Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Lindblad Expeditions Second Quarter 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Rick Goldberg. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining us for Lindblad's Second Quarter 2025 Earnings Call. With me on today's call is Natalya Leahy, our Chief Executive Officer. Natalya will begin with some opening comments, and I'll follow with details on our Q2 financial results and updated expectations for the full year before we open the call for Q&A. As always, you can find our latest earnings release in the Investor Relations section of our website. But before we get to all of that, I'd like to 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. A reconciliation of the most directly comparable GAAP financial measures and other associated disclosures are contained in the company's earnings release. With that out of the way, I'll turn the call over to Natalya.

Good morning, everyone, and thank you for joining us to review Lindblad Expeditions second quarter results. I will start by saying how incredibly proud I am of our team and a very strong performance we delivered this quarter. We are seeing a clear momentum from the strategic initiatives we've implemented to increase occupancy and innovate across our cost structure. While we are focused on value creation opportunities ahead, the meaningful progress we've made with the team in a relatively short period gives me and all of us great confidence in the path we are won. Before diving into the quarterly results, I'd like to take a step back and highlight some key milestones from the past 6 months that have positioned us for continued success. First, we introduced more strategic revenue management capabilities through thoughtful pricing architecture aligned with strategic and systemic commercial calendar. Second, we're executing impactful strategic and tactical initiatives with our Disney partners, allowing us access to new channels and audiences, which are already yielding positive outcomes. Third, we've implemented robust cost innovation process across the business. To support these priorities, we adopted an organizational structure better aligned with our long-term goals and made several key additions to our leadership team, bringing deep and diverse expertise. Cris De Souza joined us as Chief Revenue Management Officer; bringing extensive experience across revenue management, sales and marketing in the cruise industry and across multiple brands. Rear Admiral Keith Taylor, U.S. Coast Guard retired, now serving as Chief Maritime Officer. He brings more than 40 years of experience in the coast guard, maritime and cruise industry and is already delivering meaningful results in maintenance optimization and dry dock planning. Jenelle Findley was appointed Senior Vice President of Planning and Operations. With her strong operational and financial background, she is leading…

Thank you, Natalya. I'm pleased to report another strong quarter of performance, reflecting our continued progress in driving both occupancy and net yield growth, innovating our cost structure to enhance margins and most importantly, staying true to our commitment to delivering an exceptional guest experience. Total company revenues for Q2 2025 were $167 million, an increase of $31 million or 23% versus Q2 2024. Lindblad segment revenues were $111 million, an increase of $18 million or 19% compared to the prior year. Occupancy increased 8 percentage points from 78% to 86% in spite of a 5% increase in available guest nights. And net yield per available guest night increased 13% to $1,241, which is the highest Q2 net yield in company history. Land Experience segment revenues were $57 million, an increase of $13 million or 31% compared to Q2 2024, driven by increased trips, higher revenue per guest and the inclusion of Wineland Thomson Adventures, an adventure travel group that primarily operates African safaris, which was acquired in July 2024. Q2 2025 adjusted EBITDA was $24.8 million, an increase of $14.5 million or 139% versus the prior year. This was driven by a $9.8 million or 150% increase in the Lindblad segment and a $4.7 million or 121% increase in the Land Experiences segment. This included the impact of $3.4 million of employee retention tax credits realized in Q2 2025. Excluding these, Q2 adjusted EBITDA increased by $11.1 million or 106% year-over-year. Looking closer at the cost side of our business, I'm pleased to report that we delivered significant margin improvement this quarter with adjusted EBITDA margins expanding 720 basis points year-over-year to 14.8%. Operating expenses before stock-based compensation, transaction-related expenses, depreciation and amortization, interest and taxes increased $17.0 million or 13.5% versus Q2 2024. Specifically, cost of tours increased…

[Operator Instructions] Our first question will come from the line of Steven Wieczynski with Stifel.

To Natalya or Rick, obviously, very, very strong quarterly results here in the second quarter. So congratulations. If we do some simple math here, you guys have done about $55 million in EBITDA so far in the first half of this year. And kind of based on your revised EBITDA guidance, it's going to imply about $57 million-ish of EBITDA for the second half of the year at the midpoint. So that's actually lower than you guys last year did about $59 million in the second half of the year. So I'm just trying to understand if there's something we need to think about in terms of cost. I don't know if it has anything to do with those tax credits? Or what the difference is in terms of this second half of the year versus last half, just given how strong demand load factors, all that stuff seems to be at this point?

Thanks so much, Steve. So what I'd say is while we remain optimistic about the opportunities in the back half of this year, as we've mentioned on previous calls, 2025 is an investment year for our organization and many of those investments will occur in the second half of 2025.

Okay. So just to dig in that a little bit more, I guess, we need to be thinking more about a little bit higher cost and a little bit less flow- through in the second half of the year. That's kind of the way we need to be thinking about it?

That's exactly right, Steven. I think that we mentioned before that we are really focused on investing in the future growth and international expansions. And as you know, with booking curves, the investments come ahead booking results. And we are very confident and hopefully you are seeing by our progress that we're going to be in our occupancy levels ahead or at least consistent with historical levels in 2026. And so a lot of these investments are coming in the second half of '25.

