Good morning, and welcome to the Lindblad Expeditions Fourth Quarter and Full Year 2017 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Craig Felenstein. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining us for Lindblad's 2017 fourth quarter and full year earnings call. With me on the call today is 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 fourth quarter and full year results before we open the call for Q&A. 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. Those expectations are subject to risks and uncertainties that may cause the actual results and performance to be materially different from these expectations. The company cannot guarantee the accuracy of any forecast or estimates, and we undertake no obligation to update any such forward-looking statements. If you would like more information on the risks involved in forward-looking statements, please see the company's SEC filings. In addition, some of our comments may reference to 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 thank you everyone for joining us this morning. I'm pleased to have the opportunity to review the company's performance in 2017 and to highlight some of the key events that shaped our financial results and our progress towards meaningful growth, and then I would like to turn to 2018 and beyond. With what was announced we were delighted with this past year to begin operation of our newest ship, National Geographic Quest, on July 29, the first of our robust new build program. Yes, that was later than originally planned by 32 days, but she is in fact a prototype and certainly the most sophisticated passenger ship built in the U.S. in decades. While any delay is unfortunate, its effect, when considering a 25-plus year life, is really, in my view, minimal. Most importantly, she completed 2017 with high occupancies and the yields, and our guests are delighted with our ability to execute expeditions in comfort and in style. At the same time, the National Geographic Sea Bird and Sea Lion, which operated the same core geography as the Quest, Alaska primarily, maintained their high occupancies this past year, confirming that demand is very strong, and we need not be concerned with cannibalization as a consequence of bringing new vessels into the region. As we speak, the National Geographic Quest is exploring the geography where we have not been since 2004, Belize, which is totally sold out for the seven voyages planned this year. Expanding our expedition footprint is key for our U.S. flag fleet, which makes this result typically important. The Quest will have a full year of operation this year and, much like the second half of 2017, we expect it to be a key driver of our strong financial growth. Of course, as we…

Thanks, Sven. Lindblad strategic investment to expand our capacity capitalize on the growing demand for high-quality, authentic exhibition travel has begun to generate significant financial returns. In the fourth quarter of 2017, total company revenue growth was 13% versus the fourth quarter a year ago. And this revenue growth contributed to a $3.3 million increase in adjusted EBITDA to $4.8 million. The substantial year-on-year increase during the fourth quarter was driven by the Lindblad segment which generated 17% revenue growth to $48.9 million. This $7 million increase was primarily due to a 10% rise in available guest nights from the launch of the National Geographic Quest in July. The fourth quarter also included higher guest nights from the National Geographic Orion from the addition of a trans-Atlantic voyage in the current year and the cancellation of an expedition in the prior year due to engine repairs. The revenue growth also reflects a 6% increase in net yield to $924 due to higher pricing of most itineraries. Occupancy across the fleet was in line with a year ago despite the inclusion of the Orion's trans-Atlantic voyage and the vessel traveled from Portugal to Chile in October, ahead of the Antarctica season. As I mentioned last quarter, this voyage was always expected to sail at below normal occupancy levels given the itinerary, but the addition of these voyage was opportunistic and added to our revenue and adjusted EBITDA growth this past quarter. Turning the cost of the business. Lindblad segment operating expenses increased 10% on a reported basis and 8%, excluding stock-based compensation and depreciation and amortization. The year-on-year growth was primarily driven by cost from operating the National Geographic Quest and increased commissions due to the revenue and booking growth we generated this year, partially offset by lower personnel costs. Fuel…

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Chris Woronka of Deutsche Bank. Please go ahead.

Hi, guys, this is Steve Pizzella on for Chris. As you look into your 2018 guidance, can you walk us through some of the headwinds and tailwinds you foresee?

Sure. Its obviously a much different year in 2018 versus 2017. So the headwinds that we would see, overall, on the revenue side is certainly the addition of a full year of the Quest will certainly be helpful for the full year because the Quest in 2017 launched in -- at the end of July. So will have a full year of operations on the Quest so that will be a positive. We also will have the voyage cancellations that happened on the Orion as well on the Sea Lion. We will obviously, not be taking place this year. So those two things are very positive as well as the booking strength that we have seen release since the early part of 2017, the booking trend has been remarkably strong. So we expect significant growth from that. Those will be really the things that are driving the growth in the upcoming years we expect our occupancies, higher yields and additional Available Guest Nights due to the items I just mentioned. On the flip side, we do expect less inventory on Cuba, which will certainly overall, be a slight negative for the full year. As I mentioned the revenue recognition change will lower revenues by $1.5 million because of the timing really because there's nothing be deferred into 2018 but there are stuff being different out of 2018. So that really a 2018 issue, and will resolve itself in 2019 and then, so there is that are really big items that are going to take place in 2018 versus 2017.

