 — FINANCIAL STATEMENT DETAILS
The following is a reconciliation of cash, cash equivalents and restricted cash to the statement of cash flows:
|
As of September 30, |
||||||||
|
2023 |
2022 |
|||||||
|
(In thousands) |
(unaudited) |
|||||||
|
Cash and cash equivalents |
$ |
|
$ |
|
||||
|
Restricted cash |
|
|
||||||
|
Total cash, cash equivalents and restricted cash as presented in the statement of cash flows |
$ |
|
$ |
|
||||
Restricted cash consists of the following:
|
As of September 30, 2023 |
As of December 31, 2022 |
|||||||
|
(In thousands) |
(unaudited) |
|||||||
|
Credit card processor reserves |
$ |
|
$ |
|
||||
|
Federal Maritime Commission and other escrow |
|
|
||||||
|
Certificates of deposit and other restricted securities |
|
|
||||||
|
Total restricted cash |
$ |
|
$ |
|
||||
Prepaid expenses and other current assets are as follows:
|
As of September 30, 2023 |
As of December 31, 2022 |
|||||||
|
(unaudited) |
||||||||
|
(In thousands) |
||||||||
|
Prepaid tour expenses |
$ |
|
$ |
|
||||
|
Other |
|
|
||||||
|
Total prepaid expenses and other current assets |
$ |
|
$ |
|
||||
Accounts payable and accrued expenses are as follows:
|
As of September 30, 2023 |
As of December 31, 2022 |
|||||||
|
(unaudited) |
||||||||
|
(In thousands) |
||||||||
|
Accrued other expense |
$ |
|
$ |
|
||||
|
Accounts payable |
|
|
||||||
|
Total accounts payable and accrued expenses |
$ |
|
$ |
|
||||
NOTE 5 — LONG-TERM DEBT
|
As of September 30, 2023 |
As of December 31, 2022 |
|||||||||||||||||||||||
|
(unaudited) |
||||||||||||||||||||||||
|
(In thousands) |
Principal |
Deferred Financing Costs, net |
Balance |
Principal |
Deferred Financing Costs, net |
Balance |
||||||||||||||||||
|
6.75% Notes |
$ |
|
$ |
(
|
) | $ |
|
$ |
|
(
|
) |
|
||||||||||||
|
9.00% Notes |
|
(
|
) |
|
|
|
|
|||||||||||||||||
|
Other |
|
|
|
|
|
|
||||||||||||||||||
|
First Export Credit Agreement |
|
|
|
|
(
|
) |
|
|||||||||||||||||
|
Second Export Credit Agreement |
|
|
|
|
(
|
) |
|
|||||||||||||||||
|
Total long-term debt |
|
(
|
) |
|
|
(
|
) |
|
||||||||||||||||
|
Less current portion |
(
|
) |
|
(
|
) |
(
|
) |
|
(
|
) | ||||||||||||||
|
Total long-term debt, non-current |
$ |
|
$ |
(
|
) | $ |
|
$ |
|
$ |
(
|
) | $ |
|
||||||||||
For the
three
and
nine
months ended
September 30, 2023,
$
6.75% Notes
On
February 4, 2022,
the Company issued $
The 6.75% Notes contain covenants that, among other things, restrict the Company’s ability, and the ability of the Company’s restricted subsidiaries, to incur certain additional indebtedness and make certain dividend payments, distributions, investments and other restricted payments. These covenants are subject to a number of important exceptions and qualifications set forth in the 6.75% Notes.
Revolving Credit Facility
On
February 4, 2022,
the Company entered into a senior secured revolving credit facility (the “Revolving Credit Facility”), which provides for an aggregate principal amount of commitments of $
The Revolving Credit Facility contains customary affirmative and negative covenants, as well as financial covenants and event of default provisions.
9.00% Notes
On
May 2, 2023,
the Company issued $
The 9.00% Notes contain covenants that, among other things, restrict the Company’s ability, and the ability of the Company’s restricted subsidiaries, to incur certain additional indebtedness and make certain dividend payments, distributions, investments and other restricted payments. These covenants are subject to a number of important exceptions and qualifications set forth in the 9.00% Notes.
Other
The Company’s Off the Beaten Path subsidiary’s original $
The Company’s DuVine subsidiary has a EUR
Prior Senior Secured Credit Agreements
In
January 2018,
the Company entered into a senior secured credit agreement (the “First Export Credit Agreement”), for the purpose of providing financing for up to
In
April 2019,
the Company entered into a senior secured credit agreement (the “Second Export Credit Agreement”), under which the Company borrowed $
Covenants
The Company’s 6.75% Notes, Revolving Credit Facility and 9.00% Notes contain covenants that include, among others, limits on additional indebtedness and limits on certain investments. The Company was in compliance with its covenants in effect as of September 30, 2023.
NOTE 6 — FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
Derivative Instruments and Hedging Activities
The Company’s derivative assets and liabilities consist principally of foreign exchange forward contracts and are carried at fair value based on significant observable inputs (Level 2 inputs). Derivatives entered into by the Company are typically executed over-the-counter and are valued using internal valuation techniques, as quoted market prices are not readily available. The valuation technique and inputs depend on the type of derivative and the nature of the underlying exposure. The Company principally uses discounted cash flows along with fair value models that primarily use market observable inputs. These models take into account a variety of factors including, where applicable, maturity, currency exchange rates, interest rate yield curves and counterparty credit risks.
Currency Risk . The Company uses currency exchange forward contracts to manage its exposure to changes in currency exchange rates associated with certain of its non-U.S. dollar denominated receivables and payables. The Company primarily economically hedges a portion of its current-year currency exposure to the Canadian and New Zealand dollars, the Euro and the British pound sterling . The fluctuations in the value of these forward contracts largely offset the impact of changes in the value of the underlying risk they economically hedge.
The Company held the following derivative instruments with absolute notional values as of September 30, 2023:
|
(In thousands) |
Absolute Notional Value |
|||
|
Foreign exchange contracts |
|
|||
Estimated fair values (Level 2 ) of derivative instruments were as follows:
|
As of September 30, 2023 |
As of December 31, 2022 |
|||||||||||||||
|
(unaudited) |
||||||||||||||||
|
(In thousands) |
Fair Value, Asset Derivatives |
Fair Value, Liability Derivatives |
Fair Value, Asset Derivatives |
Fair Value, Liability Derivatives |
||||||||||||
|
Derivative instruments not designated as cash flow hedging instruments: |
||||||||||||||||
|
Interest rate cap (a) |
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
Foreign exchange forward (b) |
- |
|
|
|
||||||||||||
|
Total |
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
(a) |
Recorded in prepaid expenses and other current assets. The interest rate cap matured during May 2023. |
|
| (b) | Recorded in accounts payable and accrued expenses. |
Changes in the fair value of the Company’s hedging instruments are recorded in accumulated other comprehensive income. The effects of derivatives recognized in the Company’s condensed consolidated financial statements were as follows:
|
For the three months ended September 30, |
For the nine months ended September 30, |
|||||||||||||||
|
(In thousands) |
2023 |
2022 |
2023 |
2022 |
||||||||||||
|
(unaudited) |
(unaudited) |
|||||||||||||||
|
Derivative instruments not designated as cash flow hedging instruments: |
||||||||||||||||
|
Interest rate cap (a) |
$ |
|
$ |
|
$ |
(
|
) | $ |
|
|||||||
|
Foreign exchange forward (b) |
(
|
) |
(
|
) |
|
(
|
) | |||||||||
|
Total |
$ |
(
|
) | $ |
|
$ |
(
|
) | $ |
(
|
) | |||||
|
(a) |
The interest rate cap matured during
May 2023.
Recognized in interest expense, net, for the
three
and
nine
months ended
September 30, 2023
and the
three
months ended
September 30, 2022.
