What changed in this filing

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Item 1. Financial Statements

2023-05-03 compared with 2022-11-02 · 275 added, 467 removed, 736 unchanged (50% of the section changed)

4 unchanged sentences

(In thousands, except share and per share data)

September 30, 2022

March 31, 2023

December 31, 2022

(unaudited)  

Current Assets:

5 unchanged sentences

28,847  

Short-term securities

13,591  

Marine operating supplies

25 unchanged sentences

71,019  

Lease liabilities - current

Long-term debt - current

1 unchanged sentence

23,337  

Lease liabilities - current

Total current liabilities

4 unchanged sentences

529,452  

Deferred tax liabilities

Lease liabilities

5 unchanged sentences

Series A redeemable convertible preferred stock, 165,000 shares authorized;

62,000 and 80,000 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

62,000 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

70,211  

7 unchanged sentences

Preferred stock, $ 0.0001 par value, 1,000,000 shares authorized;

62,000 and 80,000 Series A shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

62,000 Series A shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

Common stock, $ 0.0001 par value, 200,000,000 shares authorized;

53,132,670 and 50,800,786 issued, 53,065,365 and 50,755,546 outstanding as of September 30, 2022 and December 31, 2021, respectively

53,243,007 and 53,177,437 issued, 53,175,702 and 53,110,132 outstanding as of March 31, 2023 and December 31, 2022, respectively

Additional paid-in capital

3 unchanged sentences

( 264,888 )  

Accumulated other comprehensive loss

Total stockholders' deficit

8 unchanged sentences

(In thousands, except share and per share data)

For the three months ended September 30,

For the nine months ended September 30,

For the three months ended March 31,

Tour revenues

8 unchanged sentences

Interest expense, net

Loss on foreign currency

Other (expense) income

Gain on foreign currency

Total other expense

Loss before income taxes

Income (loss) before income taxes

Income tax expense (benefit)

Net income (loss)

Net income (loss) attributable to noncontrolling interest

Net loss attributable to Lindblad Expeditions Holdings, Inc.

Net income (loss) attributable to Lindblad Expeditions Holdings, Inc.

Series A redeemable convertible preferred stock dividend

7 unchanged sentences

(In thousands)

For the three months ended September 30,

For the nine months ended September 30,

For the three months ended March 31,

Net income (loss)

Other comprehensive income:

Cash flow hedges:

Net unrealized income

Reclassification adjustment, net of tax

Total other comprehensive income

Total comprehensive loss

Total comprehensive income (loss)

comprehensive income (loss) attributive to non-controlling interest

Comprehensive loss attributable to stockholders

Comprehensive income (loss) attributable to stockholders

The accompanying notes are an integral part of these condensed consolidated financial statements.

5 unchanged sentences

Additional Paid-In

Accumulated Other Comprehensive

Total Stockholders'

Balance as of June 30, 2022

Stock-based compensation

Net activity related to equity compensation plans

Redeemable noncontrolling interest

Series A preferred stock dividend

Net loss attributable to Lindblad Expeditions Holdings, Inc

Balance as of September 30, 2022

Additional Paid-In

Accumulated Other Comprehensive

Total Stockholders'

Balance as of December 31, 2022

1 unchanged sentence

Net activity related to equity compensation plans

Issuance of stock for conversion of preferred stock

Other comprehensive income, net

Redeemable noncontrolling interest

Series A preferred stock dividend

Net loss attributable to Lindblad Expeditions Holdings, Inc.

Balance as of September 30, 2022

LINDBLAD EXPEDITIONS HOLDINGS, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders ’

 (Deficit) Equity (continued)

(In thousands, except share data)

Additional Paid-In

Accumulated Other

Total Stockholders'

Comprehensive Loss

Equity (Deficit)

Balance as of June 30, 2021

Stock-based compensation

Net activity related to equity compensation plans

Other comprehensive income, net

Series A preferred shares dividend

Net loss attributable to Lindblad Expeditions Holdings, Inc.

Balance as of September 30, 2021

Net income attributable to Lindblad Expeditions Holdings, Inc.

Balance as of March 31, 2023

Additional Paid-In

2 unchanged sentences

Comprehensive Loss

Equity (Deficit)

Balance as of December 31, 2021

1 unchanged sentence

Net activity related to equity compensation plans

Issuance of stock for acquisition

Other comprehensive income, net

Redeemable noncontrolling interest

Series A preferred shares dividend

Net loss attributable to Lindblad Expeditions Holdings, Inc.

Balance as of September 30, 2021

Balance as of March 31, 2022

The accompanying notes are an integral part of these condensed consolidated financial statements.

3 unchanged sentences

(In thousands)

For the nine months ended September 30,

For the three months ended March 31,

Cash Flows From Operating Activities

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Net income (loss)

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Depreciation and amortization

Amortization of deferred financing costs and other, net

Right-of-use lease asset

Amortization of right-to-use lease assets

Stock-based compensation

1 unchanged sentence

Change in fair value of contingent acquisition consideration

Loss on foreign currency

Gain on foreign currency

Write-off of unamortized issuance costs related to debt refinancing

10 unchanged sentences

Purchases of property and equipment

Acquisition (net of cash acquired)

Net cash used in investing activities

Sale of securities

Net cash provided by (used in) investing activities

Cash Flows From Financing Activities

3 unchanged sentences

Repurchase under stock-based compensation plans and related tax impacts

Net cash provided by financing activities

Net decrease in cash, cash equivalents and restricted cash

Net cash (used in) provided by financing activities

Net increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

4 unchanged sentences

Non-cash preferred stock dividend

Value of shares issued for acquisition

The accompanying notes are an integral part of these condensed consolidated financial statements.

36 unchanged sentences

All intercompany balances and transactions have been eliminated in these unaudited condensed consolidated financial statements.

These unaudited condensed consolidated financial statements and footnotes should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto for the year ended December 31, 2021 contained in the Company’s Annual Report on Form 10 -K filed with the SEC on February 28, 2022 ( the “2021 Annual Report”).

There have been no significant changes to the Company’s accounting policies from those disclosed in the 2021 Annual Report.

Ramp of Fleet Operations 

The Company resumed operation in June 2021 and, since then, has continually ramped its operations, providing immersive expeditions in 2022 across all ten of its owned vessels.

 Where travel restrictions remain, which primarily includes a limited number of itineraries impacted by the Russia-Ukraine conflict, the Company is adjusting itineraries where possible, and working with guests to reschedule travel plans and refund payments or issue future travel certificates, as applicable. Previously, due to the spread of the COVID- 19 virus and the effects of travel restrictions around the world, the Company had suspended or rescheduled the majority of its expeditions departing between March 16, 2020 through May 31, 2021.

The Company believes there are a variety of strategic advantages that enabled it to deploy its ships safely and quickly as travel restrictions were lifted.

Most notably, the size of its owned and operated vessels, which range from 48 to 148 passengers, allows for a highly controlled environment that includes stringent cleaning protocols.

The small nature of the Company’s ships also allowed it to efficiently and effectively test its guests and crew prior to boarding, or as otherwise needed. Additionally, the majority of expeditions take place in remote locations where human interactions are limited, so there is less opportunity for external influence.

Balance Sheet and Liquidity

As of September 

30, 2022, the Company had $ 116.4  million in unrestricted cash and $ 29.5 million in restricted cash primarily related to deposits on future travel originating from U.S.

ports and credit card reserves.

As of September 30, 2022, the Company had a total debt position of $ 572.4 million and was in compliance with all of its debt covenants in effect.

The Company believes that it will be in compliance with all applicable covenants over the next 12 months. 

During May 2022, the Company further amended its senior secured export credit agreements to extend the waiver of its net leverage coverage ratio from March 2022 through December 31, 2022.

On February 4, 2022, the Company issued $ 360.0 million of 6.75 % senior secured notes, maturing 2027, and entered into a new $ 45.0 million revolving credit facility.

Proceeds from the senior secured note issuance were used primarily to pay the outstanding borrowings under the Company's prior credit agreement, including the term facility, Main Street Loan and the revolving credit facility. 

contained in the Company’s Annual Report on Form 10 -K filed with the SEC on March 10, 2023 ( the “2022  Annual Report”).

There have been no significant changes to the Company’s accounting policies from those disclosed in the 2022  Annual Report.

NOTE 2 —

6 unchanged sentences

When a net loss occurs, potential common shares have an anti-dilutive effect on earnings per share and such shares are excluded from the diluted earnings per share calculation.

For the three and nine months ended September 30, 2022 and 2021, the Company incurred net losses from operations, therefore basic and diluted net loss per share are the same for each period.

For the three and nine months ended September 30, 2022, 

approximately 0.8  million restricted shares, 1.4  million shares issuable upon exercise of options and 7.4  million common shares issuable upon the conversion of the Preferred Stock were excluded from dilutive potential common shares for the periods as they were anti-dilutive.

For the three  months ended March 31, 2023 and 2022, the Company incurred net losses available to stockholders, therefore basic and diluted net loss per share are the same in each respective period.

For the three  months ended March 31, 2023, 0.8  million unvested restricted shares, 1.9 million shares issuable upon exercise of options and 7.6  million common shares issuable upon the conversion of the Preferred Stock were excluded from the calculation of dilutive potential common shares for the period as they were anti-dilutive.

For the 

three and nine months ended September 30, 2021, 

0.8  million restricted shares, 1.5  million shares issuable upon exercise of options and 9.5 million common shares issuable upon conversion of the Preferred Stock were excluded from dilutive potential common shares for the periods as they were anti-dilutive. 

three months ended March 31, 2022, 

0.8  million unvested restricted shares, 1.5  million shares issuable upon exercise of options and 9.3  million common shares issuable upon conversion of the Preferred Stock were excluded from the calculation of dilutive potential common shares for the period as they were anti-dilutive. 

Loss per share was calculated as follows:

For the three months ended September 30,

For the nine months ended September 30,

For the three months ended March 31,

(In thousands, except share and per share data)

Net loss attributable to Lindblad Expeditions Holdings, Inc.

