Good morning everyone and welcome to the Lindblad Expeditions Inc. Reports Fourth 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 also note, today’s event is being recorded. At this time I would like to turn the conference call over to Craig Felenstein. Sir please go ahead.

Thank you, Jamey. Good morning, everyone, and thank you for joining us for Lindblad's 2021 fourth quarter and yearend 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 up 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.

Thanks Craig. Good morning and my thanks to all of you for joining us today. In this call, I will recap various highlights from 2021 and also share my thoughts about the increasingly positive outlook we have for the business in the months and years ahead. This story of resilience and resurgence has at its heart a very dedicated team inside our family of companies. And I'm extremely grateful for their perseverance, hard work and passion. 2021 was the year that was defined in great part by the effects of the pandemic. The initial stages of COVID shutdown our operations back in March of 2020 and it was June of 2021 when we began to resume sailing. While we were not operational, we focused on taking the necessary steps to reduce costs, fortify our balance sheet and right size our cost structure, working to position ourselves for success upon the restart of operations. Once we resumed operations last summer, it was a time of resurgence. However, the business then became more challenging again first from the Delta variant and then when the Omicron variant swept across the world in the winter months. Our founder Sven Lindblad often reminds us of the Darwinian principle regarding the need to adapt in order to survive for species of all kinds. We as a company drew inspiration from this reminder. One aspect of our innovation and adaptation was our approach to health and safety. We developed and continually evolved a series of protocols designs to create the safest environment possible for our guests and crew, 100% vaccination requirements for everyone on-board and other measures including masks, regular testing and in some instances the need for quarantine cabins all contributed to our ability to operate effectively in multiple geographies. The needed emphasis on health also…

Thanks, Dolf. Before I get started, let me take a moment to thank everyone across our fleet, operations and offices who are working harder than ever to ensure our guests are having unforgettable experiences as they explore the world's most amazing geographies. It is their hard work and dedication which has enabled us to ramp our operations so quickly and successfully during the back half of 2021 and which has positioned us to emerge from the pandemic as a strong company with dramatically expanded earnings potential. With 9 of our 10 ships having now operated with guests and our land businesses expanding the destinations they explore, we have clearly accelerated our operating momentum. Due in large part to the short term impact from the Omicron variant, it will still take some time to fully return to the financial levels we were generating when we paused operations, but we have ample liquidity to further ramp up operations and whether any immediate uncertainties that may arise. More importantly, the investments we have made during the pandemic to expand our fleet capacity and diversify our product offerings has significantly increased our earnings potential from pre-pandemic levels and will enable us to further capitalize on the growing demand for authentic adventure travel. Turning to our current financial position. We ended the fourth quarter with $151 million in unrestricted cash and $22 million in restricted cash primarily related to deposits on voyages that originate in the United States and credit card reserves. $173 million of total cash declined $12 million versus at the end of the third quarter but cash from operations was positive $11 million driven by significant guests payments for upcoming voyages and deposits for future travel partially offset by increased operating cash usage as we launched itineraries, prepared additional ships for sailing…

Ladies and gentlemen we will now begin the question and answer session. Our first question this morning comes from Steven Wieczynski from Stifel. Please go with your questions.

Hey, guys, good morning. So I fully appreciate you don't want to give any kind of guidance right now given the continued uncertainty around the pandemic and its impact on your ramp timeline. But Craig or Dolf can you maybe help us think about how you see the year playing out from a higher level perspective, I guess based on what you're seeing right now? And I guess I'm trying to understand is should we think about the first half of the year running with losses and then the second half of the year turning positive? And I know, Craig, you talked about in your prepared remarks, you talked about the first quarter showing a loss and then kind of going from there, that's probably a little bit sooner than what we would have expected?

Sure. So let me give you a little bit of history, and then we can talk about the future. So the first thing I would say is, last time we spoke at the end of October at that point, we were anticipating a positive EBITDA contribution in the first quarter of 2022. Given the cancellations that we've seen with regards to bookings due to the Omicron variant, and most of folks pushing to either later in 2022 and into 2023 obviously, there will be losses in the first quarter. The second quarter, I would say at this point remains a bit of uncertainty. It is possible that we have positive earnings contribution, but there's no certainty given cancellation rates, given the lateness of the booking patterns. So I'm not going to sit here and say that's going to happen. It'll really depend on ultimately what happens with the cancellations over the next what I would say is two to three months. We do anticipate the back half of the year being very solidly profitable assuming no changes in the current environment. But given the uncertainty that we see with regards to COVID it's hard to say that for sure but that is currently our anticipation for the year.