For the
nine
months ended
September 30, 2022,
$
|
| (b) |
Gains (losses) related to derivative instruments are expected to be largely offset by (losses) gains on the underlying exposures being hedged and recognized in gain (loss) on foreign currency. |
The carrying amounts of cash and cash equivalents, accounts payable and accrued expenses, approximate fair value due to the short-term nature of these instruments. The Company estimates the approximate fair value of its long-term debt as of
September 30, 2023
to be $
NOTE 7 — STOCKHOLDERS ’ EQUITY
Stock Repurchase Plan
The Company’s Board of Directors approved a stock and warrant repurchase plan (“Repurchase Plan”) in
November 2015
and increased the Repurchase Plan to $
Preferred Stock
In
August 2020,
the Company issued and sold
NOTE 8 — STOCK BASED COMPENSATION
The Company is authorized to issue up to
The Company recorded stock-based compensation expense of $
Long-Term Incentive Compensation
During the
nine
months ended
September 30, 2023,
the Company granted
During the
nine
months ended
September 30, 2023,
the Company awarded
Options
During the
nine
months ended
September 30, 2023,
the Company granted
| Stock Option Grants | ||||
| 2023 | ||||
| Stock price | $ |
|
||
| Exercise price | $ |
|
||
| Dividend yield |
|
% | ||
| Expected Volatility |
|
% | ||
| Risk-free interest rate |
|
% | ||
| Expected term (in years) |
|
|||
As of
September 30, 2023
and
December 31, 2022,
options to purchase an aggregate of
Natural Habitat Contingent Arrangement
In connection with the 2016 acquisition of Natural Habitat, Mr. Bressler’s employment agreement, as amended, provides Mr. Bressler, President of Natural Habitat, with an equity incentive opportunity to earn an award of options based on the future financial performance of Natural Habitat, effective as of December 31, 2025, subject to certain conditions. Mr. Bressler has a one -time right to elect an early option award of 50% at December 31, 2023, subject to certain conditions.
NOTE 9 — INCOME TAXES
As of
September 30, 2023
and
December 31, 2022,
the Company had
NOTE 10 — COMMITMENTS AND CONTINGENCIES
Redeemable Non-Controlling Interest
The Company has controlling interests in its Natural Habitat, Off the Beaten Path, DuVine and Classic Journeys consolidated subsidiaries. The noncontrolling interests are subject to put/call agreements. The put options enable the minority holders, but do not obligate them, to sell the remaining interests to the Company. The Company has call options which enable it, but does not obligate it, to acquire the remaining interests in the subsidiaries, subject to certain dates, expirations and similar redemption value purchase measurements as the put options.
Since the redemption of the noncontrolling interests are not solely in the Company’s control, the Company is required to record the redeemable noncontrolling interest outside of stockholders’ equity but after its total liabilities. In addition, if it is probable that the instrument will become redeemable, solely due to the passage of time, the redeemable noncontrollable interest should be adjusted to the redemption value via one of two measurement methods. The Company elected the income classification-excess adjustment and accretion methods for recognizing changes in the redemption value of the put options. Under this methodology, a calculation of the present value of the redemption value is compared to the carrying value of the redeemable noncontrolling interest, and the carrying value of the redeemable noncontrolling interest is adjusted to the redemption value’s present value. Any adjustments to the carrying value of the redeemable noncontrolling interest, up to the redemption value of the noncontrolling interest, are classified to retained earnings. Adjustments in excess of the redemption value of the noncontrolling interest are treated as a decrease to net income available to common stockholders.
The redemption value of the put options were determined using a discounted cash flow model. The redemption values were adjusted to their present value using the Company’s weighted average cost of capital.
The following is a rollforward of redeemable non-controlling interest:
|
For the three months ended September 30, |
For the nine months ended September 30, |
|||||||||||||||
|
(In thousands) |
2023 |
2022 |
2023 |
2022 |
||||||||||||
|
(unaudited) |
(unaudited) |
|||||||||||||||
|
Beginning balance |
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
Net income attributable to noncontrolling interest |
|
|
|
|
||||||||||||
|
Redemption value adjustment of put option |
|
|
|
|
||||||||||||
|
Distribution |
|
|
(
|
) |
|
|||||||||||
|
Ending balance |
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
Royalty Agreement – National Geographic
The Company is party to an alliance and license agreement with National Geographic, which allows the Company to use the National Geographic name and logo. In return for these rights, the Company is charged a royalty fee. The royalty fee is included within selling and marketing expense. The fee is calculated based upon a percentage of certain ticket revenues less travel agent commission, including the revenues received from cancellation fees and any revenues received from the sale of pre- and post-expedition extensions. Royalty expense for the
three
and
nine
months ended
September 30, 2023
was $
The royalty balance payable to National Geographic as of
September 30, 2023
and
December 31, 2022
was $
Royalty Agreement – World Wildlife Fund
Natural Habitat has a license agreement with WWF, which allows it to use the WWF name and logo. In return for these rights, Natural Habitat is charged a royalty fee and a fee based on annual gross sales. The fees are included within selling and marketing expense. This royalty fee expense was $
Charter Commitments
From time to time, the Company enters into agreements to charter vessels onto which it holds its tours and expeditions. Future minimum payments on its charter agreements as of September 30, 2023 are as follows:
|
For the years ended December 31, |
Amount |
|||
|
(In thousands) |
(unaudited) |
|||
|
2023 (three months) |
$ |
|
||
|
2024 |
|
|||
|
2025 |
|
|||
|
Total |
$ |
|
||
NOTE 11 — SEGMENT INFORMATION
The Company is primarily a specialty cruise and experiential travel operator with operations in reportable segments, Lindblad and Land Experiences. The Company evaluates the performance of the business based largely on the results of its operating segments. The chief operating decision maker and management review operating results monthly and base operating decisions on the total results at a consolidated level, as well as at a segment level. The reports provided to the Board of Directors are at a consolidated level and contain information regarding the separate results of both segments.
The Company evaluates the performance of its business segments based largely on tour revenues and operating income without allocating other income and expenses, net, income taxes and interest expense, net. Operating results for the Company’s reportable segments were as follows:
|
For the three months ended September 30, |
For the nine months ended September 30, |
|||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
|
(In thousands) |
(unaudited) |
(unaudited) |
||||||||||||||
|
Tour revenues: |
||||||||||||||||
|
Lindblad |
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
Land Experiences |
|
|
|
|
||||||||||||
|
Total tour revenues |
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
Operating income (loss): |
||||||||||||||||
|
Lindblad |
$ |
|
$ |
(
|
) | $ |
|
$ |
(
|
) | ||||||
|
Land Experiences |
|
|
|
|
||||||||||||
|
Total operating income (loss) |
$ |
|
$ |
|
$ |
|
$ |
(
|
) | |||||||
For the
three
and
nine
months ended
September 30, 2023,
there was $
Depreciation and amortization are included in segment operating income as shown below:
|
For the three months ended September 30, |
For the nine months ended September 30, |
|||||||||||||||
|
2023 |
2022 |
2023 |
2022 |
|||||||||||||
|
(In thousands) |
(unaudited) |
(unaudited) |
||||||||||||||
|
Depreciation and amortization: |
||||||||||||||||
|
Lindblad |
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
Land Experiences |
|
|
|
|
||||||||||||
|
Total depreciation and amortization |
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
The following table presents our total assets, intangibles, net and goodwill by segment:
|
(In thousands) |
As of September 30, 2023 |
As of December 31, 2022 |
||||||
|
(unaudited) |
||||||||
|
Total Assets: |
||||||||
|
Lindblad |
$ |
|
$ |
|
||||
|
Land Experiences |
|
|
||||||
|
Total assets |
$ |
|
$ |
|
||||
|
Intangibles, net: |
||||||||
|
Lindblad |
$ |
|
$ |
|
||||
|
Land Experiences |
|
|
||||||
|
Total intangibles, net |
$ |
|
$ |
|
||||
|
Goodwill: |
||||||||
|
Lindblad |
$ |
|
$ |
|
||||
|
Land Experiences |
|
|
||||||
|
Total goodwill |
$ |
|
$ |
|
||||
|
MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION |
The following discussion and analysis addresses material changes in the financial condition and results of operations of the Company for the periods presented. This discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q ( “ Form 10-Q ” ), as well as the audited consolidated financial statements and related notes included in the Company ’ s Annual Report on Form 10-K filed with the Securities and Exchange Commission ( “ SEC ” ) on March 10, 2023 (the “2022 Annual Report”). Unless the context otherwise requires, in this Form 10-Q, “Company,” “Lindblad,” “we,” “us,” “our,” and “ours” refer to Lindblad Expeditions Holdings, Inc., and its subsidiaries.