$ ( 8,726 )  

$ ( 24,338 )  

$ ( 79,203 )  

Net income (loss) attributable to Lindblad Expeditions Holdings, Inc.

Series A redeemable convertible preferred stock dividend

1 unchanged sentence

$ ( 448 )  

$ ( 25,678 )  

$ ( 82,821 )  

Weighted average shares outstanding:

2 unchanged sentences

50,757,126  

51,665,912  

50,013,191  

Total weighted average shares outstanding, diluted

1 unchanged sentence

50,757,126  

51,665,912  

50,013,191  

Undistributed loss per share available to stockholders:

1 unchanged sentence

$ ( 0.01 )  

$ ( 1.60 )  

$ ( 0.18 )  

$ ( 0.50 )  

$ ( 1.60 )  

NOTE 3 —

1 unchanged sentence

The Company’s guests remit deposits in advance of tour embarkation.

Guest deposits consist of guest ticket revenues as well as revenues from the sale of pre- and post-expedition excursions, hotel accommodations, land-based expeditions, and air transportation to and from the ships.

Guest deposits represent unearned revenues and are reported as unearned passenger revenues in the condensed consolidated balance sheets when received and are subsequently recognized as tour revenue over the duration of the trip.

Accounting Standards Codification, Revenue from Contracts with Customers (Topic 606 ) defines a “contract liability”

as an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration from the customer.

The Company does not consider guest deposits to be a contract liability until the guest no longer has the right, resulting from the passage of time, to cancel their reservation and receive a full refund. In conjunction with the suspension or rescheduling of expeditions, the Company provided guests an option of either a refund or future travel certificates, which in some instances exceeded the original cash deposit.

The Company has recorded liabilities up to the amount of cash deposits.

The additional value of any future travel certificates is being recognized as a discount when applied to future expeditions. The change in contract liabilities within unearned passenger revenues presented in our condensed consolidated balance sheets are as follows:

Guest deposits consist of guest ticket revenues as well as revenues from the sale of pre- and post-expedition excursions, hotel accommodations, land-based expeditions and certain air transportation.

Guest deposits represent unearned revenues and are reported as unearned passenger revenues when received and are subsequently recognized as tour revenue over the duration of the expedition.

Contract liabilities represent the Company's obligation to transfer goods or services to a customer for which the Company has received consideration from the customer.

The Company does 

not  consider guest deposits to be a contract liability until the guest 

no  longer has the right, resulting from the passage of time, to cancel their reservation and receive a full refund. In conjunction with the suspension or rescheduling of expeditions, the Company provided guests an option of either a refund or future travel certificates, which in some instances exceeded the original cash deposit. The value of future travel certificates in excess of cash received is being recognized as a discount to tour revenues at the time the related expedition occurs. Future travel certificates are valued based on the Company’s expectation that a guest will travel again.

March 31, 2023 and December 31, 2022, 

the Company has recorded $ 249.6  million and $ 245.1  million, related to unearned passenger revenue, respectively.

Contract Liabilities

(In thousands)

(unaudited)  

Balance as of December 31, 2022

3 unchanged sentences

95,692  

Balance as of September 30, 2022

Balance as of March 31, 2023

$ 139,628  

The following table disaggregates our tour revenues by the sales channel it was derived from:

For the three months ended September 30,

For the nine months ended September 30,

For the three months ended March 31,

Guest ticket revenue:

(unaudited)  

National Geographic

5 unchanged sentences

The following is a reconciliation of cash, cash equivalents and restricted cash to the statement of cash flows:

For the nine months ended September 30,

For the three months ended March 31,

(In thousands)

(unaudited)  

Cash and cash equivalents

8 unchanged sentences

Restricted cash consists of the following:

As of September 30, 2022

As of March 31, 2023

As of December 31, 2022

(In thousands)

(unaudited)  

Credit card processor reserves

2 unchanged sentences

Federal Maritime Commission and other escrow

14,739  

Certificates of deposit and other restricted securities

2 unchanged sentences

$ 28,847  

Amounts within prepaid expenses and other current assets in excess of 5% of current assets as of September 30, 2022 were prepaid tour expenses of $ 20.7  million and prepaid marketing, commission and other expenses of $ 12.9 million, and as of December 31, 2021, 

were prepaid tour expenses of $ 10.3 million. 

As of September 30, 2022 

and December 31, 2021, no  individual amounts within accounts payable and accrued expenses were in excess of 

5% of current liabilities.

In 2021, the Company received a $ 27.0 million grant under the Coronavirus Economic Relief for Transportation Services (“CERTS”) Act, which provided grants to eligible motorcoach, school bus, passenger vessel, and pilotage companies that have experienced annual revenue losses of 25 percent or more as result of COVID- 19.

The priority use of grant funds was required to be for payroll costs, though grants could be used for operating expenses and the repayment of debt accrued to maintain payroll.

The Company had accounted for the grant as a current liability on its balance sheet, as any amounts not appropriately used within one year of the grant date would have to be returned to the U.S.

As expenses for the grant were incurred, the corresponding amounts were recognized in other income on the income statement.

During the three months ended March 31, 2022, the Company recognized the remaining $ 11.6 million of the CERTS grant in other income for permitted payroll costs and ship operating expenses and, as of September 30, 2022, has no further liability recorded for the grant.

The Company’s loan receivable is recorded at amortized cost within other current  assets.

The Company reviewed its loan receivable for credit losses in connection with the preparation of its condensed consolidated financial statements for the period ended September 30, 2022. 

In evaluating the allowance for loan losses, the Company considered factors such as historical loss experience, the type and amount of loan, adverse situations that 

affect the borrower’s ability to repay and prevailing economic conditions.

Based on these credit loss estimation and experience factors, the Company realized 

no  allowance for loan loss for the 

nine months ended September 30, 2022.

The following is a rollforward of the loan receivable balance:

Loan Receivable

Prepaid expenses and other current assets are as follows: 

As of March 31, 2023

As of December 31, 2022

(In thousands)

Balance as of December 31, 2021

Prepaid tour expenses

$ 25,914  

Accrued interest

Amortization of deferred costs

Balance as of September 30, 2022

$ 20,605  

18,187  

21,173  

Total prepaid expenses and other current assets

$ 44,101  

$ 41,778  

Accounts payable and accrued expenses are as follows:

As of March 31, 2023

As of December 31, 2022

(In thousands)

Accrued other expense

$ 34,578  

$ 54,418  

Accounts payable

18,810  

16,601  

Total accounts payable and accrued expenses

$ 53,388  

$ 71,019  

NOTE 5 —

LONG-TERM DEBT

As of September 30, 2022

As of March 31, 2023

As of December 31, 2022

6 unchanged sentences

$ 351,560  

First Export Credit Agreement

$ 360,000  

1 unchanged sentence

351,032  

107,695  

( 2,090 )  

105,605  

Second Export Credit Agreement

First Export Credit Agreement

91,569  

4 unchanged sentences

92,965  

Credit Facility

Second Export Credit Agreement

107,485  

1 unchanged sentence

105,345  

Revolving Facility

110,044  

19 unchanged sentences

$ 529,452  

For the three and nine months ended September 30, 2022, deferred financing costs charged to interest expense was $ 0.7  million and $ 2.1  million, respectively.

For the three and nine months ended September 30, 2021, deferred financing costs charged to interest expense was $ 0.8  million and $ 2.3 million, respectively.

During the three months ended March 31, 2022, $ 9.0 million of deferred financing costs related to the repayment of the Company’s prior credit agreement, including the term facility, Main Street Loan and revolving credit facility were written-off to other expense.

For the three months ended March 31, 2023 and 2022, $ 0.7  million and $ 0.5  million, respectively, of deferred financing costs were charged to interest expense.

On February 4, 2022, the Company issued $ 360.0 million aggregate principal amount of 6.75 % senior secured notes due 

2027  (the “Notes”) in a private offering.

The Notes bear interest at a rate of 6.75% per year, accruing from February 4, 2022, and interest on the Notes is payable semiannually in arrears on February 15 and August 15 of each year.

The Notes bear interest at a rate of 6.75% per year, and interest is payable semiannually in arrears on February 15 and August 15 of each year.

The Notes will mature on February 15, 2027, subject to earlier repurchase or redemption.

4 unchanged sentences

These covenants are subject to a number of important exceptions and qualifications set forth in the Notes. 

New Revolving Credit Facility 

On February 4, 2022, the Company entered into a new senior secured revolving credit facility (the “New Revolving Credit Facility”), which provides for an aggregate principal amount of commitments of $ 45.0 million, maturing February 2027, including a letter of credit sub-facility in an aggregate principal amount of up to $ 5.0 million.

The obligations under the New Revolving Credit Facility are guaranteed by the Company and the Guarantors and are secured by first -priority pari passu 

Revolving Credit Facility 

On February 4, 2022, the Company entered into a senior secured revolving credit facility (the “Revolving Credit Facility”), which provides for an aggregate principal amount of commitments of $ 45.0 million, maturing February 2027, including a letter of credit sub-facility in an aggregate principal amount of up to $ 5.0 million.

The obligations under the Revolving Credit Facility are guaranteed by the Company and the Guarantors and are secured by first -priority pari passu 

liens, subject to permitted liens and certain exceptions, on substantially all the assets of the Company and the Guarantors.

Borrowings under the New Revolving Credit Facility, if any, will bear interest at a rate per annum equal to, at the Company’s option, an adjusted Secured Overnight Financing Rate (“SOFR”) rate plus a spread or a base rate plus a spread.

The New Revolving Credit Facility contains customary affirmative and negative covenants, as well as financial covenants and event of default provisions.

Borrowings under the Revolving Credit Facility, if any, will bear interest at a rate per annum equal to, at the Company’s option, an adjusted Secured Overnight Financing Rate (“SOFR”) rate plus a spread or a base rate plus a spread.

The Revolving Credit Facility contains customary affirmative and negative covenants, as well as financial covenants and event of default provisions.

Senior Secured Credit Agreements

In January 2018, the Company entered into a senior secured credit agreement (the “First Export Credit Agreement”) making available to the Company a loan in an aggregate principal amount not to exceed $ 107.7 million for the purpose of providing financing for up to 80 % of the purchase price of the Company’s new ice class vessel, the National Geographic Endurance , delivered in March 2020.

In September 2021, the Company amended its First Export Credit Agreement to, among other things, waive the net leverage coverage ratio through March 2022 and annualize EBITDA used in its covenant calculation through December 31, 2022.

The loan amortizes quarterly based on a 

twelve -year profile, with 

70 % maturing over 

twelve  years from drawdown, and 

30 % maturing over 

five  years from drawdown. In September 2021, the Company amended its First Export Credit Agreement to, among other things, waive the net leverage coverage ratio through March 2022 and annualize EBITDA used in its covenant calculation through December 31, 2022.

During May 2022, the Company further amended its First Export Credit Agreement to extend the waiver of its net leverage coverage ratio from March 2022 through December 31, 2022.

Certain other covenants continue to be more restrictive during the extended covenant waiver period. The First Export Credit Agreement, as amended, bears interest at a variable interest rate equal to three -month LIBOR plus a margin of 3.50 % per annum, for an aggregated rate of 6.75 % over the borrowing period covering September 30, 2022. 

The First Export Credit Agreement, as amended, bears interest at a variable interest rate equal to three -month LIBOR plus a margin of 3.50 % per annum, for an aggregated rate of 8.65 % over the borrowing period covering March 31, 2023. 

In April 2019, the Company entered into a senior secured credit agreement (the “Second Export Credit Agreement”), to make available to the Company and subject to certain conditions, a loan in an aggregate principal amount not to exceed $ 122.8 million for the purpose of providing pre- and post-delivery financing for up to 80 % of the purchase price of the Company’s new expedition ice-class cruise vessel, the 

National Geographic Resolution , delivered in September 2021, and borrowed $ 122.8 million under the Second Export Credit Agreement.

In September 2021, the Company amended its Second Export Credit Agreement to, among other things, waive the net leverage coverage ratio through March 2022 and annualize EBITDA used in its covenant calculation through December 31, 2022.

During May 2022, the Company further amended its Second Export Credit Agreement to extend the waiver of its net leverage coverage ratio from March 2022 through December 31, 2022. 

Certain other covenants continue to be more restrictive during the extended covenant waiver period.

The Second Export Credit Agreement, as amended, bears a variable interest rate equal to three -month LIBOR plus a margin of 3.50 % per annum, for an aggregated rate of 7.07 % over the borrowing period covering September 30, 2022.

Notes Payable

In connection with the Natural Habitat acquisition in May 2016, Natural Habitat issued a $ 2.5 million unsecured promissory note, amended in May 2020, to Benjamin L.

Bressler, the founder of Natural Habitat, with an outstanding principal amount of $ 0.8 million as of 

September 30, 2022. 

The promissory note accrues interest at a rate of 1.44 % annually, with interest payable every six months and the remaining principal payment due on December 22, 2022. 

National Geographic Resolution , delivered in September 2021, and borrowed $ 122.8 million under the Second Export Credit Agreement. The loan amortizes quarterly based on a 

twelve -year profile, with 

70 % maturing over 

twelve  years from final drawdown, and 

30 % maturing over  

five  years from final drawdown. In September 2021, the Company amended its Second Export Credit Agreement to, among other things, waive the net leverage coverage ratio through March 2022 and annualize EBITDA used in its covenant calculation through December 31, 2022.

During May 2022, the Company further amended its Second Export Credit Agreement to extend the waiver of its net leverage coverage ratio from March 2022 through December 31, 2022.

The Second Export Credit Agreement, as amended, bears a variable interest rate equal to three -month LIBOR plus a margin of 3.50 % per annum, for an aggregated rate of 8.46 % over the borrowing period covering March 31, 2023.

The Company’s Off the Beaten Path subsidiary has a loan maturing September 2023 for the purchase of guest transportation vehicles.

3 unchanged sentences

The outstanding balance will amortize at a rate of 15 % on both December 2023 and December 2024, with the remaining balance due December 2025.

The loan bears a variable interest rate equal to one -month LIBOR plus a spread of 3.00 %, or 6.14 % as of September 30, 2022.

The loan bears a variable interest rate equal to one -month LIBOR plus a spread of 3.00 %, or 7.86 % as of March 31, 2023.

This loan may be voluntarily prepaid at any time and from time to time, without premium or penalty, other than customary “breakage costs”

2 unchanged sentences

This loan matures August 2025, with monthly payments, and bears an interest rate of 0.53 % annually. 

The Company’s Notes, New Revolving Credit Facility, First Export Credit Agreement and Second Export Credit Agreement contain financial and restrictive covenants that include among others, net leverage ratios, limits on additional indebtedness and limits on certain investments.

The net leverage ratio covenant of the Company’s First Export Credit Agreement and Second Export Credit Agreement have been waived through December 31, 2022. 

On October 11, 2022, the Company amended the covenants of its Senior Secured Credit Agreements to use an annualized EBITDA calculation in its net leverage ratio covenant for the periods from March 31, 2023 through September 30, 2023.

The Company was in compliance with its covenants in effect as of September 30, 2022 and believes that it will be in compliance for the next 12 months.

The Company’s Notes, Revolving Credit Facility, First Export Credit Agreement and Second Export Credit Agreement contain financial and restrictive covenants that include among others, net leverage ratios, limits on additional indebtedness and limits on certain investments. On October 11, 2022, the Company amended the covenants of its Senior Secured Credit Agreements to use an annualized EBITDA calculation in its net leverage ratio covenant for the periods from March 31, 2023 through September 30, 2023.

The Company was in compliance with its covenants in effect as of March 31, 2023.

NOTE 6 —

14 unchanged sentences

The Company recorded the effective portion of changes in the fair value of its cash flow hedges to other comprehensive income (loss), net of tax, and subsequently reclassified these amounts into earnings in the period during which the hedged transaction was recognized.

Any changes in fair values of hedges that are determined to be ineffective are immediately reclassified from accumulated other comprehensive income (loss) into earnings.

The Company reclassified $ 0.6  million from other comprehensive income (loss) to earnings for the period ended March 31, 2022 

due to the termination of a cash flow hedge relationship between the Company’s interest rate caps and the Company’s underlying corporate variable rate debt, which was repaid during February 2022. 

The Company held the following derivative instruments with absolute notional values as of September 30, 2022:

Any changes in fair values of hedges that are determined to be ineffective are immediately reclassified from accumulated other comprehensive income (loss) into earnings. 

The Company held the following derivative instruments with absolute notional values as of March 31, 2023:

(In thousands)

5 unchanged sentences

Estimated fair values (Level 2 ) of derivative instruments were as follows:

As of September 30, 2022

As of March 31, 2023

As of December 31, 2022

4 unchanged sentences

Fair Value, Liability Derivatives

Derivative instruments designated as cash flow hedging instruments:

Interest rate cap (a)

Derivative instruments not designated as cash flow hedging instruments:

Interest rate cap (a)

$ 1,392  

Foreign exchange forward (a)

$ 1,392  

Foreign exchange forward (b)

Recorded in prepaid expenses and other current assets.

(b) Recorded in accounts payable and accrued expenses. 

Changes in the fair value of the Company’s hedging instruments are recorded in accumulated other comprehensive income. The effects of derivatives recognized in the Company’s condensed consolidated financial statements were as follows:

For the three months ended September 30,

For the nine months ended September 30,

For the three months ended March 31,

(In thousands)

(unaudited)  

Derivative instruments designated as cash flow hedging instruments:

Interest rate cap (a)

$ ( 93 )  

Foreign exchange forward (b)

( 109 )  

Derivative instruments not designated as cash flow hedging instruments:

Interest rate cap (a)

Foreign exchange forward (c)

$ ( 367 )  

( 1,417 )  

Foreign exchange forward (b)

$ ( 215 )  

For the three months ended September 30, 2022, recognized as income in interest expense, net.

For the nine months ended September 30, 2022, $ 1.3  million was recognized as income in interest expense, net, and $ 0.6  million was reclassified from other comprehensive income (loss) to interest expense, net.

For the 

three  and 

nine  months ended 

September 30, 2021, 

recognized, net of tax, as a component of other comprehensive income (loss) within stockholders’ equity. 

For the 

three  and 

nine  months ended 

September 30, 2021, 

$ 0.9 million and $ 1.0 million, respectively, were recognized as losses on foreign currency in the condensed consolidated statements of income, and $ 2.4  million and $ 2.0  million losses, respectively, were recognized, net of tax, as a component of other comprehensive income (loss) within stockholders’ equity.

Recognized in interest expense, net.

For the three  months ended March 31, 2022, $ 0.6  million was reclassified from other comprehensive income (loss) to interest expense, net.

Gains (losses) related to derivative instruments are expected to be largely offset by (losses) gains on the underlying exposures being hedged and recognized in gain (loss) on foreign currency.

In connection with the acquisition of Classic Journeys, the purchase agreement includes a contingent consideration earnout, see Note 11—Acquisitions, which is required to be recorded at fair value at each period.

The possible contingent acquisition consideration earnout is either zero or $ 0.6 million, depending on the achievement of certain average annual net profits targets for the years ended December 31, 2022 and 2023 by the acquired operation.

As of September 30, 2022, the contingent liability had a value of $ 0.3  million using a Level 3 valuation method, which was recorded in other long-term liabilities. 

The carrying amounts of cash and cash equivalents, accounts payable and accrued expenses, approximate fair value due to the short-term nature of these instruments.

The Company estimates the approximate fair value of its long-term debt to be $ 495.3  million as of September 30, 2022, based on the terms of the agreements and comparable market data as of September 30, 2022.

As of September 30, 2022 and December 31, 2021, the Company had no other significant liabilities that were measured at fair value on a recurring basis.

The Company estimates the approximate fair value of its long-term debt as of March 31, 2023 

to be $ 541.8  million based on the terms of the agreements and comparable market data as of March 31, 2023.

As of March 31, 2023 and December 31, 2022, the Company had no other significant liabilities that were measured at fair value on a recurring basis.

NOTE 7 —

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These repurchases exclude shares repurchased to settle statutory employee tax withholding related to the exercise of stock options and vesting of stock awards. The Company has cumulatively repurchased 875,218  shares of common stock for $ 8.3  million and 6,011,926 warrants for $ 14.7 million, since plan inception.

The remaining balance for the Repurchase Plan was $ 12.0  million as of September 30, 2022.

The Repurchase Plan is suspended due to restrictions related to the Main Street Expanded Loan Facility program that continue for one year upon repayment.

The Company repaid the Main Street Expanded Loan Facility in February 2022. 

The remaining balance for the Repurchase Plan was $ 12.0  million as of March 31, 2023.

Preferred Stock

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30  consecutive trading days. The Preferred Stock is convertible at any time, at the holder’s election, into a number of shares of common stock of the Company equal to the quotient obtained by dividing the then-current accrued value by the conversion price of $ 9.50 .

The Preferred Stock deferred issuance costs were approximately $ 2.1  million as of September 30, 2022, recorded as reduction to preferred stock on balance sheet.

During the year ended December 31, 2021, 5,000 shares of Preferred Stock and related accumulated dividends were converted by the holder into 566,364 shares of the Company’s common stock.

During the nine months ended September 30, 2022, 18,000 shares of Preferred Stock and related accumulated dividends were converted by the holder into 2,109,561  shares of the Company’s common stock.

The Company recorded accrued dividends for Preferred Stock of $ 1.0  million and $ 3.6  million for the three and nine months ended September 30, 2022, respectively, and $ 1.3 million and $ 4.0  million for the three and nine months ended September 30, 2021, respectively.

As of September 30, 2022, the 62,000 shares of Preferred Stock outstanding and accumulated dividends could be converted at the option of the holders into approximately 7.4  million shares of the Company’s common stock.

The Preferred Stock deferred issuance costs was $ 2.1  million as of March 31, 2023, recorded as reduction to preferred stock.

The Company recorded accrued dividends for Preferred Stock of $ 1.1  million and $ 1.3  million for the three  months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023, the 62,000 shares of Preferred Stock outstanding and accumulated dividends could be converted at the option of the holders into 

7.6  million shares of the Company’s common stock.

NOTE 8 —

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The Company is authorized to issue up to 4.7 million shares of common stock under the 2021 Long-Term Incentive Plan (“the Plan”) which was approved by shareholders in September 2021.

As of September 30, 2022, approximately 3.6  million shares were available to be granted under the Plan.

As of September 30, 2022 and December 31, 2021, options to purchase an aggregate of 1.4  million and 1.5 million shares of the Company’s common stock, respectively, with a weighted average exercise price of $ 15.10  and $ 10.30 , respectively, were outstanding.

As of September 30, 2022, 388,000  options were exercisable.

The Company recorded stock-based compensation expense of $ 1.6  million and $ 5.3 million, during the three and nine months ended September 30, 2022, respectively, and $ 1.4  million and $ 4.1  million during the three and nine months ended September 30, 2021, respectively.

As of March 31, 2023, 

2.9  million shares were available to be granted under the Plan.

The Company recorded stock-based compensation expense of $ 2.8  million and $ 1.8  million during the three  months ended March 31, 2023 and 2022, respectively.

Long-Term Incentive Compensation

During the nine months ended September 30, 2022, the Company granted 342,602 restricted stock units ("RSUs") with a weighted average grant price of $ 13.27 .

During the three months ended March 31, 2023, the Company granted 273,656 restricted stock units (“RSUs”) with a weighted average grant price of $ 9.57 .

The RSUs will primarily vest equally over three years on the anniversary of the grant date, subject to the recipient’s continued employment or service with the Company on the applicable vesting date. The number of shares were determined based upon the closing price of our common stock on the date of the award.

During the nine months ended September 30, 2022, the Company awarded 56,209  market performance share units (“MSUs”) with a weighted average grant price of $ 15.08 .

The MSUs are market-based equity incentive awards based on a performance-multiplier of change in the stock price of the Company’s common stock between the grant date and March 31, 2025.

The number of shares that will eventually be earned and vest may be more or less than the number of MSUs that are awarded, depending on the Company's common stock price, at a level ranging from 0 % to 150 %.

The number of MSUs earned shall be determined and shall vest on March 31, 2025, subject to the recipient’s continued employment or service with the Company on the vesting date.

During the three months ended March 31, 2023, the Company awarded 96,757  performance-based restricted share units (“PSUs”) with a weighted average grant price of $ 9.56 .

The PSUs generally vest 

three  years following the date of grant based on the attainment of performance- or market-based goals, all of which are subject to a service condition.

The Company does 

not  deliver the shares associated with the PSUs to the employee, non-employee director or other service providers until the performance and vesting conditions are met. 

During the three months ended March 31, 2023, the Company granted 500,000 options, with an average exercise price of $ 9.56 .

The options vest ratably over four years with a term of ten years. 

Stock Option Grants

Exercise price

Dividend yield

Expected Volatility

Risk-free interest rate

Expected term (in years)

As of March 31, 2023 and December 31, 2022, options to purchase an aggregate of 1.9  million and 1.4  million shares of the Company’s common stock, respectively, with a weighted average exercise price of $ 13.64  and $ 15.10 , respectively, were outstanding.

As of March 31, 2023, 388,000  options were exercisable.

Natural Habitat Contingent Arrangement

In connection with the acquisition of Natural Habitat, Mr.

Bressler, the founder of Natural Habitat, has an equity incentive opportunity to earn an award of options based on the future financial performance of Natural Habitat, where if the Final Year Equity Value of Natural Habitat, as defined in Mr.

Bressler's amended employment agreement, exceeds $ 25.0 million, effective as of December 31, 2023, 

Bressler will be granted options with a fair value equal to 10.1 % of such excess, subject to certain conditions. 

NOTE 9 —

RELATED PARTY TRANSACTIONS

In May 2016, in connection with the Company's acquisition of Natural Habitat, Natural Habitat issued an unsecured promissory note, amended May 2020, to Mr.

Bressler, the founder of Natural Habitat.

See Note 5—Long -term Debt for more information.

NOTE 10 —

As of September 30, 2022 

and December 31, 2021, the Company had no unrecognized tax benefits recorded. The Company's effective tax rate for the three and nine months ended September 30, 2022 was an expense of 46.0 % and 0.8 %, respectively, versus an expense of 12.1 % and a benefit of 2.8 % for the three and nine months ended September 30, 2021, respectively.

In connection with the 

2016  acquisition of Natural Habitat, Mr.

Bressler employment agreement, as amended, provides Mr.

Bressler, President of Natural Habitat, with an equity incentive opportunity to earn an award of options based on the future financial performance of Natural Habitat, effective as of 

December 31, 2025, subject to certain conditions. Mr.

Bressler has a 

one -time right to elect an early option award of 

50%  at 

December 31, 2023, subject to certain conditions. 

NOTE 9 —

To further expand the Company’s land-based experiential travel offerings and increase its addressable market, the Company completed three acquisitions during 2021.

On February 1, 2021 ,  the Company acquired 

80.1 % of the outstanding common stock of Off the Beaten Path, a land-based travel operator specializing in authentic national park experiences, on 

March 3, 2021 ,  the Company acquired 

70 % of the outstanding common stock of DuVine, an international luxury cycling and adventure company focused on exceptional food and wine experiences, and on October 13, 2021, the Company acquired 80.1 % of Classic Journeys, a leading luxury walking tour company. 

The acquisitions had an aggregate purchase price of $ 23.6 million, including $ 1.8 million in Company stock and $ 0.2 million in deferred contingent consideration.

The deferred contingent consideration has an earnout potential between zero and $ 0.6 million.

The acquisitions were accounted for under purchase accounting and are included in the Company's consolidated financial statements since the date of the acquisitions.

The Company preliminarily recorded $ 10.4 million in intangible assets related to tradenames and customer lists and $ 19.9 million in goodwill related to these acquisitions.

The amount recorded for the intangible assets and goodwill is subject to possible adjustment when the valuation of Classic Journeys is finalized. 

As of March 31, 2023 

and December 31, 2022, the Company had no unrecognized tax benefits recorded. The Company's effective tax rate for the three months ended March 31, 2023 was an expense of 66.5 %, versus a benefit of 

0.4 % for the three  months ended March 31, 2022. 

The effect tax rate for the three months ended March 31, 2023 was impacted by a $ 1.5 million discrete tax expense.

NOTE 10 —

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The following is a rollforward of redeemable non-controlling interest:

For the three months ended September 30,

For the nine months ended September 30,

For the three months ended March 31,

(In thousands)

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$ 10,626  

$ 7,494  

Net income (loss) attributable to noncontrolling interest

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( 2,090 )  

Acquired businesses' noncontrolling interest

( 255 )  

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$ 14,458  

$ 31,583  

$ 10,134  

Royalty Agreement –

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In return for these rights, the Company is charged a royalty fee.

The royalty fee is included within selling and marketing expense on the accompanying condensed consolidated statements of operations.

The royalty fee is included within selling and marketing expense.

The fee is calculated based upon a percentage of certain ticket revenues less travel agent commission, including the revenues received from cancellation fees and any revenues received from the sale of pre- and post-expedition extensions.

Royalty expense for the three and nine months ended September 30, 2022 was $ 1.9 million and $ 4.5 million, respectively, and was $ 0.7  million and $ 0.9 million for the three and nine months ended September 30, 2021, respectively.

The royalty balance payable to National Geographic as of September 30, 2022 and December 31, 2021 was $ 1.8  million and $ 0.9  million, respectively, and are included in accounts payable and accrued expenses on the accompanying condensed consolidated balance sheets.

Royalty expense for the three  months ended March 31, 2023 was $ 1.3  million, and was $ 1.2  million for the three  months ended March 31, 2022.

The royalty balance payable to National Geographic as of March 31, 2023 and December 31, 2022 

was $ 2.1 million and $ 1.8 million, respectively, and are included in accounts payable and accrued expenses.

Royalty Agreement –

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In return for these rights, Natural Habitat is charged a royalty fee and a fee based on annual gross sales.

The fees are included within selling and marketing expense on the accompanying condensed consolidated statements of operations.

This royalty fee expense was $0.4  million and $1.0  million for the three and nine months ended September 30, 2022, respectively, and $ 0.2  million and $ 0.3  million for the three and nine months ended September 30, 2021, respectively.

The fees are included within selling and marketing expense.

This royalty fee expense was $ 0.2  million for the three  months ended March 31, 2023 and 

March 31, 2022.

Charter Commitments

From time to time, the Company enters into agreements to charter vessels onto which it holds its tours and expeditions.

Future minimum payments on its charter agreements as of September 30, 2022 are as follows:

Future minimum payments on its charter agreements as of March 31, 2023 are as follows:

For the years ended December 31,

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(unaudited)  

2022 (three months)

$ 10,870  

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Operating results for the Company’s reportable segments were as follows:

For the three months ended September 30,

For the nine months ended September 30,

For the three months ended March 31,

(In thousands)

(unaudited)  

Tour revenues:

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$ 50,274  

$ 50,641  

$ 198,063  

$ 40,264  

$ 157,799  

Land Experiences

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17,572  

29,635  

105,477  

41,291  

64,186  

Total tour revenues

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$ 67,846  

$ 80,276  

$ 303,540  

$ 81,555  

$ 221,985  

Operating income (loss):

$ 12,118  

$ ( 22,282 )  

$ 15,140  

$ ( 60,380 )  

$ ( 80,617 )  

$ 20,237  

Land Experiences

12,950  

12,629  

( 686 )  

13,315  

Total operating income (loss)

$ 12,466  

$ ( 17,652 )  

$ 23,460  

$ ( 47,751 )  

$ ( 81,303 )  

$ 33,552  

For the three months ended March 31, 2023 

there was $ 2.5  million in intercompany tour revenues between the Lindblad and Land Experiences reportable segments, which were eliminated in consolidation. For the three months ended March 31, 2022, there was $ 1.6  of intercompany tour revenues between the Lindblad and Land Experiences reportable segments eliminated in consolidation.

Depreciation and amortization are included in segment operating income as shown below:

For the three months ended September 30,

For the nine months ended September 30,

For the three months ended March 31,

(In thousands)

(unaudited)  

Depreciation and amortization:

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$ 10,741  

$ 1,162  

$ 31,087  

$ 24,618  

$ 6,469  

Land Experiences

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$ 11,178  

$ 1,516  

$ 33,193  

$ 25,785  

$ 7,408  

The following table presents our total assets, intangibles, net and goodwill by segment:

(In thousands)

As of September 30, 2022

As of March 31, 2023

As of December 31, 2022

Total Assets:

(unaudited)  

$ 628,968  

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Land Experiences

11,361  

Total intangibles, net

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$ 42,017  

For the three and nine months ended September 30, 2022 

there was $ 1.7  million and $ 5.3  million, respectively, in intercompany tour revenues between the Lindblad and Land Experiences reportable segments, which were eliminated in consolidation. For the three and nine months ended September 30, 2021, there was $ 1.0 and $ 1.1 million, respectively, of intercompany tour revenues between the Lindblad and Land Experiences reportable segments eliminated in consolidation.

NOTE 12 —

SUBSEQUENT EVENTS

In May 2023, the Company issued $ 275.0 million of 9.00 % senior secured notes, maturing 2028 (the “2028 Notes”), with proceeds used primarily to prepay in full all outstanding borrowings under its existing export credit facilities.

The 2028 Notes are guaranteed on a senior secured basis by the Company and certain of the Company’s subsidiaries, and collateralized by certain of the Company’s assets.

MANAGEMENT ’

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s Annual Report on Form 10-K filed with the Securities and Exchange Commission ( “

) on February 28, 2022. Unless the context otherwise requires, in this Form 10-Q, “Company,”

) on March 10, 2023 (the “2022 Annual Report”). Unless the context otherwise requires, in this Form 10-Q, “Company,”

“Lindblad,”

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Potential risks and uncertainties include, but are not limited to:

suspended operations, cancelling or rescheduling of voyages and other potential disruptions to our business and operations related to the COVID-19 virus and/or the Russia-Ukraine conflict;

the impacts of the COVID-19 virus and/or the Russia-Ukraine conflict on our financial condition, liquidity, results of operations, cash flows, employees, plans and growth, fuel prices, changes in fuels consumed and availability of fuel supply in the geographies in which we operate or in general;

adverse worldwide economic, geopolitical or other conditions could reduce the demand for expedition travel;

adverse publicity regarding the cruise industry in general; 

unscheduled disruptions in our business due to travel restrictions, weather events, mechanical failures, pandemics or other events; 

events and conditions around the world, including war and other military actions, such as the current conflict between Russia and Ukraine, inflation, higher fuel prices, higher interest rates and other general concerns about the state of the economy or other events impacting the ability or desire of people to travel;

suspended operations, cancelling or rescheduling of voyages and other potential disruptions to our business and operations related to the COVID-19 virus, the Russia-Ukraine conflict, the political unrest in Peru or another unexpected event;

the impacts of inflation, the COVID-19 virus and/or the Russia-Ukraine conflict on our financial condition, liquidity, results of operations, cash flows, employees, plans and growth;

increases in fuel prices, changes in fuels consumed and availability of fuel supply in the geographies in which we operate or in general; 

the impacts of inflation and negative economic conditions or negative economic outlooks on the demand for expedition travel;

the loss of key employees, our inability to recruit or retain qualified shoreside and shipboard employees and increased labor costs;

the impact of delays or cost overruns with respect to anticipated or unanticipated drydock, maintenance, modifications or other required construction related to any of our vessels;

unscheduled disruptions in our business due to travel restrictions, weather events, mechanical failures, pandemics or other events;

changes adversely affecting the business in which we are engaged:

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our business strategy and plans;

our ability to maintain our relationship with National Geographic;

our ability to maintain or renew (on favorable terms or at all) our relationship with National Geographic and/or World Wildlife Fund;

compliance with new and existing laws and regulations, including environmental regulations and travel advisories and restrictions;

compliance with the financial and/or operating covenants in our debt arrangements;

the impact of severe or unusual weather conditions, including climate change, on our business;

adverse publicity regarding the travel and cruise industry in general;

loss of business due to competition;

the result of future financing efforts;

compliance with new and existing laws and regulations, including environmental regulations and travel advisories and restrictions;

the loss of key employees, our inability to recruit or retain qualified shoreside and shipboard employees and increased labor costs; 

the inability to meet or achieve our sustainability related goals, aspirations, initiatives, and our public statements and disclosures regarding them;

our common stock ranks junior to our Series A Preferred Stock with respect to dividends and amounts payable in the event of our liquidation, dissolution or winding up our affairs;

the result of future financing efforts;

those risks discussed herein and in Item 1A.

Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on February 28, 2022 (the “2021 Annual Report”).

Risk Factors in our 2022 Annual Report.

We urge you not to place undue reliance on these forward-looking statements, which speak only as of the date of this Form 10-Q.

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2023 Highlights

During 2022, we have provided immersive expeditions to our guests, on all ten of our owned and operated vessels, to Alaska, Antarctica, the Arctic, Baja California’s Sea of Cortez, British Columbia, Canada's Northwest Passage, French Polynesia, the Galápagos Islands, Greenland, Iceland, Norway, the Pacific Northwest, South America and elsewhere. 

During third quarter 2022, we launched the National Geographic Islander II , our spacious all-suite ship, for expeditions in the Galápagos Islands.

During May 2022, we amended our senior secured credit agreements to, among other things, extend the waiver of the net leverage ratio covenant through December 31, 2022. On October 11, 2022, we amended the covenants our senior secured credit agreements to use an annualized EBITDA calculation in our net leverage ratio covenant for the periods from March 31, 2023 through September 30, 2023.

During February 2022, we issued $360.0 million of 6.75% senior secured notes due 2027 and entered into a new $45.0 million revolving credit facility, which remains undrawn and matures February 2027.

We used the proceeds from the notes to prepay in full all outstanding borrowings under our prior term loan, including the Main Street Loan, and revolving credit facility, and paid all related premiums, terminating in full our existing credit agreement and the commitments thereunder.

During February 2022, our cupos necessary for tours in the Galápagos Islands were contractually renewed for a 20-year period.

Ramp of Fleet Operations  

We resumed operation in June 2021 and, since then, have continually ramped our operations, providing immersive expeditions in 2022 across all ten of our owned vessels.

During the third quarter of 2022, operations included trips to Alaska, the Arctic, the Pacific Northwest, British Columbia, Canada's Northwest Passage, the Galápagos Islands, Greenland, Iceland, Norway and South America. Travel restrictions related to COVID-19 have diminished dramatically, and we will resume operations in additional geographies in the remainder of 2022 and throughout 2023. Where travel restrictions remain, which primarily includes a limited number of itineraries impacted by the Russia-Ukraine conflict, we are adjusting itineraries where possible, and working with guests to reschedule travel plans and refund payments or issue future travel certificates, as applicable. Previously, due to the spread of the COVID-19 virus and the effects of travel restrictions around the world, we had suspended or rescheduled the majority of its expeditions departing between March 16, 2020 through May 31, 2021.

We believe there are a variety of strategic advantages that enabled us to deploy our ships safely and quickly as travel restrictions were lifted.

Most notably, the size of our owned and operated vessels, which range from 48 to 148 passengers, allows for a highly controlled environment that includes stringent cleaning protocols.

The small nature of our ships also allowed us to efficiently and effectively test our guests and crew prior to boarding, or as otherwise needed. Additionally, the majority of expeditions take place in remote locations where human interactions are limited, so there is less opportunity for external influence. 

Bookings Trends

We have substantial advanced reservations for future travel despite some continued impact from the COVID-19 virus, including, but not limited to, elevated cancellations, as well as some impact related to itinerary changes due to the Russia-Ukraine conflict. Bookings for 2023 are 23% ahead of the bookings for the full year 2020 at the same point in 2019.

