What changed in this filing

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Item 1. Financial Statements

2024-05-01 compared with 2023-11-02 · 377 added, 748 removed, 392 unchanged (74% of the section changed)

4 unchanged sentences

(In thousands, except share and per share data)

September 30, 2023

December 31, 2022

As of March 31, 2024

As of December 31, 2023

Current Assets:

Cash and cash equivalents

$ 168,015  

$ 87,177  

$ 177,719 $ 156,845

Restricted cash

36,802  

28,847  

Short-term securities

13,591  

Marine operating supplies

46,451 30,499

Prepaid expenses and other current assets

44,722  

41,778  

62,394 57,158

Total current assets

259,154  

183,319  

286,564 244,502

Property and equipment, net

530,337  

539,406  

42,017  

521,630 526,002

42,017 42,017

Intangibles, net

11,219  

Deferred tax asset

Right-to-use lease assets

Other long-term assets

$ 851,605  

$ 787,975  

$ 868,038 $ 831,297

Current Liabilities:

Unearned passenger revenues

$ 250,568  

$ 245,101  

$ 290,790 $ 252,199

Accounts payable and accrued expenses

66,701  

71,019  

64,962 65,055

Long-term debt - current

23,337  

Lease liabilities - current

Total current liabilities

319,033  

341,120  

357,555 319,224

Long-term debt, less current portion

620,888  

529,452  

622,676 621,778

Deferred tax liabilities

Lease liabilities

Other long-term liabilities

Total liabilities

943,271  

873,621  

984,491 945,063

Commitments and contingencies

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

62,000 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

72,397  

69,143  

62,000 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

74,649 73,514

Redeemable noncontrolling interests

34,232  

27,886  

106,629  

97,029  

STOCKHOLDERS’

36,297 37,784

110,946 111,298

STOCKHOLDERS’ DEFICIT

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

62,000 Series A shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

62,000 Series A shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

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

53,379,750 and 53,177,437 issued, 53,321,818 and 53,110,132 outstanding as of September 30, 2023 and December 31, 2022, respectively

53,524,606 and 53,390,082 issued, 53,466,674 and 53,332,150 outstanding as of March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital

92,549  

83,850  

99,059 97,139

Accumulated deficit

( 290,849 )  

( 326,463 ) ( 322,208 )

Total stockholders' deficit

( 198,295 )  

( 227,399 ) ( 225,064 )

Total liabilities, mezzanine equity and stockholders' deficit

$ 851,605  

$ 787,975  

$ 868,038 $ 831,297

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

3 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

$ 175,989  

$ 144,783  

$ 444,183  

$ 303,540  

Operating expenses:

Cost of tours

95,590  

87,576  

245,293  

208,023  

General and administrative

30,015  

24,535  

85,589  

68,882  

Selling and marketing

19,387  

16,025  

55,197  

41,193  

Depreciation and amortization

10,521  

10,839  

33,660  

33,193  

Total operating expenses

155,513  

138,975  

419,739  

351,291  

Operating income (loss)

20,476  

24,444  

Operating income

Other (expense) income:

Interest expense, net

( 11,482 )  

( 8,369 )  

( 33,593 )  

(Loss) gain on foreign currency

( 455 )  

( 872 )  

Other (expense) income

( 77 )  

( 333 )  

( 3,773 )  

Total other expense

( 12,014 )  

( 9,574 )  

( 37,320 )  

Income (loss) before income taxes

( 3,766 )  

( 12,876 )  

(Loss) income before income taxes

Income tax expense

Net income (loss)

( 5,498 )  

( 14,463 )  

Net income attributable to noncontrolling interest

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

( 8,726 )  

( 18,205 )  

Net (loss) income

Net (loss) income attributable to noncontrolling interest

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

Series A redeemable convertible preferred stock dividend

Net income (loss) available to stockholders

$ 4,540  

$ ( 9,762 )  

$ ( 21,460 )  

Net loss available to stockholders

Weighted average shares outstanding

53,309,336  

53,045,329  

53,227,642  

51,665,912  

53,401,799  

53,045,329  

53,227,642  

51,665,912  

Undistributed income (loss) per share available to stockholders:

$ 0.08  

$ ( 0.18 )  

$ ( 0.40 )  

$ 0.08  

$ ( 0.18 )  

$ ( 0.40 )  

Undistributed loss per share available to stockholders:

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

3 unchanged sentences

(In thousands)

For the three months ended September 30,

For the nine months ended September 30,

Net income (loss)

For the three months ended March 31,

Net (loss) income

Other comprehensive income:

Cash flow hedges:

Reclassification adjustment, net of tax

Total other comprehensive income

Total comprehensive income (loss)

comprehensive income attributive to non-controlling interest

Comprehensive income (loss) attributable to stockholders

Total comprehensive (loss) income

comprehensive (loss) income attributive to non-controlling interest

Comprehensive (loss) income attributable to stockholders

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

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AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders ’

 Deficit

Condensed Consolidated Statements of Stockholders ’ Deficit

(In thousands, except share data)

1 unchanged sentence

Total Stockholders'

Balance as of June 30, 2023

Stock-based compensation

Net activity related to equity compensation plans

Redeemable noncontrolling interest

Series A preferred stock dividend

Net income attributable to Lindblad Expeditions Holdings, Inc

Balance as of September 30, 2023

Additional Paid-In

Total Stockholders'

Balance as of December 31, 2023

4 unchanged sentences

Net loss attributable to Lindblad Expeditions Holdings, Inc.

Balance as of September 30, 2023

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

LINDBLAD EXPEDITIONS HOLDINGS, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders ’

 Deficit

(In thousands, except share data)

Additional Paid-In

Accumulated Other

Total Stockholders'

Comprehensive Loss

Balance as of June 30, 2022

Stock-based compensation

Net activity related to equity compensation plans

Redeemable noncontrolling interest

Series A preferred shares dividend

Net loss attributable to Lindblad Expeditions Holdings, Inc.

Balance as of September 30, 2022

Balance as of March 31, 2024

Additional Paid-In

Accumulated Other

Total Stockholders'

Comprehensive Loss

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 shares dividend

Net loss attributable to Lindblad Expeditions Holdings, Inc.

Balance as of September 30, 2022

Net income attributable to Lindblad Expeditions Holdings, Inc.

Balance as of March 31, 2023

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

Net (loss) income

Adjustments to reconcile net loss to net cash provided by operating activities:

4 unchanged sentences

Deferred income taxes

Change in fair value of contingent acquisition consideration

(Gain) loss on foreign currency

Write-off of unamortized issuance costs related to debt refinancing

Loss (gain) on foreign currency

Changes in operating assets and liabilities

Marine operating supplies and inventories

Prepaid expenses and other current assets

7 unchanged sentences

Purchases of property and equipment

Sale of short-term securities

Net cash used in investing activities

Sale of securities

Net cash (used in) provided by investing activities

Cash Flows From Financing Activities

Proceeds from long-term debt

Repayments of long-term debt

1 unchanged sentence

Repurchase under stock-based compensation plans and related tax impacts

Net cash provided by financing activities

Net increase (decrease) in cash, cash equivalents and restricted cash

Net cash used in financing activities

Net increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

7 unchanged sentences

Notes to the Unaudited Condensed Consolidated Financial Statements

NOTE 1 —

BUSINESS AND BASIS OF PRESENTATION

Lindblad Expeditions Holdings, Inc.’s and its consolidated subsidiaries’

(collectively, the “Company”

or “Lindblad”) mission is offering life-changing adventures around the world and pioneering innovative ways to allow its guests to connect with exotic and remote places.

The Company currently operates a fleet of ten owned expedition ships and five seasonal charter vessels under the Lindblad brand, operates land-based, eco-conscious expeditions and active nature focused tours under the Natural Habitat, Inc.

(“Natural Habitat”) and Off the Beaten Path, LLC (“Off the Beaten Path”) brands, designs handcrafted walking tours under the Classic Journeys, LLC (“Classic Journeys”) brand and operates luxury cycling and adventure tours under the DuVine Cycling + Adventure Company (“DuVine”) brand.

The Company’s common stock is listed on the NASDAQ Capital Market under the symbol “LIND”.

NOTE 1 — BUSINESS AND BASIS OF PRESENTATION

Lindblad Expeditions Holdings, Inc.’s and its consolidated subsidiaries’ (collectively, the “Company” or “Lindblad”) mission is offering life-changing adventures around the world and pioneering innovative ways to allow its guests to connect with exotic and remote places.

The Company currently operates a fleet of ten owned expedition ships and six seasonal charter vessels under the Lindblad brand, operates land-based, eco-conscious expeditions and active nature focused tours under the Natural Habitat, Inc.

The Company’s common stock is listed on the NASDAQ Capital Market under the symbol “LIND”.

The Company operates the following two reportable business segments:

Lindblad Segment.

 The Lindblad segment primarily provides ship-based expeditions aboard customized, nimble and intimately-scaled vessels that are able to venture where larger cruise ships cannot, thus allowing Lindblad to offer up-close experiences in the planet’s wild and remote places and capitals of culture.

Each expedition ship is fully equipped with state-of-the-art tools for in-depth exploration, and the majority of expeditions involve travel to remote places with limited infrastructure and ports, such as Antarctica and the Arctic, or places that are best accessed by a ship, such as the Galápagos Islands, Alaska, Baja California’s Sea of Cortez and Panama, and foster active engagement by guests.

The Company has an alliance with National Geographic Partners, LLC (“National Geographic”), which provides for lecturers and National Geographic experts, including photographers, writers, marine biologists, naturalists, field researchers and film crews, to join many of the Company’s expeditions.

Each expedition ship is fully equipped with state-of-the-art tools for in-depth exploration and the majority of expeditions involve travel to remote places with limited infrastructure and ports, such as Antarctica and the Arctic, or places that are best accessed by a ship, such as the Galápagos Islands, Alaska, Baja California’s Sea of Cortez and Panama, and foster active engagement by guests.

The Company has a brand license agreement with National Geographic Partners, LLC (“National Geographic”), which provides for lecturers and National Geographic experts, including photographers, writers, marine biologists, naturalists, field researchers and film crews, to join many of the Company’s expeditions.

Land Experiences Segment.

 The Land Experiences segment includes our 

four  primarily land-based brands, Natural Habitat, DuVine, Off the Beaten Path and Classic Journeys.

