Lindblad Expeditions Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
April 30, 2024

There are 7 speakers on the call.

Operator

Good morning, everyone, and welcome to the Lynn Black Expeditions 20 24 First Quarter Financial Results. My name is Angela, and I'll be coordinating your call today.

Operator

During the presentation, you can register to ask a question by pressing star followed by 1 on your telephone keypad. I will now hand you over to your host, Craig Valentine, Chief Financial Officer to begin. Please go ahead.

Speaker 1

Thank you, operator. Good morning, everyone, and thank you for joining us for Lindblad's 2024 Q1 earnings call. With me on the call today is Sven Lindblad, Lindblad's Founder and Chief Executive Officer. Sven will begin with some opening comments, and then I will follow-up with some details on our financial results, balance sheet and current 2024 expectations before we open the call for Q and A. You can find our latest earnings release in the Investor Relations section of our website.

Speaker 1

Before we get started, let me remind everyone that the company's comments today may include forward looking statements. Those expectations are subject to risks and uncertainties that may cause actual results and performance to be materially different from these expectations. The company cannot guarantee the accuracy of any forecast or estimates, and we undertake no obligation to update any such forward looking statements. If you would like more information on the risks involved in forward looking statements, please see the company's SEC filings. In addition, our comments may reference non GAAP financial measures.

Speaker 1

A reconciliation of the most directly comparable GAAP financial measures and other associated disclosures are contained in the company's earnings release. And with that out of the way, let me turn the call over to Seth.

Speaker 2

Thank you, Craig, and good morning and thank you all for joining us today. If I sound a little odd periodically, I've been hit hard by allergies, so I might cough now and then. I'm sure that's true for many of you with all of the flowering trees around. In any case, Lindblad's Q1 results set the stage for another year of double digit growth and record results in 2024. Craig will provide additional color on our performance this past quarter, but before he does, let me take a few minutes to discuss some of the drivers of the continued growth this year as well as some of the steps we are taking to sustain that momentum in the years ahead.

Speaker 2

First and foremost, the booking strength we experienced throughout 2023 has continued into this year as more and more guests want to explore the remarkable destinations we visit. The pull to connect authentically with nature and culture is continually growing and there is no other company in this segment with our track record or with our commitment to providing authentic and immersive travel itineraries. Bookings this year to date for future travel were up 20% versus the same period in 2023, and we expanded our overall in year bookings growth to 4% ahead of where we were at the same point in 2023. Now it's worth reminding that 2023 benefited from significant carryover business from cancellations during COVID. Excluding these carryover bookings, the reservations for 24 travel would be well over 20% of that a year ago.

Speaker 2

These carryover bookings were also one of the primary reasons for occupancies below the Q1 a year ago. Excluding carryover bookings, the occupancy would have increased versus the Q1 of 2023. The majority of the carryover bookings for 2023 were early in the year, so the impact of these guests on occupancy growth will diminish as the year progresses. Lastly, it is important to remember, as I discussed last quarter, that a key contributor to current occupancy levels is a 2 year loss of generating new guests during COVID, drying up the pipeline of the key past guest constituency. This effect is diminishing by the day and occupancies will move higher as the pipeline again refills.

Speaker 2

At the same time, there are a couple of external headwinds that we continue to deal with. The first is geopolitical events across the globe. Reality is that we've always they've always played a role ebbing and flowing through the years, and we are currently dealing with 2 specific events that certainly depressed revenue and occupancy in the Q1. The Israeli Hamas war and events in Ecuador in early January both caused cancellations and short term softening in future business. These kinds of events can also affect costs fuel for example increased significantly hopefully temporarily due to the instability in the Middle East.

Speaker 2

Periodic disruptions may have a distorting effect on quarters, but as we continue to scale our business, they will have less and less impact on overall results. The other headwind is the discounting taking place with our competition in the expedition space. As 2023 evolved through the summer and fall, we started seeing more and more dramatic price actions, sometimes even 2 for 1 offerings for prime seasons in places like Antarctica. Clearly, the relationship of inventory and demand is out of balance for some of our peers as well as some desperation coming out of COVID. Rather than joining the fray given the potential long term ramifications to the value proposition we deliver, We have remained committed not to buy occupancy and maintain price integrity, which you can see with our net yield up slightly versus a year versus the Q1 a year ago.

