Review of Lindblad’s First Quarter 2016 Results
“The Company delivered solid results in the first quarter, driven by the strong performance of the fleet. Guest nights sold increased by over 10% versus the prior year period, as we made changes in vessel deployments in the quarter,” said Sven-Olof Lindblad, President and Chief Executive Officer of Lindblad. “Adjusted EBITDA was up 23.9% for the quarter, as we benefitted from an increase in available guest nights and favorable operating leverage.”
Tour revenues in the first quarter amounted to $61.6 million, as compared with $55.4 million in the first quarter of 2015, which represents an increase of $6.2 million or 11.2%. The growth was primarily driven by $6.1 million higher guest ticket revenues derived from changes in vessel deployments and price increases.
Net Yield in the quarter amounted to $1,008 as compared with $1,004 in the first quarter of 2015. Lindblad recorded 47,619 Guest Nights Sold compared with 43,210 in the prior year quarter, an increase of 10.2%, and an occupancy rate of 91.8% in the first quarter of 2016 compared with 92.0% in the 2015 quarter.
Adjusted Net Cruise Cost per Available Guest Night amounted to $670 in the first quarter of 2016, as compared with $701 in the same period in the prior year, which represents a decrease of 4.4%. The decrease was primarily driven by a decrease in fuel costs and the impact of a 10% increase in the number of Available Guest Nights, partially offset by an increase in cost of tours related to two additional voyages, and in general and administrative costs due to public company costs.
Adjusted EBITDA was $17.6 million in the first quarter of 2016 as compared with $14.2 million in the same period in 2015, an increase of $3.4 million, or 23.9%. This increase is primarily due to the benefit of increased revenue from a 10% increase in guest nights sold, which exceeded the increase in variable costs from providing those additional guest nights and an increase in public company costs. Net income was $10.5 million for the first quarter of 2016 as compared with $6.9 million for the 2015 quarter.
Lindblad uses a variety of operational and financial metrics, including non-GAAP financial measures, to evaluate its performance and financial condition. The accompanying financial data includes additional information regarding these metrics and a reconciliation of non-GAAP financial information to GAAP.
John T. McClain, the Company’s Chief Financial Officer also added: “We continue to see a solid booking pace for 2016 with 89% of projected guest ticket revenues for the 2016 financial year on the books as of April 30, 2016, compared with 98% at the same time in 2015 for the 2015 financial year, a reduction of approximately $5.3 million, much of which is in the fourth quarter. We have a number of initiatives in place to drive revenue growth in this period.”
On April 25, 2016, the Company took possession of the Via Australis, which will be used in the Company’s operations in the Galápagos Islands. The Company has begun a significant renovation and expects to deploy the ship during the fourth quarter of 2016. The Via Australis has been renamed the National Geographic Endeavour II and will replace the National Geographic Endeavour. In December 2016, the Company will also expand its travel offerings with new expeditions in Cuba aboard thePanorama II, which will be the fifth chartered vessel in Lindblad’s fleet.
As has been announced previously, the Company has two new coastal vessels on order and the build is proceeding on schedule. The first vessel, which has been named the National Geographic Quest, is expected to be delivered in the second quarter of 2017 and will sail in Alaska and British Columbia during the summer of 2017. The second newbuild vessel is expected to be delivered in the second quarter of 2018.
Acquisition of Natural Habitat, Inc.
As announced on May 5, 2016, the Company acquired 80.1% of the outstanding common stock of Natural Habitat, Inc. (“Natural Habitat”), a leading adventure travel and ecotourism company based in Colorado. The acquisition provides the Company a platform for expansion into land-based offerings with a partner that has a strong, trusted and complementary brand and a shared focus on nature and conservation. The purchase price for the 80.1% interest in Natural Habitat was approximately $20 million and was financed through a combination of cash on hand ($14.85 million), Lindblad stock ($2.65 million, or 264,208 shares) and an unsecured promissory note (approximately $2.5 million). The implied 2015 EBITDA purchase multiple for the acquisition is 5.4x including the $5 million of cash acquired at closing.
Stock and Warrant Repurchase Plan Update
As previously reported in our March 11, 2016 release, the Company repurchased 1.97 million warrants for $5.4 million in the first quarter of 2016, representing an average price of $2.76 per warrant. Total program to date, the Company repurchased 4.06 million of its warrants for $10.9 million, representing an average price of $2.69 per warrant. The Company currently has $9.1 million available under the current $20 million authorization.
New Independent Board Member
On May 5, 2016, the Company appointed Catherine B. Reynolds as an independent director. Mrs. Reynolds is the Chairman and Chief Executive Officer of Educap, Inc., which has provided more than $5 billion in education loans to hundreds of thousands of qualified students and families. She is a successful business leader and social entrepreneur who currently devotes her time and abilities primarily to philanthropic pursuits through the Catherine B. Reynolds Foundation. Mrs. Reynolds was selected by Businessweek magazine as one of the 50 most philanthropic living Americans and is the first self-made woman to make their list. She is also the recipient of the Woodrow Wilson Award for Corporate Citizenship, bestowed annually on America’s most outstanding business leaders by the Woodrow Wilson International Center for Scholars. She is a current or former Trustee of a number of organizations including New York University, Vanderbilt University, Harvard Kennedy School’s Center for Public Leadership, the John F. Kennedy Center for the Performing Arts, and the American Academy of Achievement. Mrs. Reynolds started her career at the accounting firm of Arthur Young and is a graduate of Vanderbilt University.
Chief Commercial Officer
On May 3, 2016, the Company announced the appointment of Philip Auerbach as the Company’s new Chief Commercial Officer. He will join Lindblad on May 26, 2016. Mr. Auerbach has served as senior vice president and regional chief marketing officer of Caesars Entertainment Corporation since July 2013, responsible for all revenue and the marketing strategy for the nine Casino Resorts in Caesars’ Las Vegas portfolio. He was formerly a Partner at McKinsey & Company, counseling clients across the financial services, hospitality, airline and telecommunications industries. Prior to that, he served as a Principal at Novantas, a boutique financial services consulting group. In this new role at Lindblad, Mr. Auerbach will be responsible for all revenue production and will lead marketing, sales, digital product development, and strategic partnerships.
Conference Call Scheduled
The Company has scheduled a conference call at 10:00 a.m. Eastern Time on May 6, 2016 to discuss the earnings of Lindblad. The conference call can be accessed by dialing (844) 378-6487 (United States), (855) 669-9657 (Canada) or (412) 542-4182 (outside the U.S.). A replay of the call will be available at the Company’s investor relations website, investors.expeditions.com.