Natural Habitat  specializes in conservation-oriented adventures, providing life-enhancing forays into the natural world that feature wild habitats and the animals and people who live there.

Natural Habitat’s travel adventures provide unparalleled access to the planet's most extraordinary wildlife, landscapes and cultures.

Natural Habitat’s unique itineraries include access to private wildlife reserves, remote corners of national parks and distinctive, secluded, and remote lodges and camps situated where wildlife viewing is best, such as polar bear tours in Churchill, Canada, Alaskan grizzly bear adventures, small-group Galápagos Islands tours and African safaris.

Natural Habitat has partnered with World Wildlife Fund (“WWF”) to offer conservation travel, which is sustainable travel that contributes to the protection of nature and wildlife.

DuVine  specializes in luxury cycling and adventure tours around the world, providing immersive cultural and culinary experiences through thoughtfully designed itineraries led by expert local guides.

Offerings primarily include tours throughout Europe, the United States and South America. Examples of DuVine’s tours include cycling and culinary tours throughout the Bordeaux and Burgundy wine making regions, Tuscan truffle, porcini and chestnut harvest regions, Napa and Sonoma wine making regions and lakes and volcanos throughout Patagonia.

DuVine’s trips include top-quality gear and support and are tailored to riders of all abilities with an emphasis on exceptional food and wine experiences, along with boutique accommodations.

Off the Beaten Path  provides active small-group and private custom journeys around the world with a long-standing focus on offering unique adventures and experiences throughout United States (“U.S.”) National Parks.

In addition to other U.S.-based adventures such as ranch vacations and fly-fishing expeditions, Off the Beaten Path’s small-group product offerings include international expeditions across Europe, Africa, Australia, Central and South America and the South Pacific, such as hiking through the Dolomites, family adventures in Patagonia’s Lake District and experiencing the culture of Morocco.

All Off the Beaten Path expeditions are defined by a focus on outdoor activity led by experienced, friendly guides.

Classic Journeys  offers highly curated active small-group and private custom journeys centered around cinematic walks focused on engaging experiences that immerse guests into the history and culture of the places they are exploring and the people who live there, led by expert local guides in over 

50  countries around the world. Classic Journeys’

tours are highlighted by luxury boutique accommodations and handcrafted itineraries curated through years of local connections such as experiencing Tuscan farmhouse kitchens, exploring Minoan ruins in Crete, or eating and dancing around a Berber encampment campfire.

The Land Experiences segment includes our four primarily land-based brands, Natural Habitat, DuVine, Off the Beaten Path and Classic Journeys.

Natural Habitat offers over 100 different expedition itineraries in more than 45 countries spanning all seven continents, with eco-conscious expeditions and nature-focused, small-group tours that include polar bear tours in Churchill, Canada, Alaskan grizzly bear adventures, small-group Galápagos Islands tours and African safaris.

Natural Habitat has partnered with World Wildlife Fund (“WWF”) to offer conservation travel, which is sustainable travel that contributes to the protection of nature and wildlife.

Off the Beaten Path offers active small-group adventures, led by local, experienced guides, with distinct focus on wildlife, hiking national parks and culture.

Off the Beaten Path offerings include insider national park experiences in the Rocky Mountains, Desert Southwest, and Alaska, as well as unique trips across Central and South America, Oceania, Europe and Africa.

DuVine offers intimate group cycling and adventure tours around the world with local cycling experts as guides, immersive in local cultural, cuisine and high-quality accommodations.

International cycling tours include the exotic Costa Rican rainforests, the rocky coasts of Ireland and the vineyards of Spain while cycling adventures in the United States include cycling beneath the California redwoods, pedaling through Vermont farmland and wine tastings in the world-class vineyards of Napa and Sonoma.

Classic Journeys offers highly curated active small-group and private custom journeys centered around cinematic walks led by expert local guides in over 50 countries around the world.

These walking tours are highlighted by expert local guides, luxury boutique accommodations, and handcrafted itineraries that immerse guests into the history and culture of the places they are exploring and the people who live there.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements and notes to the unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding unaudited interim financial information and include the accounts and transactions of the Company.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial statements for the periods presented.

Operating results for the periods presented are not necessarily indicative of the results of operations to be expected for the full year due to seasonality and other factors.

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

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 —

EARNINGS PER SHARE

These unaudited condensed consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto for the year ended December 31, 2023 contained in the Company’s Annual Report on Form 10 -K filed with the SEC on March 6, 2024 ( the “2023 Annual Report”).

There have been no significant changes to the Company’s accounting policies from those disclosed in the 2023 Annual Report.

Recently Adopted Accounting Pronouncements

During November 2023, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023 - 07 ― Segment Reporting (Topic 280 )–Improvements to Reportable Segment Disclosures.

The amendments in this ASU are intended to improve and enhance disclosures about reportable segments’ significant segment expenses.

ASU 2023 - 07 is effective for fiscal years beginning after December 15, 2023 and interim periods beginning after December 15, 2024.

The Company adopted this guidance January 1, 2024 for its annual reporting, as required, and for its interim reporting will adopt January 1, 2025, as required.

These amendments require the Company to disclose significant segment expenses that are regularly provided to the chief operating decision maker and are included within each reported measure of segment operating results.

Recent Accounting Pronouncements

During December 2023, FASB issued ASU 2023 - 09 ― Income Taxes (Topic 740 )—Improvements to Income Tax Disclosures.

The amendments in this ASU are intended to enhance the transparency and decision usefulness of income tax disclosures.

ASU 2023 - 09 is effective for fiscal years beginning after December 15, 2024.

The Company will adopt this guidance January 1, 2025 for its annual reporting, as required.

These amendments will increase the Company’s disclosures related to income taxes.

During March 2024, FASB issued ASU 2024 - 01 ― Compensation—Stock Compensation (Topic 718 ) - Scope Application of Profits Interest and Similar Awards.

The amendments in this ASU add illustrative examples to help demonstrate how an entity should apply the scope guidance in paragraph ASU 718 - 10 - 15 - 3 to determine whether profits interest and similar awards should be accounted for in accordance with Topic 718, Compensation—Stock Compensation.

ASU 2024 - 01 is effective for fiscal years beginning after December 15, 2024.

The Company will adopt this guidance January 1, 2025, as required, and does not believe it will have a material impact the Company's financial statements.

NOTE 2 — EARNINGS PER SHARE

Earnings (loss) per Common Share

Earnings (loss) per common share is computed using the two -class method related to its Series A Redeemable Convertible Preferred Stock, par value of $ 0.0001  (“Preferred Stock”).

Under the two -class method, undistributed earnings available to stockholders for the period are allocated on a pro rata basis to the common stockholders and to the holders of the Preferred Stock based on the weighted average number of common shares outstanding and number of shares that could be issued upon conversion of the Preferred Stock.

Earnings (loss) per common share is computed using the two -class method related to its Series A Redeemable Convertible Preferred Stock, par value of $ 0.0001 (“Preferred Stock”).

Under the two -class method, undistributed earnings available to stockholders for the period are allocated on a pro rata basis to the common stockholders and to the holders of the Preferred Stock based on the weighted average number of common shares outstanding and number of shares that could be issued upon conversion of the Preferred Stock.

Diluted earnings per share is computed using the weighted average number of common shares outstanding and, if dilutive, potential common shares outstanding during the period.

Potential common shares consist of the dilutive incremental common shares associated with restricted stock awards and shares issuable upon the exercise of stock options, using the treasury stock method, and the potential common shares that could be issued from conversion of the Preferred Stock, using the if-converted method.

Potential common shares consist of the dilutive incremental common shares associated with restricted stock awards and shares issuable upon the exercise of stock options, using the treasury stock method, and the potential common shares that could be issued from conversion of the Preferred Stock, using the if-converted method.

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 nine months ended September 30, 2023 and three and nine months ended September 30, 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 nine months ended September 30, 2023, 0.8  million unvested restricted shares, 1.3  million shares issuable upon exercise of options and 7.8  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 months ended September 30, 2023, 7.8  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, 2022, 

0.8  million unvested restricted shares, 1.4  million shares issuable upon exercise of options and 7.4 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. 

For the three months ended March 31, 2024 and 2023, 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, 2024, 0.8 million unvested restricted shares, 2.2 million shares issuable upon exercise of options and 8.1 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 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.

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

$ 5,638  

$ ( 8,726 )  

$ ( 18,205 )  

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

Series A redeemable convertible preferred stock dividend

Undistributed income (loss) available to stockholders

$ 4,540  

$ ( 9,762 )  

$ ( 21,460 )  

Undistributed loss available to stockholders

Weighted average shares outstanding:

Total weighted average shares outstanding, basic

53,309,336  

53,045,329  

53,227,642  

51,665,912  

Dilutive potential common shares

91,365  

Dilutive potential options

Total weighted average shares outstanding, diluted

53,401,799  

53,045,329  

53,227,642  

51,665,912  

Undistributed income (loss) per share available to stockholders:

$ 0.08  

$ ( 0.18 )  

$ ( 0.40 )  

$ 0.08  

$ ( 0.18 )  

$ ( 0.40 )  

NOTE 3 —

Undistributed loss per share available to stockholders:

NOTE 3 — REVENUES

Customer Deposits and Contract Liabilities

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 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 primarily related to the COVID- 19 pandemic, 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.

September 30, 2023 and December 31, 2022, 

the Company has $ 250.6 million and $ 245.1  million, related to unearned passenger revenue, respectively.

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.

As of March 31, 2024 and December 31, 2023, the Company has $ 290.8 million and $ 252.2 million, related to unearned passenger revenue, respectively.

Contract Liabilities

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Balance as of December 31, 2023

$ 178,198  

Recognized in tour revenues during the period

Additional contract liabilities in period

365,392  

Balance as of September 30, 2023

$ 115,632  

Balance as of March 31, 2024

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:

National Geographic

Guest ticket revenue

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Tour revenues

NOTE 4 —

FINANCIAL STATEMENT DETAILS

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

As of September 30,

Under the brand license agreement between the Company and National Geographic, effective January 1, 2024, National Geographic no longer receives commissions on sales bookings through the former National Geographic sales channel as the co-selling arrangement operates as direct sales through the Company’s booking system.

In the three months ended March 31, 2023, the National Geographic sales channel accounted for 14 % of the Company’s consolidated guest ticket revenue.

In the table above, 2023 guest ticket revenues through the National Geographic sales channel have been classified as direct sales for comparison purposes.

NOTE 4 — FINANCIAL STATEMENT DETAILS

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

As of March 31,

(In thousands)

Cash and cash equivalents

$ 168,015  

$ 116,446  

Restricted cash

36,802  

29,524  

Total cash, cash equivalents and restricted cash as presented in the statement of cash flows

$ 204,817  

$ 145,970  

Restricted cash consists of the following:

As of September 30, 2023

Restricted cash consists of the following:

As of March 31, 2024

As of December 31, 2023

1 unchanged sentence

Credit card processor reserves

$ 20,850  

$ 20,400  

Federal Maritime Commission and other escrow

14,270  

Certificates of deposit and other restricted securities

Total restricted cash

$ 36,802  

$ 28,847  

Prepaid expenses and other current assets are as follows: 

As of September 30, 2023

Prepaid expenses and other current assets are as follows:

As of March 31, 2024

As of December 31, 2023

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Prepaid tour expenses

$ 23,580  

$ 20,605  

21,142  

21,173  

Total prepaid expenses and other current assets

$ 44,722  

$ 41,778  

Accounts payable and accrued expenses are as follows:

As of September 30, 2023

As of March 31, 2024

As of December 31, 2023

1 unchanged sentence

Accrued other expense

$ 50,783  

$ 54,418  

Accounts payable

15,918  

16,601  

Total accounts payable and accrued expenses

$ 66,701  

$ 71,019  

NOTE 5 —

LONG-TERM DEBT

As of September 30, 2023

NOTE 5 — LONG-TERM DEBT

As of March 31, 2024

As of December 31, 2023

2 unchanged sentences

Deferred Financing Costs, net

$ 360,000  

$ ( 7,322 )  

$ 352,678  

$ 360,000  

( 8,968 )  

351,032  

275,000  

( 6,833 )  

268,167  

First Export Credit Agreement

94,794  

( 1,829 )  

92,965  

Second Export Credit Agreement

110,044  

( 2,207 )  

107,837  

Total long-term debt

635,089  

( 14,155 )  

620,934  

565,793  

( 13,004 )  

552,789  

Less current portion

( 46 )  

( 23,337 )  

Total long-term debt, non-current

$ 635,043  

$ ( 14,155 )  

$ 620,888  

$ 542,456  

$ ( 13,004 )  

$ 529,452  

For the three and nine months ended September 30, 2023, $ 0.9  million and $ 2.4  million, respectively, of deferred financing costs were charged to interest expense, and for the three and nine months ended September 30, 2022, $ 0.7  million and $ 2.1 million, respectively, of deferred financing costs were charged to interest expense.

During the three months ended June 30, 2023, $ 3.9  million of deferred financing costs related to the repayment of the Company’s prior senior secured credit agreements (the “Export Credit Agreements”) were written-off to other expense. 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.

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

2027  (the “6.75% Notes”) in a private offering.

The 6.75% 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.

For the three months ended March 31, 2024 and 2023, $ 0.9 million and $ 0.7 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 “6.75% Notes”) in a private offering.

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

The 6.75% Notes will mature on February 15, 2027, subject to earlier repurchase or redemption.

The Company used the net proceeds from the offering to prepay in full all outstanding borrowings under its prior credit agreement, including the term facility, Main Street Loan, and revolving credit facility, to pay any related premiums and to terminate in full its prior credit agreement and the commitments thereunder. The 6.75% Notes are senior secured obligations of the Company and are guaranteed on a senior secured basis by the Company and certain of the Company’s subsidiaries (collectively, the “Guarantors”) and 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.

The 6.75% Notes may be redeemed by the Company, at set redemption prices and premiums, plus accrued and unpaid interest, if any. 

The 6.75% Notes contain covenants that, among other things, restrict the Company’s ability, and the ability of the Company’s restricted subsidiaries, to incur certain additional indebtedness and make certain dividend payments, distributions, investments and other restricted payments.

These covenants are subject to a number of important exceptions and qualifications set forth in the 6.75% Notes. 

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 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. As of September 30, 2023, the Company had no borrowings under the Revolving Credit Facility.

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

On May 2, 2023, the Company issued $ 275.0 million aggregate principal amount of 9.00 % senior secured notes due 

2028  (the “9.00% Notes”) in a private offering.

The 9.00% Notes bear interest at a rate of 9.00% per year, accruing from May 2, 2023, and interest is payable semiannually in arrears on May 15 and November 15 of each year, beginning on November 

9.00% Notes will mature on May 

15, 2028, subject to earlier repurchase or redemption.

The Company used the net proceeds from the offering to prepay in full all outstanding borrowings under its prior senior secured credit agreements, to pay any related premiums and to terminate in full its prior senior secured credit agreements and the commitments thereunder. The 9.00% Notes are senior unsecured obligations of the Company and are guaranteed (i) on a senior secured basis by certain of the Company’s subsidiaries (collectively, the “Secured Guarantors”) and secured by a first -priority lien, subject to permitted liens and certain exceptions, on the equity and substantially all the assets of the Secured Guarantors, and (ii) on a senior unsecured basis by certain other subsidiaries of the Company. The 9.00% Notes may be redeemed by the Company, at set redemption prices and premiums, plus accrued and unpaid interest, if any. 

The 9.00% Notes contain covenants that, among other things, restrict the Company’s ability, and the ability of the Company’s restricted subsidiaries, to incur certain additional indebtedness and make certain dividend payments, distributions, investments and other restricted payments.

These covenants are subject to a number of important exceptions and qualifications set forth in the 9.00% Notes. 

The Company’s Off the Beaten Path subsidiary’s original $ 0.3 million loan for the purchase of guest transportation vehicles was repaid during June 2023 and its $ 0.8 million loan under the Main Street Expanded Loan Facility, which originated on December 11, 2020, 

was repaid during May 2023. 

The Company’s DuVine subsidiary has a EUR 0.1 million State Assistance Loan related to the financial consequences of the COVID- 19 pandemic, for the purpose of employment preservation.

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

Prior Senior Secured Credit Agreements

In January 2018, the Company entered into a senior secured credit agreement (the “First Export Credit Agreement”), 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 , and borrowed $ 107.7 million upon delivery in March 2020. 

The First Export Credit Agreement was repaid in full on May 2, 2023 with the proceeds of the 9.00 % Notes. 

In April 2019, the Company entered into a senior secured credit agreement (the “Second Export Credit Agreement”), under which the Company borrowed $ 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.

The Company borrowed $ 30.5 million in 2019, $ 30.6 million in 2020 and $ 61.7 million in 2021.

The Second Export Credit Agreement was repaid in full on May 2, 2023 with the proceeds of the 9.00 % Notes. 

The Company’s 6.75% Notes, Revolving Credit Facility and 9.00% Notes contain covenants that include, among others, limits on additional indebtedness and limits on certain investments.

The Company was in compliance with its covenants in effect as of September 30, 2023.

NOTE 6 —

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Derivative Instruments and Hedging Activities

The Company’s derivative assets and liabilities consist principally of foreign exchange forward contracts and are carried at fair value based on significant observable inputs (Level 2 inputs).

Derivatives entered into by the Company are typically executed over-the-counter and are valued using internal valuation techniques, as quoted market prices are not readily available.

The valuation technique and inputs depend on the type of derivative and the nature of the underlying exposure.

The Company principally uses discounted cash flows along with fair value models that primarily use market observable inputs.

These models take into account a variety of factors including, where applicable, maturity, currency exchange rates, interest rate yield curves and counterparty credit risks.

Currency Risk .

The Company uses currency exchange forward contracts to manage its exposure to changes in currency exchange rates associated with certain of its non-U.S.

dollar denominated receivables and payables.

The Company primarily economically hedges a portion of its current-year currency exposure to the Canadian and New Zealand dollars, the Euro and the British pound sterling .

The fluctuations in the value of these forward contracts largely offset the impact of changes in the value of the underlying risk they economically hedge.

The Company held the following derivative instruments with absolute notional values as of September 30, 2023:

(In thousands)

Absolute Notional Value

Foreign exchange contracts

16,731  

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

As of September 30, 2023

As of December 31, 2022

(In thousands)

Fair Value, Asset Derivatives

Fair Value, Liability Derivatives

Fair Value, Asset Derivatives

Fair Value, Liability Derivatives

Derivative instruments not designated as cash flow hedging instruments:

Interest rate cap (a)

Foreign exchange forward (b)

Recorded in prepaid expenses and other current assets.

The interest rate cap matured during 

(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,

(In thousands)

Derivative instruments not designated as cash flow hedging instruments:

Interest rate cap (a)

$ 1,046  

$ ( 683 )  

Foreign exchange forward (b)

( 455 )  

( 872 )  

$ ( 455 )  

$ ( 637 )  

The interest rate cap matured during May 2023.

Recognized in interest expense, net, for the three and nine months ended September 30, 2023 and the three months ended September 30, 2022.

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.

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.

The 6.75% Notes are senior secured obligations of the Company and are guaranteed on a senior secured basis by the Company and certain of the Company’s subsidiaries (collectively, the “Guarantors”) and 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.

The 6.75% Notes may be redeemed by the Company, at set redemption prices and premiums, plus accrued and unpaid interest, if any.

Revolving Credit Facility

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.

The Company is required to pay a 0.5 % quarterly commitment fee on undrawn amounts under the Revolving Credit Facility.

As of March 31, 2024, the Company had no borrowings under the Revolving Credit Facility.

On May 2, 2023, the Company issued $ 275.0 million aggregate principal amount of 9.00 % senior secured notes due 2028 (the “9.00% Notes”) in a private offering.

The 9.00% Notes bear interest at a rate of 9.00% per year, payable semiannually in arrears on May 15 and November 15 of each year.

The 9.00% Notes will mature on May 15, 2028, subject to earlier repurchase or redemption.

the commitments thereunder.

The 9.00% Notes are senior unsecured obligations of the Company and are guaranteed (i) on a senior secured basis by certain of the Company’s subsidiaries (collectively, the “Secured Guarantors”) and secured by a first -priority lien, subject to permitted liens and certain exceptions, on the equity and substantially all the assets of the Secured Guarantors, and (ii) on a senior unsecured basis by certain other subsidiaries of the Company.