Speaker 2

There is little to no benefit in adding occupancy if yield decreases proportionately. So price integrity is key, is a key long term metric and essential to preserve even if occupancies move ahead of it slower in the short term. Given the opportunity and experiential travel, our thesis is that brand is now and will become even more important than ever. That is why we are so excited about the recent extension and expansion of our brand partnership with National Geographic until 2,040. With the power of both our brands now combined with the distribution clout of Disney, we believe we can leverage our collective strengths to really take advantage of the increased demand, while distinguishing ourselves from competition.

Speaker 2

We just came off at 5 day off-site on one of our expedition ships with high level participation from all three entities. The purpose was to build understanding and to surface meaningful ideas that will propel us all into the future, with the core theme being the power of 3. This was just another step towards maximizing the opportunity ahead. Since the day the new agreement was signed in November, our team along with their marketing and sales teams have been deepened into strategy and tactical plans on a regular basis to energize collective goals and build specific initiatives to drive business. Collaboratively, we have made significant progress, including a new brand strategy that incorporates a new co branded logo with National Geographic, which we will begin rolling out later this year.

Speaker 2

The brand changes are subtle, but more fully harness the National Geographic brand to capitalize on one of the world's largest social media followings and their extremely high awareness, trust and credibility. As we focus on maximizing the brand opportunity, we are also updating our website on both National Geographic Expeditions and expeditions.com domains to create a seamless unified booking experience. Last summer, we launched a completely redesigned online booking flow on the expeditions dot com website and have since seen a near doubling of the percentage of our direct bookings made online. We're now actively working on the development needed to enable all those same digital features on the National Geographic Expeditions website, and we'll launch those enhancements later in this year. A key component of the new arrangement is the ability to leverage the powerful Disney sales network.

Speaker 2

Our teams are focused and energized on developing coordinated sales strategies, B2B marketing tactics and events and activating high potential Disney distribution channels. The expanded license agreement also gives us the ability to sell globally. Our consumer and trade sales efforts will launch in the first will launch in our first new market by the end of the summer and more will follow based on market opportunity. While we continue to lay these foundational blocks, we're already leveraging the power of Disney synergy machine to execute high visibility on brand activations today. Over the course of the last few months, Disney has leaned on their marketing engine to place the co brand in some of their most valuable visible media assets, including the Wheel of Fortune, Good Morning America, Disney Plus, National Geographic and even on the homepage of disney.com to celebrate Earth Month.

Speaker 2

Bookings in the year for travel in 2024 are up 35% versus 2023 and the Disney and National Geographic marketing efforts has contributed to that result. These are just a few highlights where we're working together to create both the top of funnel demand and lower funnel performance for years to come. We anticipate really benefiting from this new arrangement starting in 20 25 as we reach more citizen explorers than ever before by opening larger addressable markets through new worldwide audiences. As we look to maximize the opportunity with National Geographic and Disney, we have become even more focused on itinerary development and innovating the ways we immerse our guests in parts of the world we have been visiting for years. We have made some major changes for this year and into the future, balancing our inventory to accommodate both past and new guests.

Speaker 2

2 of the most significant are focused on Iceland, which attracts a greater level of new guests and new itineraries in Antarctica that provide flights either one way or both ways from South America to the continent, avoiding either one or both crossings of the Drake Passage and allowing people with less available time to participate. These programs from November 24 through February 25 sold out faster than anything we have ever, ever offered. And for the 'twenty five, 'twenty six season, we will add another ship, the National Geographic Orion, fully dedicated to this approach, allowing us to connect with more travelers who wouldn't have considered this type of expedition before. This also speaks to our ability to be nimble with regard to our product offerings. As we focus on driving higher returns across the fleet, we continue to broaden and deepen our land based portfolio with this morning's announcement of our signing a deal to acquire Wineland Thompson Adventures, which includes respected Tanzania Safari Specialist Thompson Safaris with more than 40 years of experience in the country.

Speaker 2

Their portfolio also includes the historic award winning Gibbs Farm Lodge and 80 Acre Sanctuary that was my favorite lodge when I was a guide in East Africa. Tanzania is one of the finest places in Africa for wildlife viewing, including famed national parks like the Serengeti and Ngorongoro Crater. And African safaris have been have exploded in recent years as evidenced by Natural Habitat's growth in the region. Similar to the acquisitions of Natural Habitat, Divine, Cycling, Australopithe and Path Classic Journeys, Lindblad will leverage its experience and resources to further accelerate the growth of the Lineland Thompson brands and capitalize on the growing demand for authentic and immersive adventure travel and safaris. We do need regulatory approval in Tanzania and expect the transaction close early in the second half of twenty twenty four.

