COVID-19 impacts on Lindblad’s results

2020-05-16T09:22:39+00:00 May 16th, 2020|Finance|

Lindblad Expeditions has reported first quarter tour revenues of $81.2 mill, a decrease $8.4 mill, or 9%, compared to the same period in 2019.

This decline was driven by a $6.5 mill decrease at the Lindblad segment and $1.9 mill drop at Natural Habitat.

Lindblad segment tour revenue of $69.5 mill was a drop of $6.5 mill, or 9%, compared to 1Q19, primarily due to a 12% decrease in available guest nights largely, which was largely down to disrupted, cancelled and rescheduled voyages as a result of COVID-19.

The available guest nights, as well as a decline in occupancy to 89%, due to additional shoulder season itineraries across the US fleet, was partially offset by a 3% increase in net yields, due to price increases and itinerary changes.

Natural Habitat revenues of $11.7 mill decreased $1.9 mill, or 14%, compared to the first quarter of 2019, primarily due to disrupted, cancelled and rescheduled departures as a result of COVID-19.

The Group reported a net loss of $1.9 mill for 1Q20, $0.04 per diluted share, compared with net income of $14.7 mill, $0.31 per diluted share, in the first quarter of 2019. The $16.6 mill decrease primarily reflected the impact of COVID-19 on operations, a $3.4 mill loss on foreign currency in the current year versus a $0.7 mill foreign currency gain in 1Q19 and a $1.2 mill decrease in income tax benefit versus the same period a year ago.

First quarter 2020 adjusted EBITDA of $10.6 mill was a drop of $11.5 mill, or 52%, compared to the same period in 2019. This decrease was driven by a $10.9 mill decline at the Lindblad segment and a $0.6 mill decrease at Natural Habitat.

Lindblad segment adjusted EBITDA was $10.1 mill, a decrease of $10.9 mill, compared to 1Q19, due primarily to the lower tour revenue and costs associated with disrupted voyages as a result of COVID-19.

Thist quarter also included costs related to the launch of the ‘National Geographic Endurance’, as well as higher drydocking and personnel costs, partially offset by lower operating costs, due to cancelled voyages and a decrease in commission expense from the impact of COVID-19 on revenues.

Natural Habitat adjusted EBITDA of $0.5 mill was a fall of $0.6 mill on 1Q19, primarily due to the lower revenue as a result of COVID-19, partially offset by lower operating costs related to fewer departures and a decline in marketing spend.

Sven-Olof Lindblad, President and CEO, said: “Lindblad was off to another great start in 2020 with the strong momentum we generated throughout the last few years continuing during the first two months of the year.

“Since that point, the spread of the COVID-19 virus and the related travel restrictions around the world have created unprecedented challenges. As always, the safety of our guests and crew remains our highest priority, and we are very pleased that we have had no reported cases of COVID-19 across our fleet and were able to safely disembark all guests from our ships in a timely fashion.

“Given the uncertainty that the virus has created around the timing and impact on future operations, we are taking all necessary steps to enhance our liquidity, while preparing further protocols, including testing, to put in place for when we can safely resume operations.

“We firmly believe that the smaller size of our ships, our advanced cleaning systems and robust operating protocols, along with the remote geographies we visit, and the profile of our guests, ideally situates us to be able to resume operations safely and effectively once travel restrictions have been lifted.

“Over the last 40 years, we had to overcome significant adversity from time to time and, in every instance, we have endured and then flourished due in large part to the resiliency of our employees and guests. We fully expect to do so again and look forward to returning to the world’s most remarkable locations,” he said.

Due to the spread of the COVID-19 virus affecting travel around the world, the company has suspended or rescheduled the majority of expeditions departing 16th March through 30th June, 2020 and has been working with guests to reschedule travel plans and refund payments, as applicable.

The majority of the company’s ships are currently being maintained with minimally required crew on board to ensure they comply with all necessary regulations and can be fully put back into service quickly as needed.

In accordance with local regulations, the company closed its offices and most employees are working remotely to maintain general business operations, to provide assistance to existing and potential guests and to maintain information technology systems.

“The company has moved quickly to implement a comprehensive plan to mitigate the impact of COVID-19 and preserve and enhance our liquidity position. We are employing a variety of cost reduction and cash preservation measures, while accessing available capital under our existing debt facilities and exploring additional sources of capital and liquidity,” Lindblad added.

These measures include the following operating expense and capital expenditure reductions –

  • Significantly reducing ship and land-based expedition costs including crew payroll, land costs, fuel and food. All ships have been safely laid up.
  • Lowered expected annual maintenance capital expenditures by over $10 mill, savings of more than 50% from originally planned levels.
  • Meaningfully reduced general and administrative expenses through payroll reductions and the elimination of all non-essential travel, office expenses and discretionary spending.
  • Suspended the majority of planned advertising and marketing spend.
  • Deferred payment of the majority of bonuses earned for 2019 performance, as well as cash compensation for the Board.
  • Suspended all repurchases of common stock under the stock repurchase plan..

The company reported a strong start to the year with Lindblad segment bookings as at the end of February up 25% for the full year, compared to the same point a year ago and the Group had sold 88% of original projected guest ticket revenues for the year.

Since that point, the company has experienced a substantial impact from the COVID-19 virus, including elevated cancellations and softness in near-term demand. Lindblad segment bookings for travel in 2020 are now 27% below the same point a year ago, due primarily to the cancelled and rescheduled voyages, as well as cancellations for travel later this year.

The company still has substantial advanced bookings for future travel in 2020, including 8% more bookings for the second half of 2020, compared with the second half of 2019, as of the same date. In addition, the company said that it continued to see new bookings for travel in 2020, 2021 and 2022, including over $15 mill since 1st March, 2020 and it is receiving deposits and final payments for future travel.

Lindblad said that export credit agencies, in conjunction with export credit lenders, are working to finalise an industry wide initiative to grant a 12-month debt holiday to provide interim debt service relief for amortisation payments and financial covenants.

Considering the cost reduction measures and the potential deferral of near-term export credit agreement amortisation, the Group estimated its monthly cash usage, while its vessels are not in services, to be about $10-15 mill, including ship and office operating expenses, necessary capital expenditures and interest and principal payments.