Cautionary Note Regarding Forward-Looking Statements
Any statements in this Form 10-Q about our expectations, beliefs, plans, objectives, prospects, financial condition, assumptions or future events or performance are not historical facts and are “forward-looking statements” as that term is defined under the federal securities laws. These statements are often, but not always, made through the use of words or phrases such as “believe,” “anticipate,” “should,” “intend,” “plan,” “will,” “expects,” “estimates,” “projects,” “positioned,” “strategy,” “outlook” and similar words. You should read the statements that contain these types of words carefully. Such forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause actual results to differ materially from what is expressed or implied in such forward-looking statements. There may be events in the future that we are not able to predict accurately or over which we have no control. Potential risks and uncertainties include, but are not limited to:
| ● | events and conditions around the world, including war and other military actions, such as the Israel-Hamas war, the current conflict between Russia and Ukraine, inflation, higher fuel prices, higher interest rates and other general concerns about the state of the economy or other events impacting the ability or desire of people to travel; | |
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suspended operations, cancelling or rescheduling of voyages and other potential disruptions to our business and operations related to the COVID-19 virus, the Russia-Ukraine conflict, political unrest in destinations we visit, outbreak of disease in any destination we visit or another unexpected event; |
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the Israel-Hamas war, impacts of inflation, the COVID-19 virus and/or the Russia-Ukraine conflict on our financial condition, liquidity, results of operations, cash flows, employees, plans and growth; |
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increases in fuel prices, changes in fuels consumed and availability of fuel supply in the geographies in which we operate or in general; |
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the impacts of inflation and negative economic conditions or negative economic outlooks on the demand for expedition travel; | |
| ● | the loss of key employees, our inability to recruit or retain qualified shoreside and shipboard employees and increased labor costs; | |
| ● | the impact of delays or cost overruns with respect to anticipated or unanticipated drydock, maintenance, modifications or other required construction related to any of our vessels; | |
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unscheduled disruptions in our business due to civil unrest, travel restrictions, weather events, mechanical failures, pandemics or other events; | |
| ● | any change in state classifications of our workforce; | |
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changes adversely affecting the business in which we are engaged: | |
| ● | management of our growth and our ability to execute on our planned growth, including our ability to successfully integrate acquisitions; | |
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our business strategy and plans; |
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our ability to maintain or renew (on favorable terms or at all) our relationship with National Geographic and/or World Wildlife Fund; |
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| ● | compliance with new and existing laws and regulations, including environmental regulations and travel advisories and restrictions; | |
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compliance with the financial and/or operating covenants in our debt arrangements; |
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the impact of severe or unusual weather conditions, including climate change, on our business; |
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| ● | adverse publicity regarding the travel and cruise industry in general; | |
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loss of business due to competition; |
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| ● | the inability to meet or achieve our sustainability related goals, aspirations, initiatives, and our public statements and disclosures regarding them; | |
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the result of future financing efforts; and |
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those risks discussed herein and in Item 1A. Risk Factors in our 2022 Annual Report and in Part II - Item 1A. Risk Factors in our Form 10-Q for the quarterly period ended June 30, 2023. |
We urge you not to place undue reliance on these forward-looking statements, which speak only as of the date of this Form 10-Q. We do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or uncertainties after the date hereof or to reflect the occurrence of unanticipated events.
Business Overview
We provide expedition cruising and land-based adventure travel fostering a spirit of exploration and discovery, using itineraries featuring up-close encounters with wildlife and nature, history and culture and promote guest empowerment, human connections and interactivity. Our mission is to offer life-changing adventures around the world and pioneer innovative ways to allow our guests to connect with exotic and remote places.
We currently operate a fleet of ten owned expedition ships and five seasonal charter vessels under the Lindblad brand. Each expedition ship is fully equipped with state-of-the-art tools for in-depth exploration and the majority of our expeditions involve travel to remote places, such as voyages to the Arctic, Antarctic, the Galápagos Islands, Alaska, Baja’s Sea of Cortez, the South Pacific, Costa Rica and Panama. We have a longstanding relationship with the National Geographic Society (“National Geographic”) dating back to 2004, which is based on a shared interest in exploration, research, technology and conservation. This relationship includes a co-selling, co-marketing and branding arrangement whereby our owned vessels carry the National Geographic name and National Geographic sells our expeditions through its internal travel division. We collaborate with National Geographic on voyage planning to enhance the guest experience by having National Geographic experts, including photographers, writers, marine biologists, naturalists, field researchers and film crews, join our expeditions. Guests are able to interface with these experts through lectures, excursions, dining and other experiences throughout their voyage.
We operate land-based nature adventure travel expeditions around the globe, with unique itineraries designed to offer intimate encounters with nature and the planet’s wild destinations and the animals and people who live there.
Natural Habitat, Inc. (“Natural Habitat”) provides eco-conscious expeditions and nature-focused, small-group experiences that include polar bear tours in Churchill, Canada, Alaskan grizzly bear adventures, small-group Galápagos Islands tours and African safaris. Natural Habitat partners with World Wildlife Fund (“WWF”) to offer conservation travel, which is sustainable travel that contributes to the protection of nature and wildlife.
DuVine Cycling + Adventure Company (“DuVine”) provides intimate cycling adventures and travel experiences, led by expert guides, with a focus on connecting with local character and culture, including high-quality local cuisine and accommodations. International cycling tours include the exotic Costa Rican rainforests, the rocky coasts of Ireland and the vineyards of Spain, while cycling adventures in the United States include cycling beneath the California redwoods, pedaling through Vermont farmland and wine tastings in the world-class vineyards of Napa and Sonoma.
Off the Beaten Path, LLC (“Off the Beaten Path”) provides small group travel, led by local, experienced guides, with distinct focus on wildlife, hiking national parks and culture. Off the Beaten Path offerings include insider national park experiences in the Rocky Mountains, Desert Southwest, and Alaska, as well as unique trips across Europe, Africa, Australia, Central and South America and the South Pacific.
Classic Journeys, LLC (“Classic Journeys”) offers highly curated active small-group and private custom journeys centered around cinematic walks led by expert local guides in over 50 countries around the world. These walking tours are highlighted by luxury boutique accommodations and handcrafted itineraries that immerse guests into the history and culture of the places they are exploring and the people who live there.
We operate two segments including the Lindblad segment, which consists of the operations of our Lindblad brand, and the Land Experiences segment, consisting of our Natural Habitat, DuVine, Off the Beaten Path and Classic Journeys brands.
2023 Highlights
During 2023, we provided immersive expeditions to our guests across all of our ships including voyages to Antarctica, the Arctic, Alaska, Australia, Baja California’s Sea of Cortez, the Baltic Sea, British Columbia, Eastern Canada, Central America, Europe, the Galápagos Islands, Greenland, Iceland, Indonesia, Japan, New Zealand, through the Northwest Passage, the Pacific Northwest, Patagonia, the South Pacific and elsewhere, as well as African safaris, trips and tours through the U.S. National Parks, our Alaska Bear Camp, the Scotland Highlands, bike tours of Portugal, the French wine country, Tuscany and Spain.
During May 2023, we issued $275.0 million of 9.00% senior secured notes, maturing 2028, with proceeds used primarily to pay the outstanding borrowings under our prior senior secured credit agreements (the “Export Credit Agreements”).
