Hello, everyone, and welcome to the Lindblad Expeditions Holding's 2022 Fourth Quarter and Full Year Financial Results. My name is Bruno, and I will be operating your call today. [Operator Instructions] I will now hand over to your host, Craig Felenstein, Chief Financial Officer. Please go ahead.

Thank you, Bruno. Good morning, everyone, and thank you for joining us for Lindblad's 2022 fourth quarter and year-end 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, liquidity and 2023 expectations, 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'd 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 thank you all for joining us today. In this call, I will recap various highlights from 2022 and also share thoughts on the very positive outlook we have for the business in the months and years ahead. For those of you who have been following our journey, you know that our growth strategy includes both organic growth in our existing fleet and land companies, and also strategic acquisitions that are value accretive out of the gate and provide an array of travel options for our adventurous guests. Adding to our platform of premium travel companies focused on creating life-changing guest experiences has been a powerful means of building shareholder value. As a team, we continue to be energized by this dual-pronged strategy and are pushing forward in each of these areas. Before -- but before providing you with more detail, I do want to thank all the people at Lindblad Expeditions, Natural Habitat, DuVine Cycling + Adventure, Off the Beaten Path and Classic Journeys for their tremendous hard work last year. Without their efforts, our company could not have emerged from the pandemic so successfully and would not be so well poised for the future. 2022 is a year that will be remembered as being the year of resurgence. While our full fleet was sailing by the end of 2021 and all of our land companies, including the three acquired during 2021, had restarted operations, it was in 2022 that we started getting more traction. Last year, guests became more comfortable with foreign travel, countries significantly loosened COVID quarantine requirements and our vendors and partners across the globe eventually returns to a state closer to that of pre-pandemic operations. Craig will provide more detail, but we made significant progress this past year financially, including a…

Thanks, Dolf. As Dolf highlighted, throughout 2022, we dramatically ramped our operations, delivering record revenues as we began to significantly capitalize on the strategic investments we made over the last several years to expand our fleet capacity and diversify our product offerings. The earnings potential of the company has increased considerably since pre-pandemic levels, and with strong operating momentum across our robust platform and a growing demand for authentic and immersive travel experiences, we are poised to deliver substantial positive EBITDA in 2023, while further positioning ourselves to take full advantage of our high-quality travel portfolio and deliver sustained growth in the years ahead. Before we look ahead, let me take a few minutes to discuss our performance from this past year, as we focused on further ramping operations, cultivating our land acquisitions from 2021 and emerging from the pandemic as a strong and vibrant company. Total company revenue for the full year 2022 of $421 million increased $274 million versus 2021 and was $78 million or 23% higher than 2019, due in large part to our expanded fleet and additional land-focused offerings. At the Lindblad segment, revenue of $278 million increased $195 million year-on-year and $6 million or 2% versus 2019, primarily due to the ramp in operations, which included additional available guest nights from new capacity and higher pricing across the fleet. Occupancy in the year was 75%. And while guest counts for the full year were not quite yet back to 2019 levels, you can see the revenue opportunity we have across the expanded fleet as we grow occupancy levels and increase yields. As we increased guest counts across our fleet, we also significantly grew our land platform by further integrating the three businesses we acquired in 2021 and driving more guests in Natural Habitat. Revenue at…

[Operator Instructions] Our first question is from Steve Wieczynski from Stifel. Steve, your line is now open. Please go ahead.

Yes. Hey guys, good morning. So, Craig, just wanted to dig in a little more around your some of the commentary you just made there about your initial guidance for the year. And can you maybe help us think about the range that you put out there, meaning, what would it take you to get both to the low end of that range and then also the high end of the range? Just trying to get a feel for what you guys have embedded in there? And then, I guess the other question here is, look, if we look at the revenue guidance, it seems the flow-through down to the EBITDA line is probably a little bit less than what we would have expected. So, any commentary there around your cost outlook for this year would be helpful as well.

Sure. Thanks, Steve, for the question. So, when we provided guidance for 2023, the focal point -- and that is really the driving factor behind a lot of variability in the guidance is going to come related to occupancy, as you might imagine. The cost base of the business, we feel is very understandable and fixed, and then we know what that will look like here over the next kind of 12 months. But it really comes down to the occupancy levels both in future bookings continue to come in, as anticipated, which right now they are trending very, very positive. And on the flip side of that, the cancellations start to -- what I would say, is softened a little bit as we head through the course of the year. We anticipate that happening. But those are really the two variables, which will ultimately drive us to the high end of the range or the low end of the range. It would be more on the revenue side than it would be on the cost side. With regards to the flow-through from revenue to EBITDA, there's really two things going on. The first thing is, we are expecting really significant growth at our land-based businesses. And the land-based businesses by definition do have a lower margin associated with them. So, we do expect to see some nice growth across all of the land-based businesses that we have in our umbrella today, and that will obviously deliver higher EBITDA, but will do so at a lower margin. The second side of this really relates to the occupancy levels across the fleet. The new ships that we built, the Endurance and the Resolution, which are getting just absolutely rave reviews from our guests, are performing really, really well. The reality of those ships is, however, they are larger ships. And as you ramp occupancy on those ships, the margin flow-through is magnificent. So, the gross profit margin on those ships should be somewhere well north of 50%, trending towards 60% as they get to the occupancy levels that we would traditionally expect for those ships. We're still building to that. And as a result, the marginal ships will be lower until the occupancies get all the way up to those levels for full year. So, those are really the two driving factors that you're seeing today.

Okay. That's really good color. Thanks for that, Craig. And then, second question is, look, you, obviously, are starting -- you should be starting to generate some cash flow here at this point. And I know you've talked about kind of your buyback program, you now have kind of been released from that [main first] (ph) restriction in terms of buying back your stock. So just wanted to kind of understand how you think about using your cash from here moving forward throughout '23?

Sure. So, when we look at the cash that we have on hand and the opportunities in front of us, we really looked through the same lens that we looked at, I would say, since I've been here and really even throughout the pandemic, which is the primary focus here is to drive organic growth, first and foremost. And we really have a significant amount of opportunity to continue to do that, given where our occupancies are today, given where our yields are today. So that would really be primary driver number one. Primary driver number two is to look for M&A opportunities, whether it'd be on the land side of the house, whether it'd be from new ship side of the house, or some other side of the house, which will improve the long-term growth profile of the company. We've done a pretty good job of that being, what I would say is judicious with our capital spend in that area over the last six years. We'll continue to do that moving forward. And then, the third area, in the absence of those two things is to return capital back to shareholders. We did that certainly back in -- prior to the pandemic. And as things become more clear here with regards to occupancies, with regards to opportunities moving forward over the course of the year, we'll certainly look through that lens and decide whether it's the right time to return capital back to shareholders. We, obviously, believe that the shares are attractive at the price point that they are at today, but we have a variety of corporate needs moving forward that we want to focus on as well. So that's the lens that we'll use.

Okay. Got you. Great color. Thanks guys. Appreciate it.

Thank you.

Thanks, Steve.

Our next question is from Alex Fuhrman from Craig-Hallum Capital Group. Alex, your line is now open. Please go ahead.

Hey, guys. Thanks very much for taking my question, and congratulations on what sounds like a strong start to 2023. Wanted to ask about some of the lingering challenges that you are still seeing and try to get a sense of how much they might be weighing on your EBITDA this year. I think you mentioned that some things like quarantines in some places and headlines -- headwinds related to air travel and the loss of the Northeast Passage. Are those major headwinds as you think about your profitability? And just curious, which is more impactful, those sort of macro headwinds or your own cancellation policy, which has now reverted back to the pre-COVID policy, is that going to be -- do you think the bigger driver of profitability as you start to get through all of the bookings that were made under the old policy?

Thanks for the question there, Alex. I think the good news is that I think all of the lingering topics are improving pretty steadily. So, pretty much consistently now we're getting good news out of foreign countries that are lowering their requirements and it's only just a few such as New Zealand, Panama, Argentina that have even more lenient policies than they had in the past. And I think health concerns are going down dramatically. We're seeing very few incidences of COVID on the ships that obviously gets back to guests that are communicating with each other and their community, and so I think people are feeling safe. The airline issues were more significant, some weeks ago than they are today as the world is kind of getting back into more of a routine. So, I would say those are improving. But I would say that those are more significant than the cancelation policy. As it relates to the cancellation policy, we've returned to pre-pandemic policy, which does have a penalty associated with cancellation. And in 2024, we're actually going to more of what is an industry standard, which is even a higher level of penalty for cancellation, closer to 15% of the cost of the trip. And so, I think those will improve. But on a relative basis, you would -- I would say the external factors are more significant than the internal ones, and that would be true throughout our industry, but I think we're negotiating them fairly well. Let me turn it over to Craig for a little more specific as it relates to how that's affecting EBITDA.

Yes. Thanks, Dolf. So, when you think about what's impacting us from the items that were mentioned, they all really end up in the same place, which is are we getting to the same levels of occupancy that we want to get to as a company. We're not there yet. We're certainly going to be much better than we were in 2022, but we're not back to the 90% level that we were back in 2019, and all of these things are an overhang on that side of the house. It's hard to say how much each one of them is as a percentage. But certainly, when people decide at the last minute because they have health concerns to cancel and it may not be related to COVID, it may be related to any sort of illness that impacts us because we can fill that ship in a short period of time where they have the ability to cancel. As Dolf, mentioned, as we get through 2023 and certainly more to the back half of 2023, we anticipate that not to be as much of an issue because the cancellation policies back to where it was previously. The exception to the -- aside from the revenue what I would say is pressures that we're feeling because of some of the items that Dolf mentioned is, it's important to remember that fuel is still a headwind for us. Traditionally fuel has only been about 3% or 4% of our overall costs. It's certainly ranking higher than that right now. Prices have come down on the fuel side from where they were at the end of 2022 or I would say more towards the middle to end of 2022, but they're nowhere near yet where they were back in the 2019 timeframe. So, there is a headwind on that front as well, which is impacting EBITDA.

Okay. That's really helpful. And then, if I could ask, Dolf, so it looks like you're going to be chartering some voyages on the Sea Cloud II in 2024. Could you tell us a little bit more about that? Is that in response to more demand in the Mediterranean? Or are there may be opportunities to free up your other ship to concentrate on other regions?

Alex, I am so glad that you asked about that. So, as a reminder to those who might not be so familiar, we had a long relationship with the Sea Cloud Company, and the original Sea Cloud has been just a fantastic charter for us for many years. So, it's on the strength of that experience that we wanted to expand the relationship to yet another ship, the Sea Cloud II, which will have that same general geographic orientation actually, Alex. The greater Mediterranean and then down into the Caribbean is where these ships are designed to go and these are sailing ships. They're a different experience onboard, more of a historic kind of formats and sailing experience for real sailing enthusiasts. So, we consider this to be not only just a beautiful way for guests to be in these geographies that we spend a little bit less time and frankly with our existing fleet, but also add guests who come in through the sort of the vantage point of sailing, but then can learn more about the broader expedition products that we offer throughout the world. And so, we consider this strategically helpful, but certainly also financially and audience building.

Okay. That's really helpful. Thanks very much.

You need to go. Alex, you need to go. Take the trip.

Our next question is from Ryan Sundby from William Blair. Ryan, your line is now open. Please go ahead.

Hey guys, good morning. Congrats on another nice quarter here. Dolf or Craig, I guess, outside of the headwinds you've kind of covered here so far, can you talk a little bit about what you're seeing from the consumer and from the macro backdrop here? Any changes to the guest mix or signs of shift down in terms of lower priced rooms or itineraries or even shorter duration trips?

Sure. Thanks, Ryan. So, a couple of things on the guest demographic side of the house. First and foremost, if anything, we're actually seeing a shift more to the up rather than the down. What you're seeing across the fleet is aside from the price points that we're maintaining or rising on our -- what I would say is more traditional fleet. The newer price points on some of our newer inventory is at a higher level and we are having no problems getting those price points at the occupancy levels that we're getting across the entire fleet. So, the price point shift has actually been very, very positive. With regards to any kind of other shifts, with regards to our guests, the only thing, I would say, has changed a little bit here in the short term, this is really just during the wave season, is we are seeing newer guests as a percentage versus repeat guests, which is always higher during wave season. We tend to get newer guests during wave season than we get repeat guest. But the skew has been a little bit more towards the newer side, not dramatically, but a little bit. So, I think that's one thing I would point out. The other thing that I would point out is we are seeing -- and Dolf talked a little bit about our marketing strategy and our marketing success in his comments, we are seeing more direct business right now as a percentage of our overall business than we are seeing from other sources. So those would be two of the shifts that we're seeing, but all really positive with regards to the guests and their demand.

Ryan, I'll just briefly add to that. I think a lot of this is a function of the work that we're doing with search engine optimization. And so, we're just seeing a higher incidence of people, particularly for our core geographies such as Antarctica, Galapagos and Alaska, that are coming in from the web as opposed to in response to brochures or letters or emails. And so, that's been nice to see and we hope we can continue that throughout the year.

That's great to hear. And then, Dolf, I thought you sounded excited about pursuing a dual-pronged strategy here, both organic and -- and organically. I guess given the success you've seen on the land-based side, are you looking more actively there, or are you seeing upstreams out there like what you were able to do with Islander II?

I think -- I don't think that we have a strong preference for one versus another. We're just focusing on the very best guest experiences that we know will be appealing to our guests, and we're trying to make sure that we pay for something that we know we can grow, but at a price that we think is accretive. And so, in my mind, where our approach and the people inside the company who are doing this are looking not only at land company opportunities, but also ships, and even companies that have ships and maybe based elsewhere in the world that have sales and marketing organizations and operating infrastructure that would allow us to create a new base of operation from which to build and serve guests all over the world. So, I wouldn't say that we're leaning one way or another and I feel good about the quality of our diligence and the way we were able to work, particularly with founders and family companies that are looking for a good next step by selling to a company such as ours, who knows that we care about their guests and trying to do good work in the world and for the world. And so shared ethos is probably as important as anything else when we are looking at opportunities.

Yes. Makes a lot of sense. All right. Thanks, guys.

Thank you.

[Operator Instructions] We currently have no further questions. I will now hand back to Craig Felenstein, Chief Financial Officer, for final remarks. Please go ahead.

Thank you, Bruno, and thank you everybody for joining us this morning. We look forward to speaking with you about the company moving forward here. And if you have additional questions, please feel free to reach out either today or over the next several weeks, we're happy to catch up. Thank you.

Thank you.

Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines.