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Lindblad Expeditions Holdings Inc  (NASDAQ:LIND)
Q1 2019 Earnings Call
May. 02, 2019, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the Lindblad Expeditions First Quarter 2019 Financial Results Conference Call and Webcast. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference over to Craig Felenstein, Chief Financial Officer . Please go ahead.

Craig Felenstein -- Chief Financial Officer

Thank you, Operator. Good morning, everyone and thank you for joining us for Lindblad's First Quarter 2019 Earnings Call.

With me on the call today is Sven Lindblad, our Founder and Chief Executive Officer. Sven will begin with some opening comments, and then I will follow with some details on our first quarter results before we open the call for Q&A. You can find our latest earnings release in the Investor Relations section of our website.

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. 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 Sven.

Sven-Olof Lindblad -- Chief Executive Officer, President and Director

Thanks, Craig, and thanks to all of you, who have made time to join us today. 2019 is off to a strong start for Lindblad building off the sustained momentum, we have generated over the last year and a half.

Our strategic investments throughout the past several years along with a proven track record for delivering authentic high quality expeditions, and growing demand for expedition travel are bearing fruit and we are extremely well-positioned to deliver continued growth in both the short and long-term. I'd like to take a few minutes this morning to discuss some of the key components to our first quarter results while also highlighting some of the initiatives that will help build on this momentum moving forward.

The biggest driver this past quarter was the addition of our second new build, the National Geographic venture. The interest from our guests was certainly high and it was important for us to see how she would adapt in Baja, California as a 100 guests ship in a geography that we have served with 60 guest ships for decades. Certainly, there was a bit of fine tuning needed in the three different itineraries we conducted. But both we and our guests were delighted with the amazing experience, she provided in this remarkable geography.

At the same time, our sister ship, the National Geographic Quest had a second successful season in Costa Rica, Panama and Belize as we diversified the offerings on our new vessels ahead of the Alaska season.

With the addition of this new capacity, we have been diligent and looking to develop diversified itineraries for our existing inventory. This past quarter, we experimented with a short focused five night program on the National Geographic Sea Bird in Magdalena Bay a wildlife pitch region in Baja California. This new idea turned out to be incredibly popular despite being offered with very little lead time. This program along with ten others, which we refer to as wild escapes, is building out our concept of short itineraries primarily for our smaller ships, most notably the National Geographic Sea Lion and Sea Bird with the goal of bringing in new somewhat younger guests, who may not have so much time at this stage in their lives.

This also allows us to provide some clear differentiation between this classic vessel in our new coastal US vessels. We are extremely delighted by the reception of these short programs, and believe they are key component to our success and growth in the future. As we diversify our offerings in terms of itinerary lengths and configurations. We also have teams engaged in deep research as to new geographies, which we wish to add to the mix.

Unfortunately, I will wait as to specifics probably best not to alert competitors any earlier than necessary. It's clear though that as we grow finding new geography is a key component to any successful plan. Overall, we are off to a great start with our expanding fleet occupancies this past quarter. Once again, we're over 90% despite the additional inventory, and we are excited about the opportunities our increased capacity provides.

Revenues in Q1 were up 9%, led by the increased inventory and occupancy strength. While EBITDA came in as planned similar to Q1 a year ago, as several building blocks or growth were expanded in the period. Greg will, of course, go into further detail on our financial performance in a few minutes. But we already -- we are already seeing positive signs in terms of lead generation and bookings for future travels from our increased marketing investments ,as we execute our media plan and beginning -- begin a rollout of our new brand campaign.

Additionally, in Q1, we began work in earnest on a series of four technology projects that we believe will provide us with the platform to both sustain and accelerate our growth plans, as well as continued to deliver an industry leading guest experience. These programs which include the launch of a new reservation system, a new CRM and Marketing Cloud solution, and the new website will begin rolling out later this year and into early 2020.