During June 2023, Natural Habitat renewed its partnership agreement with WWF through December 31, 2028.
We have substantial advanced reservations for future travel with bookings for the full year 2023 42% ahead of the bookings for 2019 at the same point in 2019.
The discussion and analysis of our results of operations and financial condition are organized as follows :
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a description of certain line items and operational and financial metrics we utilize to assist us in managing our business; |
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results and a comparable discussion of our consolidated and segment results of operations; |
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a discussion of our liquidity and capital resources, including future capital and contractual commitments and potential funding sources; and |
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a review of our critical accounting policies. |
Financial Presentation
Description of Certain Line Items
Tour revenues
Tour revenues consist of the following:
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Guest ticket revenues recognized from the sale of guest tickets; and |
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Other tour revenues from the sale of pre- or post-expedition excursions, hotel accommodations, air transportation to and from the ships and excursions, goods and services rendered onboard that are not included in guest ticket prices, trip insurance, and cancellation fees. |
Cost of tours
Cost of tours includes the following:
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Direct costs associated with revenues, including cost of pre- or post-expedition excursions, hotel accommodations, and land-based expeditions, air and other transportation expenses, and cost of goods and services rendered onboard; |
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Payroll costs and related expenses for shipboard and expedition personnel; |
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Food costs for guests and crew, including complimentary food and beverage amenities for guests; |
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Fuel costs and related costs of delivery, storage and safe disposal of waste; and |
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Other tour expenses, such as land costs, port costs, repairs and maintenance, equipment expense, drydock, ship insurance, and charter hire costs. |
Selling and marketing
Selling and marketing expenses include commissions, royalties and a broad range of advertising and promotional expenses.
General and administrative
General and administrative expenses include the cost of shoreside vessel support, reservations and other administrative functions, including salaries and related benefits, credit card commissions, professional fees and rent.
Operational and Financial Metrics
We use a variety of operational and financial metrics, including non-GAAP financial measures, such as Adjusted EBITDA, Net Yields, Occupancy and Net Cruise Costs, to enable us to analyze our performance and financial condition. We utilize these financial measures to manage our business on a day-to-day basis and believe that they are the most relevant measures of performance. Some of these measures are commonly used in the cruise and tourism industry to evaluate performance. We believe these non-GAAP measures provide expanded insight to assess revenue and cost performance, in addition to the standard GAAP-based financial measures. There are no specific rules or regulations for determining non-GAAP measures, and as such, they may not be comparable to measures used by other companies within the industry.
The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. You should read this discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and the related notes thereto also included within.
Adjusted EBITDA is net income (loss) excluding depreciation and amortization, net interest expense, other income (expense), income tax (expense) benefit, (gain) loss on foreign currency, (gain) loss on transfer of assets, reorganization costs, and other supplemental adjustments. Other supplemental adjustments include certain non-operating items such as stock-based compensation, executive severance costs, the National Geographic fee amortization, debt refinancing costs, acquisition-related expenses and other non-recurring charges. We believe Adjusted EBITDA, when considered along with other performance measures, is a useful measure as it reflects certain operating drivers of the business, such as sales growth, operating costs, selling and administrative expense, and other operating income and expense. We believe Adjusted EBITDA helps provide a more complete understanding of the underlying operating results and trends and an enhanced overall understanding of our financial performance and prospects for the future. Adjusted EBITDA is not intended to be a measure of liquidity or cash flows from operations or a measure comparable to net income as it does not take into account certain requirements, such as unearned passenger revenues, capital expenditures and related depreciation, principal and interest payments, and tax payments. Our use of Adjusted EBITDA may not be comparable to other companies within the industry.
The following metrics apply to our Lindblad segment:
Adjusted Net Cruise Cost represents Net Cruise Cost adjusted for non-GAAP other supplemental adjustments which include certain non-operating items such as stock-based compensation, the National Geographic fee amortization, and acquisition-related expenses.
Available Guest Nights is a measurement of capacity and represents double occupancy per cabin (except single occupancy for a single capacity cabin) multiplied by the number of cruise days for the period. We also record the number of guest nights available on our limited land programs in this definition.
Gross Cruise Cost represents the sum of cost of tours plus, selling and marketing expenses, and general and administrative expenses.
Gross Yield per Available Guest Night represents tour revenues less insurance proceeds divided by Available Guest Nights.
Guest Nights Sold represents the number of guests carried for the period multiplied by the number of nights sailed within the period.
Maximum Guests is a measure of capacity and represents the maximum number of guests in a period and is based on double occupancy per cabin (except single occupancy for a single capacity cabin).
Net Cruise Cost represents Gross Cruise Cost excluding commissions and certain other direct costs of guest ticket revenues and other tour revenues.
Net Cruise Cost Excluding Fuel represents Net Cruise Cost excluding fuel costs.
Net Yield represents tour revenues less insurance proceeds, commissions and direct costs of other tour revenues.
Net Yield per Available Guest Night represents Net Yield divided by Available Guest Nights.
Number of Guests represents the number of guests that travel with us in a period.
Occupancy is calculated by dividing Guest Nights Sold by Available Guest Nights.
Voyages represent the number of ship expeditions completed during the period.
Foreign Currency Translation
The U.S. dollar is the functional currency in our foreign operations and re-measurement adjustments and gains or losses resulting from foreign currency transactions are recorded as foreign exchange gains or losses in the condensed consolidated statements of operations.
Seasonality
Traditionally, our Lindblad brand tour revenues are mildly seasonal, historically larger in the first and third quarters. The seasonality of our operating results fluctuates due primarily to our vessels being taken out of service for scheduled maintenance or drydocking, which is typically during nonpeak demand periods, in the second and fourth quarters. Our drydock schedules are subject to cost and timing differences from year-to-year due to the availability of shipyards for certain work, drydock locations based on ship itineraries, operating conditions experienced especially in the polar regions and the applicable regulations of class societies in the maritime industry, which require periodically more extensive reviews. Drydocking impacts operating results by reducing tour revenues and increasing cost of tours. Our Natural Habitat, DuVine, Off the Beaten Path and Classic Journeys brands are seasonal businesses, with the majority of Natural Habitat’s tour revenue recorded in the third and fourth quarters from its summer season departures and polar bear tours, while the majority of Off the Beaten Path, DuVine and Classic Journeys’ revenues recorded during the second and third quarters from their spring and summer season departures.
Results of Operations — Consolidated
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For the three months ended September 30, |
For the nine months ended September 30, |
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(In thousands) |
2023 |
2022 |
Change |
% |
2023 |
2022 |
Change |
% |
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Tour revenues |
$ | 175,989 | $ | 144,783 | $ | 31,206 | 22 | % | $ | 444,183 | $ | 303,540 | $ | 140,643 | 46 | % | ||||||||||||||||
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Cost of tours |
95,590 | 87,576 | 8,014 | 9 | % | 245,293 | 208,023 | 37,270 | 18 | % | ||||||||||||||||||||||
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General and administrative |
30,015 | 24,535 | 5,480 | 22 | % | 85,589 | 68,882 | 16,707 | 24 | % | ||||||||||||||||||||||
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Selling and marketing |
19,387 | 16,025 | 3,362 | 21 | % | 55,197 | 41,193 | 14,004 | 34 | % | ||||||||||||||||||||||
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Depreciation and amortization |
10,521 | 10,839 | (318 | ) | (3 | )% | 33,660 | 33,193 | 467 | 1 | % | |||||||||||||||||||||
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Operating income (loss) |
$ | 20,476 | $ | 5,808 | $ | 14,668 | 253 | % | $ | 24,444 | $ | (47,751 | ) | $ | 72,195 | NM | ||||||||||||||||
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Net income (loss) |
$ | 8,459 | $ | (5,498 | ) | $ | 13,957 | NM | $ | (14,463 | ) | $ | (76,203 | ) | $ | 61,740 | 81 | % | ||||||||||||||
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Undistributed income (loss) per share available to stockholders: |
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Basic |
$ | 0.08 | $ | (0.18 | ) | $ | 0.26 | $ | (0.40 | ) | $ | (1.60 | ) | $ | 1.20 | |||||||||||||||||
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Diluted |
$ | 0.08 | $ | (0.18 | ) | $ | 0.26 | $ | (0.40 | ) | $ | (1.60 | ) | $ | 1.20 | |||||||||||||||||
Comparison of the Three and Nine Months Ended September 30, 2023 to the Three and Nine Months Ended September 30, 2022 — Consolidated
Tour Revenues
Tour revenues for the three months ended September 30, 2023 increased $31.2 million, or 22%, to $176.0 million, compared to $144.8 million for the three months ended September 30, 2022. The Lindblad segment tour revenues increased by $25.0 million, or 30%, and the Land Experiences segment increased $6.2 million, or 10%, primarily due to operating additional expeditions and trips, and from higher pricing.