Okay, got you. Second question would be around new capacity and maybe how you're thinking about new capacity given the fact you don't have any ships on order at this point, and whether that means you go out and build new capacity or there has been some disruption out there in the luxury side of the cruise business over the past month or so. And does that present an opportunity to go out and buy existing hardware?

Well, Steve this is Dolf. I think it's fair to say that we are constantly on the lookout for ways to increase capacity that are strategically aligned with what we think is the special sauce for Lindblad around size of ship and the types of expeditions that we can run and so we are always in active conversations with any number of folks who have ships out there and also on the strength of the end resolution and also the endurance. We do have an interest in thinking hard about going forward with additional ships but at this point we're not placing that order.

Okay, got you. Thanks, guys. Appreciate it.

Thanks, Steve.

Our next question comes from Chris Woronka from Deutsche Bank. Please go ahead with your question.

Hey, good morning, guys. I think you mentioned in the prepared comments, some work you're doing around CRM and some dynamic pricing. Can you talk -- give us maybe a little bit more color on what you're doing there? I know in the past, pricing integrity has been really important to you and price consistency across a given ship or itinerary. So can you just give some more color on, if that's changing, or what you hope to accomplish?

What we see is the opportunity to be more nimble and in the marketplace, in fact is evolving. Prior to today, the company hasn't had the ability from a digital standpoint to really have a really clear look at what's going on with the various competitors in the various geographies. That's the capability that we're building now. And similar to what you see in airlines, we do think there's always, there's going to be some amount of ability to adjust pricing at a point in the future particularly when voyages closer in might have some additional capacity. That's really all in the future. We're building that foundational capacity not only from a data and analytical standpoint, but also in terms of the marketing engine and the kinds of promotions that we believe we could run that would help stimulate demand. And so it's really a whole body of work that a combination of our marketing and digital teams are doing and we're just excited at this point to build the foundation which you'll see a lot of coming to before in the Q3 timeframe and to build from there.

Hey Chris, one thing I'll add on top of that you kind of touched upon a little bit with your question is this notion of the upside of the pricing side of the house. We do believe prior to the pandemic, that we were believing some pricing opportunity on the table, because traditionally, when we set our pricing which in many cases was anywhere from a year and a half to two years in advance of sailing, we left those pricing stagnant or static because we didn't have the opportunity to raise it because our system wouldn't allow it to do it. With the new reservation system will allow us to have more dynamic pricing, which will allow us as we see a lot of these voyages fill up to raise pricing over time, which takes advantage of the demand curve that each of the individual voyages has. So we think there's some certain opportunity to increase yield through these new digital transformation opportunities moving forward.

Okay, thanks. That's helpful. And then as we think about kind of your itinerary plan for ’22, I know you've had to make changes over the past couple of years. But what you see now, are you going to get back to more of a normalized schedule, given all the trying to get out whether the all your various destinations, whether you have enough visibility on whether they're lifting COVID restrictions and what their plans might be for the future and if you guys feel comfortable consistently kind of operating in those same markets?

Well, I'd say two things. First of all, it is clearly a goal to get back to all of the itineraries and we are seeing quite a bit of movement across the world in terms of governments starting to reduce restrictions. The CDC itself is starting to look at the severity of COVID with individuals as opposed to the number of cases all of which I think moves us in a direction where some there will be more lenience and more ability to go different places. But I think one of the strengths of the company this last year has been the ability to be nimble and agile. And what we're going to do is keep that muscle in place because if there's a need to pivot, we will do so. So we have backup and contingency plans for the ships if for some reason, they're not able to go on the originally scheduled route.

One of the things I'll add on top of that, is when you think about the flexibility, it's not just about what geographies are open, but it's also about where our guests ultimately want to go. A prime example of that is we were originally only going to have three of our ships operating in Alaska in 2022. But given the demand, we have ultimately moved the Sea Lion from the East Coast of the United States to Alaska for the summer. And we are looking to do potentially the same thing with the Orion depending on availability. So for us that nimbleness that Dolf mentioned earlier again has two components. It's not just reacting to the geographies themselves and what to open but also where our guests want to go.

Okay, very helpful. Thanks, guys.

Our next question comes from Tyler Batory from Janney. Please go ahead with your questions.

Good morning. This is Jonathan on for Tyler. Thanks for taking our questions. First one for me just wanted to follow up on that discussion. Can you just provide some color or remind us on the restrictions that are still in place in some of the markets where you would normally operate?

