Good morning and welcome to the Lindblad Expeditions Inc Third Quarter 2017 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. After today's presentation there will be an opportunity to ask questions. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Craig Felenstein, Chief Financial Officer. Please go ahead.

Thank you operator. Good morning everyone and thank you for joining us for Lindblad's third quarter 2017 earnings call. With me on the call today is the Sven Lindblad, our Founder and Chief Executive Officer. Sven will begin with some opening comments and then I will follow with some details on our third quarter results. You can find our latest earnings release in the Investor Relations section of our website. Before we get started, let me remind everyone that the company's comments today may include forward-looking statements 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 forecast or estimates, and we undertake no obligation to update any forward-looking statements. If you would like more information on the risks involved in forward-looking statements, please see the company's SEC filings. In addition, 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. And with that out of the way, let me turn the call over to Sven.

Thanks Craig and good morning everybody and thanks for joining us. I am delighted with our strong third quarter performance on both the revenue and EBITDA front, the growth we delivered as a result of strong bookings we've generated over the last year, and firmly demonstrates the opportunity we have to grow as well as we add capacity to meet the growing demand for expedition travel. In short the thesis we laid out when we accessed to public markets back in 2015 is beginning to play out. The National Geographic Quest launched in July of 2017 and our guests actually loved the ship, this is a great reflection of our basic premise of focusing on the experience and what's outside while at the same time delivering a level of comfort and service previously unheard of on U.S. ships of this size. I personally spent time on the Quest during September and it was gratifying to see the fruits of our labor over the past two years and the resulting appreciation of our guests. As we mentioned last quarter we did experience a later than planned delivery based on a variety of factors, the most relevant ones being the Quest as a prototype at a level of sophistication not seen in U.S. ship building -- passenger ship building in decades and the grounding of the ship during launch which caused damage to a propeller and a rudder. The delay was short-term and bookings for the Quest remained very robust for the remainder of 2017 and for the first three quarters of 2018. Reservations for the company overall also continue to be very strong. Bookings made in 2017 are up over 30% versus 2016 and while we're not seeing any additional significant bookings for the current year, we're seeing sustained momentum for…

Thanks Sven. As Sven mentioned the investment pieces that the company laid out when it went public in July of 2015 has started to come to fruition. The growing enthusiasm for expedition travel combined with our expanding capacity and distinguished track record and delivering unparalleled expedition experiences has begun to deliver significant financial growth. The considerable demand surrounding the launch of the National Geographic Quest without any material degradation in the occupancy for our existing fleet gives us further confidence in the long-term growth opportunity for Lindblad Expeditions. While the timing of the initial growth targets have shifted a little due to be anticipated delivery schedule of the next two new builds, we are poised to deliver sustained financial growth and create increasing shareholder value in the years ahead. Turning to the most recent quarter, Lindblad delivered revenue growth of 20% versus the third quarter a year ago led by 20% growth at the Lindblad segment and a 17% increase in natural habitat. This revenue growth contributed to a 33% increase in adjusted EBITDA versus the third quarter a year ago with 27% growth at the Lindblad segment and $1.2 million increase in natural habitat, nearly three times the adjusted EBITDA that natural habitat generated in the third quarter of 2016. Looking at the segments individually, the Lindblad segment reported revenues of 67.5 million, an increase of 11.3 million versus the third quarter a year ago primarily due to a 16% increase in available guest nights from the launch of the National Geographic Quest in July and to a lesser extent the cancellation of a voyage on the National Geographic Orion a year ago to repair a stabilizer. The revenue increase also reflects a 4% increase in net yield to $1048 due to higher pricing and the impact of itinerary…

[Operator Instructions]. The first question comes from Greg Badishkanian of Citi. Please go ahead.

Hi, this is actually Jessy [ph] for Greg. So, a couple of quick ones. Did you reduce your full year revenue guidance by 6 million of the range and I think you had 3.6 million impact from the cancellations this quarter, so if you could just kind of walk us through where that other 2.5 million came from?

So, the decrease really relates to three I would say separate items. The first item certainly relates to Cuba. We have seen not a whole lot of new bookings coming in after the State Department warning in October and we actually have seen a few cancellations. So we are not seeing that revenue come in as was originally expected. It will still be a profitable venture for us in Cuba but it certainly is not going to deliver the kind of return that we originally expected. The second is we are seeing a little bit of a falloff in other revenue which is the items that happen around the voyage, such as extensions, options, insurance, cancellations, other revenue of that item. The reality of those items is that the bulk of that is not highly profitable from an EBITDA perspective because there are low margins on those items. But that is certainly impacting our fourth quarter expectations. And then we have seen as I mentioned in my prepared remarks, we have seen some shift in the bookings trends more towards 2018 than currently in 2017. So the quality of the bookings and the size of the bookings remains significant but we're seeing it more in 2018 than in 2017. So those are really the three factors that are causing us to lower guidance for the current year.