Tour revenues for the nine months ended September 30, 2023 increased $140.6 million, or 46%, to $444.2 million, compared to $303.5 million for the nine months ended September 30, 2022. The Lindblad segment tour revenues increased by $113.6 million, or 57%, and the Land Experiences segment increased $27.0 million, or 26%, primarily due to operating additional expeditions and trips, and from higher pricing.
Cost of Tours
Total cost of tours for the three months ended September 30, 2023 increased $8.0 million, or 9%, to $95.6 million, compared to $87.6 million for the three months ended September 30, 2022. The Lindblad segment cost of tours increased by $3.7 million, or 7%, and the Land Experiences segment increased $4.3 million, or 12%, primarily due to operating additional expeditions and trips.
Total cost of tours for the nine months ended September 30, 2023 increased $37.3 million, or 18%, to $245.3 million, compared to $208.0 million for the nine months ended September 30, 2022. The Lindblad segment cost of tours increased by $22.2 million, or 15%, and the Land Experiences segment increased $15.1 million, or 24%, primarily due to operating additional expeditions and trips.
General and Administrative
General and administrative expenses for the three months ended September 30, 2023 increased $5.5 million, or 22%, to $30.0 million, compared to $24.5 million for the three months ended September 30, 2022. At the Lindblad segment, general and administrative expenses increased $4.3 million, or 25%, from the prior year period, primarily due to higher personnel costs associated with the ramp in operations, higher credit card commissions due to the strong booking environment and increased stock compensation expense. At the Land Experiences segment, general and administrative expenses increased $1.2 million, or 16%, primarily due to increased personnel costs related to operating additional trips and higher credit card commissions due to the strong booking environment.
General and administrative expenses for the nine months ended September 30, 2023 increased $16.7 million, or 24%, to $85.6 million, compared to $68.9 million for the nine months ended September 30, 2022. At the Lindblad segment, general and administrative expenses increased $11.9 million, or 25%, from the prior year period, primarily due to higher personnel costs and sales tax costs associated with the ramp in operations, higher credit card commissions due to the strong booking environment and increased stock compensation expense. At the Land Experiences segment, general and administrative expenses increased $4.8 million, or 24%, primarily due to increased personnel costs related to operating additional trips and higher credit card commissions due to the strong booking environment.
Selling and Marketing
Selling and marketing expenses for the three months ended September 30, 2023 increased $3.4 million, or 21%, to $19.4 million, compared to $16.0 million for the three months ended September 30, 2022. At the Lindblad segment, selling and marketing expenses increased $2.8 million, or, 22%, primarily due to higher commissions related to the ramp in operations and increased marketing spend to drive future bookings. At the Land Experiences segment, selling and marketing expenses increased $0.6 million, or 16%, primarily due to increased marketing spend to drive future bookings and higher commissions related to the ramp in operations.
Selling and marketing expenses for the nine months ended September 30, 2023 increased $14.0 million, or 34%, to $55.2 million, compared to $41.2 million for the nine months ended September 30, 2022. At the Lindblad segment, selling and marketing expenses increased $10.5 million, or 31%, primarily due to higher commissions related to the ramp in operations and increased sales and marketing spend on future bookings. At the Land Experiences segment, selling and marketing expenses increased $3.5 million, or 46%, primarily due to increased marketing spend to drive future bookings and higher commissions related to the ramp in operations.
Depreciation and Amortization
Depreciation and amortization expenses for the three months ended September 30, 2023 decreased $0.3 million, or 3%, to $10.5 million, compared to $10.8 million for the three months ended September 30, 2022.
Depreciation and amortization expenses for the nine months ended September 30, 2023 increased $0.5 million, or 1%, to $33.7 million, compared to $33.2 million for the nine months ended September 30, 2022.
Other Income (Expense)
Other expense for the three months ended September 30, 2023, increased $2.5 million to $12.0 million from $9.5 million for the three months ended September 30, 2022, due to a $3.1 million increase in interest expense, primarily due to higher interest rates across our debt facilities and increased borrowings.
Other expense for the nine months ended September 30, 2023, increased $9.5 million to $37.3 million from $27.8 million for the nine months ended September 30, 2022, primarily due to a $7.1 million increase in interest expense, due to higher interest rates across our debt facilities, increased borrowings, and the write-off of $3.9 million of deferred financing costs, fees and other expenses related to the repayment of our prior Export Credit Agreements. In 2022, we wrote-off $9.0 million of deferred financing costs and incurred $1.9 million of fees and other expenses related to the repayment of our prior credit agreement, including the term facility, Main Street Loan and revolving credit facility, and a $1.4 million loss on foreign currency translation, which was mostly offset by recognition of $11.6 million in other income related to expenses covered under the grant for the Coronavirus Economic Relief for Transportation Services Act grant.
