Earnings Call Transcript - LIND Q4 2025

Operator, Operator

Hello, and thank you for standing by. My name is Bella, and I will be your conference operator today. At this time, I would like to welcome everyone to Lindblad Expeditions Holdings, Inc. 2025 Fourth Quarter and Full Year Financial Results. I would now like to turn the conference over to Rick Goldberg, Chief Financial Officer. You may begin.

Rick Goldberg, CFO

Thank you, operator. Good morning, everyone, and thank you for joining us for Lindblad's fourth quarter 2025 earnings call. With me on today's call is Natalya Leahy, our Chief Executive Officer. Natalya will begin with some opening comments, and I will follow with details on our 2025 results and 2026 expectations before we open the call for Q&A. As always, you can find our latest earnings release in the Investor Relations section of our website. But before we get to all of that, I'd like to 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. With that out of the way, I'll turn the call over to Natalya.

Natalya Leahy, CEO

Thank you, Rick. Good morning, everyone. Well, we are very excited to share our progress and results today. As we begin this call, I'd like to start with the words from our founder, Sven Lindblad, 'We have always had a very distinct North Star. If we can provide people with extraordinary experiences in the world's most charismatic places, they form a connection with the natural world that is truly profound.' This year, as we celebrate the 60th anniversary of the very first nonscientific expedition to Antarctica led by Sven's father, this North Star feels as relevant as ever. It guides us in every decision every day. Rick and I recently marked our first year in the company, aboard National Geographic Resolution in Antarctica, standing on a bridge as Captain Martin noted that we were the southernmost passenger ship in the world for days. Latest came with expedition leader, Stefano, towards a glacier with emperor penguins nearby. It's moments like this that remind us what truly sets Lindblad Expeditions apart, unmatched expertise, intimate ships, and deeply authentic experiences. That commitment is not only philosophical; it drives results. In 2025, we delivered record guest satisfaction scores and record financial performance while strengthening our operating discipline and accelerating progress across all three strategic pillars. To that end, we've also rounded up our strong leadership team with the recent addition of a new Chief Marketing Officer, Mike Fulkerson, who brings extensive experience across hospitality, luxury, expedition, and cruising sectors. Turning to our results. Full year revenues reached a record $771 million, representing 20% growth year-over-year. We achieved record growth in yields to $1,335 per guest night, the highest in the company's history. Our adjusted EBITDA increased 38% to another record of $126.2 million with margins expanding 220 basis points to 16.4%, reflecting our operational discipline and the scalability of our business model. We also strengthened our balance sheet position, improving our net leverage from 4.6x at the end of 2024 to approximately 3.1x by year-end 2025. These full year achievements were punctuated by our strong fourth quarter results with revenues increasing 23% to $183.2 million. The Lindblad segment delivered 28% revenue growth, driven by an 11% increase in net yields to $1,279 per guest night, while occupancy rose to 87% from 78% in Q4 2024. Our Land Experiences segment maintained its momentum with 16% revenue growth, underscoring strength across our entire portfolio. Let me walk you through how we achieved these results across our three strategic pillars. Our first pillar focuses on maximizing revenue generation through occupancy, pricing, and deployment optimization. I'm proud to update you on our progress across multiple initiatives in this area. Our relationships with Disney continue to expand our reach through broader distribution to broader audiences, contributing to strong performance across key channels. As an example, bookings from earmarked Disney travel agents increased 35% for the full year. Our onboard expedition sales program rollout resulted in nearly three times as many bookings in 2025 compared to 2024. Importantly, the percentage of guests booking within 30 days of a voyage has doubled since the launch of the