During Lindblad's Q1 earnings call Tuesday, management defended the purchase versus buying back shares or ships, and CEO Sven Lindblad said second-hand tonnage may become available from newcomers who've even had to discount in the prime market, Antarctica.
Net loss was $5.1m, or 10 cents per share, wider than the 4-cent loss consensus expectation and the year-ago 1-cent/share loss. Lower operating results and higher interest expense were partially offset by reduced income tax expense and stock-based compensation.
Revenues of $153.6m were higher than expected, up 7% from a year ago driven by a $2.8m increase at the Lindblad segment and a $7.4m increase in the land experiences segment.
Net yield rises to $1,219, occupancy declines to 76%
Lindblad segment tour revenue of $118.3m was up 2% due to more available guest nights thanks to greater fleet utilization and a 1% increase in net yield per available guest night to $1,219, partially offset by a decrease in occupancy to 76% from 81%.
Citing discounting by competitors, Sven Lindblad said maintaining price integrity is key — even if that means sacrificing some occupancy.
With Lindblad having extended its National Geographic relationship into 2040 and expanded it to bring the greater power of the Walt Disney Co., the company expects to benefit from higher brand awarenss and the 'powerful Disney sales network' beginning this year but really starting to make a difference in 2025.
94% of Lindblad revenue booked for 2024
CFO Craig Felenstein said 94% of Lindblad segment revenue is already booked for 2024.
Use of capital
An analyst questioned the use of capital to acquire a land tour company rather than buying back 'undervalued' shares.
Felenstein said Wineland-Thomson Adventures was purchased at a multiple significantly below Lindblad's, and Sven Lindblad pointed to the 'meaningful opportunity' to own a company with 40 years of experience in Tanzania, a country with the 'wealthiest wildlife in all of Africa.'
He called the land tours segment a 'counter-balance' to high-fixed-cost ships in the event of downturns.
'Keen on growing our maritime business'
The company is 'keen on growing our maritime business,' Lindblad said, and one consideration is doing that with second-hand hardware or newbuilds.
'There probably will be ships available in the future that were built and perhaps were not as successful as the people who built them hoped they'd be,' Lindblad said, with a laugh, '... so we're really keeping our eyes out ...'
But first the CEO wants to be sure Lindblad is filling ships as it did pre-pandemic because 'the value of that is off the charts compared to any other type of investment.' Making up the 10%-12% occupancy differential from now to where it would like to be is 'massively valuable.'
Demand level that could trigger an acquisition
Lindblad wants to feel confident there's demand to fill 125% of the occupancy the company already has, and that would trigger considering new capacity.
'Occupancies will go up,' he told analysts, 'but more important than occupancy in the short term is price integrity in the long term. We could get to 100% occupancy tomorrow if we took on some bad habits that would have an impact on the business long term.'
Competitive environment
On the competitive environment, an analyst asked if it's the number of new expedition cruise entrants or how they're handling pricing that's more relevant?
'The explosion of entries in the last five years is unprecedented,' Lindblad said, with 'so many more ships than were ever imagined in this segment.'
He thinks new entrants, some having to offer two-for-one pricing in peak season Antarctica, 'underestimated the complexity of expedition crusing' with its operations in remote areas and the need for good teams and deep relationships with destinations. And rivals may be 'underrating the intelligence of the audience' — it's very sophisticated and cares about the quality of the experience.
The Lindblad brand is known for its legacy and expertise, but will become much better known with the National Geographic branding and the Disney clout, Sven Lindblad said.
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