Balance Sheet and Liquidity

As of September 30, 2022, we had $116.4 million in unrestricted cash and $29.5 million in restricted cash primarily related to deposits on future travel originating from U.S.

ports and credit card reserves.

Our total debt position was $572.4 million as of September 30, 2022, and we were in compliance with all of our debt covenants currently in effect.

As we continue to ramp operations, we anticipate a significant increase in guest payments as we receive final payments for upcoming expeditions as well as deposits for new reservations for future travel.

Our monthly cash usage will increase as we incur costs in operating expeditions, including the impact of higher fuel costs and inflation, and spending to market and advertise upcoming expeditions and trips.

However, there can be no assurance that cash flows from operations will be available to fund future obligations or that we will not experience delays or cancellations with respect to the resumption of our operations.

During the first quarter we provided immersive expeditions to our guests across all of our ships including voyages to Antarctica, Patagonia, Baja California’s Sea of Cortez, the Galápagos Islands, Central America, Australia, New Zealand, the South Pacific and elsewhere and generated $143.4 million in revenue, $12.5 million in operating income and $27.2 million in Adjusted EBITDA (non-GAAP financial measure defined below). 

We have substantial advanced reservations for future travel with bookings for the full year 2023 45% ahead of the bookings for 2019 at the same point in 2019.

During May, we issued $275.0 million of 9.00% senior secured notes, maturing 2028, with proceeds used primarily to pay the outstanding borrowings under our existing export credit agreements. 

The discussion and analysis of our results of operations and financial condition are organized as follows :

a description of certain line items and operational and financial metrics we utilize to assist us in managing our business;

results and a comparable discussion of our consolidated and segment results of operations for the three and nine months ended September 30, 2022 and 2021;

results and a comparable discussion of our consolidated and segment results of operations for the three months ended March 31, 2023 and 2022;

a discussion of our liquidity and capital resources, including future capital and contractual commitments and potential funding sources;

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Drydocking impacts operating results by reducing tour revenues and increasing cost of tours.

Our Natural Habitat, DuVine, Off the Beaten Path and Classic Journeys brands are seasonal businesses, with the majority of Natural Habitat’s tour revenue recorded in the third and fourth quarters from its summer season departures and polar bear tours, while the majority of Off the Beaten Path, DuVine and Classic Journeys’

revenues are recorded during the second and third quarters from their spring and summer season departures.

revenues recorded during the second and third quarters from their spring and summer season departures.

Results of Operations - Consolidated

For the three months ended September 30,

For the nine months ended September 30,

For the three months ended March 31,

(In thousands)

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Operating income (loss)

Net income (loss)

Undistributed loss per share available to stockholders:

Comparison of the Three and Nine Months Ended September 30, 2022 to Three and Nine Months Ended September 30, 2021 —

Comparison of the Three Months Ended March 31, 2023 to Three Months Ended March 31, 2022 —

Tour Revenues

Tour revenues for the three months ended September 30, 2022 increased $80.3 million, to $144.8 million, compared to $64.5 million for the three months ended September 30, 2021.

The Lindblad segment tour revenues increased by $50.6 million, and the Land Experiences segment increased $29.6 million, primarily due to the ramp of expeditions and trips, and higher pricing.

The Land Experiences segment also includes the results for Classic Journeys for 2022, which was acquired in the fourth quarter of 2021. 

Tour revenues for the nine months ended September 30, 2022 increased $222.0 million, to $303.5 million, compared to $81.6 million for the nine months ended September 30, 2021.

The Lindblad segment tour revenues increased by $157.8 million, and the Land Experiences segment increased $64.2 million, primarily due to the ramp of expeditions and trips, and higher pricing.

For 2022, the Land Experiences segment also includes results for the full year-to-date period for Off the Beaten Path and DuVine, which were acquired in the first quarter of 2021, and the results for Classic Journeys, which was acquired during the fourth quarter of 2021. 

Tour revenues for the three months ended March 31, 2023 increased $75.5 million, to $143.4 million, compared to $67.8 million for the three months ended March 31, 2022.

The Lindblad segment tour revenues increased by $65.2 million, and the Land Experiences segment increased $10.3 million, primarily due to the ramp of expeditions and trips, and higher pricing. 

Cost of Tours

Total cost of tours for the three months ended September 30, 2022 increased $42.0 million, or 92%, to $87.6 million, compared to $45.6 million for the three months ended September 30, 2021.

The Lindblad segment cost of tours increased by $25.5 million, and the Land Experiences segment increased $16.5 million, primarily due to the ramp of expeditions and trips. The Land Experiences segment also includes the results for Classic Journeys for 2022, which was acquired in the fourth quarter of 2021. 

Total cost of tours for the nine months ended September 30, 2022 increased $134.8 million to $208.0 million, compared to $73.3 million for the nine months ended September 30, 2021.

The Lindblad segment cost of tours increased by $97.0 million, and the Land Experiences segment increased $37.8 million, primarily due to the ramp of expeditions and trips. The Land Experiences segment also includes results for the full year-to-date period for Off the Beaten Path and DuVine, which were acquired in the first quarter of 2021, and the results for Classic Journeys, which was acquired in the fourth quarter of 2021. 

Total cost of tours for the three months ended March 31, 2023 increased $14.1 million, or 24%, to $72.0 million, compared to $57.9 million for the three months ended March 31, 2022.

The Lindblad segment cost of tours increased by $9.5 million, and the Land Experiences segment increased $4.6 million, primarily due to the ramp of expeditions and trips. 

General and Administrative

General and administrative expenses for the three months ended September 30, 2022 increased $7.5 million, or 44%, to $24.5 million, compared to $17.0 million for the three months ended September 30, 2021.

At the Lindblad segment, general and administrative expenses increased $4.6 million from the prior year period, primarily due to higher personnel costs associated with the ramp in operations and higher credit card commissions due to the strong booking environment. At the Land Experiences segment, general and administrative expenses increased $2.9 million, primarily due to increased personnel costs related to operating additional trips, higher credit card commissions due to the strong booking environment and the inclusion of results for Classic Journeys, which was acquired in the fourth quarter of 2021. 

General and administrative expenses for the nine months ended September 30, 2022 increased $22.8 million, or 49%, to $68.9 million, compared to $46.1 million for the nine months ended September 30, 2021.

At the Lindblad segment, general and administrative expenses increased $14.2 million from the prior year period, primarily due to higher personnel costs associated with the ramp in operations, increased credit card commissions due to the strong booking environment and higher stock-based compensation expense. At the Land Experiences segment, general and administrative expenses increased $8.6 million, primarily due to increased personnel costs related to operating additional trips, higher credit card commissions due to the strong booking environment and the inclusion of results for the full year-to-date period for Off the Beaten Path and DuVine, which were acquired in the first quarter of 2021, and the results for Classic Journeys, which was acquired in the fourth quarter of 2021. 

General and administrative expenses for the three months ended March 31, 2023 increased $5.8 million, or 28%, to $26.4 million, compared to $20.6 million for the three months ended March 31, 2022.

At the Lindblad segment, general and administrative expenses increased $3.3 million from the prior year period, primarily due to higher personnel costs associated with the ramp in operations and higher credit card commissions due to the strong booking environment. At the Land Experiences segment, general and administrative expenses increased $2.5 million, primarily due to increased personnel costs related to operating additional trips and higher credit card commissions due to the strong booking environment. 

Selling and Marketing

Selling and marketing expenses for the three months ended September 30, 2022 increased $5.8 million, or 57%, to $16.0 million, compared to $10.2 million for the three months ended September 30, 2021.

At the Lindblad segment, selling and marketing expenses increased $4.2 million, primarily due to higher commissions related to the ramp in operations.

At the Land Experiences segment, selling and marketing expenses increased $1.6 million, primarily due to increased marketing spend associated with the ramp in operations and the inclusion of results for Classic Journeys, which was acquired in the fourth quarter of 2021.

Selling and marketing expenses for the nine months ended September 30, 2022 increased $23.5 million to $41.2 million, compared to $17.7 million for the nine months ended September 30, 2021.

At the Lindblad segment, selling and marketing expenses increased $20.0 million, primarily due to higher commissions related to the ramp in operations and increased advertising spend to drive future growth.

At the Land Experiences segment, selling and marketing expenses increased $3.5 million, primarily due to increased marketing spend associated with the ramp in operations, and includes results for the full year-to-date period for Off the Beaten Path and DuVine, which were acquired in the first quarter of 2021, and the results for Classic Journeys, which was acquired in the fourth quarter of 2021.

Selling and marketing expenses for the three months ended March 31, 2023 increased $8.3 million, or 68%, to $20.7 million, compared to $12.3 million for the three months ended March 31, 2022.

At the Lindblad segment, selling and marketing expenses increased $6.3 million, primarily due to higher commissions related to the ramp in operations and increased marketing spend to drive future bookings.

At the Land Experiences segment, selling and marketing expenses increased $2.0 million, primarily due to increased marketing spend to drive future bookings.

Depreciation and Amortization

Depreciation and amortization expenses for the three months ended September 30, 2022 increased $1.5 million, or 16%, to $10.8 million, compared to $9.3 million for the three months ended September 30, 2021, primarily due to depreciation for the National Geographic Resolution placed into service in September 2021, depreciation of technology assets placed into service to support our digital initiatives, accelerated depreciation for the National Geographic Islander , which was replaced in August 2022, and the amortization of acquired intangibles.

Depreciation and amortization expenses for the nine months ended September 30, 2022 increased $7.4 million, or 29%, to $33.2 million, compared to $25.8 million for the nine months ended September 30, 2021, primarily due to depreciation for the National Geographic Resolution placed into service in September 2021, depreciation of technology assets placed into service to support our digital initiatives, accelerated depreciation for the National Geographic Islander , which was replaced in August 2022, and the amortization of acquired intangibles.

Depreciation and amortization expenses for the three months ended March 31, 2023 increased $0.6 million, or 6%, to $11.8 million, compared to $11.2 million for the three months ended March 31, 2022.