The 9.00% Notes may be redeemed by the Company, at set redemption prices and premiums, plus accrued and unpaid interest, if any.

The Company’s DuVine subsidiary has a EUR 0.1 million State Assistance Loan related to the financial consequences of the COVID- 19 pandemic, for the purpose of employment preservation.

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

The Company’s 6.75% Notes, Revolving Credit Facility and 9.00% Notes contain covenants that include, among others, limits on additional indebtedness and make certain dividend payments, distributions, investments and other restricted payments.

These covenants are subject to a number of important exceptions and qualifications set forth in the 6.75% Notes, Revolving Credit Facility and 9.00% Notes.

The Company was in compliance with its covenants in effect as of March 31, 2024.

NOTE 6 — FAIR VALUE MEASUREMENTS

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 as of September 30, 2023 

to be $ 613.3  million based on the terms of the agreements and comparable market data as of September 30, 2023.

As of September 30, 2023 and December 31, 2022, the Company had no other significant liabilities that were measured at fair value on a recurring basis.

NOTE 7 —

STOCKHOLDERS ’

The Company estimates the approximate fair value of its long-term debt as of March 31, 2024 to be $ 644.2 million based on the terms of the agreements and comparable market data as of March 31, 2024.

As of March 31, 2024 and December 31, 2023, the Company had no other significant liabilities that were measured at fair value on a recurring basis.

NOTE 7 — STOCKHOLDERS ’ EQUITY

Stock Repurchase Plan

The Company’s Board of Directors approved a stock and warrant repurchase plan (“Repurchase Plan”) in November 2015 and increased the Repurchase Plan to $ 35.0 million in November 2016.

The Repurchase Plan authorizes the Company to purchase, from time to time, the Company’s outstanding common stock and previously outstanding warrants.

The Company’s Board of Directors approved a stock and warrant repurchase plan (“Repurchase Plan”) in November 2015 and increased the Repurchase Plan to $ 35.0 million in November 2016.

The Repurchase Plan authorizes the Company to purchase, from time to time, the Company’s outstanding common stock and previously outstanding warrants.

Any shares purchased will be retired.

The Repurchase Plan has no time deadline and will continue until otherwise modified or terminated at the sole discretion of the Company’s Board of Directors.

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, 2023. 

The Repurchase Plan has no time deadline and will continue until otherwise modified or terminated at the sole discretion of the Company’s Board of Directors.

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 March 31, 2024.

Preferred Stock

In August 2020, the Company issued and sold 85,000 shares of Preferred Stock for $ 1,000 per share for gross proceeds of $ 85.0 million. The Preferred Stock has senior and preferential ranking to the Company’s common stock.

The Preferred Stock is entitled to cumulative dividends of 6.00 % per annum, and for the first two years the dividends were required to be paid-in-kind.

After the second anniversary of the issuance date, the dividends may be paid-in-kind or be paid in cash at the Company’s option. During 2023, the Company thus far has continued to pay Preferred Stock dividends in-kind. At any time after the 

third  anniversary of the issuance, the Company 

at its option, convert all, but 

not  less than all, of the Preferred Stock into common stock if the closing price of shares of common stock is at least 

150%  of the conversion price for 

20  out of 

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 $ 2.1  million as of September 30, 2023, recorded as reduction to preferred stock.

The Company recorded accrued dividends for Preferred Stock of $ 1.1  million and $ 3.3 million for the three and nine months ended September 30, 2023, respectively, and $ 1.0  million and $ 3.6 million for the three and nine months ended September 30, 2022, respectively.

As of September 30, 2023, the 62,000 shares of Preferred Stock outstanding and accumulated dividends could be converted at the option of the holders into 7.8  million shares of the Company’s common stock.

NOTE 8 —

STOCK BASED COMPENSATION

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, 2023, 3.8 million shares were available to be granted under the Plan.

The Company recorded stock-based compensation expense of $ 3.0  million and $ 9.2 million during the three and nine months ended September 30, 2023, respectively, and $ 1.6  million and $ 5.3 million during the three and nine months ended September 30, 2022, respectively.

In August 2020, the Company issued and sold 85,000 shares of Preferred Stock for $ 1,000 per share for gross proceeds of $ 85.0 million.

The Preferred Stock has senior and preferential ranking to the Company’s common stock.

The Preferred Stock is entitled to cumulative dividends of 6.00 % per annum, and for the first two years the dividends were required to be paid-in-kind.

After the second anniversary of the issuance date, the dividends may be paid-in-kind or be paid in cash at the Company’s option.

During 2024, the Company thus far has continued to pay Preferred Stock dividends in-kind.

At any time after the third anniversary of the issuance, the Company may, at its option, convert all, but not less than all, of the Preferred Stock into common stock if the closing price of shares of common stock is at least 150% of the conversion price for 20 out of 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 $ 2.1 million as of March 31, 2024, recorded as reduction to preferred stock.

The Company recorded accrued dividends for Preferred Stock of $ 1.1 million for each of the three months ended March 31, 2024 and 2023.

As of March 31, 2024, the 62,000 shares of Preferred Stock outstanding and accumulated dividends could be converted at the option of the holders into 8.1 million shares of the Company’s common stock.

NOTE 8 — STOCK BASED COMPENSATION

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 March 31, 2024, 2.1 million shares were available to be granted under the Plan.

The Company recorded stock-based compensation expense of $ 2.1 million and $ 2.8 million for the three months ended March 31, 2024 and 2023, respectively.

Long-Term Incentive Compensation

During the nine months ended September 30, 2023, the Company granted 553,871 restricted stock units (“RSUs”) with a weighted average grant price of $ 9.78 .

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, 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 nine months ended September 30, 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  

Stock price  

$ 9.56  

Exercise price  

$ 9.56  

Dividend yield  

Expected Volatility  

Risk-free interest rate  

Expected term (in years)  

As of September 30, 2023 and December 31, 2022, options to purchase an aggregate of 1.3  million and 1.4  million shares of the Company’s common stock, respectively, with a weighted average exercise price of $ 12.36  and $ 15.10 , respectively, were outstanding.

As of September 30, 2023, 638,115  options were exercisable.

Natural Habitat Contingent Arrangement

In connection with the 

2016  acquisition of Natural Habitat, Mr.

Bressler’s 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 —

As of September 30, 2023 

and December 31, 2022, the Company had no unrecognized tax benefits recorded. The Company's effective tax rate for the three and nine months ended September 30, 2023 was an expense of 0.0 % and 12.3 %, respectively, versus an expense of 

46.0 % and 0.8 % for the three and months ended September 30, 2022, respectively. In 2023, the effective income tax expense differs from the statutory rate primarily due to the valuation allowance and for the nine months ended September 30, 2023 was also impacted by a $ 1.5 million discrete tax expense. 

In 2022, the effective income tax expense differs from the statutory rate primarily due to the expected results for the year and the impact of taxes from foreign jurisdictions.

NOTE 10 —

COMMITMENTS AND CONTINGENCIES

During the three months ended March 31, 2024, the Company awarded 159,660 restricted stock units (“RSUs”) with a weighted average grant price of $ 9.33 .

The number of shares were determined based upon the closing price of our common stock on the date of the award.

During the three months ended March 31, 2024, the Company awarded 159,564 performance-based restricted share units (“PSUs”) with a weighted average grant price of $ 9.33 .

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.

Stock option information for the three months ended March 31, 2024 is below.

Stock Option Grants

Number of options awarded 1,300,000

Exercise price

Dividend yield

Expected Volatility

Risk-free interest rate

Expected term (in years)

As of March 31, 2024 and December 31, 2023, options to purchase an aggregate of 2.2 million and 0.9 million shares of the Company’s common stock, respectively, with a weighted average exercise price of $ 9.28 and $ 10.55 , respectively, were outstanding.

As of March 31, 2024, 1,697,434 options were exercisable.

In connection with the 2016 acquisition of Natural Habitat, Mr.

Bressler’s 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, where if the final year equity value of Natural Habitat, as defined in Mr.

Bressler's employment agreement, as amended, exceeds $ 25.0 million, effective as of December 31, 2025, Mr.

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

The actual number of options granted will be determined by the calculated final year equity value of Natural Habitat and the Black-Scholes per share option value, factoring in the Company’s stock price on the date of the grant, its volatility and an appropriate risk-free rate.

During the three months ended March 31, 2024, Mr.

Bressler exercised a one -time right to elect to receive 50 % of such award early, which is calculated based on performance through December 31, 2023.

As of result of the early exercise, during the three months ended March 31, 2024, the Company granted 1.3 million options, with an exercise price of $ 8.44 , to Mr.

The options vested on the grant date and have a term of ten years.

During 2023, the Company determined it was probable the performance condition would be met related to this award and recorded all expense related to it.

The expense related to the remaining equity incentive opportunity through December 31, 2025 was also deemed probable in 2023 and is being expensed over Mr.

Bressler’s service period.

For the three months ended March 31, 2024, stock-based compensation expense related to this award was $ 0.6 million.

NOTE 9 — INCOME TAXES

As of March 31, 2024 and December 31, 2023, the Company had no unrecognized tax benefits recorded.

The Company's effective tax rate for the three months ended March 31, 2024 was an expense of 6.2 %, versus an expense of 66.5 % for the three months ended March 31, 2023.

In 2024, the effective income tax expense differs from the statutory rate primarily due to temporary timing differences related to interest expense, depreciation and stock-based compensation expense.

In 2023, the effective income tax expense was impacted by a $ 1.5 million discrete tax expense.

NOTE 10 — COMMITMENTS AND CONTINGENCIES

Redeemable Non-Controlling Interest

1 unchanged sentence

The noncontrolling interests are subject to put/call agreements.

The put options enable the minority holders, but do 

not obligate them, to sell the remaining interests to the Company.

The Company has call options which enable it, but does not obligate it, to acquire the remaining interests in the subsidiaries, subject to certain dates, expirations and similar redemption value purchase measurements as the put options.

Since the redemption of the noncontrolling interests are not solely in the Company’s control, the Company is required to record the redeemable noncontrolling interest outside of stockholders’

equity but after its total liabilities.

In addition, if it is probable that the instrument will become redeemable, solely due to the passage of time, the redeemable noncontrollable interest should be adjusted to the redemption value via one of two measurement methods. The Company elected the income classification-excess adjustment and accretion methods for recognizing changes in the redemption value of the put options.

Under this methodology, a calculation of the present value of the redemption value is compared to the carrying value of the redeemable noncontrolling interest, and the carrying value of the redeemable noncontrolling interest is adjusted to the redemption value’s present value.

Any adjustments to the carrying value of the redeemable noncontrolling interest, up to the redemption value of the noncontrolling interest, are classified to retained earnings.

Adjustments in excess of the redemption value of the noncontrolling interest are treated as a decrease to net income available to common stockholders.

The put options enable the minority holders, but do not obligate them, to sell the remaining interests to the Company.

The Company has call options which enable it, but does not obligate it, to acquire the remaining interests in the subsidiaries, subject to certain dates, expirations and similar redemption value purchase measurements as the put options.

See “Subsequent Events” for additional information.

Since the redemption of the noncontrolling interests are not solely in the Company’s control, the Company is required to record the redeemable noncontrolling interest outside of stockholders’ equity but after its total liabilities.

The Company elected the income classification-excess adjustment and accretion methods for recognizing changes in the redemption value of the put options.

Any adjustments to the carrying value of the redeemable noncontrolling interest, up to the redemption value of the noncontrolling interest, are classified to retained earnings.

Adjustments in excess of the redemption value of the noncontrolling interest are treated as a decrease to net income available to common stockholders.

The redemption value of the put options were determined using a discounted cash flow model.

The redemption values were adjusted to their present value using the Company’s weighted average cost of capital. 

The redemption values were adjusted to their present value using the Company’s weighted average cost of capital.

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)

Beginning balance

$ 30,513  

$ 19,595  

$ 27,886  

$ 10,626  

Net income attributable to noncontrolling interest

Net (loss) income attributable to noncontrolling interest

Redemption value adjustment of put option

17,957  

( 255 )  

Ending balance

$ 34,232  

$ 31,583  

$ 34,232  

$ 31,583  

Royalty Agreement –

National Geographic

The Company is party to an alliance and license agreement with National Geographic, which allows the Company to use the National Geographic name and logo.

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

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, 2023 was $ 2.0 million and $ 5.9 million, respectively, and was $ 1.9  million and $ 4.5 million for the three and nine months ended September 30, 2022, respectively.

The royalty balance payable to National Geographic as of September 30, 2023 and December 31, 2022 

was $ 1.9 million and $ 1.8 million, respectively, and is included in accounts payable and accrued expenses.

Royalty Agreement –

World Wildlife Fund

Natural Habitat has a license agreement with WWF, which allows it to use the WWF name and logo.

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.

This royalty fee expense was $ 0.4  million and $ 0.9  million for the three and nine months ended September 30, 2023, respectively, and $ 0.4  million and $ 1.0 million for the three and nine months ended September 30, 2022, respectively.

Brand License Agreement – National Geographic

The Company is party to a brand license agreement with National Geographic, effective January 1, 2024, which includes a co-selling and co-marketing arrangement through which National Geographic promotes the Company’s offerings in its marketing campaigns across web-based, email, print and other marketing platforms and distributes the Company’s expeditions through the Disney Signature Experiences platform and also allows the Company to use the National Geographic name and logo.

In return for these rights, the Company is charged a royalty fee, which is included within selling and marketing expense.

The fee is calculated based upon a percentage of substantially all 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.

Beginning in 2026, the agreement has minimum royalties that increase annually through the end of the agreement term, which based on current performance are expected to be exceeded.

During 2023, the Company operated under its former alliance and license agreement with National Geographic, where National Geographic sold the Company’s expeditions through its internal travel division in return for a commission fee and also allowed the Company to use the National Geographic name and logo in return for a royalty fee.

Both the commission and royalty fees were recorded within selling and marketing expense.

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, 2023 are as follows:

Future minimum payments on its charter agreements as of March 31, 2024 are as follows:

For the years ended December 31,

(In thousands)

2023 (three months)

18,558  

$ 25,791  

NOTE 11 —

SEGMENT INFORMATION

2024 (nine months)

NOTE 11 — SEGMENT INFORMATION

The Company is primarily a specialty cruise and experiential travel operator with operations in two reportable segments, Lindblad and Land Experiences.

The Company evaluates the performance of the business based largely on the results of its operating segments.

The chief operating decision maker and management review operating results monthly and base operating decisions on the total results at a consolidated level, as well as at a segment level.

The chief operating decision maker and management review operating results monthly and base operating decisions on the total results at a consolidated level, as well as at a segment level.

The reports provided to the Board of Directors are at a consolidated level and contain information regarding the separate results of both segments.

The Company evaluates the performance of its business segments based largely on tour revenues and operating income without allocating other income and expenses, net, income taxes and interest expense, net.

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,

The Company evaluates the performance of its business segments based largely on tour revenues and operating income without allocating other income and expenses, net, income taxes and interest expense, net.

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

For the three months ended March 31,

(In thousands)

Tour revenues:

$ 108,750  

$ 83,741  

$ 311,660  

$ 198,063  

Land Experiences

67,239  

61,042  

132,523  

105,477  

Total tour revenues

$ 175,989  

$ 144,783  

$ 444,183  

$ 303,540  

Operating income (loss):

$ 7,501  

$ ( 7,142 )  

$ 8,576  

Operating income:

Land Experiences

12,975  

12,950  

15,868  

12,629  

Total operating income (loss)

$ 20,476  

$ 5,808  

$ 24,444  

For the three and nine months ended September 30, 2023, there was $ 2.3 million and $ 6.3 million, respectively, of 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, 2022, there was $ 1.7 million and $ 5.3 million, respectively, of intercompany tour revenues between the Lindblad and Land Experiences reportable segments eliminated in consolidation.

Total operating income

For the three months ended March 31, 2024 and 2023, there was $ 2.8 million and $ 2.5 million, respectively, of intercompany tour revenues between the Lindblad and Land Experiences reportable segments, which were 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)

Depreciation and amortization:

$ 9,665  

$ 10,090  

$ 31,155  

$ 31,087  

Land Experiences

Total depreciation and amortization

$ 10,521  

$ 10,839  

$ 33,660  

$ 33,193  

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

(In thousands)

As of September 30, 2023

As of March 31, 2024

As of December 31, 2023

(In thousands)

Total Assets:

$ 692,119  

$ 662,683  

Land Experiences

159,486  

125,292  

$ 851,605  

$ 787,975  

Intangibles, net:

$ 1,614  

$ 1,680  

Land Experiences

Total intangibles, net

$ 9,864  

$ 11,219  

Land Experiences

42,017  

Total goodwill

$ 42,017  

MANAGEMENT ’

S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION

NOTE 12 — SUBSEQUENT EVENTS

During April 2024, Mr.

Bressler exercised a portion of the put option on Natural Habitat, allowing the Company to acquire an additional 9.95 % of Natural Habitat for $ 15.2 million, increasing its ownership to 90.1 %.

During April 2024, the Company exercised a portion of its call option on DuVine, acquiring an additional 5 % of the business and increasing its total ownership of DuVine to 75 %, for $ 1.5 million.

During April 2024, the Company announced an agreement for the acquisition of Wineland-Thomson Adventures, Inc, an adventure travel group that primarily operates Tanzania safaris, camp and tours.

The aggregate purchase price for Wineland-Thompson Adventures, which includes one U.S.-based company and four Tanzanian-based companies, will be approximately $ 30 million and will be financed through at least $ 24 million in cash and Lindblad stock of up to $ 6 million, with the final cash and stock amounts to be determined prior to the close of the transaction.

The purchase price for the Tanzanian-based companies is approximately $ 11.2 million.

The Company expects to complete the acquisition following required Tanzanian regulatory review and approval.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION

The following discussion and analysis addresses material changes in the financial condition and results of operations of the Company for the periods presented.

This discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q ( “

Form 10-Q ”

), as well as the audited consolidated financial statements and related notes included in the Company ’

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

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

“Lindblad,”

“we,”

“us,”

“our,”

and “ours”

refer to Lindblad Expeditions Holdings, Inc., and its subsidiaries.

This discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q ( “ Form 10-Q ” ), as well as the audited consolidated financial statements and related notes included in the Company ’ s Annual Report on Form 10-K filed with the Securities and Exchange Commission ( “ SEC ” ) on March 6, 2024 (the “ 2023 Annual Report ” ).

Unless the context otherwise requires, in this Form 10-Q, “ Company, ” “ Lindblad, ” “ we, ” “ us, ” “ our, ” and “ ours ” refer to Lindblad Expeditions Holdings, Inc., and its subsidiaries.

Cautionary Note Regarding Forward-Looking Statements

Any statements in this Form 10-Q about our expectations, beliefs, plans, objectives, prospects, financial condition, assumptions or future events or performance are not historical facts and are “forward-looking statements”

as that term is defined under the federal securities laws.

These statements are often, but not always, made through the use of words or phrases such as “believe,”

“anticipate,”

“should,”

“intend,”

“plan,”

“will,”

“expects,”

“estimates,”

“projects,”

“positioned,”

“strategy,”

“outlook”

and similar words.

These statements are often, but not always, made through the use of words or phrases such as “believe,” “anticipate,” “should,” “intend,” “plan,” “will,” “expects,” “estimates,” “projects,” “positioned,” “strategy,” “outlook” and similar words.

You should read the statements that contain these types of words carefully.

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

events and conditions around the world, including war and other military actions, such as the Israel-Hamas war, 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, political unrest in destinations we visit, outbreak of disease in any destination we visit or another unexpected event;

the Israel-Hamas war, 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;

adverse general economic factors, such as fluctuating or increasing levels of interest rates, inflation, unemployment and perceptions of these and similar conditions that decrease the level of disposable income of consumers or consumer confidence that negatively impact 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 or other health pandemic, the civil unrest in Ecuador, the Israel-Hamas war, the Russia-Ukraine conflict, political unrest, terrorism, war or another unexpected event in destinations we visit;

events and conditions around the world, including war and other military actions, such as the civil unrest in Ecuador, the Israel-Hamas war, 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;

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

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

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

any change in state classifications of our workforce;

changes adversely affecting the business in which we are engaged;

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our business strategy and plans;

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

our ability to maintain our relationships 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;

our substantial indebtedness and our ability to remain in compliance with the financial and/or operating covenants in such arrangements;

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

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the result of future financing efforts;

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

those risks discussed herein and in Item 1A.

Risk Factors in our 2022 Annual Report and in Part II - Item 1A.

Risk Factors in our Form 10-Q for the quarterly period ended June 30, 2023.

Risk Factors in our 2023 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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We provide expedition cruising and land-based adventure travel fostering a spirit of exploration and discovery, using itineraries featuring up-close encounters with wildlife and nature, history and culture and promote guest empowerment, human connections and interactivity.

Our mission is to offer life-changing adventures around the world and pioneer innovative ways to allow our guests to connect with exotic and remote places. 

We currently operate a fleet of ten owned expedition ships and five seasonal charter vessels under the Lindblad brand.

Each expedition ship is fully equipped with state-of-the-art tools for in-depth exploration and the majority of our expeditions involve travel to remote places, such as voyages to the Arctic, Antarctic, the Galápagos Islands, Alaska, Baja’s Sea of Cortez, the South Pacific, Costa Rica and Panama.

We have a longstanding relationship with the National Geographic Society (“National Geographic”) dating back to 2004, which is based on a shared interest in exploration, research, technology and conservation.

This relationship includes a co-selling, co-marketing and branding arrangement whereby our owned vessels carry the National Geographic name and National Geographic sells our expeditions through its internal travel division.

Our mission is to offer life-changing adventures around the world and pioneer innovative ways to allow our guests to connect with exotic and remote places.

We currently operate a fleet of ten owned expedition ships and operate six seasonal charter vessels under the Lindblad Expeditions, LLC.

(“Lindblad”) brand.

Each expedition ship is fully equipped with state-of-the-art tools for in-depth exploration and the majority of our expeditions involve travel to remote places, such as voyages to Alaska, the Arctic, Antarctic, the Galápagos Islands, Baja’s Sea of Cortez, the South Pacific, Costa Rica and Panama.

We have a longstanding relationship with the National Geographic Society dating back to 2004, which is based on a shared interest in exploration, research, technology and conservation.

This relationship, which was recently expanded and extended in November 2023 to the end of 2040 through a Brand License Agreement with National Geographic Partners, LLC (“National Geographic”), includes a co-selling, co-marketing and global branding arrangement whereby National Geographic promotes our offerings in its marketing campaigns across web-based, email, print and other marketing platforms and distributes our expeditions through the Disney Signature Experiences platform and our owned vessels carry the National Geographic name.

We collaborate with National Geographic on voyage planning to enhance the guest experience by having National Geographic experts, including photographers, writers, marine biologists, naturalists, field researchers and film crews, join our expeditions.

Guests are able to interface with these experts through lectures, excursions, dining and other experiences throughout their voyage.

We operate land-based nature adventure travel expeditions around the globe, with unique itineraries designed to offer intimate encounters with nature and the planet’s wild destinations and the animals and people who live there.

Guests have the ability to interact with these experts through lectures, excursions, dining and other experiences throughout their voyage.

Natural Habitat, Inc.

(“Natural Habitat”) provides eco-conscious expeditions and nature-focused, small-group experiences that include polar bear tours in Churchill, Canada, Alaskan grizzly bear adventures, small-group Galápagos Islands tours and African safaris.

Natural Habitat partners with World Wildlife Fund (“WWF”) to offer conservation travel, which is sustainable travel that contributes to the protection of nature and wildlife. 

DuVine Cycling + Adventure Company (“DuVine”) provides intimate cycling adventures and travel experiences, led by expert guides, with a focus on connecting with local character and culture, including high-quality local cuisine and accommodations.

Natural Habitat has partnered with World Wildlife Fund (“WWF”) to offer conservation travel, which is sustainable travel that contributes to the protection of nature and wildlife.

Off the Beaten Path, LLC (“Off the Beaten Path”) provides small group travel, led by local, experienced guides, with distinct focus on wildlife, hiking national parks and culture.

International cycling tours include the exotic Costa Rican rainforests, the rocky coasts of Ireland and the vineyards of Spain, while cycling adventures in the United States include cycling beneath the California redwoods, pedaling through Vermont farmland and wine tastings in the world-class vineyards of Napa and Sonoma.

Off the Beaten Path, LLC (“Off the Beaten Path”) provides small group travel, led by local, experienced guides, with distinct focus on wildlife, hiking national parks and culture.

Off the Beaten Path offerings include insider national park experiences in the Rocky Mountains, Desert Southwest, and Alaska, as well as unique trips across Europe, Africa, Australia, Central and South America and the South Pacific.

Classic Journeys, LLC (“Classic Journeys”) offers highly curated active small-group and private custom journeys centered around cinematic walks led by expert local guides in over 50 countries around the world.

These walking tours are highlighted by luxury boutique accommodations and handcrafted itineraries that immerse guests into the history and culture of the places they are exploring and the people who live there.

We operate two segments including the Lindblad segment, which consists of the operations of our Lindblad brand, and the Land Experiences segment, consisting of our Natural Habitat, DuVine, Off the Beaten Path and Classic Journeys brands.

2023 Highlights

During 2023, we provided immersive expeditions to our guests across all of our ships including voyages to Antarctica, the Arctic, Alaska, Australia, Baja California’s Sea of Cortez, the Baltic Sea, British Columbia, Eastern Canada, Central America, Europe, the Galápagos Islands, Greenland, Iceland, Indonesia, Japan, New Zealand, through the Northwest Passage, the Pacific Northwest, Patagonia, the South Pacific and elsewhere, as well as African safaris, trips and tours through the U.S.

National Parks, our Alaska Bear Camp, the Scotland Highlands, bike tours of Portugal, the French wine country, Tuscany and Spain. 

During May 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 prior senior secured credit agreements (the “Export Credit Agreements”). 

During June 2023, Natural Habitat renewed its partnership agreement with WWF through December 31, 2028.

We have substantial advanced reservations for future travel with bookings for the full year 2023 42% ahead of the bookings for 2019 at the same point in 2019. 

These walking tours are highlighted by luxury boutique accommodations, and handcrafted itineraries that immerse guests into the history and culture of the places they are exploring and the people who live there.

We operate two segments consisting of (i) the Lindblad segment, which consists of the operations of our Lindblad brand, and (ii) the Land Experiences segment, consisting of our Natural Habitat, DuVine, Off the Beaten Path and Classic Journeys brands.

2024 Highlights

During the first quarter we provided immersive expeditions to our guests across all of our ships including voyages to Antarctica, Patagonia, South Georgia and the Falkland Islands, Baja California’s Sea of Cortez, the Galápagos Islands, Central America, Australia, New Zealand, the South Pacific and elsewhere.

During April 2024, we increased our ownership of Natural Habitat to 90.1% for $15.2 million, as Mr.

Bressler exercised a portion of his put option, and we exercised a portion of our call option on DuVine, increasing our ownership to 75% for $1.5 million.

During April 2024, we announced an agreement for the acquisition of Wineland-Thomson Adventures, Inc, an adventure travel company that primarily operates Tanzania safaris, camp and tours, for approximately $30.0 million in cash and Lindblad stock.

We expect to complete the acquisition following required Tanzanian regulatory review and approval, which is expected to take at least three months.

We have substantial advanced reservations for future travel with bookings for the full year 2024 4% ahead of the bookings for 2024 at the same point in 2023 and over 20% ahead excluding carryover bookings in 2023.

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

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You should read this discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and the related notes thereto also included within.

Adjusted EBITDA is net income (loss) excluding depreciation and amortization, net interest expense, other income (expense), income tax (expense) benefit, (gain) loss on foreign currency, (gain) loss on transfer of assets, reorganization costs, and other supplemental adjustments.

Other supplemental adjustments include certain non-operating items such as stock-based compensation, executive severance costs, the National Geographic fee amortization, debt refinancing costs, acquisition-related expenses and other non-recurring charges.

Adjusted EBITDA is net income (loss) excluding depreciation and amortization, net interest expense, other income (expense), income tax (expense) benefit, (gain) loss on foreign currency, (gain) loss on transfer of assets, reorganization costs, and other supplemental adjustments.

Other supplemental adjustments include certain non-operating items such as stock-based compensation, executive severance costs, the National Geographic fee amortization, debt refinancing costs, acquisition-related expenses and other non-recurring charges.

We believe Adjusted EBITDA, when considered along with other performance measures, is a useful measure as it reflects certain operating drivers of the business, such as sales growth, operating costs, selling and administrative expense, and other operating income and expense.

We believe Adjusted EBITDA helps provide a more complete understanding of the underlying operating results and trends and an enhanced overall understanding of our financial performance and prospects for the future.

We believe Adjusted EBITDA helps provide a more complete understanding of the underlying operating results and trends and an enhanced overall understanding of our financial performance and prospects for the future.

Adjusted EBITDA is not intended to be a measure of liquidity or cash flows from operations or a measure comparable to net income as it does not take into account certain requirements, such as unearned passenger revenues, capital expenditures and related depreciation, principal and interest payments, and tax payments.

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

Results of Operations —

For the three months ended September 30,

For the nine months ended September 30,

Our Natural Habitat, Off the Beaten Path, DuVine 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 recorded during the second and third quarters from their spring and summer season departures.

Results of Operations — Consolidated

Our consolidated results for the three months ended March 31, 2024 and 2023 are set forth below.

Percentages that are not meaningful to the change are noted as NM in the table.

For the three months ended March 31,

(In thousands)

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Depreciation and amortization

Operating income (loss)

Net income (loss)

Undistributed income (loss) per share available to stockholders:

Comparison of the Three and Nine Months Ended September 30, 2023 to the Three and Nine Months Ended September 30, 2022 —

Operating income

Net (loss) income

Undistributed loss per share available to stockholders:

Comparison of the Three Months Ended March 31, 2024 and 2023 — Consolidated

Tour Revenues

Tour revenues for the three months ended September 30, 2023 increased $31.2 million, or 22%, to $176.0 million, compared to $144.8 million for the three months ended September 30, 2022.

The Lindblad segment tour revenues increased by $25.0 million, or 30%, and the Land Experiences segment increased $6.2 million, or 10%, primarily due to operating additional expeditions and trips, and from higher pricing. 

Tour revenues for the nine months ended September 30, 2023 increased $140.6 million, or 46%, to $444.2 million, compared to $303.5 million for the nine months ended September 30, 2022.

