LINDBLAD EXPEDITIONS HOLDINGS, INC. 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risk in the normal course of our business. The primary exposure relates to the exchange rate fluctuations between our U.S. dollar functional reporting currency and other currencies. This exposure includes prepaid assets, potential newbuild contracted payments, charter commitments and current liabilities that are denominated in currencies other than our functional currency. We have ship maintenance and construction contracts which are denominated in currencies other than the U.S. dollar. While we have previously entered into, and may, in the future, enter into, forward contracts to manage a portion of the currency risk associated with these contracts, we are, or may be, exposed to fluctuations in the exchange rates for the portions of the contracts that have not been hedged. Additionally, if a shipyard is unable to perform under such a contract, any foreign currency forward contracts that were entered into to manage the currency risk would need to be terminated. We use currency exchange contracts to manage our exposure to changes in currency exchange rates associated with certain of our non-U.S. dollar denominated receivables and payables. We primarily hedge a portion of our current-year currency exposure to the Canadian and New Zealand dollars, the Indian rupee, 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. We generally have not hedged our fuel purchases as there is no particular market or index to hedge against given the geographic diversity of where we purchase our fuel. During 2022, fuel costs increased across our fleet as worldwide crude oil and fuel prices significantly increased with the Russian invasion of Ukraine. Fuel costs represented 4.1%, 4.9% and 7.4% of our tour revenues for the years ended December 31, 2024, 2023 and 2022, respectively. We may be exposed to a market risk for interest rates related to our revolving credit facility. As of December 31, 2024, no amounts were outstanding under the revolving credit facility. For additional information regarding our long-term borrowings see Note 6―Long-Term Debt to our Consolidated Financial Statements included herein.