We'll gain myriads of new capabilities as part of this effort including a full online booking capacity, live inventory, a fully integrated dynamic pricing platform and the ability to price in multiple currencies. Robust and cross and upsell capabilities that can be delivered both digitally and over the phone, and the ability to ensure our guests and travel partners have an even more seamless experience across their journey via our CRM implementation.

As we invest for the future, we continue to see growing demand from new and returning guests for our diverse set of vessels and itineraries. Current reservation trends remain very strong with Lindblad generating record bookings during the first quarter of 2019. It was the highest generating booking quarter in our history. And we are seeing demand strength for travel in both 2019 and beyond. Bookings for expeditions in 2019 are up double digits versus bookings for 2018 at the same point a year ago, and pacing for 2020 is nearly 50% ahead of 2019. At the same time last year, driven in part by the introduction of the National Geographic endurance, while not diminishing the pacing on the other ships.

Speaking of the endurance, our hull and superstructure were assembled in Poland this past quarter, and she was delivered to Norway late last month, where she will be completed for a launch in 2020. The endurance has been designed as the ultimate expedition platform with a focus on the guest experience, safety and comfort. And we couldn't be more excited about the remarkable experiences she will provide to our guests for years to come.

Given the sustained booking strength across our fleet and for the endurance in particular, we announced last quarter that we will be building a sister ship to the endurance, which will be the fourth ice-class ship in the Lindblad-National Geographic fleet. Steel cutting begins this month and we anticipate delivery in Q3 of 2021. As we add capacity and look for ways to further expand our fleet, we also continue to explore a variety of M&A opportunities. We are very diligent in our evaluation given the opportunity for organic growth but also because we have a blueprint for a successful acquisition and integration with natural habitat.

All of the features that made this acquisition so successful, well run, limited distraction, cross marketing opportunities, a diverse and loyal audience continue to bear fruit and we expect another year or strong growth from natural habitat in 2019.

Before I finish up, I do want to touch upon one other topic. Since we spoke several months ago, so much has changed in the world and a multitude of fronts. One area of particular note as it relates to our world is an ever increasing acknowledgment, the climate change is real and needs to be urgently confronted that the environment more broadly, has been under considerable assault, which too needs to be urgently confronted. The plastic in our oceans have reached alarming levels and this too, needs to be urgently confronted. We are seeing an ever increasing sense of urgency on the part of people, who want to see the world's wild places.

At the same time, they want to learn more about what they can do. They want to be with companies that they believe take these issues seriously and are addressing them positively. We do not use any single use plastics. We work very hard to source sustainable fish. We pressure suppliers to mitigate waste and packaging. And we together with our guests invest nearly $2 million a year in conservation, education and science via the Lindblad National Geographic Fund.

We have two very significant initiatives, which will vastly broaden our commitment to these issues. However -- however, we are not quite ready to announce them, but we'll do so on Oceans Day, June 8. There is such synergy between our guests, our enterprise and the places we visit. There always has been. But now there is simply greater urgency and all parties benefit and accelerated innovation to create greater balance between humans and the natural world. The acceleration of innovation is a powerful driver behind all we do, which I believe provides the tonic of purpose, an elixir for our guests, our personal -- our personnel and for the places we explore. And it is a key and essential ingredient to propel this enterprise to ever high -- ever higher long term value.

And now, if I may please turn this back to Craig and again, many thanks for joining us this morning.

Craig I. Felenstein -- Chief Financial Officer

Thanks, Sven. Lindblad strong first quarter, once again highlights our ability to deliver sustained financial results as we further invest in additional capacity, upgrade our infrastructure and expand our sales and marketing capabilities. With the addition of our two US coastal vessels, we have expanded our available guest nights by over 20% from pre expansion levels. And despite the added inventory, we continue to generate high yields and occupancies. Our proven track record of delivering authentic and high quality experiences, along with a strong booking environment will allow us to grow significantly in 2019 even as we invest to further capitalize on the long term opportunity given the growing demand for adventure travel.

Turning to the first quarter of 2019, total company revenue increased 9% versus the first quarter year ago, led by 8% growth at the Lindblad segment and 14% growth at natural habitat. Well adjusted EBITDA was down 1% as the revenue increase was offset by the planned timing of marketing and personnel spend to drive long term growth initiatives.

