Good morning or good afternoon, and welcome to the Lindblad Expeditions First Quarter Financial Results Call. My name is Adam, and I'll be your operator for today. [Operator Instructions] I will now hand the call over to Chief Financial Officer, Craig Felenstein, to begin. So, Craig, please go ahead, when you are ready.

Thank you, Adam. Good morning, everyone, and thank you for joining us for Lindblad's 2023 first 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, balance sheet and current 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 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, everyone, and thanks for joining us today. Not long ago, I wrote our annual report letter to shareholders and described 2022 as a year of resurgence for our company. It was a year with many highlights, returning to full operations on all our ships, the first full-year and brilliant performance at both poles of our new Bluewater ships, the National Geographic Endurance and the National Geographic Resolution. In the Galapagos, the extremely positive reception of our guests to the Islander II and the securing of 20 more years of coupos to operate there. And the record-setting financial performance of our land companies were all reasons for celebration. Most importantly, we experienced a change in guest focus with COVID becoming less and less of a topic. The desire to once again explore the world's most amazing geographies returned and bookings started to meaningfully increase. This backdrop is one which created momentum into our first quarter performance, and I'm pleased to say that Q1 2023 results represent all-time highs for Lindblad Expeditions in both revenue and EBITDA. Craig will give some additional color on our financial results in a few minutes, but our first quarter performance demonstrates the earnings power inherent in the increased capacity of our fleet as well as the fast-growing land companies. I for one, and extremely grateful to the hardworking and dedicated team of people who fought steadfastly over the last three years to ensure Lindblad Expeditions emerged from the pandemic as a strong and vibrant company and who are now working diligently to push it to new heights. A centerpiece of the Q1 2023 performance was the increased guest count as we broadened the usage of our expanded fleet and achieved 81% occupancy fleet-wide. All of our ships were fully deployed during the…

Thanks, Dolf. The strong financial results Lindblad generated during the first quarter perfectly demonstrates the opportunity we have across our platform as we take advantage of the strong and growing demand for high-quality experiential travel. The targeted strategic investments we made during the pandemic to dramatically increase the capacity of our fleet and to broaden our portfolio of product offerings has significantly expanded the earnings potential of the company, and we have just started to significantly tap into that earnings power. At the same time, with our recent debt refinancing, we have further strengthened our balance sheet, providing additional financial flexibility as we continue to ramp the business and explore additional growth opportunities that can further amplify the growth trajectory of the company. I'll discuss our balance sheet in a moment, but before I do, let's take a quick look at our financial performance from this past quarter. First quarter total company revenue of $143 million increased $76 million or 111% versus the first quarter a year-ago as we continued to ramp operations and was $54 million or 60% higher than 2019 due in large part to our expanded fleet and additional land-focused offerings. At the Lindblad segment, revenue of $115 million increased $65 million or 130% versus the first quarter a year-ago and $39 million or 52% versus 2019. The year-on-year growth was driven by a 71% expansion in available guest nights from broader utilization of the fleet and by increased occupancy of 81% versus 66% in the first quarter a year-ago. The higher occupancy, combined with increased pricing across the fleet, drove net yields to $1,205 per night, an increase of 63% from the first quarter of 2022. While occupancy is not yet back to traditional levels, you can see the revenue opportunity we have across the expanded…

[Operator Instructions] And our first question today comes from Steve Wieczynski from Stifel. Steve, your line is open. Please go ahead.

Yes. Hey, guys. Good morning. So Craig, let's – can we do some simple math here. You just posted a $27 million EBITDA first quarter. And based on your unchanged guidance, you're saying your business is going to do, let's say – let's call it, $48 million at the midpoint for the last three quarters of the year. You kind of talked about this towards the end of your prepared remarks, and I fully understand the seasonality of your business. But, I guess, I really have no idea how this business is only going to do $48 million of EBITDA over the last three quarters of the years – over the years. So are you being super conservative here? Are you seeing something we aren't seeing? Just trying to square away why that full-year guidance wasn't touched yet at this point? Thanks.

Sure. Thanks, Steve. So when you look at the guidance that we gave for the year, obviously, there was a fair amount of items that we knew heading into the year, including the fact that we expected Q1 to be very strong and it was. So we knew we're going to start off the year on the right foot, which is certainly what happened. When you look at kind of the rest of the year, there are certain headwinds which are just relevant in the business. Certainly, when you look at Q2, you're going to have a significant amount of dry dock and transit time as I just mentioned, there is some expenses associated with launching our Seaware product this week, which will roll through the quarter. There are some cancellation impacts associated with Peru. Thankfully, that's in the rearview window, but it did have an impact on us in the early part of the quarter. And then as Dolf mentioned in his commentary, you certainly do have some of these more esoteric or shoulder season inventory voyages, which are still ramping up. The geographies that have bounced back quicker are the tried and true geographies that we have certainly been operating in for years. Some of the more, I would say, nuance that generates are still ramping. And those are more prevalent in the second quarter and the fourth quarter. So that's kind of the primary driver between a lot of this. The other thing that's kind of happening on the cost side is, while fuel costs have come down from where they were in the fourth quarter, they still haven't fully abated, and we're still seeing the impact of higher costs. But the last thing that I'll say with regards to guidance is where we end up for the full-year, it still has a significant amount of variability to it associated with the bookings continue on the same trajectory that they're on today and what happens with cancellations. Dolf talked about cancellations coming down dramatically, and they have, but they're still higher than they were in 2019 and probably close to 2x higher, which is still a headwind that we're facing. So with all those things combined, we felt leaving guidance where it has made the most sense at this time.

Okay. Thanks, Craig for that. And then second question, in terms of cancellation rates, I guess, can you then help us think about maybe how you guys are thinking about load factors for the rest of the year? There's obviously going to be some seasonality with shoulder seasons and stuff like that. So just any help there around how you're thinking about occupancy for the last three quarters? And then also, if we can get an update on just kind of how – what you're seeing from higher airfares and any pressure that you are seeing? Or does that come back in a little bit from a booking perspective? Thanks.

Sure. Let me handle the first part, and I'll turn it over to Dolf for the second part. When you look at the year that we're facing it moving forward, we do expect to continue to ramp occupancy each quarter versus where we were back in 2022. However, we will not yet obviously get back to the levels we were at in 2019 and we're ramping towards that as we head out of this year into 2024. When you think about the quarterly cadence of our occupancies, certainly, Q1 and Q3 will be the strongest occupancy quarters for the year and you would expect Q2 and Q4 to be the lowest occupancies of the year with Q2 probably facing the most headwinds out of all of the quarters for the upcoming years. So that's kind of how the cadence should play itself out in 2023.

Yes. I'll just comment briefly on the airfare comment. It's certainly the case that airfares are higher. They're dramatically higher for places like Australia and New Zealand. We're also seeing airfare to Europe being something that our guests are thinking about. And I do think it has had some effect on bookings. We made quite an effort to offset that with promotions of our own to like reduce that as a negative factor. But I do think that for the next few months, at least, I do think that will be a factor. And we expect that it will improve by the end of the year.

Okay, great. Thanks, guys. Appreciate it.

Thanks, Steve.

The next question comes from Tyler Batory from Oppenheimer. Tyler, your line is open. Please go ahead.

Good morning. This is Jonathan on for Tyler. Thanks for taking our questions. And congrats on the quarter. First one for me, can you talk a little bit about what you're seeing from the consumer given the macro backdrop here and what's happened over the last few months? Any changes to the guest mix or signs of the ship down in terms of lower priced rooms or itinerary changes or shorter durations?

Sure. Thanks, Jonathan. So a couple of things that are happening with regards to the guest mix. I will say, for the most part, they remain pretty consistent with where they have been traditionally. We are seeing some additional bookings in year for 2023, that's arguably in past years would probably be pushed out to 2024. That booking window is shifting a little bit to more in the short-term and then actually more in the long-term so that bell curve has kind of changed a little bit. But that is – could be potentially short lived, but that's what we're seeing today. We are also continuing to see more bookings from U.S. guests than international guests. The mix is becoming a little more U.S. focused, not too dramatically, but a little shifting on that front. And then we've seen a significant amount of success with first-time guests. So the mix of first-time to repeat guests has shifted a little bit. That was always to be expected, partially because of the additional inventory that we have across the fleet. So as you add more heart where you're going to ultimately need to get more new guests into the mix. But we are seeing a whole lot of new success with the first-time guests, which is nice. We're also seeing growth in the repeat guests, which is nice, but the new guests are growing a little bit faster right now.

Very helpful. Thank for the color, Craig. And then switching gears somewhat in a similar vein on the inorganic growth front, I'm curious if you're seeing more opportunities coming to market, whether that's existing hardware or potential bolt-on acquisitions given some of that macro volatility we've seen?

Yes. Thanks, Jonathan. We, in fact, are seeing, I think, an uptick in the overall marketplace as it relates to the potential acquisitions of some of the smaller companies similar to what we've done in the past. And we're always going to look out for ships that could be additive to our fleet. I think the world is opening up again, particularly with family businesses and the travel business that have weathered the storms of the pandemic and are thinking hard about whether they're going to pass their companies on to the next generation or whether they're – they prefer to make a sale. So we don't have anything that is close to the finish line at the moment, but we're active in the marketplace and we're encouraged by the kinds of opportunities that could be available to us in the coming months and years.

Okay. Good. I appreciate all the color guys. That’s all for me.

Thanks, Jonathan.

The next question comes from Alex Fuhrman from Craig-Hallum Capital. Alex, your line is open. Please go ahead.

Hey, guys. Thanks for taking my question. Congratulations on a really strong start to the year. I want to ask about the Land Experiences segment. What's been driving the strength there? I remember a few years-ago, there was maybe some hesitation to market the land offering to your cruise customers just given how high priced the cruises are relative to some of the land voyages, not that the land voyages are [indiscernible] up there in price. But just curious if you had any more kind of interplay between the two segments there or if it's just in its own kind of natural recovery and demand for the Land Experiences?

Sure. Thanks, Alex. Let me start out by saying one of the things that we were looking for when we acquired these companies was, obviously, we're looking for businesses that fit with the ethos and the mission of what Lindblad does. We're looking for businesses that ultimately had significant growth upside from where they were today. But we were also interested in finding businesses that had really strong leaders that were running those businesses today. And I will say, both Dolf and I would point out that the folks who are running those businesses, whether it be Andy and Deena over DuVine, whether it be [indiscernible] Off the Beaten Path, whether it be Edward and Susie at Classic Journeys and certainly Ben at Natural Habitat, they've done a great job with these businesses. And they set them up for success coming out of the pandemic because they were delivering such amazing experiences in such amazing geographies. We always knew that they had significant growth ahead of them. And we also knew that we could add some significant fuel to that growth by providing some additional heft from the Lindblad company, providing some additional focus from the Lindblad company. And I think that what's happened coming out of the pandemic. So you're seeing really nice success from these businesses. I will say we have really just started to scratch the surface of what Lindblad can do for these businesses, a lot of the success that you're seeing today, the success that was built into these businesses by these original founders and owners. But as Dolf mentioned in his comments, by sharing best practices on the way things can operate by making sure we're focused on the right products by giving them the marketing capabilities that they need to attract new guests. All these things are really what I would say, combining to create some really nice momentum at these businesses.

And I'll just add that we're really seeing the benefit of the pent-up demand that occurred during the pandemic and as they come into their stronger seasons now. A lot of the guests that held off for a few years are really coming back with some strength. Probably the most remarkable example of the growth also is DuVine, where the – you may know that there's just been this surge and interest in bicycling, which is true not only here in the U.S. but also abroad. And so that company is just riding that wave, no pun intended, extremely well. So we're excited about it. And then Craig really said the right thing, I think, as related to marketing, just the opportunity for these leaders to share best practices in what they're seeing, not only from a sort of traditional marketing standpoint, but definitely with the enhanced kind of web marketing and search engine optimization that comes with being part of the Lindblad company, all of those things are contributing. So we're just really optimistic about each of those businesses going forward.

Okay. That’s really helpful. Thank you both.

Thanks, Alex.

[Operator Instructions] We have no further questions at this time. So I'll hand the call back to the management team for any concluding remarks.

Thanks, Adam, and thank you, everybody, for joining us this morning. We look forward to maintaining the dialogue. If you have additional questions, please give us a ring and we'd be happy to connect again. Thank you.

Thank you, everyone.