Other Income (Expense)

Other expense for the three months ended September 30, 2022, increased $6.4 million to $9.5 million from $3.1 million for the three months ended September 30, 2021, primarily due to the following:

A $2.3 million increase in interest expense, net to $8.4 million in 2022, primarily due to additional drawdowns throughout 2021 under our export credit agreements related to the delivery of the National Geographic Resolution , as well as increased principal on our notes as a result of the debt refinancing in February 2022 and higher rates across our debt facilities. 

A $0.6 million decrease in loss on foreign currency translation.

A $4.6 million increase in other expenses due to the $4.4 million related to expenses covered under the grant for the Coronavirus Economic Relief for Transportation Services (“CERTS”) Act recognized in third quarter 2021.

Other expense for the nine months ended September 30, 2022, increased $13.5 million to $27.8 million from $14.2 million for the nine months ended September 30, 2021, primarily due to the following:

A $9.1 million increase in interest expense, net to $26.5 million in 2022, primarily due to additional drawdowns throughout 2021 under our export credit agreements related to the delivery of the National Geographic Resolution , as well as increased principal on our notes as a result of the debt refinancing in February 2022 and higher rates across our debt facilities. 

A $0.3 million increase in loss on foreign currency translation.

A $4.3 million decrease in other income primarily due to the write-off of $9.0 million of deferred financing costs and $1.9 million of fees and other expenses related to the repayment of our prior credit agreement, including the term facility, Main Street Loan and revolving credit facility, during 2022, and the $4.4 million related to expenses covered under the CERTS grant during 2021, mostly offset by the by recognition of $11.6 million related to expenses covered under the CERTS grant during 2022.

Other expense for the three months ended March 31, 2023, increased $2.1 million to $10.1 million from $8.1 million for the three months ended March 31, 2022, primarily due to a $1.8 million increase in interest expense, primarily due to higher rates across our debt facilities.

Results of Operations —

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The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

For the three months ended September 30,

For the nine months ended September 30,

For the three months ended March 31,

(In thousands)

8 unchanged sentences

Total adjusted EBITDA

Comparison of Three and Nine Months Ended September 30, 2022 to Three and Nine Months Ended September 30, 2021 at the Lindblad Segment

Tour Revenues

Tour revenues for the three months ended September 30, 2022 increased $50.6 million to $83.7 million, compared to $33.1 million for the three months ended September 30, 2021.

The increase in 2022 was a result of the ramp in expeditions and higher pricing compared with the third quarter of 2021. 

Tour revenues for the nine months ended September 30, 2022 increased $157.8 million to $198.1 million, compared to $40.3 million for the nine months ended September 30, 2021.

The increase in 2022 was a result of the ramp in expeditions and higher pricing compared with the nine months ended September 30, 2021.

Operating Loss

Operating loss for the three months ended September 30, 2022 improved by $15.2 million to a loss of $7.1 million compared to a loss of $22.3 million for the three months ended September 30, 2021, primarily due to the increase in tour revenues, partially offset by higher cost of tours and personnel costs due to the ramp in operations, increased commissions related to the revenue and bookings growth and increased depreciation mainly from the delivery of the National Geographic Resolution .

Operating loss for the nine months ended September 30, 2022 improved $20.2 million to a loss of $60.4 million compared to a loss of $80.6 million for the nine months ended September 30, 2021, primarily due to the increase in tour revenues, partially offset by higher cost of tours and personnel costs due to the ramp in operations, increased commissions related to the revenue and bookings growth, higher marketing costs to drive future growth and increased depreciation mainly from the delivery of the National Geographic Resolution .

Comparison of Three and Nine Months Ended September 30, 2022 to Three and Nine Months Ended September 30, 2021 at the Land Experiences Segment

Tour Revenues

Tour revenues for the three months ended September 30, 2022 increased $29.6 million to $61.0 million compared to $31.4 million for the three months ended September 30, 2021, primarily as a result of operating additional trips during the third quarter 2022, higher pricing and the inclusion of results for Classic Journeys in 2022, which was acquired in the fourth quarter of 2021.

Tour revenues for the nine months ended September 30, 2022 increased $64.2 million to $105.5 million compared to $41.3 million for the nine months ended September 30, 2021, primarily as a result of operating additional trips during 2022, higher pricing and the inclusion of the full year-to-date period of results for Off the Beaten Path and DuVine, which were acquired in the first quarter of 2021, and the results for Classic Journeys, which was acquired in the fourth quarter of 2021.

Operating Income (Loss)

Operating income for the three months ended September 30, 2022 improved $8.4 million to $13.0 million compared to operating income of $4.6 million for the three months ended September 30, 2021, primarily a result of operating additional trips during the third quarter of 2022 and the inclusion of results for Classic Journeys in 2022, which was acquired in the fourth quarter of 2021.

Operating income of $12.6 million for the nine months ended September 30, 2022 improved by $13.3 million compared to a loss of $0.7 million for the nine months ended September 30, 2021.

The improvement in operating income was primarily a result of operating additional trips during 2022 and the inclusion of the full year-to-date period of results for Off the Beaten Path and DuVine, which were acquired in the first quarter of 2021, and the results for Classic Journeys, which was acquired in the fourth quarter of 2021.

Adjusted EBITDA —

The following table outlines the reconciliation of net loss to consolidated Adjusted EBITDA.

For the three months ended September 30,

For the nine months ended September 30,

(In thousands)

Interest expense, net

Income tax expense (benefit)

Depreciation and amortization

Loss on foreign currency

Other expense (income)

Stock-based compensation

Adjusted EBITDA

The following tables outline the reconciliation for each reportable segment from operating income to Adjusted EBITDA.

Lindblad Segment

For the three months ended September 30,

For the nine months ended September 30,

(In thousands)

Operating loss

Depreciation and amortization

Stock-based compensation

Adjusted EBITDA

Land Experiences Segment

For the three months ended September 30,

For the nine months ended September 30,

(In thousands)

Operating income (loss)

Depreciation and amortization

Stock-based compensation

Adjusted EBITDA

Guest Metrics —

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The following table sets forth our Available Guest Nights, Guest Nights Sold, Occupancy, Maximum Guests, Number of Guests and Voyages:

For the three months ended September 30,

For the nine months ended September 30,

For the three months ended March 31,

Available Guest Nights

5 unchanged sentences

Calculation of Gross and Net Yield per Available Guest Night

For the three months ended September 30,

For the nine months ended September 30,

For the three months ended March 31,

(In thousands, except for Available Guest Nights, Gross and Net Yield per Available Guest Night)

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The following table reconciles operating income to our Net Yield Guest Metric for the Lindblad Segment:

For the three months ended September 30,

For the nine months ended September 30,

For the three months ended March 31,

(In thousands)

7 unchanged sentences

Calculation of Gross and Net Cruise Cost

For the three months ended September 30,

For the nine months ended September 30,

For the three months ended March 31,

(In thousands, except for Available Guest Nights, Gross and Net Cruise Cost per Avail.

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Adjusted Net Cruise Cost per Available Guest Night

Comparison of Three Months Ended March 31, 2023 to Three Months Ended March 31, 2022 at the Lindblad Segment

Tour Revenues

Tour revenues for the three months ended March 31, 2023 increased $65.2 million to $115.5 million, compared to $50.3 million for the three months ended March 31, 2022.

The 130% increase in 2023 was driven by higher guest ticket revenues primarily from an increase in available guest nights and from higher pricing and occupancy compared with the first quarter of 2022. 

Operating Income

We generated $12.1 million of operating income for the three months ended March 31, 2023, compared to a $33.6 operating loss for the three months ended March 31, 2022, primarily due to the increase in tour revenues, partially offset by higher cost of tours and personnel costs due to the ramp in operations, increased commissions related to the revenue and bookings growth and increased marketing spend to support future growth initiatives.

Comparison of Three Months Ended March 31, 2023 to Three Months Ended March 31, 2022 at the Land Experiences Segment

Tour Revenues

Tour revenues for the three months ended March 31, 2023 increased $10.3 million to $27.9 million compared to $17.6 million for the three months ended March 31, 2022 primarily as a result of operating additional trips during the first quarter 2023 and higher pricing.

Operating Income 

We generated $0.3 million of operating income for the three months ended March 31, 2023, compared to an operating loss of $0.7 million for the three months ended March 31, 2022, primarily due to the increase in tour revenue, partially offset by higher operating and personnel costs related to operating additional departures, increased commissions related to the revenue and bookings growth and increased marketing spend to support future growth initiatives.

Adjusted EBITDA —

The following table outlines the reconciliation of net loss to consolidated Adjusted EBITDA.

For the three months ended March 31,

(In thousands)

Net income (loss)

Interest expense, net

Income tax expense (benefit)

Depreciation and amortization

Gain on foreign currency

Stock-based compensation

Adjusted EBITDA

The following tables outline the reconciliation for each reportable segment from operating income to Adjusted EBITDA.

Lindblad Segment

For the three months ended March 31,

(In thousands)

Operating income (loss)

Depreciation and amortization

Stock-based compensation

Adjusted EBITDA

Land Experiences Segment

For the three months ended March 31,

(In thousands)

Operating income (loss)

Depreciation and amortization

Stock-based compensation

Adjusted EBITDA

Liquidity and Capital Resources

The COVID-19 pandemic has had a material negative impact on our operations and financial results and, while we have substantially resumed operations, given the dynamic nature of this situation, we cannot reasonably estimate the impacts of the COVID-19 pandemic on our financial condition, results of operations, cash flows, plans and growth in the future. 

As of September 30, 2022, we had approximately $572.4 million in long-term debt obligations, including the current portion of long-term debt.

We believe that our cash on hand and expected future operating cash inflows will be sufficient to fund operations, debt service requirements and necessary capital expenditures, assuming that our operations continue to ramp as we currently expect. 

We anticipate a significant increase in guest payments as we receive final payments for upcoming expeditions and trips, as well as deposits for new reservations for future travel. As we continue to ramp operations, our monthly cash usage will continue to increase as we incur costs in operating additional expeditions and trips and increase spending to market and advertise upcoming expeditions and trips.