Results of Operations — Segments
Selected information for our reportable segments is below. The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
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For the three months ended September 30, |
For the nine months ended September 30, |
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(In thousands) |
2023 |
2022 |
Change |
% |
2023 |
2022 |
Change |
% |
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Tour revenues: |
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Lindblad |
$ | 108,750 | $ | 83,741 | $ | 25,009 | 30 | % | $ | 311,660 | $ | 198,063 | $ | 113,597 | 57 | % | ||||||||||||||||
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Land Experiences |
67,239 | 61,042 | 6,197 | 10 | % | 132,523 | 105,477 | 27,046 | 26 | % | ||||||||||||||||||||||
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Total tour revenues |
$ | 175,989 | $ | 144,783 | $ | 31,206 | 22 | % | $ | 444,183 | $ | 303,540 | $ | 140,643 | 46 | % | ||||||||||||||||
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Operating income (loss): |
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Lindblad |
$ | 7,501 | $ | (7,142 | ) | $ | 14,643 | NM | $ | 8,576 | $ | (60,380 | ) | $ | 68,956 | NM | ||||||||||||||||
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Land Experiences |
12,975 | 12,950 | 25 | 0 | % | 15,868 | 12,629 | 3,239 | 26 | % | ||||||||||||||||||||||
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Total operating income (loss) |
$ | 20,476 | $ | 5,808 | $ | 14,668 | 253 | % | $ | 24,444 | $ | (47,751 | ) | $ | 72,195 | NM | ||||||||||||||||
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Adjusted EBITDA: |
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Lindblad |
$ | 20,119 | $ | 4,889 | $ | 15,230 | 312 | % | $ | 48,887 | $ | (23,560 | ) | $ | 72,447 | NM | ||||||||||||||||
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Land Experiences |
13,831 | 13,699 | 132 | 1 | % | 18,472 | 14,735 | 3,737 | 25 | % | ||||||||||||||||||||||
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Total adjusted EBITDA |
$ | 33,950 | $ | 18,588 | $ | 15,362 | 83 | % | $ | 67,359 | $ | (8,825 | ) | $ | 76,184 | NM | ||||||||||||||||
Guest Metrics — Lindblad Segment
The following table sets forth our Available Guest Nights, Guest Nights Sold, Occupancy, Maximum Guests, Number of Guests and Voyages:
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For the three months ended September 30, |
For the nine months ended September 30, |
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2023 |
2022 |
2023 |
2022 |
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Available Guest Nights |
85,959 | 70,995 | 243,329 | 174,954 | ||||||||||||
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Guest Nights Sold |
69,903 | 57,229 | 192,052 | 130,826 | ||||||||||||
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Occupancy |
81 | % | 81 | % | 79 | % | 75 | % | ||||||||
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Maximum Guests |
10,613 | 8,826 | 29,113 | 21,785 | ||||||||||||
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Number of Guests |
8,910 | 7,225 | 23,648 | 16,656 | ||||||||||||
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Voyages |
129 | 114 | 359 | 302 | ||||||||||||
The following table shows the calculations of Gross and Net Yield. Gross Yield is calculated by dividing Tour Revenues by Available Guest Nights and Net Yield is calculated by dividing Net Revenue by Available Guest Nights:
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Calculation of Gross and Net Yield per Available Guest Night |
For the three months ended September 30, |
For the nine months ended September 30, |
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(In thousands, except for Available Guest Nights, Gross and Net Yield per Available Guest Night) |
2023 |
2022 |
2023 |
2022 |
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Guest ticket revenues |
$ | 94,751 | $ | 73,700 | $ | 273,653 | $ | 174,762 | ||||||||
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Other tour revenue |
13,999 | 10,041 | 38,007 | 23,301 | ||||||||||||
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Tour Revenues |
108,750 | 83,741 | 311,660 | 198,063 | ||||||||||||
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Less: Commissions |
(6,732 | ) | (5,728 | ) | (19,996 | ) | (14,381 | ) | ||||||||
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Less: Other tour expenses |
(6,569 | ) | (6,030 | ) | (19,296 | ) | (21,025 | ) | ||||||||
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Net Yield |
$ | 95,449 | $ | 71,983 | $ | 272,368 | $ | 162,657 | ||||||||
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Available Guest Nights |
85,959 | 70,995 | 243,329 | 174,954 | ||||||||||||
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Gross Yield per Available Guest Night |
$ | 1,265 | $ | 1,180 | $ | 1,281 | $ | 1,132 | ||||||||
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Net Yield per Available Guest Night |
1,110 | 1,014 | 1,119 | 930 | ||||||||||||
The following table reconciles operating income to our Net Yield Guest Metric for the Lindblad Segment:
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For the three months ended September 30, |
For the nine months ended September 30, |
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(In thousands) |
2023 |
2022 |
2023 |
2022 |
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Operating income (loss) |
$ | 7,501 | $ | (7,142 | ) | $ | 8,576 | $ | (60,380 | ) | ||||||
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Cost of tours |
55,021 | 51,296 | 167,392 | 145,251 | ||||||||||||
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General and administrative |
21,122 | 16,871 | 60,374 | 48,487 | ||||||||||||
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Selling and marketing |
15,441 | 12,626 | 44,163 | 33,618 | ||||||||||||
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Depreciation and amortization |
9,665 | 10,090 | 31,155 | 31,087 | ||||||||||||
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Less: Commissions |
(6,732 | ) | (5,728 | ) | (19,996 | ) | (14,381 | ) | ||||||||
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Less: Other tour expenses |
(6,569 | ) | (6,030 | ) | (19,296 | ) | (21,025 | ) | ||||||||
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Net Yield |
$ | 95,449 | $ | 71,983 | $ | 272,368 | $ | 162,657 | ||||||||
The following table shows the calculations of Gross and Net Cruise Costs:
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Calculation of Gross and Net Cruise Cost |
For the three months ended September 30, |
For the nine months ended September 30, |
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(In thousands, except for Available Guest Nights, Gross and Net Cruise Cost per Avail. Guest Night) |
2023 |
2022 |
2023 |
2022 |
||||||||||||
|
Cost of tours |
$ | 55,021 | $ | 51,296 | $ | 167,392 | $ | 145,251 | ||||||||
|
Plus: Selling and marketing |
15,441 | 12,626 | 44,163 | 33,618 | ||||||||||||
|
Plus: General and administrative |
21,122 | 16,871 | 60,374 | 48,487 | ||||||||||||
|
Gross Cruise Cost |
91,584 | 80,793 | 271,929 | 227,356 | ||||||||||||
|
Less: Commissions |
(6,732 | ) | (5,728 | ) | (19,996 | ) | (14,381 | ) | ||||||||
|
Less: Other tour expenses |
(6,569 | ) | (6,030 | ) | (19,296 | ) | (21,025 | ) | ||||||||
|
Net Cruise Cost |
78,283 | 69,035 | 232,637 | 191,950 | ||||||||||||
|
Less: Fuel Expense |
(5,434 | ) | (8,933 | ) | (19,939 | ) | (21,419 | ) | ||||||||
|
Net Cruise Cost Excluding Fuel |
72,849 | 60,102 | 212,698 | 170,531 | ||||||||||||
|
Non-GAAP Adjustments: |
||||||||||||||||
|
Stock-based compensation |
(2,953 | ) | (1,632 | ) | (9,146 | ) | (5,283 | ) | ||||||||
|
Other |
- | (309 | ) | (10 | ) | (450 | ) | |||||||||
|
Adjusted Net Cruise Cost Excluding Fuel |
$ | 69,896 | $ | 58,161 | $ | 203,542 | $ | 164,798 | ||||||||
|
Adjusted Net Cruise Cost |
$ | 75,330 | $ | 67,094 | $ | 223,481 | $ | 186,217 | ||||||||
|
Available Guest Nights |
85,959 | 70,995 | 243,329 | 174,954 | ||||||||||||
|
Gross Cruise Cost per Available Guest Night |
$ | 1,065 | $ | 1,138 | $ | 1,118 | $ | 1,300 | ||||||||
|
Net Cruise Cost per Available Guest Night |
911 | 972 | 956 | 1,097 | ||||||||||||
|
Net Cruise Cost Excluding Fuel per Available Guest Night |
847 | 847 | 874 | 975 | ||||||||||||
|
Adjusted Net Cruise Cost Excluding Fuel per Available Guest Night |
813 | 819 | 836 | 942 | ||||||||||||
|
Adjusted Net Cruise Cost per Available Guest Night |
876 | 945 | 918 | 1,064 | ||||||||||||
Comparison of the Three and Nine Months Ended September 30, 2023 to the Three and Nine Months Ended September 30, 2022 at the Lindblad Segment
Tour Revenues
Tour revenues for the three months ended September 30, 2023 increased $25.0 million, or 30%, to $108.7 million, compared to $83.7 million for the three months ended September 30, 2022. The 30% increase in 2023 was primarily driven by higher guest ticket revenues from a 21% increase in available guest nights due to greater fleet utilization and from a 9% increase in net yield per available guest night to $1,110 mostly due to higher pricing. Occupancy of 81% was in line with the third quarter of 2022.
Tour revenues for the nine months ended September 30, 2023 increased $113.6 million, or 57%, to $311.7 million, compared to $198.1 million for the nine months ended September 30, 2022. The 57% increase in 2023 was primarily driven by higher guest ticket revenues from a 39% increase in available guest nights due to greater fleet utilization and from a 20% increase in net yield per available guest night to $1,119 due to higher pricing and increased occupancy compared with 2022.
Operating Income
Operating income of $7.5 million for the three months ended September 30, 2023 improved $14.6 million compared to a $7.1 million operating loss for the three months ended September 30, 2022, primarily due to the increase in tour revenues, partially offset by higher cost of tours and personnel costs due to the ramp in operations, increased commissions related to the revenue and bookings growth and increased sales and marketing spend to support future bookings.
Operating income of $8.6 million for the nine months ended September 30, 2023 improved $69.0 million compared to a $60.4 million operating loss for the nine months ended September 30, 2022, primarily due to the increase in tour revenues, partially offset by higher cost of tours and personnel costs due to the ramp in operations, increased commissions related to the revenue and bookings growth and increased sales and marketing spend to support future bookings.
