Good day, and welcome to the Lindblad Expeditions Inc. Third Quarter 2021 Financial Results Conference Call. All participants will be in a listen-only mode. After today’s presentation, there will be an opportunity to ask questions. 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, Matthew. Good morning, everyone, and thank you for joining us for Lindblad's 2021 third quarter earnings call. With me on the call today is Dolf Berle, Lindblad's, Chief Executive Officer. Dolf will begin with some opening comments, and then I will follow with some details on our financial results, and liquidity 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 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, 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 Dolf.

Thank you, Craig, and welcome to all of you joining our call today. Let me begin by saying that, Q3 was an extremely busy time for the company as we executed against each dimension of our strategic and operating plans. I am grateful to the hard-working teams on our ships, the many highly professional members of our land companies, and the Lindblad office employees who worked together so well to accomplish so much these past few months. Highlights, include our return to broader operations, the success of our COVID protocols, the acquisition of Classic Journeys' walking company, the delivery of the National Geographic Resolution, our newest polar ice-class vessel, meaningful progress with our digital initiatives, and ongoing development in the areas of environmental sustainability, and our commitment to diversity, equity and inclusion as an organization. I would like to take the next few minutes to provide some additional details on each of these areas, beginning with how quickly we have been able to get the majority of our fleet back into operations in geographies that we have been exploring for many decades. Eight of our nine ships took guests on immersive expeditions this past quarter, including two vessels in the Galapagos, four in Alaska, and two in Iceland, and we were able to achieve a fleet-wide occupancy of 82%. There was particular strength across our Alaska season, where we initially launched only two ships, but due to guest demand were able to ultimately operate all four of our US flagged vessels throughout the summer. Our international ships also performed well, despite achieving lower occupancies for the most part, due to the continued nuances of foreign travel and concerns around the COVID Delta variant. One thing to note is for those guests, who were already booked, but opted to not travel…

Thanks Dolf. Good morning everyone, and thank you for joining us. As Dolf mentioned, we are extremely excited to have nearly all of our expanded fleet ramping up operations with nine of our 10 owned and operated ships taking guests prior to year-end. I would like to once again thank all of our dedicated crew and staff across the world, as well as our diligent office personnel for their sustained resiliency over the past 1.5 years, and for their commitment to not only prepare us to return to operations, but to do so as a strong and vibrant company. While we have clearly accelerated our operating momentum, it will take some time to fully return to the financial levels we were generating when we paused operations. In the short-term, we have ample liquidity to ramp up operations and weather any immediate uncertainties. And looking further ahead, the investments we have made during the pandemic to expand our fleet capacity and diversify our product offerings has positioned us to drive significant growth over the next few years, as we capitalize on the demand for authentic adventure travel. Turning to our current financial position. We ended the third quarter with $156 million in unrestricted cash and $29 million in restricted cash primarily related to deposits on voyages that originate in the United States and credit card reserves. The $185 million of total cash, declined $18 million versus the end of the second quarter of 2021, as significant guest payments for upcoming voyages and deposits for future travel were offset by increased operating cash usage, as we launched itineraries, prepared additional ships for sailing and increased marketing spend to drive future bookings. The change in cash during the quarter, also reflects the receipt of $21 million grant under the CERTS Act, as well…

We will now begin the question-and-answer session. Our first question will come from Steven Wieczynski with Stifel. Please go ahead.

Hey, guys. Good morning. So my first question is going to be somewhat of a theoretical guidance question. So I'm not sure if you're going to answer this or not, but I'm going to take a shot here. So the question is, kind of, based on what you're seeing today in terms of demand and pricing and if the world stays pretty much status quo in terms of the virus, would you guys expect that you'd be in a positive earnings position in next year in 2022? And I guess really what I'm trying to understand is, how quickly these increased start-up costs that you guys have been incurring will start to roll off, as well as the technology investment headwinds? Hopefully, that all kind of makes sense.

Sure. Thanks, Steve, for your question. So when we look out to 2022, there's certainly a lot of variables still. We -- there's still a variety of geographies and destinations that are still uncertain about whether we can actually travel there over the course of next year. Although, the signs for the vast majority of those destinations is very, very positive. The guest demand curve is very, very positive with regards to the want to travel to the -- across the fleet over the course of 2022. And the cost base that we have, but I would say, instilled over the last year is not that dramatically different than the cost base moving forward -- sorry, moving forward than what it was historically, aside from some of the minor costs associated with additional crew and cleaning costs and testing costs and things of that nature. So when you layer all those factors together, we certainly would expect at this point for 2022 to be a positive earnings year. In fact, it is the potential for the first quarter of 2022 to be a positive EBITDA quarter. That said, there's still a lot of variability to that and we're not going to sit here and say that's going to happen, but it is certainly something that is achievable when you look out to 2022.

Okay. That's great color. Thanks, Craig. And then, second question would be around new hardware. Obviously, with the delivery of the Resolution, you guys don't have any new builds on order. And it seems that the demand for your products obviously remains extremely strong here. So how should we think about or how are you guys thinking about new orders at this point, or -- and another question is, how do you balance ordering new hardware versus buying existing hardware?

Well, Steve, we're pretty opportunistic as it relates to looking at ships around the world that we feel that we can buy at a good price that would represent good replacements for older hardware. We don't have anything that we are looking at, at the moment, other than what we just accomplished with the Crystal Esprit as a replacement for the Islander. As it relates to new hardware going forward we do intend to be a growth company and we're very bullish on what we see as opportunity not only in the polar regions, but also a number of other destinations that our guests are really showing a lot of excitement about. So as you can imagine, we are carefully gauging the P&L and the incoming cash and looking at what's going on from a capital structure standpoint on our balance sheet in order to be able to have the right timing for the purchase of what would be more vessels in the future. So at this point, we are making sure that the Resolution comes in for a good landing and gets on and we're just very focused on that. But I think in the coming year we'll have more to talk about as it relates to plans for future hardware.

Okay. Got you. Thanks, guys. We appreciate it.

You bet.

Thanks, Steve.

Our next question will come from Tyler Boyd with Janney Capital Markets. Please go ahead.

Hi. Good morning. This is Jonathan on for Tyler. Thanks for taking our questions. First one from me, Land Experiences came in well above our expectations I'm wondering if you could provide some additional color on that segment and what drove the strength there. And follow-on to that. It's how the ramp-up is going at DuVine and Off the Beaten Path compared to your original expectations when you did the acquisitions?

Sure. Thanks for your question this morning. So overall I would say -- I'll answer the second part of your question first which is we certainly had a stronger performance out of the gate than we originally anticipated for both of these acquisitions because they were made at the start of the pandemic. But what we ascertain rather quickly is especially for someone like off the Beaten Path which does the majority of their trips and their experiences in the US that demand for travel in the US was stronger than it had been in a really long time. So the results over the course of the second and third quarter was better than we anticipated because of that surging demand as Dolf mentioned for domestic travel. When you look at those businesses, it is important to note that the second and third quarter traditionally for them is their strongest quarters because of where they operate and the variety of trips they offer in Q2 and Q3. So you will see a slowdown in Q4 and Q1 from those entities. But overall the seasonality would be very strong again in Q2 and Q3.

And maybe I'll add Jonathan that it's important to remember that for the land company experiences, the size of the guest group is quite small. And so you're often on a tour with between 8 and 12 people. And so the ability to be more careful related to COVID and be with people that you know and that you're traveling with and -- is actually I think more comforting to guests than people who go on larger excursions. And so -- or larger group excursions. And so I think that's worked in our favor. And Off the Beaten Path was really a standout this last quarter because of the domestic nature of what they worked. And then just a tremendous excitement that Americans found in going back to our national parks. And so as you may recall Off the Beaten Path is primarily focused at the national park experience. And so we're really pleased with how those companies are doing. And as I referenced earlier, we see nothing but great futures for them as they compare notes share, guest lists and innovate around the types of experiences they can do possibly even together at times in different geographies.

Yes. One other thing I'll add Jonathan is that when you think about the thesis when we acquired these companies which is there's a certain amount of heft and weight that Lindblad can bring to the table for these smaller land-based companies with regards to marketing to our list as well as some additional marketing spend opportunities. And that is already starting to play itself out. So our ability to market across the platform of companies that we have has borne fruit across the assets that we now have and we should see some nice continued growth that only grows over time. So we feel very confident that the thesis will continue to play itself out even more so in 2022 and beyond.

Okay. Great. That's very helpful color. Thank you. And then turning to the guest demographics I'm wondering if there's been any change or any color you can provide there in terms of the average age or income or percentage of repeat customers for people that are signing up for these future voyages?

Yes. We haven't seen a whole lot of change what I would say is in terms of a shift in anything over the last several months. But one thing that has happened is we did start to send out some more hard direct mail brochures over the last quarter that we had I would say over the last 1.5 years. And typically when you do that you tend to get more repeat guests because that's who you're mailing to. So the number of repeat guests was up a little bit in the third quarter versus what had happened over the I would say six months prior but that's really the only change. For the most part the demographics in terms of age, the demographics in terms of wealth household income hasn't changed dramatically recently.

