Ladies and gentlemen, thank you for standing by. My name is Desirey, and I will be your conference operator today. At this time, I would like to welcome everyone to the Lindblad Expeditions Holdings, Inc. Reports 2024 Second Quarter Financial Results. All lines have been placed on mute to prevent any back on noise. After speaker’s remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to Dyson Dryden, Chief Financial Officer. Please go ahead.

Thank you, Desirey. Good morning, everyone, and thank you for joining us for Lindblad's 2024 second quarter earnings call. With me on the call today is Sven Lindblad, Founder and CEO. Sven will begin with some opening comments, and then I will follow with some details on the financial results and our current 2024 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 forecasts 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 please turn the call over to Sven. Sven?

Thanks, Dyson, and thank you for stepping in and doing such a spectacular job as Interim CFO, while we consider our CFO search. Good morning, everyone, and thank you all for joining us today. Lindblad's strong second quarter results set the stage for another year of double-digit growth and record results for 2024. Dyson will provide additional color on our performance this past quarter, but before he does, let me take a few minutes to discuss some of the drivers of the continued growth this year, as well as the steps we are taking to sustain the momentum in the years ahead. First, I would like to emphasize how delighted we are with two new additions to our Board of Directors. Annette Reavis currently serves as Chief People Officer at CrossFit, she has served as a strategic partner for people and business operations and organizational design. Perhaps our most defining role was a decade at Meta, where she served as VP of Human Resources, playing an integral role in the company's growth from 1,400 to over 40,000 employees. Andy Stuart is a celebrated cruise industry Titan. He served as President and Chief Executive Officer, and held several other executive level positions over his 31-year tenure at Norwegian Cruise Line Holdings. These two additions to our Board add a significant diversity of key experiences, which will help tremendously in navigating the company's future. And I would like to thank Bernie Aronson for a significant wisdom and insight during his tenure on our Board. Now turning to our quarterly results. Bookings to date for future travel were up 17% versus the same period in 2023, and our in-year bookings expanded to 6% over the same point in 2023. It's important to note that 2023 benefited significantly from the carryover business from prior…

Thank you, Sven. Lindblad's strong year-on-year growth continued during the second quarter as we further ramped up ship operations with broader deployment of our expanded fleet and continue to grow our diversified portfolio of land businesses. As we deliver sustained year-on-year growth, we are taking the operational and strategic steps necessary to take full advantage of the earnings potential of the company. The investments we've made in additional capacity, diverse product offerings, technological capabilities, and overall infrastructure have positioned us to capitalize on the growing demand for experiential travel. Turning to the second quarter. Total revenue of $136.5 million increased $11.7 million or 9% versus the second quarter of 2023. Lindblad segment tour revenues were $93.1 million, which is an increase of $5.6 million or 6% compared to the second quarter a year ago. The increase was driven by a 4% increase in available guest nights, a 6% increase in net yield per available guest night to $1,094 and an increase in occupancy to 78%, up from 74%. As Sven noted, we canceled two voyages as we decided to transit around the Red Sea due to the conflict in the region. And our Egypt program was affected by the Middle East conflict. We also saw instability in Mainland Ecuador, which impacted Galapagos for a brief period of time. And experienced tour revenues were $43.4 million, which is an increase of $6.1 million or 16% compared to the second quarter a year ago, led by additional guests and higher pricing across Natural Habitats, trips to Africa, the Galapagos Islands, Europe, the Amazon, India and Alaska, defined cycling tours across Italy, France, Croatia, Turkey, and Spain, classic journeys cultural walking tours in places like Portugal and Iceland and off the beat and pass small guided group adventures to the U.S. National Parks.…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Steven Wieczynski with Stifel. Your line is open.

Thanks, guys. Good morning. So Dyson, this is one is probably for you. I don't want to put you in the hot seat right away. But it's a guidance question, and you addressed a little bit of this in your prepared remarks, but I'm going to ask it a little bit differently. So if we think about the first half of this year, you guys you generated about $32 million in EBITDA. That is actually below the $35 million you generated in the first half of 2019. So -- my question is, to get to the low end of your EBITDA guidance for the year, you guys are going to generate about 50 -- mid-50s, $56 million in EBITDA in the second half of the year. That's well above what you did in the second half of 2019. And look, I fully understand there's a material change in capacity. But I guess the real question is what gives you guys such confidence with only five months left in the year that kind of getting that mid-50s EBITDA in the second half of the year is going to be possible. Thanks.

Yeah, sure. Thanks, Steve. So let me just talk a little bit about our strong booking position. I think that's really going to be the key variable in the back half of the year. The Lindblad segment is a very strong booking segment for the year. So we've already booked 98% of -- we've already booked 98% of the Lindblad segment, full year projected ticket revenues for 2024. As you know, that last 2% does come at a very high margin. So filling the rest of the 2% is our focus. And if we do that, we should be able to get there where we want to be on for the full year guidance perspective. So we're confident at this point in time based on the trends and the cancellations really going back to historical levels that we're in a good position to reach the guidance. I think also importantly, the land business bookings are also very strong. The bookings just the Nat Hab which is our largest land segment, were up 20% year-over-year. So we remain confident in achieving the guidance.