Sure. So there's a couple of places that are restrictions and again some of them are in flux. So when we talk about restrictions they may be open in some variety but closed and others depending on where you want to operate. So the two biggest I would say hurdles for us right now one is certainly Russia, which had its own issues prior to the news that we're seeing now and certainly, we'll keep an eye on what is going on today. But that is a geography that is not yet fully open to us. And then Greenland is another one that is looking like it's going to be open, but it's not yet where we would expect it to be for us to be able to operate there. So those I think, are the two largest geographies that ultimately are giving us pause. And then there are some pockets within Europe that are still not necessarily where they need to be for us to go there fully. But we're working through those and expect by the time this summer months roll around to be okay in those geographies.

And Jonathan, I think one of the things that we find is really kind of central to what's going on with the company is just guest perception and concern about quarantine if they're in a foreign country, and for some reason tests positive. And so while restrictions may loosen, in terms of accessibility to countries, what we also keep track of is the quarantine requirements, which we of course communicate with our guests. And we're also seeing signs of some easing there. But everyone across the world is being very careful to use restrictions too quickly.

Okay. Got it. That's very helpful. And then wondering if you could provide some color on how you're thinking about continuing to limit the ship usage versus removing some of those restrictions in the near future. Understanding it's a balancing act on the COVID variant spikes and the pricing demand curve that you just talked about.

Yes, with regards to our existing fleet and how we ultimately utilize it given the uncertainty that's still out there today, we do anticipate operating at reduced capacity levels for the first half of the year. Now let may not last the whole first half of the year. But when we think about the year in terms of when we model it out, we're assuming that for the first half of the year, we're going to be limiting the capacity for really, the majority of the reason is to have quarantine cabins if necessary. Our ships provide ample opportunity to socially distance, the protocols that are in place are doing an amazing job of keeping COVID at bay. But you do want to have the opportunity to quarantine if you need to do so. But we'll continue to evaluate that on a voyage by voyage basis, frankly, as we move forward. And we certainly would anticipate being back to utilizing 100% of our capacity by July 1 at the latest.

Very helpful. Thanks, guys. That's all from me.

Thanks, Jonathan.

Thank you.

Our next question comes from Alex Fuhrman from Craig-Hallum. Please go ahead with your questions.

All right, thanks very much guys for taking my question. It looks like 2023 is tracking to be a record year here for Lindblad, the bookings pattern hold. Can you give us a sense of how much of that demand is coming from existing customers that have rescheduled their canceled trips versus repeat customers booking new trips and then lastly, new customers making their first time bookings? Just curious how that compares to what you were seeing 6 and 12 months ago earlier in the pandemic?

Yes. So let me talk a little bit about the current booking target and what we're seeing and who's booking today versus who was booking a year ago. So traditionally when you think about any given year with regards to our business, historically about 40% of our guests, and maybe a little bit less, in any given year we were repeat guests. So we have a really nice base of business that comes from returning loyal guests. We also have a pretty wide base of business that was coming from new travelers. What you saw early on in the pandemic or even really up until the end of 2020 with the booking terms if I look back a year ago, we were seeing much more returning guests as the folks that were booking itineraries. And that's not surprising because those guys have traveled with us in the past. They understand what it is we do and they understand how the experience is going to be different from let's say a traditional cruise line and as a result they were comfortable traveling with us. And that continued to be the way that way for the majority of 2021, at least through the first half. What we're seeing today is the booking curve is actually transitioned back to what it was historically, which is about 40% of the bookings today are coming from returning guests where the remainder is coming from new guests. So it's really a nice spread of business. When you look out to 2023, the vast majority of the bookings that you're seeing in 2023 are new bookings. Only about 11% of our bookings right now for 2023 are folks utilizing travel credits from previous cancellations. So we are seeing a nice set of folks booking for the future. And we would expect that to continue down the path as the as the world continues to open up.

Okay, great. That's really helpful, Craig. And then obviously, it sounds like your, your acquisitions that you've made, I'm sure those are subjected to some of the same kind of short term cancellations and volatility as your sea bass voyages. But when those acquisitions really get back up and running at full speed whether that's 2023 or ‘24, what would we expect to see as revenue for some of those acquisitions at a normal run rate basis.

Yes. We haven't provided a long term guidance on the acquisitions. But what I would say is when you think about what natural habitat was doing back in 2019, which is they generated a little over $8 million of EBITDA when you look at the assets we just acquired, the goal is to grow them from where they are today to those levels. Today they're all generating very, I'd say low single digit EBITDA with regards to their traditional before the pandemic took hold. But the goal is to grow them over time. So I'm not going to put a timeframe now for when we can get to that level. But we certainly see a unique amount of opportunity as they take advantage of the marketing heft of Lindblad as they, I would say streamline their product initiatives and as they work with other land based companies across our portfolio from a shared marketing, shared services experience. So we think there's a unique amount of opportunity moving forward.