The Lindblad segment tour revenues increased by $113.6 million, or 57%, and the Land Experiences segment increased $27.0 million, or 26%, primarily due to operating additional expeditions and trips, and from higher pricing. 

Tour revenues for the three months ended March 31, 2024 increased $10.2 million, or 7%, to $153.6 million, compared to $143.4 million for the three months ended March 31, 2023.

The Lindblad segment tour revenues increased by $2.8 million, or 2%, and the Land Experiences segment increased $7.4 million, or 27%, primarily due to operating additional trips, higher pricing and increased other revenue.

Cost of Tours

Total cost of tours for the three months ended September 30, 2023 increased $8.0 million, or 9%, to $95.6 million, compared to $87.6 million for the three months ended September 30, 2022.

The Lindblad segment cost of tours increased by $3.7 million, or 7%, and the Land Experiences segment increased $4.3 million, or 12%, primarily due to operating additional expeditions and trips. 

Total cost of tours for the nine months ended September 30, 2023 increased $37.3 million, or 18%, to $245.3 million, compared to $208.0 million for the nine months ended September 30, 2022.

The Lindblad segment cost of tours increased by $22.2 million, or 15%, and the Land Experiences segment increased $15.1 million, or 24%, primarily due to operating additional expeditions and trips. 

Total cost of tours for the three months ended March 31, 2024 increased $7.3 million, or 10%, to $79.3 million, compared to $72.0 million for the three months ended March 31, 2023.

The Lindblad segment cost of tours increased by $1.6 million, or 3%, and the Land Experiences segment increased $5.7 million, or 38%, primarily due to operating additional trips, higher costs, increased fuel pricing and higher expenses associated with increased other revenue.

General and Administrative

General and administrative expenses for the three months ended September 30, 2023 increased $5.5 million, or 22%, to $30.0 million, compared to $24.5 million for the three months ended September 30, 2022.

At the Lindblad segment, general and administrative expenses increased $4.3 million, or 25%, from the prior year period, primarily due to higher personnel costs associated with the ramp in operations, higher credit card commissions due to the strong booking environment and increased stock compensation expense. At the Land Experiences segment, general and administrative expenses increased $1.2 million, or 16%, primarily due to increased personnel costs related to operating additional trips and higher credit card commissions due to the strong booking environment. 

General and administrative expenses for the nine months ended September 30, 2023 increased $16.7 million, or 24%, to $85.6 million, compared to $68.9 million for the nine months ended September 30, 2022.

At the Lindblad segment, general and administrative expenses increased $11.9 million, or 25%, from the prior year period, primarily due to higher personnel costs and sales tax costs associated with the ramp in operations, higher credit card commissions due to the strong booking environment and increased stock compensation expense. At the Land Experiences segment, general and administrative expenses increased $4.8 million, or 24%, primarily due to increased personnel costs related to operating additional trips and higher credit card commissions due to the strong booking environment. 

General and administrative expenses for the three months ended March 31, 2024 increased $6.0 million, or 23%, to $32.4 million, compared to $26.4 million for the three months ended March 31, 2023.

At the Lindblad segment, general and administrative expenses increased $4.0 million, or 21%, from the prior year period, primarily due to higher personnel costs, increased information technology costs following the launch of our digital infrastructure and higher credit card commissions due to the strong booking environment.

At the Land Experiences segment, general and administrative expenses increased $2.0 million, or 26%, 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, 2023 increased $3.4 million, or 21%, to $19.4 million, compared to $16.0 million for the three months ended September 30, 2022.

At the Lindblad segment, selling and marketing expenses increased $2.8 million, or, 22%, 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 $0.6 million, or 16%, primarily due to increased marketing spend to drive future bookings and higher commissions related to the ramp in operations.

Selling and marketing expenses for the nine months ended September 30, 2023 increased $14.0 million, or 34%, to $55.2 million, compared to $41.2 million for the nine months ended September 30, 2022.

At the Lindblad segment, selling and marketing expenses increased $10.5 million, or 31%, primarily due to higher commissions related to the ramp in operations and increased sales and marketing spend on future bookings.

At the Land Experiences segment, selling and marketing expenses increased $3.5 million, or 46%, primarily due to increased marketing spend to drive future bookings and higher commissions related to the ramp in operations.

Selling and marketing expenses for the three months ended March 31, 2024 increased $2.1 million, or 10%, to $22.8 million, compared to $20.7 million for the three months ended March 31, 2023.

At the Lindblad segment, selling and marketing expenses increased $2.3 million, or 14%, primarily due to higher royalties associated with the new National Geographic agreement.

At the Land Experiences segment, selling and marketing expenses decreased $0.2 million, or 5%.

Depreciation and Amortization

Depreciation and amortization expenses for the three months ended September 30, 2023 decreased $0.3 million, or 3%, to $10.5 million, compared to $10.8 million for the three months ended September 30, 2022.

Depreciation and amortization expenses for the nine months ended September 30, 2023 increased $0.5 million, or 1%, to $33.7 million, compared to $33.2 million for the nine months ended September 30, 2022.

Depreciation and amortization expenses for the three months ended March 31, 2024 decreased $0.5 million, or 4%, to $11.3 million, compared to $11.8 million for the three months ended March 31, 2023.

Other Income (Expense)

Other expense for the three months ended September 30, 2023, increased $2.5 million to $12.0 million from $9.5 million for the three months ended September 30, 2022, due to a $3.1 million increase in interest expense, primarily due to higher interest rates across our debt facilities and increased borrowings.

Other expense for the nine months ended September 30, 2023, increased $9.5 million to $37.3 million from $27.8 million for the nine months ended September 30, 2022, primarily due to a $7.1 million increase in interest expense, due to higher interest rates across our debt facilities, increased borrowings, and the write-off of $3.9 million of deferred financing costs, fees and other expenses related to the repayment of our prior Export Credit Agreements.

In 2022, we wrote-off $9.0 million of deferred financing costs and incurred $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, and a $1.4 million loss on foreign currency translation, which was mostly offset by recognition of $11.6 million in other income related to expenses covered under the grant for the Coronavirus Economic Relief for Transportation Services Act grant.

Results of Operations —

Other expense for the three months ended March 31, 2024, increased $1.7 million to $11.8 million from $10.1 million for the three months ended March 31, 2023, due primarily to a $1.1 million increase in interest expense, due to increased borrowings and higher interest rates related to our high yield offering in May 2023.

Results of Operations — Segments

Selected information for our reportable segments is below.

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)

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Total tour revenues

Operating income (loss):

Operating income:

Land Experiences

Total operating income (loss)

Total operating income

Adjusted EBITDA:

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Total adjusted EBITDA

Guest Metrics —

Lindblad Segment

Guest Metrics — Lindblad Segment

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)

7 unchanged sentences

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)

Operating income (loss)

Operating income

Cost of tours

5 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.

16 unchanged sentences

Adjusted Net Cruise Cost per Available Guest Night

Comparison of the Three and Nine Months Ended September 30, 2023 to the Three and Nine Months Ended September 30, 2022 at the Lindblad Segment

Comparison of the Three Months Ended March 31, 2024 and 2023 at the Lindblad Segment

Tour Revenues

Tour revenues for the three months ended September 30, 2023 increased $25.0 million, or 30%, to $108.7 million, compared to $83.7 million for the three months ended September 30, 2022.

The 30% increase in 2023 was primarily driven by higher guest ticket revenues from a 21% increase in available guest nights due to greater fleet utilization and from a 9% increase in net yield per available guest night to $1,110 mostly due to higher pricing. Occupancy of 81% was in line with the third quarter of 2022. 

Tour revenues for the nine months ended September 30, 2023 increased $113.6 million, or 57%, to $311.7 million, compared to $198.1 million for the nine months ended September 30, 2022.

The 57% increase in 2023 was primarily driven by higher guest ticket revenues from a 39% increase in available guest nights due to greater fleet utilization and from a 20% increase in net yield per available guest night to $1,119 due to higher pricing and increased occupancy compared with 2022.

Tour revenues for the three months ended March 31, 2024 increased $2.8 million, or 2%, to $118.3 million, compared to $115.5 million for the three months ended March 31, 2023.

The increase was primarily driven by other revenue.

Operating Income

Operating income of $7.5 million for the three months ended September 30, 2023 improved $14.6 million compared to a $7.1 million operating loss for the three months ended September 30, 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 sales and marketing spend to support future bookings. 

Operating income of $8.6 million for the nine months ended September 30, 2023 improved $69.0 million compared to a $60.4 million operating loss for the nine months ended September 30, 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 sales and marketing spend to support future bookings.

Comparison of Three and Nine Months Ended September 30, 2023 to Three and Nine Months Ended September 30, 2022 at the Land Experiences Segment

Operating income of $7.8 million for the three months ended March 31, 2024 decreased $4.3 million compared to a $12.1 million for the three months ended March 31, 2023, as the increase in tour revenues was more than offset by higher operating expenses.

Operating expenses included higher cost of tours, primarily due to increased fuel pricing and land costs, as well as expenses associated with the other revenue, higher sales and marketing costs, primarily due to increased royalties associated with the new National Geographic agreement and higher general and administrative costs, primarily due to increased personnel costs, increased information technology costs following the launch of our digital infrastructure and higher credit card commissions due to the revenue and bookings growth.

Comparison of Three Months Ended March 31, 2024 and 2023 at the Land Experiences Segment

Tour Revenues

Tour revenues for the three months ended September 30, 2023 increased $6.2 million, or 10%, to $67.2 million compared to $61.0 million for the three months ended September 30, 2022 primarily as a result of operating additional trips during the third quarter 2023 and higher pricing. 

Tour revenues for the nine months ended September 30, 2023 increased $27.0 million, or 26%, to $132.5 million compared to $105.5 million for the nine months ended September 30, 2022 primarily as a result of operating additional trips during 2023 and higher pricing. 

Operating Income 

Operating income of $13.0 million for the three months ended September 30, 2023 was flat compared to $13.0 million for the three months ended September 30, 2022, as the increase in tour revenue was offset by increased operating and personnel costs related to operating additional departures, higher commissions related to the revenue and bookings growth and increased marketing spend to support future growth initiatives.

Operating income of $15.9 million for the nine months ended September 30, 2023 increased $3.2 million compared to operating income of $12.6 million for the nine months ended September 30, 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 higher marketing spend to support future growth initiatives.