program, leading to expanded booking curves and higher repeat rates. Our outbound sales program gained significant traction with sales increasing 97% for the full year. We continue to see this as a high potential channel that is in its early stages. Our online bookings increased 52% year-over-year, fueled by strong demand generation through our National Geographic partnership as well as significant enhancements to our web platform. Our extension revenues increased 45% for the year. We are pleased that we are seeing customers take full advantage of our full range of expedition offerings as they travel with us. I just returned from London, where our team hosted a series of travel advisers and journalists. We are very encouraged by the progress in the U.K. market and the momentum we've been building. In just the first six weeks of the year, we already booked half of our 2025 revenue. Our second pillar focuses on optimizing financial performance through cost innovation and fixed asset utilization. During the year, we made significant strides in building a cost innovation pipeline throughout our organization. A key highlight in our 2026 capacity growth strategy is that we are now realizing the benefits from last year's fleet optimization work. We expect mid-single digit capacity growth in 2026, driven almost entirely by our dry dock and deployment optimization that reduced non-revenue days by over 100, enabling us to release additional voyages and drive incremental sales. We've extended this work into our 2027 deployment and beyond, and are pleased to see that we expect further efficiencies to be unlocked. Looking ahead, we've also built another strong pipeline of cost innovation initiatives for 2026 and beyond, positioning us to realize continued operational efficiencies over the long term. Our last strategic pillar focuses on exploring and capitalizing on accretive growth opportunities. Last January, we acquired two Galapagos ships, as you know, expanding our presence in the core market, reinforcing our leadership position there. We also expanded our charter portfolio, including a new three-year agreement with Greg Mortimer, increasing and modernizing our Alaska capacity through a capital-light approach. Additionally, we completed the small tuck-in acquisition of Earthwatch under Natural Habitat, adding a respected citizen science brand to our portfolio. As we look ahead, a key focus of 2026 will be on identifying accretive growth opportunities, both across the fleet and by adding to our portfolio of brands. As always, I want to reiterate our purpose, our why. Our commitment to responsible exploration remains central to who we are and a defining differentiator for our company. For us, it's more than a trip. It's a mission. In 2025, we made a record $3 million investment through the Lindblad Expeditions-National Geographic Fund, the largest in its 18-year history, supporting critical conservation, research, and education initiatives worldwide. We supported 36 scientists' education and storytelling projects, including hosting visiting scientists on 25 voyages and welcoming 35 teacher fellows. I'm especially proud of our teams whose grassroots efforts raised over $50,000 to support gray whale research, a powerful reflection of our culture and action. Turning to our outlook for 2026. Our bookings momentum remains very strong. We had a record wave season, and booked revenue for '26 has already exceeded revenue for 2025. We are seeing similar positive trends for 2027 bookings, both across land and expedition segments. We are guiding full year revenues and adjusted EBITDA in the range of $800 million to $850 million, and $130 million to $140 million, respectively. Rick will provide more details on the pacing of our earnings build this year, but we are excited about our momentum and are optimistic about the opportunities ahead of us. In closing, 2025 was a foundational year, laying the groundwork for sustained profitable growth in the years ahead. We delivered record revenue, record yields, and record EBITDA alongside a significantly strengthened balance sheet, clear evidence that our strategy is working. These results reflect our team's disciplined execution and long-standing commitment to our North Star. Thank you for your continued confidence in Lindblad Expeditions. I'll now turn the call over to Rick for the financial results.

