Lindblad Expeditions Holdings Inc (LIND) 2016 Q1 法說會逐字稿

Good morning and welcome to the Lindblad Expeditions Incorporated first-quarter 2016 financial results conference call. (Operator Instructions).

I would now like to turn the conference over to Mr. John McClain, CFO of Lindblad. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining us on our first-quarter 2016 earnings conference call. Joining us on the call are Ian Rogers, our Chief Operating Officer, and Mark Ein, our Chairman. Mark will have some open comments. Then I will follow with details on the results of the first quarter. Then I will turn it over to Ian, who will provide comments on other developments in the business. And then we will open the call to your questions.

Our press release for the first-quarter 2016 results was issued this morning and is available on our Investor Relations website. The Company's comments today may include statement about expectations for the future. Those expectations are subject to known and to unknown risks, uncertainties and other factors that may cause the Company's actual results and performance in future periods to be materially different from any future results or performance suggested by these expectations. The Company cannot guarantee the accuracy of any forecasts or estimates, and we undertake no obligation to update any forward-looking statements. If you would like more information on the risks involved in the forward-looking statements, please see the Company's SEC filings.

In addition, some of our comments may reference non-GAAP financial measures. A reconciliation of the most directly comparable GAAP financial measures and other associated disclosures are contained in the Company's earnings release.

With that, I would like to turn the call over to Mark.

Thank you, John, and good morning, everyone.

I want to start by just letting all of you know that on Tuesday late in the day, Sven, our fearless leader Sven Lindblad, found out that he had a detached retina and needed to get some minor surgery done yesterday, and he is recovering. He's actually on the phone, but we want Sven to recover as quickly as he can, so the team and myself are going to take the majority of this call and tell you what's going on. But Sven is on the phone and he is recovering well.

It is a very busy time for Lindblad. The team is working extremely hard to both maximize our economics from the existing fleet and business today while simultaneously recruiting new talent to the senior management team and adding additional growth levers, including new lines of business and new capacity, which is really where the big value creation opportunity is. We are excited to fill you in on all of these activities this morning. And so I'm going to hand it back over to John, who will talk about the financial results of the first quarter. And then Ian will talk about a wide range of other topics and activities, and I will come back and close it out at the end. So, John?

Thank you, Mark. We had a strong quarter and we are pleased with how the year has begun. The Company generated total revenue of $61.6 million in the first quarter, which represents an increase of $6.2 million, or 11.2%, from the $55.4 million in the first quarter of 2015. The growth was primarily driven by $6.1 million of higher guest ticket revenues derived from a change in vessel deployments, which yielded a 10% increase in guest nights sold and an increase in pricing. Net yield remains strong at $1,008 in the quarter compared with $1,004 in the prior-year quarter. We recorded 47,619 guest nights sold in the first quarter, which was up 10.2% to last year, while we had 5,284 guests, which is a 5.9% increase from the first quarter in 2015. The occupancy rate in the quarter was 91.8% compared with 92% in the first quarter last year. Demand was very strong in the quarter while inventory was up due to a change in deployments.

Adjusted net cruise costs per available guest night amounted to $670 in the first quarter of 2016 compared with $701 in the same period in the prior year, which represents a decrease of 4.1%. This decrease was due to the benefits of increased available guest nights and lower fuel costs exceeding the impact of higher costs for more voyages and public company costs.

We continued to benefit from the lower cost of fuel in the first quarter. Fuel costs represented 4.4% of the tour revenue in the first quarter compared with 5.5% in the same period last year. This represents a 17% decrease in the fuel expense year-over-year. We do not anticipate such continued benefits for the remainder of the year. And as we mentioned before, we have not hedged fuel purchases historically but continue to investigate the potential relative to our business model.

Adjusted EBITDA for the first quarter was $17.6 million compared with $14.2 million in the same period last year, and the increase is primarily due to the benefit of increased revenue from that 10% increase in guest nights sold exceeding the increase in variable costs to provide those additional guest nights and the increase in public company costs.

We have not repurchased any shares or warrants since late January and intend to focus our capital to growth initiatives similar to Natural Habitat.

On the liquidity front, we remain extremely well-positioned to fund upcoming projects. We ended the quarter with $182 million in cash, excluding $15 million of restricted cash, compared with a debt balance of $174 million. And those amounts exclude the impacts of purchasing both Nat Hab and the Endeavour II, which occurred after the end of the quarter. Overall, we are very pleased with where we stand and we are on track to meet our future objectives.

With that, I'll turn the call over to Ian to share our activities related to longer term of the business.

Thank you John, and good morning to you all. I would like to spend some time this morning talking about recent Company events and our considerable efforts focused on the longer-term building of the business.

Yesterday we announced the acquisition of 80.1% of the outstanding common stock of Natural Habitat, Inc., a leading adventure travel and ecotourism company based in Boulder, Colorado, for $20 million. The implied 2015 EBITDA purchase multiple for the acquisition is 5.4 times, including the $5 million of cash acquired at closing.