Okay, great, thanks. And then just reflecting back on 2017, have you made any adjustments to internal processes or maintenance schedules to potentially reduce the impact of any future malfunctions?

Yes, Sven here. Well, first of all the malfunctions had nothing to do with any maintenance factor or human error. They were complete -- just unusual events that could not have been predicted. So we did not require any kind of a change in our procedures as a consequence to those events. We are, however, expanding our Marine team, both in capacity and number, given the fact that the fleet is growing, and that is a necessary thing to do and a wise thing to do, but not because of those particular incidents which were not reflective of anything that needs to be changed.

I think its important to note that we actually go above and beyond what is required from the maintenance perspective in terms of putting our ships into dry dock annually, in terms of going ahead and doing any kind of inspections that we can do to make sure that we are operating the vessels at the most efficient capacity. We’ve always done that just to make sure that we're delivering the best experience to our guests, but also because where our vessels operate, we want to make sure they are in the right shape to operate in these, I would say disperse locations. The other thing that I would point out is when you look at the 2017 incidents, the repairs on these vessels was fully covered by our insurance policies, which speaks to the fact that the insurance companies saw that the work with the lease vessels and fully agree with is that the impact of these items could not have been identified previously. That have been prevented by doing anything different than we’ve already done. So we feel very confident given the history of the company, the efforts that we put in on a repair and maintenance and upkeep schedule that we will continue to operate these vessels very efficiently moving forward.

Okay, understood. Thank you.

The next question is from Greg Badishkanian of Citi. Please go ahead.

Hi. This is actually Jesse on for Greg. Thanks for taking my call. So looking at Cuba, I know there’s some trouble there in the third quarter, just kind of wondering what you guys saw on the fourth quarter in terms of bookings? Any kind of recovery you saw there? And then maybe just what you're seeing in that market going forward?

Yes. So the Cuba, as we mentioned in the last quarter call, the government warning about traveling to Cuba as well as some of the news reports regarding some of the sonic boom issues that are happening in Cuba certainly slowed down some of the bookings that we have seen for Cuba. The bookings for us are so far advanced that we haven't seen many new bookings really in the fourth quarter for the first quarter of travel because we don't operate the vessel in Cuba other than the first quarter. So the first quarter of 2018, we are seeing lower occupancies than we saw in the first quarter of 2017, but we do not expect that to change since the last call because the window between then and the travel in the first quarter was so short. I will say that overall, the Cuba, definition for us is not something that we’re spending a lot of time focused on. We talk about our growth plan. We’re looking for opportunities to find locations that can expand our itineraries that our guests are really interested in doing it. A prime example of that as Sven mentioned earlier is Egypt. Egypt was a place for the company to travel to previously done very well with. We have not been there in a while, we are charting a vessel later this year for two voyages and we have some vessels – some itineraries lined up for 2019 as well. And early indications from just an early e-mail and a quick brochure have been very positive on Egypt. So we think we have an opportunity to grow there and we’re always looking for new itineraries and new kind of opportunities around the globe. So we will continue to do that. And Cuba, while there short-term impact is minor from a financial perspective, overall, it's not going to be a big implication to our long-term growth strategy.

Okay, great. That makes sense. And then, just on the overall concerns about industry demand keeping of capacity three years out from now. Can you maybe just talk about yourself on that how – what do you see with the intuitive capacity like 2019 and after?

I’m not 100% sure what you mean, consumer capacity or industry – or supply – demand or supply capacity, but I will try to speak to them both. Demand, I see absolutely nothing on the horizon that would suggest anything but an increasing demand as it relates to both demographics and an ever-growing interest in this kind of travel. As far as the supply side, there are new entrants coming into the market as, in my view, is that any market that is sort of underserved, if you will, and I think the expedition market is somewhat underserved that new entrants in fact broaden the category, increase interest in the category and that is fundamentally good thing, and I believe that we're well positioned in the harvest interest simply because of our tenure, our partnership with National Geographic, the fact that this is what we're focused on. And so, we do not view these new entrants as a negative. In fact, I would view it primarily as a positive, broadening the category, and we believe we will benefit as a consequent of that.

Tenure, yes. Sorry, I was talking about supply. That’s all from me. Thanks.

Thank you.

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

Hi, guys. Thanks for taking my questions. I just have a few for you. So first to follow-up on the previous question; have you seen any pricing pressure from any of your competitors? Or just generally just the pricing environment seems healthy?

Well, to-date, we have not seen any long-term pricing pressure. What does happen invariably, if people feel that they are coming up short in terms of their expectations, attracting guests, they start lowering their prices. But a lot of the competition or a lot of the new entrants are not here yet. They're out into the future. Most of them will be entering in 2019 and 2020. So we haven't seen any of that to-date.

One other thing I would point out is that we're not once to compete on price. We compete on delivering an exceptional experience and amazing opportunity for our guests given the history of the company and what we – the locations that we deliver to. I think it is important to note that, yes, obviously, pricing the market place will certainly play into the overall occupancy and demand factors that are in the marketplace. But we have traditionally been at the high end of the yields per night. And the reason we can charge those yields is because of the experience that we're delivering to our guests on a regular basis.

Okay, got you. And then, Sven, you mentioned in the prepared remarks that the booking environment continues to be really strong in 2018. And I just – I had a hard time keeping up with some of the numbers. So just wondering if you could again give us what you're seeing so far this year? And then just, if you look at the current environment you've been in this industry for a long time now. Is it just – does it seem like everything is kind of coming together. Have you felt – how do you feel about sort of where we're and what the demand looks like?

Yes. Great, great, great, question. Sometimes the numbers tell you certain things and sometimes it's just the signals you're getting from a variety of sources tell you certain things. And so I've been at this a long time. So I've gone through a whole lot of cycles obviously since I started this business – this particular business in 1979. And 2016 was this – a really, really stressful year because there were all of these external factors that were getting in the way. Just a multitude of them and they were coming in dribs and dribs and dribs. And in 2017 things began to really sort of clear up, there was a lot lesser of that. And in 2018 to-date, it's been a very, very, very positive environment. The level of the future bookings on a daily basis are unprecedented and certainly in terms of my own experience. And it just feels that there's malaises, if you will that took place for a while, is just behind that and it just feels very, very, very optimistic and certainly, the numbers there I mean, to be the – for us, getting bookings far in advance is a good thing. That kind of visibility is a very good thing and for us to be approximately 40% higher for 2019 and we were at the same time for 2018 is a very, very good and positive indicator.

Let me just add little more color what Sven said from that number's perspective, if you look at 2018, as we said earlier, we have, today, $28 million more on the books for 2018 that we have the same time for 2017. And in actuality, when you look at that 2018 bookings we have today, they already exceed the full year of 2017 a year ago. So we're doing very well from a booking perspective, partially due to the increased capacity and partially due to the increased demand in the space certainly.

Great. Thank you very much.

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

Hey, guys. Thanks for taking my call. Just two quick questions. One, you mentioned Egypt as far as new regions. Where are you in terms of testing sort of shorter duration trips? There have been – is that something that is likely to enter into 2018 just to get sort of the market that it can't really take two weeks?

Yes. So we started actually, a series of shorter programs in Baja California in – at the end of 2017 and early 2018. This was one of our smaller ships to Sea Bird. Initially, we had that period was intended to be laid up, and we decided to experiment with some of the shorter programs. I think we mentioned it before that we partnered with an organization called Exhale to create programs that had significant and really focus wellness component. We've now decided to continue in the fall of 2018 with some voyage in the Pacific Northwest and on the West Coast of the United States, and to continue those programs in Baja California. So they are going through accelerated significantly. We – honestly, these will not fly off the shelves in the short-term because they require us to build new markets, which we're actively doing. But we believe, in the long term, they will be extremely valuable for the organization, particularly sort of the edges of key seasons.

Great. That's helpful. And then just one for Craig. Can just help us a little bit in terms of how we should be thinking about CapEx? I believe that the large vessel had a 20% down payment. But how should we be thinking about 2018 on that front maintenance versus ship build?

Sure. So maintenance CapEx across the company really hover somewhere in that high-single to low double-digit range, anywhere from $8 million to $12 million depending on the year – this year to be somewhere probably around $10 million or $11 million all-in. When you look at the growth CapEx of the company in the current year, it really depends on a couple of factors but we certainly know that we'll spending the remainder of the build associated with the Venture headed for the rest of the year, that's somewhere probably around $20 million-or-so. And then have some startup cost associated with the blue-water vessel. The one variable that does remain outstanding on the CapEx side is whether exercise the option related to the new build – we have two options on the blue-water build that we have going on in Ulstein, whether we want to exercise those are not. If we do that, then we certainly well on the down payment associated with those, which will impact the current year. But then, we would have the advantage of having that vessel in two to three years from that. And so that's they are really big variable, aside from that, the CapEx would be primarily related to the Venture in the growth CapEx for the current year.

Okay, great. That's helpful and thanks.

There are no additional questions at this time. This concludes our question-and-answer session. I’d like to turn the conference back over to Craig Felenstein for closing remarks.

Thank you, everybody, for joining us this morning. And if you have any follow-up questions, I'm happy to talk later today. Just give me call in the office. Thank you very much.

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