LINDBLAD EXPEDITIONS HOLDINGS, INC. Income Taxes Disclosure

NOTE 8 — INCOME TAXES 

 

The Company provides for income taxes based on the Federal and state statutory rates on taxable income. U.S. and foreign components of income before incomes taxes are presented below:

 

		For the years ended December 31,
(In thousands)		2025				2024				2023
Domestic		$	(10,168	)		$	7,093			$	(11,630	)
Foreign			(11,582	)			(32,184	)			(26,100	)
Total		$	(21,750	)		$	(25,091	)		$	(37,730	)

 

The income tax expense (benefit) is comprised of the following:

 

		For the years ended December 31,
(In thousands)		2025				2024				2023
Current
Federal		$	1,083			$	316			$	-
State			685				52				218
Foreign — Other			1,969				984				209
Total current			3,737				1,352				427
Deferred
Federal			(826	)			842				1,492
State			(438	)			298				625
Foreign — Other			2				612				602
Total deferred			(1,262	)			1,752				2,719
Income tax expense		$	2,475			$	3,104			$	3,146

 

A reconciliation of the U.S. federal statutory income tax (benefit) expense to the Company’s effective income tax provision is as follows:

 

		For the years ended December 31,
		2025								2024								2023
(In thousands)
Tax provision at statutory rate – federal		$	(4,567	)			21.0	%		$	(5,269	)			21.0	%		$	(7,923	)			21.0	%
Tax provision at effective state and local rates (a)			103				(0.5	%)			340				(1.4	%)			800				(2.1	%)
Nontaxable or nondeductible items
Executive compensation			2,202				(10.1	%)			1,194				(4.8	%)			1,884				(5.0	%)
Impact of Consolidated Partnerships			(345	)			1.6	%			-				0.0	%			-				0.0	%
Other			(102	)			0.5	%			(174	)			0.7	%			(262	)			0.7	%
Foreign tax effects
Cayman Islands			3,301				(15.2	%)			7,966				(31.7	%)			6,257				(16.6	%)
Ecuador			341				(1.6	%)			459				(1.8	%)			36				(0.1	%)
Italy			350				(1.6	%)			-				0.0	%			-				0.0	%
Tanzania			399				(1.8	%)			95				(0.4	%)			-				0.0	%
Other foreign jurisdictions			13				(0.1	%)			-				0.0	%			-				0.0	%
Uncertain tax provisions
Change in valuation allowance			1,409				(6.5	%)			(1,817	)			7.2	%			2,548				(6.8	%)
Effect of changes in tax laws or rates enacted in current period			(993	)			4.6	%			-				0.0	%			-				0.0	%
Effect of cross-border tax laws			226				(1.0	%)			(18	)			0.1	%			-				0.0	%
Tax credits			-				0.0	%			-				0.0	%			33				(0.1	%)
Other			138				(0.7	%)			328				(1.3	%)			(227	)			0.7	%
Total effective income tax rate		$	2,475				(11.4	%)		$	3,104				(12.4	%)		$	3,146				(8.3	%)

(a)

State taxes for New York and Massachusetts make up the majority of the tax effect in this category.

 

The Company, through its subsidiaries and affiliated entities in the U.S., the Cayman Islands, Ecuador, Kenya, Tanzania, France and Italy are subject to US Federal and US state income taxes, and Ecuadorian, Kenyan, Tanzanian, French and Italian Federal income taxes. The Cayman Islands do not impose federal or local income taxes. The movement in the effective tax rate related to the foreign tax rate differential is driven by a change in the jurisdictional mix of the foreign earnings and smaller consolidated pre-tax losses in 2025.

 

Deferred tax assets (liabilities), net, are comprised of the following:

 

		As of December 31,
(In thousands)		2025				2024
Deferred tax assets:
Net operating loss carryforward		$	18,475			$	21,564
Disallowed interest carryforward			22,399				18,256
Other			1,865				1,209
Valuation allowance			(23,883	)			(23,362	)
Total net deferred assets			18,856				17,667
Deferred tax liabilities:
Property and equipment			(17,115	)			(19,111	)
Other			(821	)			(1,160	)
Total net deferred liabilities			(17,936	)			(20,271	)
Deferred tax assets (liabilities)		$	920			$	(2,604	)

 

Deferred tax assets and liabilities are recorded on the consolidated balance sheet based on tax jurisdictions. For the years ended December 31, 2025 and 2024, the Company has recorded deferred tax assets of $3.1 million and $0.9 million, respectively, within other long-term assets, and for the years ended December 31, 2025 and 2024, a deferred tax liability of $2.2 million and $3.5 million, respectively.

 

The Company recognizes valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be realized. In assessing the likelihood of realization, management considers: (i) future reversals of existing taxable temporary differences; (ii) future taxable income exclusive of reversing temporary differences and carryforwards; (iii) taxable income in prior carryback year(s) if carryback is permitted under applicable tax law; and (iv) tax planning strategies. The majority of the valuation allowance relates to interest and loss carryforwards created in the United States due to a recent history of losses in this jurisdiction. Management continues to assess whether a valuation allowance is required and if the Company becomes cumulatively profitable over a three year period in the United States, this may represent sufficient positive evidence to release the majority of the valuation allowance.

 

The Company has deferred tax assets related to U.S. federal loss carryforwards of $59.7 million as of December 31, 2025, with an indefinite carryforward period. The timing and manner in which the Company will utilize the net operating loss carryforwards in any year, or in total, may be limited in the future as a result of changes in the Company’s ownership and any limitations imposed by the jurisdictions in which the Company operates. 

 

As a result of the transition to the territorial tax regime effectuated by the Tax Cuts and Jobs Act enacted in 2017, any potential dividends from the Company’s foreign subsidiaries would no longer be subject to Federal tax in the United States. The Company continue to assert its prior position regarding the repatriation of historical foreign earnings from its Ecuadorian subsidiaries. The Company currently has no intention to remit any additional undistributed earnings of its Ecuadorian subsidiaries in a taxable manner. The Company no longer remains permanently reinvested in the earnings of its Cayman subsidiary. No taxes have been accrued as a result of this change because no taxes are expected to be imposed by either the United States or the Cayman Islands upon such a remittance.

 

The Company is subject to income taxes in the U.S. and various state and foreign jurisdictions. The Company establishes liabilities for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes may be due. These liabilities are established when the Company believes that certain positions might be challenged despite its belief that its tax return positions are fully supportable. The Company adjusts these liabilities in light of changing facts and circumstances, such as the outcome of a tax audit. The provision for income taxes includes the impact of changes to these liabilities.

 

The Company paid the following income taxes in 2025:

 

		For the year ended December 31,
(In thousands)		2025
Federal		$	850
Tanzania			496
New York State			370
Italy			345
Ecuador			737
Other			366
Total income taxes paid, net		$	3,164

 

As of December 31, 2025 and 2024, the Company had no unrecognized tax positions. The Company has elected an accounting policy to classify interest and penalties related to unrecognized tax benefits as a component of income tax expense. For the years ended December 31, 2025, 2024 and 2023, interest and penalties included in income tax expense related to unrecognized tax benefits and/or uncertain tax positions were insignificant.

 

The Company is subject to tax audits in all jurisdictions for which it files tax returns. Tax audits by their very nature are often complex and can require several years to complete. Currently, there is a foreign jurisdiction tax audit in progress, and no U.S. federal or state tax audits pending. The Company’s corporate U.S. federal tax returns for the current year and seven prior years, and state tax returns for the current year and the nine prior years, remain subject to examination by tax authorities and the Company’s foreign tax returns for the current year and the five prior years remain subject to examination by tax authorities.

 

On  July 4, 2025, the One Big Beautiful Bill Act (the “OBBB”) was enacted in the U.S. The OBBB includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, restoration of favorable tax treatment for certain business provisions including the treatment of the deductibility of interest. Of the provisions in the bill, the deductibility of interest is the most impactful to the Company and has been reflected in the Company’s tax provision. The Company will continue to assess the OBBB for its potential impact on the Company’s consolidated financial statements.