The acquisition of Nat Hab provides Lindblad a platform for expansion into land-based offerings with a partner that has a strong, trusted and complementary brand, an entrepreneur who remains very driven, motivated and focused on building his business, and a company with a shared focus on nature and conservation. We are very excited by this opportunity and would like to direct you towards our separate press release and Investor Day for much more detail on the transaction.

In addition, last week, we announced that we have launched our first 16 weekly expeditions in Cuba that will run from December 2016 through March 2017. These trips are new additions to our plan. We believe that we have created a cube offering that is very special and differentiated from others entering the market and that there will be strong demand long into the future for Cuba and all that it has to offer.

As we look forward, we do see some potential headwinds. A mix of factors, including things like the US and global economics, the terrorist bombings in Europe, the earthquake in Ecuador, the Zika virus and El Nino, all impact how people feel and their willingness to book trips many months out. Some are waiting to book closer to their trip date.

We have also seen an unanticipated softening on bookings on the Endeavour for late in the year. As you know, we will be replacing the Endeavour with the Endeavour II, and the excitement regarding the new ship has some guests opting to wait for the new ship.

Lastly, on our own end, we were delayed in getting our core marketing catalog completed and mailed, which has given it two months less time to have an impact on future sales. We continue to respond to all of these challenges as we have in the past, with focused marketing and enhancements to our offerings.

Even with the impact of these events, our advance bookings for 2016 remain solid. As of April 30, 89% of projected guest ticket revenue for 2016 was on the books compared with 98% on the books at the same time in 2015 for travel in 2015, a reduction of approximately $5.3 million in ticket revenue, much of which was in the fourth quarter. As I mentioned, we have a number of initiatives in place to drive revenue growth in this period.

To significantly enhance our marketing capabilities and to help execute our growth plan, we announced on Tuesday that we have recruited Phil Auerbach to the newly established position of Chief Commercial Officer. Phil brings us a great depth and breadth of new skills, tactics, and experiences, most recently responsible for all sales and marketing functions for Caesars' nine Las Vegas properties, including CRM, social media, events, and partnerships. For us, he will be responsible for all revenue production and will lead marketing, sales, digital product development, and strategic partnerships.

Our expansion requires an integrated commercial approach with an innovative leader to implement new growth strategies where we get even closer to our core existing customers and tap much more deeply into the vast, untapped demand for new customers who are interested in this kind of travel. Phil is perfectly placed for this new role and will start at end of May.

On our fleet, as we have discussed before, our plan calls for the addition of two new 100-passenger US-flagged coastal vessels to be added to our fleet in 2017 and 2018. The goals are 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 new build vessel is expected to be delivered in the second quarter of 2018.

On the Via Australis, which we have renamed the National Geographic Endeavour II, we took possession of the ship on April 25 and have begun refurbishment. We continue to plan for an estimated deployment in the fourth quarter of this year.

Lastly, we are diligently working on our previously announced plans for at least one blue water polar vessel to be delivered in 2019.

Now, I'd like to turn the call over to Mark to wrap it up.

Thank you, Ian and John.

In summary, as you have heard, Lindblad continues to post strong operating results. We have a tremendous opportunity in front of us, and we are focused on recruiting world-class talent to our team and executing our growth plan, both organically and through smart acquisitions, to capitalize on this opportunity.

Now we are glad to take your questions. Operator, we will now take questions.

(Operator Instructions). There are no questions at this time. I stand corrected. We have a question from Eric Gomberg of Dane Capital Management.

I'm just curious if you could talk a little bit about any expectations you have on the Natural Habitats acquisition and what type of cross-selling opportunities you think are there.

This is Mark. If you look at the presentation that we shared yesterday around the acquisition, you will see the last year's EBITDA that we shared. We haven't shared projections yet, or may not, specifically for that line of business. But as Ian said in his remarks, we think this is a really perfectly complementary company. It's got shared values, culture, and a very shared, similar demographic. But then, more importantly, mutually, we do think that there's a lot of opportunity for us to cross-sell. We know -- Lindblad actually used to be in the land-based business and we know that a lot of our travelers are interested in that kind of travel. And similarly, a number, a large number, of Natural Habitat customers are interested in our kind of maritime travel. And so that really was the driver behind it, was being able to capitalize on those things. Obviously, the company also comes with a long-term relationship with the World Wildlife Fund, which is a very important organization with its own set of -- large set of relationships that Natural Habitat has very successfully tapped into. And we certainly think and hope that we are going to find ways to tap into that as well.

So, it was a terrific opportunity for us to buy a really nicely fitting business at a really attractive price and with a lot of upside, which will be driven from those kind of cross-marketing opportunities.

Okay. And just one follow-on. You mentioned or in the opening remarks it was mentioned that you still have buyback authorization, but it sounds like you are looking more towards growth initiatives. So I'm just curious if you could maybe characterize what the acquisition pipeline looks like, and kind of what the opportunity set is there. Obviously, 5.4 times trailing looks pretty attractive. So do you have a number of things of this ilk, or is there a wide variety? Because at the same time, your stock looks reasonably attractive as well, especially with an authorization out there and a lot of dry powder on your balance sheet.