Okay, great. Thank you for all the color, guys. That’s all for me.

Thanks, Jonathan.

Our next question will come from Alex Fuhrman with Craig-Hallum Capital Group. Please go ahead.

Great. Thanks very much for taking my question. Wanted to ask about the -- you mentioned in the prepared remarks that the Delta variant caused a temporary slowdown in bookings. Is that something you started to see come back yet, or is it more just your expectation that that slowdown will end up being temporary?

We are starting to see it come back just a bit. We really surged in the early summer and this was before the Delta variant. And so what we were referring to in the prepared comments was the fact that, there was some slowdown and then some number of guests pushing out into 2022 and in some cases 2023. But we are seeing a return to health on the part of bookings. And part of that is that, we typically have a eight to 10-month lead time when people are booking that was more compressed obviously this last summer because of the return after the pandemic. But what you're seeing now is people getting organized around not only the latter part of the Antarctic season, which is a more compressed cycle but also out into next year and even next fall and winter. And so, we're encouraged by that and we're particularly encouraged by what we're seeing on the digital side with so much interest -- increased interest in -- from a web traffic standpoint and the interest we're seeing on some of our new social media activity. So, we know there's a lot of interest out there we are seeing some more booking. And so, we feel we're not past the Delta variant completely, but I'm optimistic just based on some of the news around booster shots and potentially children becoming vaccinated. I think all of those things suggest a more positive trend and kind of consumer confidence going forward.

One other thing that I would add to Dolf's comments Alex is that, the other thing that plays into this for us is when we announce geographies. So, for example, when we announced that we are going back to Antarctica, we started to see a nice surge in booking again, because there's a definitive geography that people are trying to book for. We saw the same thing happen early in the summer when we announced that we were going back to Alaska. There was a surge for Alaska at that moment. So while there was a slowdown kind of towards the tail end of the summer due to some of the Delta noise that was out there in the marketplace, in October once we announced we were going back to Antarctica we started to see that surge happen again in a positive direction.

Great. That's really helpful. And you just mentioned the return to Antarctica. Can you share a little bit about your outlook for the Antarctica season? Anything maybe in terms of how many voyages you expect to complete this year and how that's compared to prior seasons when you operated there?

Yeah. I wouldn't talk about it in terms of number of voyages, because voyages are shorter or longer depending on the year in terms of where you're going and ultimately the itinerary specific to that year. But what I would say is, up until 2019, we only had two ships in Antarctica, there was the Explorer and the Orion that were there historically This year we're going to have three ships in Antarctica. The Endurance, the Resolution, are the two new ships and the Explorer will return there as well. So we will have more opportunities for guests to travel to Antarctica this year than we have previously. So more inventory in one of our, what I would say is most desirable geographies, bodes well for the future. There's, still some challenges, because there are some protocols that people have to follow with regards to Antarctica that are a little bit more strict than they normally would be. But for the most part the guest demand to travel there has been fantastic. And we expect to have a really profitable season in Antarctica, over the next several months.

Great. That's really good to hear. And then lastly for me, can you give us an update on when do you expect countries like Norway and Russia to open up for you? And what is your strategy if you look at 2022 for modifying voyages and accommodating guests on voyages that are planned currently for some of these geographies that you can't currently sail in if you get to the closer departure data and that's still the case?

Well, let me take those in reverse order. We worked pretty carefully to remain agile and to always be keeping track across the globe of what would be viable alternatives. And so, if in fact we are shut out of a certain country. And so, we have backup plans for, most of our ships if in fact the first choice itineraries aren't able to play off. With regard to Norway and to Russia this is very much, a wait and see at the moment. In terms of specifically those countries, I would hesitate to guess when they're going to come back to full strength. We would say that we are not counting on them in the near-term and would expect that, presumably they would come back into pretty good shape for next year. But they are definitely on our watch and see list. And I wish I could be more specific, but we've just -- as we stay close to them and as we stay close to the officials in our country who monitor these things, we've learned to be patient and not predict too confidently. So I wish I could be more specific, but that's really how we're managing it at this point.

Yeah. That makes sense. Thank you. Thank you very much both of you.

Thank you.

Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Craig Felenstein, for any closing remarks.

Thank you very much for joining us this morning everybody. And if you have additional questions, please reach out and we'll be happy to schedule a call to catch-up. Thank you.

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