Speaker 2

Once it does, Vineland Thompson Adventures will create additional value for our guests and for our shareholders. Before I finish up, I would be remiss not to mention this is Craig's last earnings call with us. He has been our valued CFO for 7.5 years and has been a true partner to me, the Board and the entire organization. We will miss him a great deal and wish him well on his new non competitive opportunity. We are working on the transition and expect to have news on this front before Craig leaves at the end of the month.

Speaker 2

Many thanks for your time for the last time, Craig. And now I will turn the call back over to you.

Speaker 1

Thanks, Sven, and thanks so much for those kind words. Lindblad's Q1 performance has the company well positioned to deliver another year of record financial results as it further ramps ship operations with broader deployment of its expanded fleet and continued expansion of its diversified portfolio of land businesses. The year on year results are expected to ramp throughout the year as the company leverages the investments it has made in overall infrastructure and marketing and sales capabilities to capitalize on the strong demand for experiential travel. Turning to the Q1, total company revenue of $154,000,000 increased $10,000,000 or 7% versus the Q1 of 2023, as we continue to offer additional trips across both the Lindblad and Land Experience segments. At the Lindblad segment, revenue of $118,300,000 increased $2,800,000 or 2% versus the Q1 a year ago, led by a 3% increase in available guest nights from broader utilization of the fleet and from 1% net yield growth to 12.19 per available guest night, primarily due to higher pricing and increased other revenue, partially offset by a decrease in occupancy to 76% from 81% in the Q1 a year ago.

Speaker 1

The Q1 did include the impact of softness in the Middle East due to recent worldwide events and also included the cancellation of 2 voyages in the Galapagos as we discussed last quarter. As occupancy ramps, there will be significant operating leverage inherent in the marine platform as the company attracts more and more guests while maintaining strong pricing discipline across the expanded fleet. At the Land Experiences segment, revenue of $35,300,000 increased $7,400,000 or 27% versus a year ago, led by additional guests and higher pricing across natural habitats trips to Africa and to see the Northern Lights, divine cycling tours across Latin America and Portugal, Classic Journeys walking tours in Cuba and Costa Rica and off the beaten path trips to U. S. National Parks.

Speaker 1

Total company revenue growth was more than offset by higher operating costs in the quarter with adjusted EBITDA of $21,600,000 down $5,600,000 versus the same period a year ago. Looking a little closer at the cost side of the business, operating expenses before depreciation and amortization, interest and taxes increased 15,800,000 or 14% versus the Q1 of 2023, led by a $7,300,000 or 10% increase in cost of tours versus a year ago. This is primarily related to operating additional ship and land based itineraries. The cost of tours increase also reflects expenses associated with the other revenue, the impact of foreign currency and operating expenses and higher fuel costs due to increased usage from operating additional trips and higher pricing versus a year ago. Fuel costs were 6% of revenue in the Q1 of 2024, which was in line with the Q1 a year ago.

Speaker 1

Fuel prices have continued to rise and are anticipated to be a bit of a headwind for the remainder of the year, but overall fuel remains a relatively small component of our operating costs. Sales and marketing costs increased 2,100,000 dollars or 10% versus a year ago, primarily due to increased royalties associated with the expanded National Geographic Agreement and additional marketing spend to drive future bookings. G and A expense during the quarter increased $6,400,000 or 27 percent versus a year ago, excluding stock based compensation and one time items, primarily due to higher personnel costs associated with the expanded operations as well as from increased credit card commissions related to final payments for upcoming itineraries and higher deposits on new reservations for future travel. It's important to remember that credit card commissions are paid upon cash receipt with the expense recognized today and the trip revenue not recognized until the guest travels. With bookings up meaningfully in the Q1 versus the same period a year ago, the expense impact is significantly higher year on year with the revenue growth to be delivered in the periods ahead.

Speaker 1

The increased operating expenses resulted in total company net loss available to stockholders of $5,100,000 or $0.10 per diluted share versus $400,000 or $0.01 per diluted share reported in the Q1 a year ago. The current quarter also included additional interest expense of $1,100,000 net associated with higher rates and increased borrowings related to our debt refinancing in May 2023, as well as lower tax expense of $1,300,000 and a $800,000 decline in stock based compensation. Turning to the balance sheet, we ended the Q1 with $224,000,000 in cash, an increase of $37,000,000 versus the end of 2023. The growth was driven by free cash flow of $37,000,000 with operating cash flow of $44,000,000 primarily due to increased cash received for future travel, partially offset by $6,000,000 of CapEx, mostly due to maintenance CapEx and some additional spending on our digital initiatives. Please note that after the quarter, the company did acquire an additional 10% of Natural Habitat and an additional 5% of Divine Cycling for $16,700,000 in aggregate and now owns 90% 75% of these growing businesses respectively.

Speaker 1

Moving forward, the company anticipates using approximately $24,000,000 in cash in the acquisition of Wineland Thompson that was announced this morning, with the transaction expected to close during the Q3. The company will continue to explore additional growth opportunities in the year ahead, including further diversifying its products portfolio or opportunity expanding its fleet to capitalize on the continued growth in demand for experiential travel. Turning to the full year 2024, the company continues to anticipate significant growth driven by higher guest counts and increased net yields across the fleet, as well as additional travels across the growing land businesses. The Lindblad segment is in a strong booking position for the current year, having already booked over 94% of the Lindblad segment full year projected ticket revenues for 2024. Given the strong booking trends, the company still expects tour revenue in 2024 between $610,000,000 $630,000,000 and adjusted EBITDA between $88,000,000 $98,000,000 Due to the uncertainty regarding the timing of closing the acquisition of Weidland Thompson Adventures, there is minimal contributions included in our expectations for this year.

Speaker 1

Please note that as we mentioned last quarter, our 2nd quarter results will be impacted slightly by 2 voyage cancellations on the Explorer as we decided to transit around the Red Sea. Before I finish, I would like to take a quick moment to thank all the employees of Lindblad, including Sven and the leadership team in particular, as well as the Lindblad Board for their support over these past 7.5 years. It has been an honor and a privilege to work for Lindblad Expeditions. And I know the company has a really bright future ahead as they take more and more guests to the remarkable destinations they have been visiting for decades. And lastly, thank you to all of you in the investment community who have supported the company and who I have had the pleasure of interacting with in my time here.

Speaker 1

I have really enjoyed sharing your business with you. Thank you for your interest. And now Sven and I would be happy to answer any questions you may have.

Operator

Thank you very much, Craig. We have the first question from Steve Wieczynski from Stifel. Your line is open.

Speaker 3

Yes. Hey, guys. Good morning. First of all, congrats, Craig, on the new opportunity. You obviously will be missed at Lindt for sure.

Speaker 3

So, okay. So if we think about the rest of the year, it seems like the investment and the royalties that you guys are going to be paying out for this year for the revised Disney agreement might be a little bit more than we were expecting in terms of what we saw in the Q1. So just kind of wondering how we should think about costs associated with that investment for the next three quarters. And then on top of that, is the right thinking here that this year is all about the investment in that new partnership? And then 2025 and beyond is really when you'll start to see the benefits from teaming up with Disney.

Speaker 3

And I think Sven mentioned that in his prepared remarks, but just want to make sure that's the way we should think about the next, call it, 12 to 24 months?

Speaker 1

Sure. So let me start with and thanks for your time, Steve. I appreciate it. So let me start with the National Geographic year on year payments. So as you know, we are now with that agreement paying a flat royalty fee throughout the course of the year.

Speaker 1

A year ago, the payments to National Geographic obviously fluctuated depending on their individual performance because they were being paid a commission at the same time as well as the performance of the overall company. So the impact in every given quarter is going to fluctuate. And the impact in Q1 when you look at it year on year will be greater than it will be in some of the other quarters later in this year. So that's kind of how the year on year growth in the National Geographic payments will play out for the next 9 months. When you look at the positive impact that they're going to have and Sven can add some additional color here.

Speaker 1

Given the booking window that we do have, which is about 9 months still on average, you would anticipate the majority of the impact being in 2025 in earnest. Now there has been, as Sven mentioned, in this year, some one offs that have been done to take advantage of their Disney distribution power and the National Geographic distribution power. And we do believe that's contributing to some of the strong booking growth that we're seeing today. But the real value and the real significant value will take place in 2025 and beyond.

Speaker 2

Yes. Steve, I could add a couple of things. So if you think about that we signed our agreement with National Geographic in November, right, last year. And prior to that, Disney was really not a factor in the equation. It was we had since 2004, we had a relationship with National Geographic and whatever their machine was capable of providing and it was actually significant.

Speaker 2

But now since November, we're adding Disney to the equation. And obviously, their channels for distribution in particular and many of their ideas are incredible. I mean, this is the largest entertainment conglomerate in the world. And so we believe that there is going to be significant value as a consequence, but it is going to take a bit of time to ramp up because they don't make decisions as it relates to something next month or a few weeks from now and implement in that way. It's much more of a long term play.

Speaker 2

And but we will start seeing we already have started seeing some results, but we will see, I think, significantly greater results starting in 2025.

Speaker 3

Thanks for that guys. And then second question, I want to ask about the acquisition that was announced this morning. And I guess my question really isn't about the acquisition, but around the use of capital for that acquisition. And I guess what I'm getting at is, look, I don't think we can ignore where the share price is today. And in our opinion, to us, the underappreciated long term opportunity here with Disney and National Geographic.

Speaker 3

So to us, the share price does seem undervalued here. So I guess the question is, how do you balance doing acquisitions like this versus taking that $30,000,000 maybe not all that $30,000,000 in terms of what you spent on the acquisition and essentially looking at buying back shares at these levels. Hopefully that makes sense.

Speaker 1

Yes, sure. Thanks, Steve, for the question. We always have balanced what I would say is long term growth and long term capital deployment. When we look at the opportunities in front of us for an asset, an acquisition like Weinmann, I'm not getting too specific in what the opportunity is moving forward. But when you can buy it at the multiple that we acquired that asset at, which is significantly below where the multiple of our existing company is trading at.

Speaker 1

And you see some significant growth in that asset moving forward, especially when you layer in some of the expertise that we have at the Lindblad and Natural Habitat Companies as well as some of the resources we have to continue to invest in those assets, you weigh the opportunity versus the opportunity that you see investing in your own shares. And as you know, you can't always help and identify when these assets become available, they become available, when they become available. So continuously weighing the future growth opportunity with an asset like this versus what we believe is obviously significant upside in our existing shares. And as we move forward and we look to allocate capital moving forward, we will balance those things still between investing in our existing business, investing in M and A or returning capital to shareholders either through buying back stock or through reducing our debt load in some capacity.

Speaker 3

Okay, great. Thanks guys. Appreciate it.

Operator

Thank you. The next question is from Aaron Ward with B. Riley Securities. Your line is open.

Speaker 4

Thank you. Good morning. Two questions for me. I guess the first one, I know that you reaffirmed the prior guidance ranges and it's only been a couple of months since the Q4 call when you first gave that. But was there anything with the costs you saw in Q1 and maybe so far in April Q2 that were not fully anticipated when you gave that guidance that would kind of need to see some reliefs to maybe give you more comfort in the higher end of that range than the lower end?

Speaker 1

Nothing significant. I mean, the biggest one is obviously fuel. The prices have continued to rise and that has created a bit of a headwind for us and that will continue to be the case. And then certainly when we look at some of the voyage cancellations that we've had, the impact of not only those voyage cancellations, but also some of the, what I would say is residual softness related to some of the instability around the world would have us as a bit of a headwind on some of our guidance here. But we gave a range when we gave the range back in end of the first or end of Q4 and we still feel comfortable that we'll be within that range here moving forward.

Speaker 1

The biggest variables will certainly be the continued revenue generation. As I said on my remarks, we're 94% of the way sold out with regards to our revenue expectations for the year at the LiveLess segment. But that last 6% does come at a very high margin, right? So it's imperative on us to fill the rest of the 6%. And if we do that, we should be able to get where we want to be from a full year perspective.

Speaker 4

Got it. And then second question, I kind of I honestly understand the decision to add a highly variable cost land based business is different than the decision to add a new ship to the fleet. But maybe update us on kind of where you are on the decision curve to add to the fleet and kind of what you really need to see to make that commitment, whether it's a used ship available out there with some of these competitors that may be struggling or committing to a kind of a multiyear build process?

Speaker 2

Yes. First about the land company. So just one of the things that was particularly attractive about this most recent acquisition was that this is a company that's been in existence for 40 years and in a country which is probably the wealthiest country from the perspective of wildlife in all of Africa. And to get a footing in a country like Tanzania with somebody that has had that wealth of experience is really, really a meaningful opportunity and has tremendous opportunity to be developed further. So for us so far, the whole concept of land businesses

Speaker 1

has been a sort

Speaker 2

of a counterbalance, if you will. With ships here, it's largely fixed costs, certain things happen like COVID and the dynamics of that are different or the effect of that is different on ships than it is on land company. But we are absolutely keen on growing our maritime business. Now there are a couple of triggers that we need to there are a couple of things that we need to see before we trigger new opportunities. And one of them, by the way, is there's an interesting question about building ships or acquiring ships.

Speaker 2

The business was largely built on acquiring ships and then in recent years on building ships. Our thesis is that there probably will be ships available in the future that were built and perhaps don't have that weren't as successful as the people who built and hope they'd be, maybe a polite way of putting it. And so we're really, really keeping our eyes out on companies that have ships that may become available. That's number 1. And what we want to make sure of is that we are doing as good a job as we did prior to pandemic in filling the ships that we have, because the value of that is off the charts by comparison to any other form of investment.

Speaker 2

So making up the 10% differential, let's say, where we are now and where we would like to be 10%, 12% is just massively valuable. And you don't want to add inventory and spread out your reach because you're adding your costs and you're just spreading out your reach. That really isn't a smart thing to do. So we have to feel that we're at a stage where I mean, my goal is to have to feel that you can get 125% of the occupancy that you have. And the minute you envision you're headed in that direction, you can begin to trigger new acquisitions.

Speaker 4

Got it. Thank you both.

Speaker 1

Thank you, Eric.

Operator

Thank you. The next question is from Chris Woronka with D. B. Your line is open.

Speaker 5

Hey, good morning guys. And Craig, congrats on the new opportunity. All the best at

Speaker 1

the

Speaker 5

new place and we'll miss you.

Speaker 1

Can we maybe talk a

Speaker 5

little bit about the comments you made earlier about the competitive environment? I guess the question would be, is the level of surprise greater on kind of the level of competition that's out there and then some of the new entrants? Or is it more about how they're handling their pricing strategies? Thanks.

Speaker 2

Yes. It's Ed here. I think it's a combination of both. I mean, somebody obviously got a hold of a spreadsheet at a certain point and said, wow, this business looks like it has tremendous potential. And because when you think about it, the explosion of entries in the last 5 years is just so many more ships than were ever imagined in this segment.

Speaker 2

So it's unprecedented. So I think to be totally honest, I think what people have probably done is underestimated the complexity of expedition travel. You're going to remote areas, you have to understand geography, have to write teams or else you're going to get into trouble. You have to have good deep relationships with the people and the institutions in those countries, etcetera, etcetera, etcetera. So it's actually quite complicated.

Speaker 2

The other thing is, is I think people maybe have underrated the intelligence of the audience in certain instances because the audience is very sophisticated that does this kind of thing. And they care deeply about quality, what is the quality of the staff, what is quality of the experience, how well thought out are the itineraries, etcetera, etcetera, etcetera. So and then brand, of course, as I mentioned earlier, is I think an important thing. I mean, obviously, our brand is very, very well known to a very, very small number of people. I mean, because when we started this business, expedition travel was not a big category.

Speaker 2

But for people that have any interest in that category and that includes the trade, we are very well known in that regard. But obviously, National Geographic is a brand that everybody on the planet knows. And so the combination of the 2, create something I think quite meaningful or very, very meaningful that helps those interested in expedition travel sort of migrate in our direction. Okay. I understand.

Speaker 5

Yes. Thanks Sven. And just a follow-up on the cost side and I totally understand and heard what you mentioned about the national geographic fees and the changes there. But on the other things and maybe even look at it ex fuel, is there anything to suggest that you see moderation on the second half? I know some of the costs can be kind of lumpy, insurance, things like that.

Speaker 5

I mean, is there any visibility into lower increases moving forward?

Speaker 1

Sure. And thanks for the comments earlier, Chris. So there's a couple of things in the cost that will, I would say, mitigate a bit. One is, as you can imagine, the Q1 of the year is a big quarter from us from a cash receipt perspective, both from a deposits on future travel as well as down payments for new reservations. The credit card fees are definitely higher in Q1.

Speaker 1

So the growth in Q1 there would be higher than it would be later in the year. The second thing is there are some timing issues associated with some of the land company costs that come into the Q1. You can see the flow through from a land company profitability perspective in the Q1 is not what it is later in the year. So you should see, what I would say, better margins, I would say, on the land business certainly in the rest of the year. So those are the big ones.

Speaker 1

There's a little bit of currency hit in the Q1 related to some of the currency movements and some of the operations at our land companies as well. So that should abate itself as well. So those are some what I would say is one offs that you'll see not flow through the rest of the year. Can I ask something? Okay.

Speaker 5

Very good. Thanks, guys.

Speaker 2

So I if I could just add one thing, Sven here, because Craig and I talked about this talk about this a lot. Obviously, there is an expectation on the part of a lot of people for the occupancies to go up, rightfully so, and they will go up by the way. But more important than occupancy in the short term is price integrity in the long term. Because one of the things that you really sort of analyze a business like this, let's say, you can get to we could get to 100% occupancy tomorrow if we took on some really bad habits that would have a very negative effect on the business long term. So ships, small ships, expedition ships cannot function at revenues that are 50%.

Speaker 2

It's not possible, it's not sustainable. And so we our emphasis is let's do let's drive up occupancy, but at the same time, let's make sure we do not violate price integrity because once you do too much of that, it's hard to come back, right? So I just want to clarify that point.

Operator

Thanks, Ed.

Speaker 4

Thanks, guys.

Speaker 2

Thanks, Chris.

Operator

Thank you. The next question is from Alex Faiman with Craig Hallum Capital. Your line is open.

Speaker 6

Hey guys, thanks for taking my question. And Craig, sorry to hear that you're going to be leaving the company. Ben, you mentioned that some of your geographies, I think Antarctica, in particular, you're seeing a lot more competitive pricing from some of your competitors with the 2 for 1 deals. Curious, do you think a lot of this is ultimately short term in nature? Or do you think given the nature of your small ships and how nimble you can be, are there maybe opportunities to reposition some of your ships for part of the season to even more remote, less visited destinations where you'd have more pricing power over time?

Speaker 2

Yes. Well, I'm talking about as remote as you're going to get. But we're there is competitive price pressure, but we're doing very well in that talk.

Speaker 4

So I'm not

Speaker 2

despite the fact that there's an overwhelming number of shifts down there, we're doing well. And one of the reasons why is because we've really, like what we did with developing our fly in program for 1 of our ships. So we had the dilemma where we had a ship that was an older ship, very nice ship by the way, the National Geographic Explorer next to our 2 new ships, the National Geographic Endeavor and the National Geographic Resolution. And there's a natural inclination on the part of people who want to buy something that's new. So the ships were doing well and the Explorer was lagging a little bit behind just because again, she was older and not the new thing.

Speaker 2

So what we did is we created a whole different program incorporating the flying into Antarctica, allowing people with less time to go there. And that was the perfect counterpoint to the dilemma. We didn't like discount it. We just changed the idea. And people just bought it and it filled up instantly, essentially instantly.

Speaker 2

And so there are lots of levers you can deploy in order to change your destiny. And it isn't just obviously, it isn't just price. Geography is absolutely key or how you operate in a particular geography. So there are a variety of ways you can kind of get the job done. In this case, it was by creating a totally, totally new idea.

Speaker 2

So the Explorer and the new ships were in fact not in competition anymore.

Speaker 6

Okay, great. That's really helpful. Thank you very much.

Speaker 4

Thank you, Alex.

Operator

Thank you. We have no further questions. So I'll hand back to the management team to conclude.

Speaker 1

Thank you, operator, and thank you everybody again for joining us today. And thank you for your support for the past 7.5 years. And I look forward to finishing up the next month. And if you have any questions, please let me know and let us know and we're happy to answer them today or in

Speaker 2

the future. Thank you. Many thanks, guys.

Operator

Thank you very much. This concludes today's call. Thank you for joining. You may now disconnect your lines.

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Earnings Conference Call
Lindblad Expeditions Q1 2024
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