Okay. Got you. And then second question, another actual guidance question, so I apologize. But I guess I'm trying to figure out is that normally when you guys and Lindblad gives, historically has given guidance back in February, that guidance typically hasn't changed during the year, just given the long booking times and strong book position you guys are normally in at that point. So I guess the question is, maybe as you look back at the original guidance that you gave back in February versus the updated guidance today, what -- I don't want to say what did you guys get wrong? I'm just trying to figure out what has been kind of the biggest surprise to kind of get that guidance moved higher in the middle of the year?

So Steve, what I'd say is when we -- when Natalya and I first joined back in January, we set out this road map of driving occupancy and net yield growth with a focus on nearing bookings for 2025 as well as driving cost innovation. And I think many of those initiatives are ahead of schedule in terms of delivering on their results, which you've seen in the performance in Q1 and Q2.

Our next question comes from the line of Eric Des Lauriers with Craig Hallam.

Congrats on a very strong quarter here. First one for me, just wondering if you could expand a bit more on the increase in sales and marketing this quarter, and just kind of how to think about that going forward? You obviously called out some increased investments for the second half. In terms of sales and marketing for this quarter, obviously, there were some commissions related to the higher revenues, but kind of stripping that out, how to think of the sales and marketing build-out or investments that you guys are making now and over the next few quarters here?

So we are continuing to invest in new sales channels, our partnership with Disney, international expansion, all with the goal of driving occupancy and net yield growth. I'd also note that there was a step-up in royalties associated with our agreement with National Geographic that happened in 2025, and there will be a subsequent step-up to the long-term run rate in 2026 as that was designed to match the impact of the initiatives that we have in place with National Geographic and Disney to help us drive sales and marketing.

All right. That's very helpful. And then you mentioned, I believe it was a 38% reduction in nonrevenue days from 2025 to 2027, mostly on dry dock optimization. Just wondering if you could expand a bit more on that. How should we think about the timing or the pace of that 38% reduction? Is that kind of steady from now until 2027? Is there any periods of more or less reduction to call out?

Yes. Thank you, Eric. It's a great question. I think, first of all, we are looking at the deployment kind of generally 12 months ahead. So we just recently deployed our '27 plan. And that plan reflects about 38% reduction in nonrevenue days compared to our current '25 deployment. So that kind of started the year over '25 comparisons, and that was done by optimizing our dry dock scheduling, transition voyages and planning ahead. We also, in addition to that, as I mentioned on the call, found additional optimization opportunities in '26. So we added now cumulatively 4 voyages to '26, increasing revenue days in '26 as well. And I'm pleased to see that these voyages are booking really, really well already despite a shorter window for deployment.

[Operator Instructions] Our next question will come from the line of Eric Wold with Texas Capital Securities.

A couple of questions as well. I guess first off, I know it might be a little bit early, but you talked to kind of some of the benefits you're already seeing from the Disney relationship and kind of working with the Disney sales channel. Any way to talk about kind of the average demographic profile of the customers you're seeing bookings through the Disney sales channel versus what you may have seen from the average profile previously and kind of that customer you're tapping into now that you may not have been able to tap into before and kind of the difference between the two?

Yes. I think that this is a great question. Like you said, I think we continue to monitor and we'll report on how the demographic changes. Our core guest demographic remains the same because these are very pure sophisticated travelers who are looking for enriching authentic experiences. And so I think our brand served so well to the demographic and the focus of the brand will continue to remain the same. What we are obviously seeing with tapping into Disney demographic is more increase in multigenerational travel, and our brand is very well positioned to serve multi-generations. Therefore, you just have seen last week, we did a press release on our newly expanded Explorers and Training program, which is targeted to solve younger travelers and through, again, providing very enriching educational experience. It's not a kids club. It's really educational program that is very much on our brand and have frankly been developing over a year. We're just expanding and naming it. So what we are seeing is an increase in multi-generation travel for sure. In some of our popular destinations, especially during the holidays time like summer in Iceland and Galapagos, we are seeing almost 1/4 of our travelers 16 years and below, and the product is very well received by families.

Perfect. And then the follow-up question. Obviously, there were some issues with kind of the overcapacity coming immediately out of the pandemic. But as the cruise industry continues to strength in general in recent years and the hope is that continue to do so. Does that diminish your opportunity to find used boats in the market to acquire if you wanted to? And if that is the case, when do you start needing to consider ordering new vessels for future delivery. And if you do start looking at new vessels construction, what are you hearing in terms of backlog for what you would want in terms of timing for delivery into the future?

So a couple of answers to your question. One is, yes, we continue to see expanded demand in our product and general and experiential travel, both across our Expedition segment as well as Land segment. So we continue to look for growth opportunities. These growth opportunities don't have to necessarily come through new deals. As you have seen, we just added capacity through adding National Geographic Gemini and National Geographic Delfina to our Galapagos. Those are ships we acquired and rebranded and they are launched and serving our brand now. We're also expanding quite rapidly through chartering different ships. Last quarter, I talked about launching river cruises charter, which is a long-term 3-year charter that helps us expand into European river cruising. That's been a very successful expansion and we're getting ready to deploy '27 river plans, which will be again an expansion on '26 capacity. So we're very excited about that. We're looking across multiple different opportunities. Yes, we are considering potentially new build options as well, but that's just one of many options we are considering to expand.

And that will conclude our question-and-answer session. I'll hand the call back to Rick for any closing remarks.

Just want to thank everybody for your interest in Lindblad Expeditions, and we hope that you have a great week.

This concludes today's call. Thank you all for joining. You may now disconnect.