Comparison of Three and Nine Months Ended September 30, 2023 to Three and Nine Months Ended September 30, 2022 at the Land Experiences Segment
Tour Revenues
Tour revenues for the three months ended September 30, 2023 increased $6.2 million, or 10%, to $67.2 million compared to $61.0 million for the three months ended September 30, 2022 primarily as a result of operating additional trips during the third quarter 2023 and higher pricing.
Tour revenues for the nine months ended September 30, 2023 increased $27.0 million, or 26%, to $132.5 million compared to $105.5 million for the nine months ended September 30, 2022 primarily as a result of operating additional trips during 2023 and higher pricing.
Operating Income
Operating income of $13.0 million for the three months ended September 30, 2023 was flat compared to $13.0 million for the three months ended September 30, 2022, as the increase in tour revenue was offset by increased operating and personnel costs related to operating additional departures, higher commissions related to the revenue and bookings growth and increased marketing spend to support future growth initiatives.
Operating income of $15.9 million for the nine months ended September 30, 2023 increased $3.2 million compared to operating income of $12.6 million for the nine months ended September 30, 2022, primarily due to the increase in tour revenue, partially offset by higher operating and personnel costs related to operating additional departures, increased commissions related to the revenue and bookings growth and higher marketing spend to support future growth initiatives.
Adjusted EBITDA — Consolidated
The following table outlines the reconciliation of net income (loss) to consolidated Adjusted EBITDA. The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
|
Consolidated |
For the three months ended September 30, |
For the nine months ended September 30, |
||||||||||||||
|
(In thousands) |
2023 |
2022 |
2023 |
2022 |
||||||||||||
|
Net income (loss) |
$ | 8,459 | $ | (5,498 | ) | $ | (14,463 | ) | $ | (76,203 | ) | |||||
|
Interest expense, net |
11,482 | 8,369 | 33,593 | 26,500 | ||||||||||||
|
Income tax expense |
3 | 1,732 | 1,587 | 619 | ||||||||||||
|
Depreciation and amortization |
10,521 | 10,839 | 33,660 | 33,193 | ||||||||||||
|
Loss (gain) on foreign currency |
455 | 872 | (46 | ) | 1,417 | |||||||||||
|
Other income |
77 | 333 | 3,773 | (84 | ) | |||||||||||
|
Stock-based compensation |
2,953 | 1,632 | 9,245 | 5,283 | ||||||||||||
|
Other |
- | 309 | 10 | 450 | ||||||||||||
|
Adjusted EBITDA |
$ | 33,950 | $ | 18,588 | $ | 67,359 | $ | (8,825 | ) | |||||||
The following tables outline the reconciliation for each reportable segment from operating income to Adjusted EBITDA.
|
Lindblad Segment |
For the three months ended September 30, |
For the nine months ended September 30, |
||||||||||||||
|
(In thousands) |
2023 |
2022 |
2023 |
2022 |
||||||||||||
|
Operating income (loss) |
$ | 7,501 | $ | (7,142 | ) | $ | 8,576 | $ | (60,380 | ) | ||||||
|
Depreciation and amortization |
9,665 | 10,090 | 31,155 | 31,087 | ||||||||||||
|
Stock-based compensation |
2,953 | 1,632 | 9,146 | 5,283 | ||||||||||||
|
Other |
- | 309 | 10 | 450 | ||||||||||||
|
Adjusted EBITDA |
$ | 20,119 | $ | 4,889 | $ | 48,887 | $ | (23,560 | ) | |||||||
|
Land Experiences Segment |
For the three months ended September 30, |
For the nine months ended September 30, |
||||||||||||||
|
(In thousands) |
2023 |
2022 |
2023 |
2022 |
||||||||||||
|
Operating income |
$ | 12,975 | $ | 12,950 | $ | 15,868 | $ | 12,629 | ||||||||
|
Depreciation and amortization |
856 | 749 | 2,505 | 2,106 | ||||||||||||
|
Stock-based compensation |
- | - | 99 | - | ||||||||||||
|
Adjusted EBITDA |
$ | 13,831 | $ | 13,699 | $ | 18,472 | $ | 14,735 | ||||||||
Liquidity and Capital Resources
As of September 30, 2023, the Company had $168.0 million in unrestricted cash and cash equivalents and $36.8 million in restricted cash primarily related to deposits on future travel originating from U.S. ports and credit card reserves.
As of September 30, 2023, we had $635.1 million in long-term debt obligations, including the current portion of long-term debt. We believe that our cash on hand and expected future operating cash inflows will be sufficient to fund operations, debt service requirements and necessary capital expenditures for at least the next 12 months.
Sources and Uses of Cash for the Nine Months Ended September 30, 2023 and 2022
Net cash provided by operating activities was $35.3 million for the nine months ended September 30, 2023 compared to $0.8 million for the same period in 2022. The $34.5 million increase is primarily due to increased cash received from guests for future travel, partially offset higher costs and redemption of future travel credits during 2023 as we returned all vessels to operations.
Net cash used in investing activities was $7.6 million for the nine months ended September 30, 2023 compared to $29.6 million in the same period in 2022. 2023 primarily included divesting of marketable securities, partially offset by capital expenditures on our vessels and our digital transformation initiatives, while 2022 primarily included routine capital vessel maintenance across the fleet and renovations to the National Geographic Islander II for its launch during the third quarter of 2022.
Net cash provided by financing activities was $61.0 million for the nine months ended September 30, 2023 compared to $2.1 million for the same period in 2022. 2023 primarily included the issuance of $275.0 million of 9.00% Notes (as described below) which were used primarily to repay our prior Export Credit Agreements, while 2022 primarily included the issuance of $360.0 million of 6.75% Notes (as described below) which were used to repay our prior credit agreement, including the term facility, the Main Street Loan and the revolving facility .
Funding Sources
Debt Facilities
6.75% Notes
On February 4, 2022, we issued $360.0 million aggregate principal amount of 6.75% senior secured notes due 2027 (the “6.75% Notes”) in a private offering. The 6.75% Notes bear interest at a rate of 6.75% per year and interest is payable semiannually in arrears on February 15 and August 15 of each year. The 6.75% Notes will mature on February 15, 2027, subject to earlier repurchase or redemption. We used the net proceeds from the offering to prepay in full all outstanding borrowings under our prior credit agreement, including the term facility, Main Street Loan, and revolving credit facility, to pay any related premiums and to terminate in full our prior credit agreement and the commitments thereunder. The 6.75% Notes are senior secured obligations and are guaranteed on a senior secured basis by us and certain of our subsidiaries (collectively, the “Guarantors”) and secured by first-priority pari passu liens, subject to permitted liens and certain exceptions, on substantially all of our and the Guarantors’ assets. We may redeem the 6.75% Notes at set redemption prices and premiums, plus accrued and unpaid interest, if any.
The 6.75% Notes contain covenants that, among other things, restrict our ability and the ability of our restricted subsidiaries to incur certain additional indebtedness and make certain dividend payments, distributions, investments and other restricted payments. These covenants are subject to a number of important exceptions and qualifications set forth in the 6.75% Notes.
Revolving Credit Facility
On February 4, 2022, we entered into a senior secured revolving credit facility (the “Revolving Credit Facility”), which provides for an aggregate principal amount of commitments of $45.0 million, maturing February 2027, including a letter of credit sub-facility in an aggregate principal amount of up to $5.0 million. The obligations under the Revolving Credit Facility are guaranteed by us and the Guarantors and are secured by first-priority pari passu liens, subject to permitted liens and certain exceptions, on substantially all the assets of the Company and the Guarantors. Borrowings under the Revolving Credit Facility, if any, will bear interest at a rate per annum equal to, at our option, an adjusted SOFR rate plus a spread or a base rate plus a spread. As of September 30, 2023, we had no borrowings under the Revolving Credit Facility.