Great, that's really helpful. Thank you, Craig.

Thank you.

Our next question comes from Ryan Sundby from William Blair. Please go ahead with your questions.

Yes. Hey guys, good morning. Thanks for taking my questions. Just wanted to follow up on Steve's initial question I’m just -- the overall trends in the business here. It sounds like hoping to some increase week-over-week since December, is there any way to frame the magnitude of that improvement? And then can you maybe just compare and contrast what you're seeing today versus maybe what you saw during the Delta wave?

Sure. From a booking trend perspective, we're not going to comment on the weekly trend we got a week, but you can assume that has accelerated week to week as we get further and further away from the what I would say the onset of the Omicron variant. What was different between the Omicron variant and the Delta variant is early on in the pandemic even during the Delta variant phase on our ships, we were not seeing a lot of cases. Only a handful of cases really, what I would say is from we launched in June, all the way through kind of the end of November when you started to hear more about Omicron. Once Omicron did hit that changed a little bit. The Omicron variant was spreading what I would say is, was faster, albeit the cases that we were seeing were much more mild than we had seen with regard to the Delta variant. So that we were seeing maybe one or two cases per voyage as opposed to seeing one or two across the whole fleet. That is now subsided and Dolf could talk a little bit about recent trends with regards to the Omicron barrier, but certainly the impact that we saw on cancellations and the impact that we saw on bookings has certainly subsided over the last one I would say six weeks.

Now, Craig, just to build on that. And it's really in the month of February, we are dropping down to almost no cases on any ships. And so I think that's a function of keeping our protocols going. I think it's a function of the fact that variants in themselves are perhaps slowing down. And so we're really in a very different day today than we even were a month ago. And I think that's going to translate into a lot of enthusiasm on the part of guests as they read about this, understand it and then decide to go ahead and make bookings that they were holding off on.

And just a follow up on that last comment there. Have you seen the window in terms of booking times? Can that shrink or shorten here in the near term if things are going to return to normal?

Yes, it's really interesting, Ryan because our average booking window traditionally has been somewhere around nine months. And we were looking at this actually yesterday to see that it shifted at all. And what you've seen is that the average actually is still very similar. It's still around nine months but what you're seeing is you're seeing much more bookings for both short term as well as long term. So we are seeing some activity for folks that want to travel here in the next kind of three to four months. But we're also seeing folks who are booking for the tail end of 2023 already. They want to lock down their voyage for the future and make sure that they have a cabin because things are selling pretty quickly. So the averages really haven't changed. Albeit, I would say the distribution has kind of spread itself out a little bit.

That's really helpful. It's great to hear. Last one, just going to keep dropping for a lot of people. Can you just talk about kind of where you're at in terms of staffing and how you feel about I guess, as you ramp up itineraries, your ability to kind of keep staff in place?

Yes. I would say the most difficult time for staffing was late last year, because of the degree of uncertainty about whether voyages would in fact play off as planned. We've really seen a nice return to healthiness on that front. Our recruiting efforts are quite strong. We've actually added to our team, a new chief people officer, recently who brings the next level of sophistication in terms of catching a wide net there. So happily, we are seeing a much brighter situation with our staff. And Craig mentioned this before, but we're extremely grateful to all of those people on our ships, particularly who hung tough with us through that rather difficult time. And we're super excited about how well Alaska is filling up and how well those ships are staffed and then the international ships just continue to maintain what we would describe as quite stable staffs.

Yes, one thing I'll add on top of that, Ryan is when you think about our ships and the folks who work in those ships, a lot of the individuals who have been working on our ships, especially internationally have been folks that have been working with us for a very, very long time. So not only have they been loyal for many decades, they also were loyal throughout the pandemic, because they really wanted to come back and work with not only us as a company, but really with our guests who they loved to interact with on a regular basis. So we were seeing not a whole lot of what I would say is labor issues with regards to the international ships nor the higher levels of the the U.S. ships. The one place that I think was a little more challenging and continues to be a little challenging is some of the steward jobs and jobs like that across the U.S. fleet, which are not career folk. But we are seeing the ship staff as they need to be staffed and we'll continue to monitor it as we move forward.

That's good to hear. Thanks, guys.

Thank you.

And ladies and gentlemen, with that we'll be ending today's question and answer session. I'd like to turn the floor back over to management for any closing remarks.

Thank you, Jamie. I appreciate everybody's time this morning. If you have additional questions, please feel free to reach out and we look forward to continuing the dialogue. Thank you.

Thank you for being with us today and look forward to good times ahead.

Thank you.

Thank you.

And ladies and gentlemen with that we will conclude today's conference call. We do thank you for attending. You may now disconnect your lines.