Yes. So, we always sort of evaluate the three buckets for our capital: internal growth through adding capacity, which we know is very attractive to us, generates great returns; opportunistically looking at acquisitions, of which, since we completed our merger last year and became a public company, there has been a constant, steady flow of things that we have seen or gone after; and then, lastly, there's obviously the opportunity to buy back our stock and warrants. And we're looking at all three at all times and are looking for the highest, best returns on that capital. And at different times, all three are very attractive. As you said, we do have a good amount of liquidity and are going to continue to look at all three and hopefully be judicious and smart in how we deploy it.

All right, Mark. Thank you.

(Operator Instructions). Mordechai Yavneh, Focus Capital Management.

Congratulations on the great quarter. I just had some questions on the Nat Hab acquisition. Can you give some color on what Nat Hab's gross margins are and whether they are operating at capacity or they have room to expand?

Ian, do you want to?

Sure. We haven't disclosed operating margins publicly. With regard to expansion possibilities just in general, a land-based offering is a variable cost model with very few limitations to geographic ability to offer trips. And so we see that there is a lot of room for expansion as we look to grow the brands.

Okay. And are you planning to integrate the companies into one, or is it basically just going to be sharing customer databases but operating them separately?

We are operating the companies separately and sharing databases to really maximize the revenue potential.

Lindblad is able to use the World Wildlife Fund's database that provides Nat Hab, or that remains by Nat Hab?

The agreements are that Nat Hab shares its database, Lindblad shares its database.

So that means you would get World Wildlife Fund's database that was shared with Nat Hab also?

I think, on this, we are at the beginning of this journey. World Wildlife Fund did extend their, as we've said, extended their relationship with Nat Hab in connection with this. They are very supportive of it. But we are just at the very beginning of thinking through all of the different ways that we are going to be able to leverage off each other's relationships and databases. And as Ian said, it will be done independently. The entrepreneur who runs it, Ben Bressler, who is a terrific guy, really wanted to maintain some amount of independence and maintain the entrepreneurial spirit that has let him build it but, that said, also was looking to Lindblad to provide him resources and room for growth and also provide it back to us. And so we are going to let it run fairly independently but also try to exploit synergies and relationships to our mutual benefit whenever we can.

Okay. And if I could just ask one more follow-up, on the conference call yesterday, it was mentioned that Nat Hab already sells some of Lindblad's cruises. Do you have any -- can you give like some sort of idea of the number of, let's say, percentage of Lindblad's revenue that comes now from Nat Hab and how much more you can expect that you are hoping to gain from this initiative?

It's very small right now. So we hope to be able to sell our trips to some of their customers and vice versa. But right now, the amount that gross over there is very small.

Thank you so much. Congratulations again.

Robert Kirkpatrick, Cardinal Capital.

I was wondering if you could try to allocate or prioritize the impacts on the softness that you are seeing in the fourth-quarter bookings between the new ship, the list of things that you cited at the beginning from the global economy to El Nino to the delays in start getting out the catalog.

I think the one thing you should bear in mind, that pacing is only an indicator of bookings at a period in time and does not necessarily represent where our final revenue will be. So we talked about potentially $5 million off from our pacing of prior years but, as you mentioned, there are internal factors which we have corrected, and our marketing material is out.

The world factors are something we deal with every year. And I think, in previous conference calls, we have been very clear, and as we presented Lindblad to the market, that we are very creative and go to long lengths to make sure those voyages fill as we anticipate them to fill. I think quantifying between each of the factors is something really that would be difficult to do. We are very much more interested in just making sure we hit every note that we can and filling those vessels to the targets we need.

So, would, therefore, the softness in the Endeavour be probably the least one in terms of your thinking of it?

I don't think we can specifically identify those factors, as I discussed. I think the important thing is we have initiatives in place that will address both the specific items around Endeavour. Worldwide events, there are a slew of them there together. We are operating in a multitude of geographic opportunities, and so we have some diversification around that.

And then finally, we've corrected our internal hiccup on the marketing production. So, we are doing what we do best as a Company and really move towards filling those vessels. I think that's the best way I can answer that question for you.

And then, when we get to the second quarter, you will give us a number that more reflects 2017 as opposed to 2016? Is that the way your data disclosure works?

We will think about it at that time, because, even when you get there, the amount of data relative to 2017 is pretty small. So, we are thinking about that and how we will handle it next quarter.

Great. Thank you so much.

This concludes our question-and-answer session. I would now like to turn the conference back over to Mr. Mark Ein, Chairman of Lindblad, for any closing remarks.

Thank you, operator, and thank you all for joining. Thank you to the team for doing a terrific job.

As you can tell, the Company has an incredible amount on its plate, and the team is doing a really terrific job executing on all fronts. And we'll look forward to keeping in touch with all of you. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.