The Revolving Credit Facility contains customary affirmative and negative covenants, as well as financial covenants and event of default provisions.
9.00% Notes
On May 2, 2023, we issued $275.0 million aggregate principal amount of 9.00% senior secured notes due 2028 (the “9.00% Notes”) in a private offering. The 9.00% Notes bear interest at a rate of 9.00% per year, accruing from May 2, 2023, and interest is payable semiannually in arrears on May 15 and November 15 of each year, beginning on November 15, 2023. The 9.00% Notes will mature on May 15, 2028, subject to earlier repurchase or redemption. The net proceeds from the offering were used to prepay in full all outstanding borrowings under our prior senior secured credit agreements, to pay any related premiums and to terminate in full the prior senior secured credit agreements and the commitments thereunder. The 9.00% Notes are senior unsecured obligations and are guaranteed (i) on a senior secured basis by certain of our subsidiaries (collectively, the “Secured Guarantors”) and secured by a first-priority lien, subject to permitted liens and certain exceptions, on the equity and substantially all the assets of the Secured Guarantors, and (ii) on a senior unsecured basis by certain of our other subsidiaries. We may redeem the 9.00% Notes at set redemption prices and premiums, plus accrued and unpaid interest, if any.
Other
Our DuVine subsidiary has a EUR 0.1 million State Assistance Loan related to the financial consequences of the COVID-19 pandemic, for the purpose of employment preservation. This loan matures August 2025, with monthly payments, and bears an annual interest rate of 0.53%.
Equity
Preferred Stock
In August 2020, we issued and sold 85,000 shares of Series A Redeemable Convertible Preferred Stock, par value of $0.0001, (“Preferred Stock”) for $1,000 per share for gross proceeds of $85.0 million. As of September 30, 2023, 62,000 shares of Preferred Stock were outstanding. The Preferred Stock has senior and preferential ranking to our common stock. The Preferred Stock is entitled to cumulative dividends of 6.00% per annum, and for the first two years, the dividends were required to be paid-in-kind. After the second anniversary of the issuance date, the dividends may be paid-in-kind or be paid in cash at our option. During 2023, we thus far have continued to pay Preferred Stock dividends in-kind. At any time after the third anniversary of the issuance, we may, at our option, convert all, but not less than all, of the Preferred Stock into common stock if the closing price of shares of common stock is at least 150% of the conversion price for 20 out of 30 consecutive trading days. The Preferred Stock is convertible at any time, at the holder’s election, into a number of shares of our common stock equal to the quotient obtained by dividing the then-current accrued value by the conversion price of $9.50. At the six-year anniversary of the closing date, each investor has the right to request that we repurchase their Preferred Stock, and any Preferred Stock not requested to be repurchased shall be converted into our common shares equal to the quotient obtained by dividing the then-current accrued value by the conversion price. As of September 30, 2023, the outstanding Preferred Stock and accumulated dividends could be converted, at the option of the holders, into approximately 7.8 million shares of our common stock.
Funding Needs
We generally rely on a combination of cash flows provided by operations and the incurrence of additional debt to fund obligations. A vast majority of guest ticket receipts are collected in advance of the applicable expedition date. These advance passenger receipts remain a current liability until the expedition date, and the cash generated from these advance receipts is used interchangeably with cash on hand from other cash from operations. The cash received as advanced receipts can be used to fund operating expenses for the applicable future expeditions or otherwise, pay down debt, make long-term investments or any other use of cash. Traditionally we run a working capital deficit due primarily to a large balance of unearned passenger revenues. As of September 30, 2023, we had a working capital deficit of $59.9 million, and as of December 31, 2022, we had a working capital deficit of $157.8 million.
Critical Accounting Policies
Our preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. For a detailed discussion of our Critical Accounting Policies, please see our 2022 Annual Report, where we have discussed those policies and estimates that we believe are critical and require the use of complex judgment in their application. There have been no significant changes to our accounting policies from those disclosed in the 2022 Annual Report.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
During May 2023, we repaid our variable rate debt instruments and therefore are no longer exposed to market risks for interest rates related to variable rate debt instruments. There have otherwise been no other material changes in our exposure to market risks from the information set forth in the “Quantitative and Qualitative Disclosures About Market Risk” sections contained in our 2022 Annual Report.
|
CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
Based on an evaluation under the supervision and with the participation of the Company’s management, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) were effective as of September 30, 2023 to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
|
PART 2. |
OTHER INFORMATION |
|
ITEM 1. |
The Company is involved in various claims, legal actions and regulatory proceedings arising from time to time in the ordinary course of business. We have protection and indemnity insurance that would be expected to cover any damages.
|
ITEM 1A. |
We operate in a rapidly changing environment that involves a number of risks that could materially affect our business, financial condition or future results, some of which are beyond our control. The risks and uncertainties that we believe are most important for you to consider are discussed under the heading “Risk Factors” in the 2022 Annual Report and under the heading “Risk Factors” in our Form 10-Q for the quarterly period ended June 30, 2023.
|
ITEM 2. |
Recent Sales by the Company of Unregistered Securities
There were no unregistered sales of equity securities during the quarter ended September 30, 2023.
Stock Repurchase Plan
Our Board of Directors approved a stock and warrant repurchase plan (“Repurchase Plan”) in November 2015 and increased the Repurchase Plan to $35.0 million in November 2016. The Repurchase Plan authorizes us to purchase from time to time our outstanding common stock and our previously outstanding warrants. Any shares and warrants purchased will be retired. The Repurchase Plan has no time deadline and will continue until otherwise modified or terminated at the sole discretion of our Board of Directors. These repurchases exclude shares repurchased to settle statutory employee tax withholding related to the exercise of stock options and vesting of stock awards. We have cumulatively repurchased 875,218 shares of common stock for $8.3 million and 6,011,926 warrants for $14.7 million, since plan inception. All repurchases were made using cash resources. The balance for the Repurchase Plan was $12.0 million as of September 30, 2023.
Repurchases of Securities
The following table represents information with respect to shares of common stock withheld from vesting's of stock-based compensation awards for employee income tax withholding for the periods indicated:
|
Period |
Total number of shares purchased |
Average price paid per share |
Dollar value of shares purchased as part of publicly announced plans or programs |
Maximum dollar value of warrants and shares that may be purchased under approved plans or programs |
||||||||||||
|
July 1 through July 31, 2023 |
- | $ | - | $ | - | $ | 11,974,787 | |||||||||
|
August 1 through August 31, 2023 |
410 | 9.05 | - | 11,974,787 | ||||||||||||
|
September 1 through September 30, 2023 |
- | - | - | 11,974,787 | ||||||||||||
|
Total |
410 | $ | - | |||||||||||||
|
ITEM 3. |
Not applicable.
|
ITEM 4. |
Not applicable.
|
ITEM 5. |
During the three months ended September 30, 2023, director or Section 16 officer of the Company adopted or terminated a “Rule 10b5 - 1 trading arrangement” or “non-Rule 10b5 - 1 trading arrangement,” as each term is defined in Item 408 (a) of Regulation S-K.
|
ITEM 6. |
|
Number |
Description |
Included |
Form |
Filing Date |
||||
|
101.INS |
Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) |
Herewith |
||||||
|
101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
Herewith |
||||||
|
101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
Herewith |
||||||
|
101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
Herewith |
||||||
|
101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document |
Herewith |
||||||
|
101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
Herewith |
||||||
|
104 |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
|||||||
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on November 2, 2023.
|
LINDBLAD EXPEDITIONS HOLDINGS, INC. |
||
|
(Registrant) |
||
|
By |
/s/ Sven Lindblad |
|
| Sven Lindblad | ||
|
Chief Executive Officer |
||
|
(Principal Executive Officer)
|
||
| By |
/s/ Craig Felenstein
|
|
|
Craig Felenstein
|
||
|
Chief Financial Officer
|
||
|
(Principal Financial and Accounting Officer)
|
||