Rick Goldberg, CFO

Thank you, Natalya. It's been a privilege to partner with you and the entire leadership team at Lindblad Expeditions over the past year. Traveling with you to Antarctica aboard the National Geographic Resolution and to Churchill, Canada, to see the polar bears with Natural Habitat were two personal highlights. 2025 was a record-setting year for Lindblad Expeditions. We achieved the highest guest satisfaction scores in our history, the highest net yield, and the highest EBITDA, a testament to the strength of our brand, our strategy, and our team. Total company revenues for 2025 were $771 million, an increase of $126.3 million, or 19.6% versus 2024. Lindblad segment revenues were $495.6 million, an increase of $72.3 million, or 17.1% compared to the prior year. Occupancy increased 10 percentage points from 78% to 88% and net yield per available guest night increased 14.1% to $1,335, the highest in company history. Land Experience segment revenues were $275.4 million, an increase of $54 million, or 24.4% compared to 2024, driven by a 16% increase in guests and a 7% increase in revenue per guest. Turning now to the cost side of the business. Operating expenses before stock-based compensation, transaction-related expenses, depreciation and amortization, interest, and taxes increased $91.3 million, or 16.5% versus 2024. Specifically, cost of tours increased $55.4 million, or 15.3%, driven by operating additional voyages and trips and the inclusion of a full year of results for Thomson Group. Fuel costs were 4.8% of Lindblad segment revenue, which was down 150 basis points versus 2024. Sales and marketing costs increased $27.7 million, or 31.8%, primarily due to higher royalties and commission expenses and investments in demand generation efforts. General and administrative costs, excluding stock-based compensation and transaction-related expenses, increased $8.2 million, or 7.8% versus a year ago, driven by higher personnel costs and the inclusion of a full year of results for Thomson Group, partially offset by $5.3 million of employee retention tax credits. 2025 adjusted EBITDA was $126.2 million, the highest result in our history and an increase of $35 million, or 38.4% versus the prior year. This was driven by a $20.4 million, or 34.3% increase in the Lindblad segment and a $14.6 million, or 46% increase in the Land Experiences segment. EBITDA margin improved 220 basis points from 14.2% in 2024 to 16.4% in 2025. Net loss available to stockholders was $34.6 million, or $0.63 per diluted share, versus $0.67 per diluted share in 2024, driven by improved operating income, offset by a $23.5 million loss on extinguishment of debt related to our August refinancing and higher depreciation and amortization, primarily from the addition of the National Geographic Gemini and Delfina to our fleet. Looking quickly at the fourth quarter of 2025, revenues increased $34.6 million, or 23.4% compared to the same period in 2024. Lindblad segment revenues increased by $25.2 million, or 27.8%, driven by a 9 percentage point increase in occupancy to 87% and an 11.2% increase in net yield per available guest night. Land Experiences revenues increased $9.3 million, or 16.1%. Adjusted EBITDA for the fourth quarter was $14.2 million, an increase of approximately $700,000, or 5.4% from the fourth quarter a year ago. This was driven by a $2.5 million increase in the Land Experiences EBITDA, partially offset by a $1.8 million decline in Lindblad segment EBITDA. As we previously shared, Q4 EBITDA was impacted by an increased number of dry and wet docks, and a shift in the timing of our marketing spend to set the stage for wave season. Turning to the balance sheet. We ended the year with total cash of $289.7 million, an increase of $73.6 million versus the end of 2024. The increase reflects $111.6 million in cash from operations due primarily to the strong results of the business and increased bookings for future travel. We used $67.3 million of cash for investing activities, which includes the acquisition and refurbishment of two Galapagos vessels. For the full year, we generated $63.8 million in free cash flow. On January 20th, we announced the mandatory conversion of our 6% Series A convertible preferred stock. Following the refinancing of our debt in August, this transaction further simplified our capital structure and strengthened our balance sheet by eliminating our interest obligation and removing the risk of needing to repay the preferred stock in cash at maturity. With this conversion behind us, we remain focused on pursuing accretive growth opportunities, including fleet expansion through charters, acquisitions, and potential new builds, as well as continuing to expand our portfolio of world-class land-based experiences. Turning to full year guidance. I'm pleased to share our outlook for 2026. Available guest nights are expected to increase 4.5% to 5%, about half of which is driven by optimizing our deployment and minimizing our non-revenue days. We also benefited from the full year contribution of our two new Galapagos vessels and additional charter offerings. This capacity growth will be weighted towards the first half of the year. As Natalya mentioned, booking momentum remains strong. We delivered a record wave season, and booked revenue for 2026 has already surpassed full year 2025 revenue. We are also seeing encouraging trends in 2027 with bookings pacing ahead of 2026 at the same point last year. Net yield per available guest night is expected to increase 4% to 5%. As a result of heavier capacity growth in the first half, mainly outside of our core most profitable geographies, we anticipate a more modest net yield growth early in the year with stronger performance in the second half. For 2026, we expect total company tour revenue in the range of $800 million to $850 million. We remain focused on cost innovation with more than 20 targeted initiatives designed to enhance efficiency while preserving our commitment to a world-class guest experience and responsible exploration. At the same time, effective January 1st, we reached the final step-up to the run-rate royalty under our National Geographic agreement. Taking these factors together, we expect adjusted EBITDA in the range of $130 million to $140 million. We expect EBITDA growth to be slightly stronger in the second half, supported by a more favorable deployment mix and the first half impact of lapping the majority of the employee retention tax credits. We also anticipate approximately $10 million lower capital expenditures year-over-year, reflecting our work to optimize capital spending and the one-time impact in 2025 of refurbishing the National Geographic Gemini and Delfina. After one year at Lindblad Expeditions, Natalya and I are even more confident in the long-term potential of this business and remain firmly committed to executing against the strategic pillars we outlined a year ago: first, maximizing revenue generation through occupancy, pricing, and deployment; second, optimizing financial performance through cost innovation and fixed asset utilization; and third, exploring and capitalizing on accretive growth opportunities. Now we would be happy to answer any questions you may have.