Adjusted EBITDA —

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

Tour revenues for the three months ended March 31, 2024 increased $7.4 million, or 27%, to $35.3 million compared to $27.9 million for the three months ended March 31, 2023 primarily as a result of operating additional trips during the first quarter 2024 and higher pricing.

Operating Income

Operating income of $0.1 million for the three months ended March 31, 2024 decreased $0.2 million compared to a $0.3 million for the three months ended March 31, 2023, as the increase in tour revenue was more than offset by higher operating and personnel costs related to operating additional departures, higher marketing spend to drive future growth and the impact of foreign currency on operating expenses.

Adjusted EBITDA — Consolidated

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

For the three months ended September 30,

For the nine months ended September 30,

Reconciliation of Net (Loss) Income to Adjusted EBITDA Consolidated

For the three months ended March 31,

(In thousands)

Net income (loss)

Net (loss) income

Interest expense, net

1 unchanged sentence

Depreciation and amortization

Loss (gain) on foreign currency

(Gain) loss on foreign currency

Other expense (income)

Stock-based compensation

1 unchanged sentence

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

Reconciliation of Operating Income to Adjusted EBITDA Lindblad Segment

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)

Operating income (loss)

Operating income

Depreciation and amortization

2 unchanged sentences

Land Experiences Segment

For the three months ended September 30,

For the nine months ended September 30,

For the three months ended March 31,

(In thousands)

4 unchanged sentences

Liquidity and Capital Resources

As of September 30, 2023, the Company had $168.0 million in unrestricted cash and cash equivalents and $36.8 million in restricted cash primarily related to deposits on future travel originating from U.S.

As of March 31, 2024, the Company had $177.7 million in unrestricted cash and cash equivalents and $46.5 million in restricted cash primarily related to deposits on future travel originating from U.S.

ports and credit card reserves.

As of September 30, 2023, we had $635.1 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 for at least the next 12 months. 

Sources and Uses of Cash for the Nine Months Ended September 30, 2023 and 2022

Net cash provided by operating activities was $35.3 million for the nine months ended September 30, 2023 compared to $0.8 million for the same period in 2022. The $34.5 million increase is primarily due to increased cash received from guests for future travel, partially offset higher costs and redemption of future travel credits during 2023 as we returned all vessels to operations. 

Net cash used in investing activities was $7.6 million for the nine months ended September 30, 2023 compared to $29.6 million in the same period in 2022.

2023 primarily included divesting of marketable securities, partially offset by capital expenditures on our vessels and our digital transformation initiatives, 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 provided by financing activities was $61.0 million for the nine months ended September 30, 2023 compared to $2.1 million for the same period in 2022. 2023 primarily included the issuance of $275.0 million of 9.00% Notes (as described below) which were used primarily to repay our prior Export Credit Agreements, while 2022 primarily included the issuance of $360.0 million of 6.75% Notes (as described below) which were used to repay our prior credit agreement, including the term facility, the Main Street Loan and the revolving facility .

As of March 31, 2024, we had $635.1 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 for at least the next 12 months.

Sources and Uses of Cash for the Three Months Ended March 31, 2024 and 2023

Net cash provided by operating activities was $43.9 million for the three months ended March 31, 2024 compared to $2.1 million for the same period in 2023.

The $41.8 million increase is primarily due to increased cash received from guests for future travel.

Net cash used in investing activities was $6.5 million for the three months ended March 31, 2024 compared to $8.7 million in cash provided by investing activities during the same period in 2023.

2024 primarily included capital expenditures on our vessels and our digital transformation initiatives, while 2023 primarily included divesting of marketable securities, partially offset by capital expenditures on our vessels and our digital transformation initiatives.

Net cash used in financing activities was $0.6 million for the three months ended March 31, 2024 compared to $6.1 million for the same period in 2023.

2024 primarily included income tax withholdings for stock-based compensation, while 2023 primarily included principal payments on our prior export credit agreements .

Funding Sources

Debt Facilities  

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

The 6.75% 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.

Debt Facilities

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

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

The 6.75% Notes will mature on February 15, 2027, subject to earlier repurchase or redemption.

We used the net proceeds from the offering to prepay in full all outstanding borrowings under our prior credit agreement, including the term facility, Main Street Loan, and revolving credit facility, to pay any related premiums and to terminate in full our prior credit agreement and the commitments thereunder. The 6.75% Notes are senior secured obligations and are guaranteed on a senior secured basis by us and certain of our subsidiaries (collectively, the “Guarantors”) and secured by first-priority 

pari passu  liens, subject to permitted liens and certain exceptions, on substantially all of our and the Guarantors’ assets.

We may redeem the 6.75% Notes at set redemption prices and premiums, plus accrued and unpaid interest, if any. 

The 6.75% Notes contain covenants that, among other things, restrict our ability and the ability of our restricted subsidiaries to incur certain additional indebtedness and make certain dividend payments, distributions, investments and other restricted payments.

These covenants are subject to a number of important exceptions and qualifications set forth in the 6.75% Notes. 

The 6.75% Notes are senior secured obligations and are guaranteed on a senior secured basis by us and certain of our subsidiaries (collectively, the “Guarantors”) and secured by first-priority pari passu liens, subject to permitted liens and certain exceptions, on substantially all of our and the Guarantors’ assets.

We may redeem the 6.75% Notes at set redemption prices and premiums, plus accrued and unpaid interest, if any.

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 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. As of September 30, 2023, we had no borrowings under the Revolving Credit Facility.

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

On May 2, 2023, we issued $275.0 million aggregate principal amount of 9.00% senior secured notes due 2028 (the “9.00% Notes”) in a private offering.

The 9.00% Notes bear interest at a rate of 9.00% per year, accruing from May 2, 2023, and interest is payable semiannually in arrears on May 15 and November 15 of each year, beginning on November 15, 2023.

The 9.00% Notes will mature on May 15, 2028, subject to earlier repurchase or redemption.

The net proceeds from the offering were used to prepay in full all outstanding borrowings under our prior senior secured credit agreements, to pay any related premiums and to terminate in full the prior senior secured credit agreements and the commitments thereunder. The 9.00% Notes are senior unsecured obligations and are guaranteed (i) on a senior secured basis by certain of our subsidiaries (collectively, the “Secured Guarantors”) and secured by a first-priority lien, subject to permitted liens and certain exceptions, on the equity and substantially all the assets of the Secured Guarantors, and (ii) on a senior unsecured basis by certain of our other subsidiaries.

We may redeem the 9.00% Notes at set redemption prices and premiums, plus accrued and unpaid interest, if any. 

The 9.00% Notes contain covenants that, among other things, restrict our ability, and the ability of our restricted subsidiaries, to incur certain additional indebtedness and make certain dividend payments, distributions, investments and other restricted payments.

These covenants are subject to a number of important exceptions and qualifications set forth in the 9.00% Notes. 

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 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.

As of March 31, 2024, we had no borrowings under the Revolving Credit Facility.

On May 2, 2023, we issued $275.0 million aggregate principal amount of 9.00% senior secured notes due 2028 (the “9.00% Notes”) in a private offering.

The 9.00% Notes bear interest at a rate of 9.00% per year and is payable semiannually in arrears on May 15 and November 15 of each year.

The 9.00% Notes will mature on May 15, 2028, subject to earlier repurchase or redemption.

The 9.00% Notes are senior unsecured obligations and are guaranteed (i) on a senior secured basis by certain of our subsidiaries (collectively, the “Secured Guarantors”) and secured by a first-priority lien, subject to permitted liens and certain exceptions, on the equity and substantially all the assets of the Secured Guarantors, and (ii) on a senior unsecured basis by certain

of our other subsidiaries.

We may redeem the 9.00% Notes at set redemption prices and premiums, plus accrued and unpaid interest, if any.

Our DuVine subsidiary has a EUR 0.1 million State Assistance Loan related to the financial consequences of the COVID-19 pandemic, for the purpose of employment preservation.

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

The 6.75% Notes, Revolving Credit Facility and 9.00% Notes contain covenants that, among other things, restrict our ability and the ability of our restricted subsidiaries to incur certain additional indebtedness and make certain dividend payments, distributions, investments and other restricted payments.

These covenants are subject to a number of important exceptions and qualifications set forth in the 6.75% Notes, Revolving Credit Facility and 9.00% Notes.

As of March 31, 2024, we were in compliance with the covenants currently in effect.

Preferred Stock

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, 2023, 62,000 shares of Preferred Stock were outstanding.

As of March 31, 2024, 62,000 shares of Preferred Stock were outstanding.

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

The Preferred Stock is entitled to cumulative dividends of 6.00% per annum, and for the first two years, the dividends were required to be paid-in-kind.

After the second anniversary of the issuance date, the dividends may be paid-in-kind or be paid in cash at our option. During 2023, we thus far have continued to pay Preferred Stock dividends in-kind. At any time after the third anniversary of the issuance, we may, at our option, convert all, but not less than all, of the Preferred Stock into common stock if the closing price of shares of common stock is at least 150% of the conversion price for 20 out of 30 consecutive trading days. The Preferred Stock is convertible at any time, at the holder’s election, into a number of shares of our common stock equal to the quotient obtained by dividing the then-current accrued value by the conversion price of $9.50.

After the second anniversary of the issuance date, the dividends may be paid-in-kind or be paid in cash at our option.

During 2024, we thus far have continued to pay Preferred Stock dividends in-kind.

At any time after the third anniversary of the issuance, we may, at our option, convert all, but not less than all, of the Preferred Stock into common stock if the closing price of shares of common stock is at least 150% of the conversion price for 20 out of 30 consecutive trading days.

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

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.

As of September 30, 2023, the outstanding Preferred Stock and accumulated dividends could be converted, at the option of the holders, into approximately 7.8 million shares of our common stock. 

As of March 31, 2024, the outstanding Preferred Stock and accumulated dividends could be converted, at the option of the holders, into approximately 8.1 million shares of our common stock.

Funding Needs

4 unchanged sentences

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

As of September 30, 2023, we had a working capital deficit of $59.9 million, and as of December 31, 2022, we had a working capital deficit of $157.8 million. 

As of March 31, 2024, we had a working capital deficit of $71.0 million, and as of December 31, 2023, we had a working capital deficit of $74.7 million.

Critical Accounting Policies

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.

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 2023 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 2023 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