Okay. Thanks for that Dyson. And then second question, Sven, for you. It's a bigger picture question, really around the Disney partnership. As you continue to work and collaborate with those guys, look, a big piece of this partnership was always going to be around the ability to drive load factors higher over time. And just want to ask how you feel about the partnership today and of the ability to drive that long-term occupancy is still in play? And then maybe when will we start to see some of the material benefits of this partnership? Thanks.

Thanks, Steve, and I appreciate the question. So with any new partnership right? It's like you've got to kind of figure out how are you going to play together? How are you going to work together in the most productive way possible, right? So we've been working since 2004 with National Geographic, but National Geographic has not from being an independent organization to one owned by Fox to then migrating over to Disney. And Disney is kind of a good player from the perspective of our relationship. So the first thing we did was, this past April, we took a significant number of people from Disney, from national geographic and from our own organization, and we went to the Pacific and spent five days together, where we help build understanding about what we do in those different segments and had sort of working sessions every day for five day. Really exploring how we were going to build out this business together and how we're going to use each other's assets in a combined way to build what we call the Power of Three. And so when you think about what we all are individually and how you bring that together into some sort of a chemical mix, it's -- I believe it's an incredibly potent one. So NatGeo not only is brand, but also has tremendous content that can help with that in terms of photography, explorers, family idea, education. Disney is a massive, massive distribution entity, right? And we want to harness that and they want to harness it on behalf of our collective effort. And then obviously, we're in the execution business of making sure these expeditions happen. So I mean there is nobody in my view in the travel industry in the expedition space that has so much power behind it as a consequence of these partnerships. And so -- and everybody is really, really interacting in a very concerted way. They are constantly discussions going on about the next step and the next step and how can we advance the distribution. And so I think you're going to see in 2025, a lot of this begin to come to real fruition. Remember, we only signed a deal in November, and then you have to plan and then you have to -- Disney is a big organization and doesn't necessarily move as quickly as a smaller one like ourselves, but it is moving. And once it gets up to full steam, I think, it's going to -- I think it cannot help but have a significant effect on how we grow the business.

That's great color. Thanks, guys. Really appreciate it.

Thanks, Steve.

Our next question comes from the line of Eric Wold with B. Riley Securities. Your line is open.

Thank you. Good morning. A couple of questions. I guess, first question, kind of a follow-up on the last one around the expanded NatGeo-Disney relationship. Obviously, Sven maybe comment about the organizations like Disney, maybe built in a SaaS as you expected you went with a bunch of the teams in April, you were launching a new brand by September. If you take everything together, is everything kind of expected when you first made the announcement back in November, kind of, running on schedule ahead of plan, behind plan versus where you were? And can you make any maybe general comments about any bookings tailwind from the expectation in 2025, as you kind of previously expected you'd see?

Yes. So first of all, I just want to clarify one thing I do not say -- I did not say they were moving slower than expected. I just meant that a big organization doesn't necessarily move as quickly as a smaller organization. I think they're moving faster than I would have expected, to be honest, given the fact that it is such a large organization. So one of the major things that are -- that's going to happen this fall is a real sort of coming out party, if you will, with the trade with their entire sales team, which is huge by comparison, maybe upwards of 10 times the size of our own or more that exposes products, their products and now our products as well as to the travel treat. I mean this is a massive, massive expansion of exposure in a critical area of business development. So that and advertising plans of direct mail campaigns and search. Now we used to National Geographic and ourselves, we used to compete for search terms, for example, because we had -- we worked together, but we also have different entities because there's different attribution as to how the business was sourced, all of that is no longer there. So we are collaborating on literally everything to drive the business. And so I can't quantify it in absolute terms, but it's hard for me to imagine that it isn't going to be a very, very powerful force going forward. And we will, I think, starting the next earnings call and the one after that. I think we will be in a position to be more specific as a consequence of having more sort of water under the bridge.

I would just add that as you well know, we have about a nine-month booking window on average, that's been pretty consistent. And so as all this activity is ramping up, as Sven mentioned, the results really come in 2025, in large part just due to the timing of the booking window. So the activity is beginning to happen in earnest, and we expect the results to really start showing in 2025.

Perfect. And then a follow-up question. On the two vessels you acquired or acquiring in Galapagos. You mentioned increase your inventory in the region by 45%. Any more comments in terms of United Nations you get from that potential annual revenue for the two ships. And then how does this -- a longer-term base, how does this impact digital pricing in the region by taking out two competitive ships? And what is the opportunity to leverage that customer list to kind of bring them to other expeditions outside of the region.

Do you want to answer that?

Sure, sure. So we're not in a position to update any guidance for 2025 at this point. But we did announce that they're going to come in the service at the end of the first quarter. And so when we put out guidance, we'll certainly show that contribution. We believe these are going to be really important as far as adding first-time guest inventory, and we underwrote a very conservative occupancy level for 2025 with the transaction, which we believe is going to be very accretive to shareholders financially and frankly, from a leverage perspective as well. So I think we'll just have to give you more guidance as we go forward on that. But this is largely a first-time guest product, which is very much aligned with our mission to add new first-time guests to the funnel and improve the overall occupancy levels for the organization. The 45% increase is just the fact that there's a fixed license business, which in the Galapagos, which I think most are aware of. And so that just means it's not like two new ships are coming into the Galapagos, because we took two ships from a competitor of ours and brought them into our fleet. Is that helpful?

Yes. Thank you both.

Next question comes from the line of Alex Fuhrman with Craig-Hallum. Your line is open.

Hi, guys. Thanks very much for taking my question. It sounds like you guys are investing a lot more in the Galapagos now as a region with the new ships you have coming online. Can you talk about what your market share in that region is going to be when you have these new ships online giving the fixed supply in the region? And then I think in the past, you've talked about the Galapagos being a good region for you in terms of acquiring first-time passengers. Is that the case you expect to be able to acquire a lot of new customers as a result of your increased presence in that geography?

Yeah. Well, so Galapagos is a place we've been involved with for a very, very long time. I mean, going back to my father's, first bringing people there in 1967. And so it's a place that we're very closely connected with and is very, very important to us. And so the opportunity to expand in a place that we have such a deep connection with them, and so the public equates us being connected with is for us a real, real opportunity. So now we will have a total of 206, I think it is beds in the Galapagos, which is -- which doesn't sound like a lot when you think of cruise ships, but it's -- there's only -- in terms of boats that are like 40, 50 passengers more, there are only about 600 beds total, I think, somewhere in that neighborhood in the Galapagos, including our own. So we represent a very, very sizable percentage of the market. And as a consequence to that, we can change our investment mentality in terms of promoting the area because obviously, we have a level of scale that is proportionately different, which is very, very helpful.

Okay.

And yes, about new people, see Galapagos is an iconic place for people who are interested in nature, probably as an island group, more known than any other in the world and more aspirational than any other in the world from the perspective of natural history. And so it absolutely is a place where you can get people in the door for the first time, probably more easily than any place else on earth.

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

Next question comes from the line of Chris Woronka with Deutsche Bank. Your line is open.

Hey guys, morning. Thanks for all the details so far. Sven, I think you mentioned earlier that you might be looking to increase your activity in the river cruising space. And so the question is, did you have two new vessels coming for Galapagos. Would that require if you can decide to go down the river cruising path in a bigger way, would that require additional fleet? Or can you make that happen with your current fleet?

Yeah. So anything that we envision doing on rivers, well, we do a lot on rivers already. On the Columbian Snake River, on the Amazon. So we already are deeply involved with rivers, and we know that people really like rivers, and in Egypt, obviously, as well. So we would envision, at least for the moment, to pursue rivers on a charter basis, not on building for rivers -- or not taking our ships into rivers, more than they currently do in the Columbian Snake River. So we own now 12 ships, and we charter eight ships, and those eight charter ships are also important because they fill different niches. Maybe certain places that are particularly seasonal, and we don't want to necessarily own something. We don't want to own something where you can only successfully operate it for three months a year, and be stuck with it for the other nine. So charter is really, for us, a great mechanism to expand our offerings, and in certain instances, to test areas that, after which we might decide we want to get more deeply involved. So we have, in the past, chartered ships to certain areas, and then eventually bought a ship, or built a ship, to accommodate that interest, but right now it's going to be primarily focused on charter work.

And I'd just add that -- I just want to add one thing, which is, unlike the river product that Sven's mentioning, the Galapagos is a 52-week operational deployment, so that's the place where owning a ship makes a lot of sense. And I did find the statistic in my notes here. There are only nine ships in the Galapagos with over 40 passengers in existence. So it is a pretty limited market.

Yes. Understood. Thanks, both. I appreciate that. And then, obviously there's a lot of moving parts here. You guys, if I look at relative to 2019 or 2018, whatever the right year is, you've taken on more land-based businesses, you're growing the fleet now, you have the NatGeo and Disney partnership, and we've had inflation, of course. So the question is, as we look out to, maybe 2024 is not the right year, maybe it's 2025, 2026, the margin profile of the overall business, we just think about the EBITDA margin of 20% or so reached in 2019, is that -- is there a lot of upside in the out-years or is there are there structural limits? Just trying to get a sense of how to frame the two- to three-year potential, right?

Yeah. Without giving specific guidance, we did mention that we're focused on cost and efficiency as well. We think a combination of returning to historical occupancies and also a focus on efficiency and cost there should be an opportunity there and that work is ongoing right now. But certainly, that Chris, to your point, that would be the goal. There should be significant operating leverage in the business. Some will depend on the ultimate mix of land versus marine because they do carry different margin profiles. But yes, your focus is similar to ours.

Okay. Great. Appreciate that. Thanks, guys.

Thank you.

There are no further questions at this time. Mr. Dryden, I turn the call back over to you.

Okay. Great. Thank you, Desiree. Thank you for everyone for joining our second quarter earnings call. I hope everyone has a wonderful day and give me questions, don't hesitate to reach for us directly.

Thank you.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.