Operator, Operator

Your first question comes from the line of Steve Wieczynski with Stifel.

Steven Wieczynski, Analyst

Natalya or Rick, regarding your guidance for the year, Rick, you provided a lot of useful information about your yield expectations. Could you explain what factors might push you towards the high end or the low end of that range? I'm trying to grasp what is included in your projections. Considering occupancy, you ended 2025 around 87% to 87.5% and were hopeful for a rise into the low 90s this year. Achieving the midpoint of your guidance range seems very attainable, even before factoring in any significant price increases. I'm looking to understand what would influence a movement toward the high end as opposed to the low end.

Natalya Leahy, CEO

Steve, good to hear from you. So we ended the year with 88% occupancy, and that's been a significant improvement. We are seeing great momentum. We are very confident to get to historical occupancy levels of 90%, and so as we've been talking about for a while now, I think that we are on track to do that. Yields, of course, will be mid-digits as we talked about in the past, it's very much dependent on the booking curve. We see strong momentum. And it's always dependent on the absence of any geopolitical situation or unexpected events that can impact the demand. And Rick, anything else you want to add?

Rick Goldberg, CFO

Yes. I think specifically to your question, Steve, around what it would take for us to hit the high end of our range. I think it really comes down to; one, no major geopolitical disruptions; and secondly, continuing to execute well against our strategic pillars of maximizing revenue growth and cost innovation.

Steven Wieczynski, Analyst

Okay, understood. The second question is about how you are approaching costs for this year. Can you share your thoughts on the cost cadence throughout the quarters? I recall you mentioned that EBITDA growth is expected to be stronger in the second half of the year. What are your targets for cost per head as we look ahead to 2026?

Rick Goldberg, CFO

Yes, I think there are a few major pieces moving around. The first is the employee retention tax credits that we are lapping year-over-year, the majority of which hit in Q2 of 2025. Obviously, we have the step-up in National Geographic royalties as well as the cost innovation initiatives. The other big thing for us always is dry docks and wet docks and where those fall in the year, and we're never trying to optimize necessarily just to hit certain quarters. What we're trying to do is think holistically about where is the best place and time for us to take those dry and wet docks in order to maximize revenue and EBITDA for the year. But those dry and wet docks costs will be weighted towards Q1 and Q4 this year.

Operator, Operator

Your next question comes from the line of Eric Wold with Texas Capital Securities.

Eric Wold, Analyst

Two questions. So I guess, first, kind of as you think about the guidance for 2026, you kind of gave great color on bookings or how much has been booked relative to 2025 at this point. Can you give us a sense of how pricing is looking within kind of 2026 bookings? And similarly, as you kind of talked about '27, any kind of embedded price increases or how pricing is shaping up in '27 versus '26 as well?

Natalya Leahy, CEO

We continue to see momentum in both '26 and '27 across land and expedition segments. Overall, we maintain strong price integrity for all our products. Our demand for core destinations like Galapagos, Antarctica, and Alaska is at an all-time high, and we are successfully expanding our booking timelines. We encourage guests to book earlier, as our '27 booking curve is significantly ahead of '26. This allows us to drive price elasticity and sustain pricing momentum for both years.

Eric Wold, Analyst

Perfect. And then a follow-up question, I guess, second question. Any plans to expand the fleet with new builds at this point? I think as you get closer to pre-pandemic, post above 90% occupancy on a larger fleet than you had pre-pandemic and kind of get more visibility to that. Obviously, you're seeing strength in '27 or '26. When does it become the right time to start thinking about ordering a new ship? And what does the backlog look like if you were to place an order today for a ship that you would want? What is the time frame for delivery?

Natalya Leahy, CEO

Yes. I mean, the right time to grow capacity for us is now. That's a short answer. And by the way, we've been doing it. So in '25, as you know, we added two more ships in Galapagos, as we talked about. We also have been growing capacity through additional charters. For example, '27, Alaska capacity is increased by 12% by both optimizing our deployment, but also adding Greg Mortimer because we see strong demand. This year, as you know, we added European river charters. We expanded our charters in Asia. So we continue to do that now in addition to optimizing our deployment and reducing non-revenue days. We are looking at acquisitions of ships or new builds actively. There is nothing to announce yet. But the pipeline, if we were to go new build route, is approximately four years.

Operator, Operator

Question comes from the line of Mike Albanese with StoneX.

Unknown Analyst, Analyst

Just a couple of quick ones. First, regarding bookings, you provided nice color there. I'm just trying to get a sense of seasonal cadence. Is booking activity usually pretty stacked here in Q1? I guess I'm trying to get a sense on whether we can kind of expect that momentum to continue to build throughout the year? Or is it generally kind of tail off as the year goes?

Natalya Leahy, CEO

We just completed a record wave, which is a time when there are many bookings being finalized. We had to extend it by about a week. Generally, our bookings remain consistent throughout the year, as we cater to destinations like the Galapagos all year round. While we are wrapping up this wave, people are still making summer vacation plans and starting to prepare for next winter and spring. There isn't significant seasonal variation in bookings. However, there is some seasonality in revenue, with Q3 and Q4 being particularly strong due to the Antarctica and Alaska seasons. Overall, bookings tend to be steady year-round. We're seeing an expanded booking curve, which is beneficial for us and something we've been working towards. Bookings for 2027 are ahead of 2026, and 2026 is ahead of 2025, which helps us with pricing flexibility and booking momentum.

Unknown Analyst, Analyst

And then secondly, I just wanted to touch on some of the momentum you're seeing in online bookings here. You obviously have a few initiatives, marketing, expansion of the National Geographic relationship. Could you just talk about kind of the key drivers to the 50% plus growth? And then second to that is, there's an initiative you have to basically grow international bookings, and you just came back from the U.K. I mean, are we seeing a lift from that yet in these numbers? Or is that still kind of yet to come?

Natalya Leahy, CEO

So there are two good questions. The web platform is, obviously, a very, very accretive platform for us, so we are very pleased with the progress there. And I think it's like Rick mentioned, it's driven by two major initiatives. One is we actually did a number of updates to our web platform. We completely changed our platform, but we also enhanced our search engine capabilities there, the bookings capabilities, the way the web platform flows, and allows for higher lead generation. And then, of course, our partnership with National Geographic and Disney is driving more leads to our website. So those are the two major drivers of increased web platform bookings. Question on international markets. We launched our brand in the U.K. market last May. We are very committed to that market, and we are finally seeing a very real booking momentum. As I mentioned, in the first six weeks of this year, we already booked almost half of total 2025 annual revenue. So we will continue to be committed to that market, and we also plan to expand our efforts in Australia. Before you ask the next question, I wanted to clarify something from Eric regarding the new build. If we were to discuss the new build pipeline, I noted it's approximately a four-year pipeline. It's important to remember that in this industry, you begin publishing destinations around three years in advance. Consequently, the selling cycles start about two and a half to three years prior to the actual delivery of the ship, which leads to increased deposits before payment for the new build. I thought it was important to share this clarification.

Operator, Operator

Your last question comes from the line of Eric Des Lauriers with Craig-Hallum.

Eric Des Lauriers, Analyst

Congrats on a very strong year. As you look to add capacity, you just provided some nice color on new builds. In terms of acquiring vessels or signing charter partnerships, acquiring new land-based experiences, can you kind of talk about the competitive environment around those right now? Are you seeing the number or quality of bidders either increase or decrease? Just any kind of commentary on the overall competitive landscape when it comes to acquiring new vessels and experiences.

Rick Goldberg, CFO

I mean, I think that when it comes to acquiring new vessels and experiences, it's less about competition and just what's available in the marketplace. And so we're constantly looking for opportunities to acquire vessels that meet our standards for our guest experiences. But the reality is there aren't a lot of vessels that meet those criteria and are certainly not available in the marketplace today. And then similarly, in terms of Land Experiences, I think that for many of these founder-led businesses, we are the preferred buyer given our commitment in terms of what we believe in responsible exploration as well as how we've worked so effectively with the founders who have come on board as part of the broader Lindblad family over the course of the last decade. However, it's really about sourcing opportunities that are unique to us more so than competing with other folks who are out there, who are trying to buy similar businesses.

Operator, Operator

That concludes our Q&A session. I will now turn the call back over to Rick Goldberg, Chief Financial Officer, for closing remarks.

Rick Goldberg, CFO

Just want to thank everyone for your continued support and interest in Lindblad Expeditions, and to our team on a really strong 2025, and we remain very excited about the year ahead. Thanks so much, everyone. Bye.

Operator, Operator

Ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect. Everyone, have a great day.