Okay, thanks. And I had another one about kind of the deceleration from the bookings are up 60% I think in the first quarter then 40 in the second, and I think you said 30 for 2017 now. So will that kind of just go and paint them with pretty much everything you just covered right there?

Yeah, the reality is we look at the year overall the bookings have been strong throughout the year, when you examine the year-on-year growth we have seen a significant monthly growth year-on-year throughout the entirety of 2017 versus 2016. We did see some strength towards the back half of 2016 last year that we are now copy against in 2017. But we're still seeing nice double-digit growth in bookings even in the current months versus where we were a year ago and that applies to not only 2018 but also some of the bookings that we are already seeing for 2019.

Okay, great. Thanks.

The next question is from George Kelly of Imperial Capital. Please go ahead.

Hi, thanks for taking my questions. Back to guidance if we could actually, and just to be clear that the cancellations from the third quarter were included in previous guidance, were they not?

Correct, so the Quest cancellations that was a known entity when we reported earnings after Q2 so the $3 million impact to EBITDA was already included. As I mentioned the three items that really are bringing our guidance down a little bit for 2017 relates to Cuba, the timing of bookings, and the flow of other revenue.

Okay, and are you putting those in order of magnitude?

I would say they're probably all pretty equal with regards to the other revenue maybe a little bit less than the other two. But for the most part they're all pretty much the same size. I would say that applies from a revenue perspective. From an EBITDA perspective the other revenue decline has not really impacted EBITDA all that dramatically because it's very low margin. So the other two items wouldn't really have impacted EBITDA more than the other revenue change.

Okay, and not to get too -- but on your previous release and conference calls I think 98% of 2017 was booked. So can you just help me understand how if the other revenue is the smallest component of the change, can you help explain that?

Yeah, sure. So what happens as we go through any normal years, our bookings have been so far in advance that typically our average booking windows is about nine months. So as we get towards the end of the year what you're seeing is you see a lot of bookings continue not a ton for the current year but the vast majority is for the following year. But you do see cancellations but normal course of cancellations as certain bookings don't ultimately come to fruition as you get towards the end of the year. So when you get to more towards the end of the third quarter into the early part of the fourth quarter you see more cancellations typically than you are seeing bookings. It is not nothing out of the ordinary but it is the normal course of business. So in any given year you're going to see the -- high percentage of our ticket revenue once we report even the end of the second quarter because at that point typically it is already August. And you'll see some positives offset by some negatives for the remainder of the year. That's why today we are expecting a little bit of positive bookings for the remainder of the year but that will be offset predominantly by any debt positions or cancellations we have.

Okay, got you. Thank you.

[Operator Instructions]. The next question is from a Greg Pendy of Sidoti. Please go ahead.

Hi guys, thanks for taking my question. I just wanted to -- I was just wondering on the net yields, I think you broke that down. You said some of that was just an itinerary change. I was just wondering how much of that -- the net yield growth from a year-over-year perspective is coming just from a newer vessel in the fleet, can you kind of give us some numbers on that?

Sure, when you look at the additional net yield in the quarter you're seeing really a few factors. The first is we do have pricing across our fleet for the entire year. Okay, so whenever we look at our fleet and we look at what the opportunities are at any given moment, we do increase prices traditionally year-on-year. Sometimes so much it is more than others. We look at the demand opportunity, we look at the cost associated with these vessels, and we adjust prices accordingly. So the first really will be price increases. The second would be we did change some itineraries. When we launched the Quest we did change some itineraries on some of our existing fleet, the Sea Bird and Sea Lion which Sven could talk to a little bit in terms of the changes we made there. But by doing so we were able to increase the overall yield on these vessels a little bit which certainly helped and then obviously with the launch of Quest that's certainly played into the overall yield increase as well. So Sven you want to talk a little bit about the change in the itineraries in Alaska.

Well, when we launched the Quest we obviously didn't want to have the other older vessels running head to head with the same itineraries because then we have to focus too much on the difference between vessels which is in our estimation a good idea. So we started -- so we've been experimenting with some different itineraries in Alaska to distinguish and differentiate the programs, which also interestingly enough allows us to come up with ideas that potentially attracts some different audiences. So we shortened some of our Alaska itineraries on the Sea Bird and incorporated some land components. And so this was very experimental, turned out to be a very good idea, those were very, very well received. And in the long-term as a consequence of that, those have the potential of being more profitable than before because you're getting more people through the system and you are incorporating some land as part of the equation. So we were very, very pleased about that and certainly that's planned for 2018 and beyond.

One other factor that I should mention with regards to the net yield is a year ago we were retiring the National Geographic Endeavor as well so the yields on that vessel given the newer vessel this year has certainly gone up a little bit. That was not as significant as you factor some of the other items you mentioned but it did play into the increase year-on-year in the third quarter as well.

Got it, that's helpful, thanks a lot.

Okay, thank you everybody for joining us today. We appreciate you taking the time and if you have additional questions please give me a call in the New York office. I'm happy to answer anything that you have. Thanks.

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