Looking at the individual segments, the Lindblad segment generated revenue of $76 million as compared with $70.5 million during the first quarter of 2018. The 8% year-on-year growth was primarily driven by a 9% increase in available guest nights, mostly from the launch of the National Geographic venture in December 2018 and a slight increase in occupancy to 91%. Net yield remain very strong in the quarter at $1,099 per night and while it was down 2% versus the first quarter a year ago, that was predominantly a result of price increases being more than offset by an itinerary changes in the current quarter. We still expect to increase net yield for the full year 2019.

Turning to the cost side of the business, Lindblad segment operating expenses increased 9% on a reported basis, primarily driven by a 9% increase in cost of tours, led by the addition of the National Geographic venture to the fleet. Fuel costs in the quarter were 27% above prior here, due in large part to the fleet expansion and higher prices. Fuel was 3.5% of revenue as compared to 3% of revenue in the first quarter of 2018.

Sales and marketing costs increased 12% versus a year ago, due to higher commission expenses associated with the revenue growth, as well as from the investments we discussed in our year end call, including costs associated with the rollout of our new CRM and reservation systems and increased marketing spend as we look to further capitalize on our increasing capacity and the growing demand for expedition travel.

The first quarter of 2019 also included $1.1 million of increased depreciation and amortization, mostly related to the addition of the National Geographic venture to the fleet. Well, the first quarter of 2018 included $1 million of expense related to refinancing or credit facility a year ago. Excluding stock based compensation, depreciation and amortization and refinancing and reorganization costs. Lindblad's segment operating expenses increased 11% versus the first quarter a year ago, including 15% growth in G&A expense due to higher personnel and credit card costs.

Overall, adjusted net cruise cost on a per night basis of $743was in line with the first quarter a year ago. Adjusted EBITDA at the Lindblad segment of $20.9 million was in line with a year ago as well as the revenue growth was offset by the timing of investments for future growth initiatives. At the natural habitat segment, revenues grew 14% to $13.6 million due to additional departures and higher pricing. Adjusted EBITDA of $1.1 million decrease $0.2 million versus the first quarter a year ago, as the revenue growth was offset by a 17% increase in operating expenses, due to costs associated with the additional departures, as well as the timing of marketing and personnel spend to drive future growth.

Total company net income available to common stockholders in the quarter was $14.7 million, or $0.31 per diluted share, versus $10.8 million or $0.24 per diluted share, reported in the first quarter a year ago, primarily due to a $3.1 million tax benefit in the current year, and a $1.1 million swing in foreign currency gains in the current quarter.

Turning to our balance sheet, we remain extremely well-positioned to invest in future growth opportunities. We ended the quarter with $70 million in unrestricted cash, free cash flow for the quarter was a use of $20 million, primarily reflecting $32 million spent on the new builds, including only maintenance CapEx, free cash flow was $12 million in the first quarter an increase of $3 million from the same period a year ago.

Following the quarter, we further expanded our financial flexibility by securing an additional export credit agreement with regard to our second Norwegian blue-water newbuild. This loan is available at our option when installment payments are due and will bear either a fixed interest rate of 6.36% or a floating rate equal to LIBOR plus a margin of 3%. The next installment payment of approximately $30 million is anticipated to be paid on this new vessel in September of this year.

So turning to our four year expectations for 2019, we continue to anticipate significant growth driven by capacity expansion, as well as increased net yields. The Lindblad segment is currently pacing 11% ahead of the same point a year ago with regards to bookings. And we are already at 94% of our full year projected ticket revenues for 2019, despite the additional inventory, as compared with 95% of the 2018 full year ticket revenue at the same time a year ago.

Given the current operating environment and the sustained booking trends, we continue to expect total company tour revenue in 2019, between $350 million and $358 million, 13% to 16% growth over -- versus 2018 and adjusted EBITDA between $67 million and $70 million, or 22% to 28% growth versus 2018.

Thank you for your time this morning. And now Sven and I would be happy to answer any questions you might have. Operator?

Operator

Yeah, we will now begin the question-and-answer session to ask a question. (Operator Instructions) The first question comes from Greg Badishkanian with Citi. Please go ahead.

Fred Wightman -- Citi -- Analyst

Hey, guys. Good morning. Its actually Fred Wightman on for Greg. I apologize, Craig if I miss this. But did you call out the specific EBITDA impact either through marketing initiatives or the headcount investments in the quarter?

Craig Felenstein -- Chief Financial Officer

We have not given specific guidance for the additional marketing spend in the quarter. We have talked about the full year when you look at the IT projects that we have in the current year, as well as some of the additional costs related to the endurance this year, which won't launch until 2020. The impact of those two things combined will be somewhere in that $3 million to $4 million range, the increased marketing spend we have not specifically highlighted.

That said when you look at the the marketing spend in the current year, this is not something that's going to recur itself every single year in terms of the magnitude of the increase. We do expect this year to be a step function, partially due to what we're seeing in the marketplace in terms of the noise out there around expedition travel, and partially because we're adding new capacity. And when you do those things you want to take advantage of the opportunity and we think this is the right time to spend that investment. The -- the return on that investment will really start to take fruit, kind of the tail end of 2019, but certainly significantly in 2020.

Fred Wightman -- Citi -- Analyst

Okay, that makes sense. You know, could you just give a little bit of color on the Alaska market specifically, I know your capacities are pretty significantly better this year, but just any other color, you could add would to be helpful?

Sven-Olof Lindblad -- Chief Executive Officer, President and Director

Well, the -- hi, Sven here. One thing is clear is -- is that the Alaska market is still incredibly strong for us at least. I'm not very, very cognizant of how it's going for the big cruise lines specifically but -- but our occupancies are as high as they've ever been, probably a bit higher and we are taking way more people as a consequence of now having four ships. It's the first summer we're going to have four ships in Alaska. So basically 320 beds, which is a obviously a significant increase. And the bookings for 2020 are looking very, very strong. So I see no dilution of that market at all.

Unidentified Participant -- -- Analyst

Okay, great. And then just finally, could you talk about any expected changes from the National Geographic relationship after the Disney deal?

Craig Felenstein -- Chief Financial Officer

Well, the only thing I can tell you at this juncture is that I would anticipate this that -- that good things will happen as a consequence of it because obviously Disney's reach and Disney's abilities as it relates to business to consumer are massive and -- and way, way greater than than they were with Fox obviously. And so as far as I'm concerned, I see nothing but benefit, of course, it will take a while for Disney I would imagine to assimilate this part of the -- the whole transaction and decide how they want to move forward and engage with it. But I see nothing but positive opportunities.

Fred Wightman -- Citi -- Analyst

Thanks so much.

Operator

The next question comes from Steven Wieczynski of Stifel. Please go ahead.

Steven Wieczynski -- Stifel -- Analyst

Yeah. Hey, guys. Good morning. So Craig and Sven I guess -- I guess we look at your EBITDA guidance for the year remains unchanged. If we back out the $22 million. you did in the first quarter that's essentially saying you guys are, you know, expecting some -- some pretty significant growth? I mean, I think it's kind of low 40s growth, you know, over the last three quarters.

So I guess the question is, you know, at this point what gives you so much confidence in that growth? And look, I understand the increase in the -- in the capacity days, but I guess what I'm getting at here is with the increased spend, you know, on the marketing side and some other initiatives you're doing that EBITDA growth still seems -- no does that still seem pretty realistic? That makes sense?

Craig Felenstein -- Chief Financial Officer

Sure. So let's we -- we look at the course of the year for us, the the real power or the full power, I should say, of adding this additional inventory really is yet to come. You know, when you look at the first quarter, yes, we launched the venture. But we did pull back a little bit with some of our older inventory. You know, Sven did mention that we did do some experimenting on the Sea Bird. But we did pull back a little bit on the Sea Bird and Sea Lion in the first quarter. But we always expected the full power of that additional inventory to be there really in the second and third quarters and a little bit into the fourth quarter. So that that's the first thing.

The second thing that we're really saying is, when you look out to the remaining, the years, yeah, we booked so much of our -- of our inventory already for this year, that we feel really comfortable about whether you guys are going to play itself out, because of that inventory. And frankly, because of the pricing that we expect to see moving forward, because the yields are going to grow throughout the year as well.

The last thing I would say is, you know, the timing of the marketing spend is going to vary throughout the course of the year. Each quarter the increase is going to be different. But when you look at the plan that we have for the year, the plan of the first quarter was always anticipated, the growth that we see in the second and third quarter is going to come in as anticipated it looks like and that was really just about finalizing some of the additional inventory that we have out there in Q4, which we feel very comfortable with given historical operating trends.

Steven Wieczynski -- Stifel -- Analyst

Okay, guys. Thanks, Craig. And then I don't know this question is going to make sense. But if you look at your yields in the first quarter, you know, they were down slightly, is there, is there any way to help us think about what those yields, you know, would have looked like with, you know, with -- without the itinerary shifts (ph)? I don't know if that makes that makes sense.

Craig Felenstein -- Chief Financial Officer

Yeah. They certainly would have been up. We haven't got it to individual, individual quarters from a yield perspective, because so many things can affect that in any given moment. But when you look at the first quarter, the primary driver of the yields being lower than they were a year ago, is some of the experimentation, which we did on the Sea Bird in the first quarter, when you're doing some experimenting, A, stuff tends to go on a little bit later; B, tend to price it a little bit more advantageous to see what kind of traction you can get. And that certainly had an impact in the quarter.

If you took that out of the equation, just that one item, you would have been up year-on-year. So we feel pretty good about where the yields are, kind of the demand for existing inventory has been really, really strong. The demand for the new inventory, which certainly has a higher price point in some instances has been really strong. And that's not just true for the first quarter, but we look out to the full year 2019 and frankly into 2020. So we feel -- we feel really good about where the yields are headed, right now.

Steven Wieczynski -- Stifel -- Analyst

Okay, got you. And last question. Just a quick housekeeping question. Craig any -- any changes with the the available guest nights in terms of the way we should be thinking about those over the last three quarters of the year?

Craig Felenstein -- Chief Financial Officer

Sure. So when you look at the next few quarters, I can give you some direction with regards to the available guest nights. We haven't seen any change in our expectations. We do expect the second quarter to be very similar from an increased perspective to the first quarter. We will see a -- probably a step up a little bit on that growth in Q3. And then in Q4, it'll come down as we start to laugh a little bit at the venture launched from a year ago. And then certainly, when you look out to 2020, you get the launch of the endurance in April of 2020. So that'll certainly increase the overall capacity in 2020. So that's really how it should play out for the remainder of this year looking into next.

Steven Wieczynski -- Stifel -- Analyst

So still full year, kind of that upper single digit range.

Craig Felenstein -- Chief Financial Officer

Correct.

Steven Wieczynski -- Stifel -- Analyst

Okay. Thanks, guys. Appreciate it.

Craig Felenstein -- Chief Financial Officer

Thanks, Steve.

Operator

The next question comes from Greg Pendy of Sidoti. Please go ahead.

Gregory Pendy -- Sidoti & Company -- Analyst

Hey, guys, thanks for taking my questions. Just I guess, you mentioned, you don't give the quarterly guidance on the yield and I understand that. But is most of the catch up, is it fair to say that the itinerary is going to be more favorable in 3Q this year, I think last year, you had some itineraries, I think they were in Europe that you're not going to be doing this year.

Craig Felenstein -- Chief Financial Officer

Yeah. We do expect there to be yield expansion for the remainder of the year. The quarter that you mentioned will probably have the largest increase, which would be the third quarter, but it's less a byproduct of Europe than it is of the South Pacific a year ago. And Sven and I talked about that a year ago, that the South Pacific yields were lower than some of the other yields that we had, traditionally. And as a result, we have less inventory this year and the yields that we're getting on the Orion this year for some of her other voyages are certainly significantly higher than what was in the South Pacific in 2018. So I would expect the largest increase to be in Q3 but we do expect for the full year to have net yield expansion overall.

Gregory Pendy -- Sidoti & Company -- Analyst

Okay. Great. And then just one more, I guess, on the step up in the marketing, you just kind of give us you mentioned a brand campaign. Right now, I guess, you kind of operating under three different names. Are you looking to really kind of maintain I guess, natural habitat as its own name? Are you looking to kind of brand everything into the Lindblad name, can you just kind of give us a big picture strategy?

Craig Felenstein -- Chief Financial Officer

Yeah. So we we are not going to take natural habitat and offer it under our -- under the Lindblad brand because natural habitat does have a strong brand. It has strong loyalty. It has a very, very strong community of repeat travelers and so we see no value in subsuming that brand, if you will. Our own brand development is really around, really understanding the key ingredients that matter to guests. We do this periodically. It just helps hone our voice, if you will. It -- and that translates through everything are advertising, how we --how we approach messaging and direct mail. How we approach the web development, et cetera, et cetera. And as we were -- as we were migrating into a total new -- shall we say reconfiguring of the web or redevelopment of the web, we wanted to make sure, we had our ducks in order and did some research in the context of current times, because what people care about and what matters then changes. So it's -- it's, you know, it's really more honing of --of our messaging. That's -- that should play and we do that, you know, every, few years because you just want to keep that up to date and keep that modern.

Gregory Pendy -- Sidoti & Company -- Analyst

That's helpful. Thanks a lot.

Craig Felenstein -- Chief Financial Officer

Thank you.

Operator

The next question comes from George Kelly with Imperial Capital. Please go ahead. George Kelly, your line..

George Kelley -- Imperial Capital -- Analyst

Can you guys hear me.

Sven-Olof Lindblad -- Chief Executive Officer, President and Director

Yeah.

Craig Felenstein -- Chief Financial Officer

Yeah. I can now.

George Kelley -- Imperial Capital -- Analyst

Okay. thanks. So a few questions for you. First, on the technology side. You talked about the updates coming out this year. Can you remind us the timing of the biggest features and you know, just when they're going to start to roll through. And then when should we benefit from those technology enhancements? So are you baking anything into your 2019 guidance or is it more of a kind of three year type story there?

Craig Felenstein -- Chief Financial Officer

Sure. So we are rolling out certain functions with regards to the the new systems really over the next few months but that's going to be predominantly behind the scenes either they are going to help us with our -- our marketing and some of our customer journey tracking will certainly happen behind the scenes. The bulk of the forward facing elements of the IT transformation will take place in Q3 and Q4 of this year.

Some, such as certain features of the website will take place even in the first quarter of next year. When you look at the benefits of, I would say this rollout, the vast majority of it will not be in 2019. Actually, in 2019 to be frank, these investments will be negative. Just because the -- the outflow of both cash on a capital perspective as well as an operating expense perspective will outweigh the positive benefits. But that will certainly reverse itself in force in 2020. And you'll see the majority of the benefit start really in the first half of 2020, but really kick in in the second half of 2020 and into 2021.

George Kelley -- Imperial Capital -- Analyst

Okay. Got you. And then next on the bookings strength that you commented on record quarter, I think you said for the -- just a level of bookings. Is there anything you can isolate that drove that? Was it any specific geography or anything? And did you see that strength continue after the end of the quarter?

Craig Felenstein -- Chief Financial Officer

Yeah, the booking curves, I would say is -- it's hard to pinpoint one item specifically for 2019. For 2020 is certainly a significant piece of that increase is the new demand for the endurance. Well, as Sven mentioned maintaining the demand across the remainder of the fleet. So that's been a really, really good sign. You know, the thesis always being as you add new inventory, being able to maintain, what you have on the existing front, and then just layering that on top is certainly the big growth engine of this company. But when you look for a travel in 2019, again, very broad based, whether it be Galapagos, whether it be Alaska, whether it be the Arctic. It's been very strong across the board. Interestingly enough, when you look at the bookings that we already have for 2019, we've already exceeded significantly the bookings we have for all 2018. So this notion of additional inventory and filling it, is certainly playing itself out in both the short term as well as the long term.

George Kelley -- Imperial Capital -- Analyst

And so it sounds like that's continuing after the quarter two I mean, if you're saying..

Craig Felenstein -- Chief Financial Officer

Yeah, obviously, we're just talking about the month of April, but the month of April, bookings were very, very strong year-on-year. We saw some nice growth overall, and we don't see any reason why, it's just for them.

George Kelley -- Imperial Capital -- Analyst

Great. And then last question for me. And I'm not exactly sure how to phrase this. But over the last year, year and a half, you're adding all these new customers and what happened? What do you, I guess, all this new capacity that you've added, and you know, you're talking about booking strength? Is it mostly a function of adding new people into the mix? Or is it that your repeat customers are coming back more frequently? And I guess the big question for me, it's just as you add, you know, as more people are becoming interested in this type of travel, what kind of repeat dynamic? Do they look like your your legacy customers? Do they come back as frequently? And can you talk at all just to that?

Craig Felenstein -- Chief Financial Officer

Yeah. So, so sort of a broad answer, and then one can drill -- drill down a little bit. But the reality is, is we have a multitude of channels that we were -- we have travel agent channel, we have charters, we have affinity organizations, we have National Geographic, we have past guests. And we have different mechanisms for attracting new guests. And they all sort of have a life of their own, if you will, and they -- and they're all monitored very carefully and they're all adjusted according to need in one form or another. So, for example, we've made -- we've obviously, knowing that we were going to expand our inventory. We increased our activity in the channels that we felt were most productive, and by and large, that has been very, very successful, some more than others. Obviously, they don't all behave exactly the same, but all of them actually behave pretty well. But some are extraordinarily well in terms of their improvement, as a consequence of, you know, identity -- you know, relating the identifying the need, and then activating the channels.

And so it's a, it's kind of a complex matrix of -- of activity because you just want to make sure and I think I've stress this before in some previous calls. You want to make absolutely sure that your -- that your machine, if you will, or your system for generating new guests, is proportionate to your growth and inventory. The only thing that can really, really badly hurt companies in this business, if those two things are out of balance. And so we're very cognizant of that in my entire life since I started this business, I was, you know, that was like an obsession and make sure that your marketing reaches ahead of your inventory, which is, again, why we've made some significant investments in that area this year because we want to take advantage of growing interest. We want to make sure, we're very, very much out there. So that we're top of mind and that we capture as much of market share as we possibly can as a consequence. That's kind of an overview on marketing. If that's helpful, and if I haven't answered anything that -- that you really need more than that, just let us know and I'll dig deeper.

George Kelley -- Imperial Capital -- Analyst

That was great. Thanks.

Operator

(Operator Instructions) There is no question at the moment. This concludes our question-and-answer session. I would like to turn the conference back over to Crag Felenstein for any closing remarks.

Craig Felenstein -- Chief Financial Officer

Thank you very much for joining us today, everybody. We appreciate your time this morning. And if you have any additional follow-up questions, feel free to reach out to us here in New York at any time. Thank you.

Sven-Olof Lindblad -- Chief Executive Officer, President and Director

Thank you.

Operator

The conference call is now concluded. Thank you for attending today's presentation. You may now disconnect.

Duration: 36 minutes

Call participants:

Craig Felenstein -- Chief Financial Officer

Sven-Olof Lindblad -- Chief Executive Officer, President and Director

Craig I. Felenstein -- Chief Financial Officer

Fred Wightman -- Citi -- Analyst

Unidentified Participant -- -- Analyst

Steven Wieczynski -- Stifel -- Analyst

Gregory Pendy -- Sidoti & Company -- Analyst

George Kelley -- Imperial Capital -- Analyst

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