However, there can be no assurance that cash flows from operations will be available to fund future obligations or that we will not experience delays or cancellations with respect to the resumption of our operations.

Sources and Uses of Cash for the Nine Months Ended September 30, 2022 and 2021

Net cash provided by operating activities was $0.8 million for the nine months ended September 30, 2022 compared to $21.5 million for the same period in 2021. The $20.7 million decrease is primarily due to higher costs during 2022 as we ramped operations. 

Net cash used in investing activities was $29.6 million for the nine months ended September 30, 2022 compared to $96.3 million in the same period in 2021.

2022 primarily included routine vessel maintenance across the fleet and renovations to the National Geographic Islander II  for its launch during the third quarter of this year, while 2021 primarily included costs associated with building the 

National Geographic Resolution and the acquisitions of Off the Beaten Path and DuVine.

Net cash provided by financing activities was $2.1 million for the nine months ended September 30, 2022 compared to $55.3 million for the same period in 2021. 2022 primarily included the issuance of new senior secured notes which were used to repay the prior credit agreement, including the term facility, the Main Street Loan and the revolving facility.

2021 mainly included the drawdown of $61.7 million under a senior secured credit agreement for the remaining payments on the 

National Geographic Resolution.

As of March 31, 2023, the Company had $84.0 million in unrestricted cash and cash equivalents and $36.7 million in restricted cash primarily related to deposits on future travel originating from U.S.

ports and credit card reserves.

As of March 31, 2023, we had $560.0 million in long-term debt obligations, including the current portion of long-term debt.

We believe that our cash on hand and expected future operating cash inflows will be sufficient to fund operations, debt service requirements and necessary capital expenditures. 

Sources and Uses of Cash for the Three Months Ended March 31, 2023 and 2022

Net cash provided by operating activities was $2.1 million for the three months ended March 31, 2023 compared to $5.2 million for the same period in 2022. The $3.1 million decrease is primarily due to higher costs during 2023 as we returned all vessels to operations. 

Net cash provided by investing activities was $8.7 million for the three months ended March 31, 2023 compared to $7.5 million used in investing activities in the same period in 2022.

2023 primarily included divesting of marketable securities, partially offset by vessel capital expenditures, while 2022 primarily included routine capital vessel maintenance across the fleet and renovations to the National Geographic Islander II  for its launch during the third quarter of 2022.

Net cash used in financing activities was $6.1 million for the three months ended March 31, 2023 compared to $14.5 million provided by financing activities for the same period in 2022. 2023 primarily included repayments under our export credit agreements, while 2022 primarily included the issuance of new senior secured notes which were used to repay the prior credit agreement, including the term facility, the Main Street Loan and the revolving facility .

Funding Sources

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On February 4, 2022, we issued $360.0 million aggregate principal amount of 6.75% senior secured notes due 2027 (the “Notes”) in a private offering.

The Notes bear interest at a rate of 6.75% per year, accruing from February 4, 2022, and interest on the Notes is payable semiannually in arrears on February 15 and August 15 of each year.

The Notes bear interest at a rate of 6.75% per year and interest is payable semiannually in arrears on February 15 and August 15 of each year.

The Notes will mature on February 15, 2027, subject to earlier repurchase or redemption.

4 unchanged sentences

These covenants are subject to a number of important exceptions and qualifications set forth in the Notes. 

New Revolving Credit Facility

On February 4, 2022, we entered into a new senior secured revolving credit facility (the “New Revolving Credit Facility”), which provides for an aggregate principal amount of commitments of $45.0 million, maturing February 2027, including a letter of credit sub-facility in an aggregate principal amount of up to $5.0 million.

The obligations under the New Revolving Credit Facility are guaranteed by us and the Guarantors and are secured by first-priority pari passu 

Revolving Credit Facility

On February 4, 2022, we entered into a senior secured revolving credit facility (the “Revolving Credit Facility”), which provides for an aggregate principal amount of commitments of $45.0 million, maturing February 2027, including a letter of credit sub-facility in an aggregate principal amount of up to $5.0 million.

The obligations under the Revolving Credit Facility are guaranteed by us and the Guarantors and are secured by first-priority pari passu 

liens, subject to permitted liens and certain exceptions, on substantially all the assets of the Company and the Guarantors.

Borrowings under the New Revolving Credit Facility, if any, will bear interest at a rate per annum equal to, at our option, an adjusted SOFR rate plus a spread or a base rate plus a spread.

The New Revolving Credit Facility contains customary affirmative and negative covenants, as well as financial covenants and event of default provisions. 

Borrowings under the Revolving Credit Facility, if any, will bear interest at a rate per annum equal to, at our option, an adjusted SOFR rate plus a spread or a base rate plus a spread.

The Revolving Credit Facility contains customary affirmative and negative covenants, as well as financial covenants and event of default provisions. 

Senior Secured Credit Agreements

3 unchanged sentences

We borrowed $122.8 million under the Second Export Credit Agreement, drawing approximately $30.5 million in 2019, $30.6 million in 2020 and $61.7 million in 2021, with the ship delivered in September 2021. 

In September 2021, we amended our export credit agreements to, among other things, annualize EBITDA used in the covenant calculations through December 31, 2022.

During May 2022, we further amended our export credit agreements to extend the waiver of the total net leverage ratio covenant through December 31, 

Certain other covenants continue to be more restrictive during the extended covenant waiver period.

We were in compliance with our covenants in effect as of September 30, 2022 and are expected to be in compliance for the next 12 months. 

The First Export Credit Agreement, as amended, bears interest at a variable interest rate equal to three-month LIBOR plus a spread of 3.50% per annum, or 6.75% over the borrowing period covering September 30, 2022.

The Second Export Credit Agreement, as amended, bears a variable interest rate equal to three-month LIBOR plus a spread of 3.50% per annum, or 7.07% over the borrowing period covering September 30, 2022. On October 11, 2022, we amended the covenants of our export credit agreements to use an annualized EBITDA calculation in our net leverage ratio covenant for the periods from March 31, 2023 through September 30, 2023.

Notes Payable

In connection with the Natural Habitat acquisition in May 2016, Natural Habitat issued a $2.5 million unsecured promissory note, amended in May 2020, to Benjamin L.

Bressler, the founder of Natural Habitat, with an outstanding principal amount of $0.8 million as of September 30, 2022. The promissory note accrues interest at a rate of 1.44% annually, with interest payable every six months and the remaining principal payment due on December 22, 2022. 

The First Export Credit Agreement, as amended, bears interest at a variable interest rate equal to three-month LIBOR plus a spread of 3.50% per annum, or 8.65% over the borrowing period covering March 31, 2023.

The Second Export Credit Agreement, as amended, bears a variable interest rate equal to three-month LIBOR plus a spread of 3.50% per annum, or 8.46% over the borrowing period covering March 31, 2023. On October 11, 2022, we amended the covenants of our export credit agreements to use an annualized EBITDA calculation in our net leverage ratio covenant for the periods from March 31, 2023 through September 30, 2023.

We were in compliance with our covenants in effect as of March 31, 2023.

During April 2023, we issued $275.0 million of 9.00% senior secured notes, maturing 2028, with proceeds used primarily to pay the outstanding borrowings under our First and Second Export Credit Agreements.

The senior secured notes are guaranteed on a senior secured basis by us and certain of our subsidiaries and are collateralized by certain of our assets.

Our Off the Beaten Path subsidiary has a loan maturing September 2023 for the purchase of guest transportation vehicles.

1 unchanged sentence

Our Off the Beaten Path subsidiary has a $0.8 million loan under the Main Street Expanded Loan Facility, originated on December 11, 2020.

For the first 12 months, interest is not payable and accrued to the principal balance, thereafter, monthly interest payments are required.

The outstanding balance will amortize at a rate of 15% on both December 2023 and December 2024, with the remaining balance due December 2025.

The loan bears a variable interest rate equal to one-month LIBOR plus a spread of 3.00%, or 6.14% as of September 30, 2022.

The loan bears a variable interest rate equal to one-month LIBOR plus a spread of 3.00%, or 7.86% as of March 31, 2023.

This loan may be voluntarily prepaid at any time and from time to time, without premium or penalty, other than customary “breakage costs”

4 unchanged sentences

In August 2020, we issued and sold 85,000 shares of Series A Redeemable Convertible Preferred Stock, par value of $0.0001, (“Preferred Stock”) for $1,000 per share for gross proceeds of $85.0 million.

As of September 30, 2022, 62,000 shares of Preferred Stock were outstanding.

As of March 31, 2023, 62,000 shares of Preferred Stock were outstanding.

The Preferred Stock has senior and preferential ranking to our common stock.

3 unchanged sentences

At the six-year anniversary of the closing date, each investor has the right to request that we repurchase their Preferred Stock, and any Preferred Stock not requested to be repurchased shall be converted into our common shares equal to the quotient obtained by dividing the then-current accrued value by the conversion price.

During the nine months ended September 30, 2022, 18,000 shares of Preferred Stock and related accumulated dividends were converted by the holder into 2,109,561 shares of our common stock.

As of September 30, 2022, the outstanding Preferred Stock and accumulated dividends could be converted, at the option of the holders, into approximately 7.4 million shares of our common stock. 

As of March 31, 2023, the outstanding Preferred Stock and accumulated dividends could be converted, at the option of the holders, into approximately 7.6 million shares of our common stock. 

Funding Needs

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Traditionally we run a working capital deficit due primarily to a large balance of unearned passenger revenues.

As of September 30, 2022, we had a working capital deficit of $126.4 million, and as of December 31, 2021, we had a working capital deficit of $79.1 million. 

As of March 31, 2023, we had a working capital deficit of $152.1 million, and as of December 31, 2022, we had a working capital deficit of $157.8 million. 

Critical Accounting Policies

For a detailed discussion of the Critical Accounting Policies, please see our 2021 Annual Report.

Our preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. For a detailed discussion of our Critical Accounting Policies, please see our 2022 Annual Report, where we have discussed those policies and estimates that we believe are critical and require the use of complex judgment in their application. There have been no significant changes to our accounting policies from those disclosed in the 2022 Annual Report.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements