Good morning, everyone, and welcome to the Lindblad Expeditions Report 2023 Third Quarter Financial Results. My name is Chach, and I'll be the coordinator for your call today. [Operator Instructions] I would now like to hand over the call to Craig Felenstein, Chief Financial Officer, to begin. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining us for Lindblad's 2023 third quarter earnings call. With me on the call today is Sven-Olof Lindblad, Lindblad's Founder and Chief Executive Officer; Sven 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 Sven.

Thank you, Craig, and good morning, everybody, and thank you for joining us. Craig will discuss our record financial results in a moment. But before he does, I would like to take a few minutes to discuss some momentum across our operations, along with where we are focused as a company to further take advantage of the earnings potential of our platform and the growing demand for experiential travel. When I returned to CEO in June, I made it clear to the organization that we have three key priorities. First, as has been the number one principle since we founded the company back in 1979, ensure that everything we do elevates and enhances the guest experience. Second, given the fixed cost nature of our fleet still our expanded capacity to the same levels we were doing so prior to the pandemic and third, continue to rapidly grow the diverse businesses we have acquired while strategically and selectively looking for accretive acquisitions where we can further broaden our offerings and when appropriate, create cross-marketing opportunities that provide meaningful incremental value. I'd like to provide a little color on each of these priorities, starting with the guest experience. Ensuring our quality is the highest level possible before, during and after the expedition has always been essential because it is our promise to guests. High quality is what they reasonably expect and it's even more important today given the evolving competitive landscape. We are proud of the consistently excellent guest satisfaction scores we have always achieved and we are dedicated to continuing to earn those results as we continue to grow in the months and years ahead. There have been some short-term challenges on the pre-voyage from the changes in our operating environment and changes to our company infrastructure have presented, but we…

Thanks, Sven. As Sven mentioned, Lindblad delivered record third quarter results, building on the momentum we generated during the first half of the year. As we further ramped operations with broader deployment of our expanded fleet and additional departures across our diversified portfolio of demand businesses. Equally as important, as we deliver sustained year-on-year growth we continue to take the necessary operational and strategic steps to further position us to take full advantage of the growing demand for high-quality experiential travel. The earnings potential of the company has increased dramatically for pre-pandemic levels and the significant investments we have made in our overall infrastructure, technological footprint and marketing and sales capabilities will allow us to maximize that earnings potential in the years ahead. Turning to the third quarter specifically. Total company revenue of $176 million increased $31 million or 22% versus the third quarter a year ago. As we continue to ramp operations with strong growth across both of our operating segments. At the Lindblad segment, revenue of $109 million increased $25 million or 30% versus the third quarter a year ago. The year-on-year growth was driven by a 21% expansion in available guest nights from broader utilization of the fleet and by increased pricing, which contributed to a 9% increase in net yield to $1,110 per available guest night. Occupancy of 81% was in line with the third quarter a year ago, despite the significant increase in available guest nights year-over-year. At the Land Experiences segment, revenue of $67 million increased $6 million or 10% versus the third quarter of 2022, led by additional departures and guests across our land companies, including Natural Habitat trips to Africa, Alaska, Canada and the U.S. national parks. Off the Beaten Path trips to Alaska and the U.S. national parks, DuVine bike tours…

[Operator Instructions] Our first question today comes from Steve Wieczynski from Stifel. Please go ahead.

Hi. This is Jackson on for Steve. First of all, excellent quarter, really nice balanced performance across land-based and crews, nicely ahead of consensus EBITDA. Given the beat, can you talk about what went into the decision to leave your guidance unchanged here? And what sort of question marks still remain that might push you towards the top or bottom of that $70 million to $80 million range?

Sure. Thanks, Jackson. Appreciate it. So there's a couple of things. Obviously, we're pretty much well into the fourth quarter and we have pretty good visibility as to where the rest of the year plays out. The reason we didn't change anything at this point really circles around, I would say, three items, which are probably more variable than less visibility here moving forward. The first certainly is cancellation levels, we don't know for sure what cancellation levels are going to look like. Cancellation levels thus far aside from Media, which I’ll get into in a second, have been relatively minimal still trending a little bit above 2019 levels. But they certainly have come down significantly from where they were at the start of the year. So where they ultimately end up, will have an impact on the fourth quarter, like they do traditionally at this time of year, you're not seeing a whole lot of new bookings coming into the fourth quarter given the time frame of our bookings window. The second item is Egypt. Obviously, we have a presence in Egypt today, which is being impacted a little bit by what's going on in the world. How cancellations ratchet up with regard to each specifically will have an impact in the quarter and we'll have better visibility on that probably here in the next two to three weeks. And then the last item I would say is the fuel prices, I did mention how they're increasing here versus where they were prior in the year. But how high they ultimately increase and what the impact of that is in the fourth quarter, still is a little bit of variability. So those three things are what's kind of keeping us where we are today, and we'll see how they play out over the next several weeks and months.

Okay. Great. Really appreciate all the detail there. If I could ask one more, I would just say, in your release, you noted 2023 bookings remained solidly ahead of pre-pandemic, 42% but can you give any commentary around 2024 bookings and recent booking trends? And I guess, specifically, have you noticed any hesitance from your customer base further out, just kind of tied to the heightened geopolitical tensions globally.

Sure. So here's what I'll say. The booking trends have been relatively consistent. So when we look at kind of the bookings during the third quarter, for example, gross production in the third quarter was up close to 20% versus where it was in 2022 in the third quarter. So we continue to see really nice growth year-on-year in terms of the volumes that we're bringing in. In terms of where we are for '24, we'll provide more color on that certainly in February on our year-end earnings call. What I will say is from a percentage of sale of our available inventory for next year, we are in a really nice spot heading into 2024. We are behind where we were for 2023 a year ago, but that was predominantly because a year ago, we had some benefit from all the people who had canceled or pushed their bookings from travel in 2021 and 2022. So we had a little bit of a better base, but we're closing that gap every single week, and we expect to be in really good shape as we head into 2024. We have not seen any real impact yet other than the cancellations from Egypt with regards to what's going on in the world. The booking window for next year remains pretty consistently in that nine - averaging at nine month window. When people are booking. So no real change yet. Obviously, we don't know if that continues. But today, we're not seeing any impact.

Okay. Great. Thanks Craig.

Thank you.

Next question on the line is from Alex Fuhrman from Craig-Hallum Capital. Please go ahead.

Hi, guys. Thanks for taking my questions. I wanted to ask about the occupancy. It looks like unchanged here from last year at 81%. Can you kind of break down what the difference is between that 81% and the 90% or so that you were operating at for the most part, prior to the pandemic. I think you mentioned that short-term cancellations are starting to come down a little bit. Was that still the lion's share of the delta there in Q3? And then how much of the shortfall in occupancy relative to 2019, is it a function of needing more time to ramp up itineraries on the new ships, especially in the shoulder season.

Yes. So I'm going to -- it's a complicated equation, but I'll try and keep it as clear as I possibly can. So we have certain products, which are drivers for new people coming in. Mostly bucket list destinations and certain like Alaska, for example, in the Galapagos and then we have a certain number of itineraries, particularly on the blue water ships that are more esoteric in the South Pacific, Papua New Guinea, certain parts of the Arctic, South America. And these are really quite heavily dependent on past guests. And so we had 2020 and 2021 and then a weaker two -- a bit of a weaker 2022, where we were not generating the same numbers of new guests. And so the pipeline got stagnant, if you will, or didn't expand in those years. And so our inventory was a bit out of balance. And also a key factor was that we had a lot of new itineraries planned primarily involving parts of Russia, the Northeast passage, for example, that had originally just completely flown off the shelves and filled. And obviously, we had to reroute and involve a lot of geography that was less new and a lot of those past guests had already been through those areas. So there's a bit of rebalancing of inventory needed until that pipeline gets back to the level that it's meant to be in order to provide the fuel, if you will, for those esoteric programs. And we're sort of in the middle of that. For example, we've already done some of that rebalancing for '24 and we are going to do some more work on that front for '25. And by '26, I think we'll be back sort of in a normal cadence again.

Great. That's really helpful. Appreciate that.

[Operator Instructions] It appears we have no further questions.

Great. Thank you, operator, for your time. Thank you, everybody else for joining us. I know it's a busy morning, on a variety of fronts. So if you have additional questions, please feel free to reach out, and we're happy to continue the discussion.

Thank you.

This concludes today's presentation. You may now disconnect your lines, and enjoy the rest of your day.