Bluegreen Vacations Corporation (NYSE: BXG) ("Bluegreen" or the
“Company") today reported its second quarter 2019 financial
results.
2Q19 Highlights:
- (Loss) Earnings per Share (“EPS”) of $(0.15), compared to $0.36
in the prior year quarter.
- Net loss attributable to shareholders was $(11.2 million),
compared to net earnings of $26.7 million in the prior year
quarter.
- Included in this quarter’s results are expenses related to our
settlement with Bass Pro of $39.1 million, or $0.39 per share
- Adjusted EBITDA of $28.7 million, compared to $41.9 million in
the prior year quarter.
- Total revenue of $195.6 million, compared to $194.9 million in
the prior year quarter.
- System-wide Sales of Vacation Ownership Interests (“VOIs”) of
$163.6 million, compared to $172.0 million in the prior year
quarter.
“We are pleased that during the quarter we came to a resolution
of our differences with our long-time partner, Bass Pro Shops. The
settlement agreement not only reinstated all of our marketing
activities in Bass Pro retail stores, but resolved the issues which
were delaying the expansion of our network into Cabela’s retail
stores, which we believe positions us to reach an even broader
audience,” said Shawn B. Pearson, Chief Executive Officer and
President. “We also saw early indications of progress in our
efforts to combat third-party exit firms as we realized lower
default rates and provisions for loan losses in the quarter. We are
eager to refocus our attention on enhancing engagement with our
current owners and new owners, both through our existing sales
channels as well as with new prospective marketing partners.
Bluegreen offers attractive and affordable vacation options in
popular, high-volume, ‘drive-to’ locations, which we believe will
continue to resonate with consumers. We anticipate that our efforts
will take some time to flow through to our results, but we are
confident that the actions we are taking today will translate into
enhanced performance over time.”
Financial Results
(dollars in millions, except per share data)
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
Change
2019
2018
Change
Total revenue
$
195.6
$
194.9
0.3
%
$
364.4
$
362.5
0.5
%
(Loss) income before non-controlling
interest and
(benefit) provision for income taxes
$
(10.0)
$
39.4
(125.4)
%
$
12.2
$
70.2
(82.6)
%
Net (loss) income attributable to
shareholders
$
(11.2)
$
26.7
(141.9)
%
$
4.0
$
47.7
(91.6)
%
(Loss) earnings per share basic and
diluted
$
(0.15)
$
0.36
(141.7)
%
$
0.05
$
0.64
(92.2)
%
Adjusted EBITDA
$
28.7
$
41.9
(31.6)
%
$
54.9
$
75.2
(27.0)
%
Capital-light revenue(1) as a percentage
of
total revenue
65.4%
70.0%
(460)
bp
68.0%
72.3%
(430)
bp
(1)
Bluegreen's "capital-light" revenue
includes revenue from the sales of VOIs under fee-based sales and
marketing arrangements, just-in-time inventory acquisition
arrangements, and secondary market arrangements, as well as other
fee-based services revenue and cost reimbursements revenue.
Total revenue for the three months ended June 30, 2019 was
$195.6 million, compared to $194.9 million in the prior year
period, primarily due to increases in resort operations and club
management revenue and interest income, and a decrease in the
provision for loan loss, partially offset by a decrease in VOI
sales as discussed more fully under “Segment Results” below.
Adjusted EBITDA was $28.7 million in the second quarter of 2019
compared to $41.9 million in the second quarter of 2018, primarily
due to lower VOI sales and higher cost of VOI sales and net
carrying cost of inventory, partially offset by a lower provision
for loan losses and higher profit on resort operations and club
management operations.
In terms of segment results, decreased results in the Sales of
VOIs and Financing segment were partially offset by growth in the
Resort Operations and Club Management segment, as more fully
described below.
Segment Results
Sales of VOIs and Financing Segment (dollars in millions,
except per guest and per transaction amounts)
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
Change
2019
2018
Change
System-wide sales of VOIs
$
163.6
$
172.0
(4.9)
%
$
293.3
$
304.8
(3.8)
%
Segment adjusted EBITDA
$
36.2
$
48.3
(25.0)
%
$
67.3
$
92.0
(26.8)
%
Guest tours
65,167
65,570
(0.6)
%
113,305
115,767
(2.1)
%
Average sales price per transaction
$
15,432
$
15,442
(0.1)
%
$
15,591
$
15,351
1.6
%
Sales to tour conversion ratio
16.4%
17.1%
(4.1)
%
16.7%
17.3%
(3.5)
%
Sales volume per guest ("VPG")
$
2,528
$
2,646
(4.5)
%
$
2,603
$
2,653
(1.9)
%
Selling and marketing expenses, as a
% of system-wide sales of VOIs
50.7%
48.5%
220
bp
50.5%
48.9%
160
bp
Provision for loan losses
14.9%
16.4%
(150)
bp
16.1%
14.7%
140
bp
Cost of VOIs sold
15.5%
9.9%
560
bp
12.0%
6.9%
510
bp
During the second quarter of 2019, system-wide sales of VOIs
were $163.6 million, compared to $172.0 million in the second
quarter of 2018. The year over year change in sales was primarily
driven by a lower sale-to-tour conversion ratio, which resulted in
a lower average sales volume per guest (“VPG”), in part due to
disruptions at sales offices related to the Bass Pro matter, which
has subsequently been resolved as described under Bass Pro
Settlement below. Package sales volumes in the second quarter of
2019 increased approximately 7% compared to the second quarter of
2018 following an 8% increase in the first quarter, and these
increases are expected to result in increased guest tours over the
next six to 18 months. However, the growth in package sales
occurred in channels that are typically not as efficient as Bass
Pro, in which the Company experienced a decrease in package sales
during the quarter due to the period of time we were denied access
to the Bass Pro stores.
Provision for loan losses decreased to 14.9% of gross VOI sales,
compared to 16.4% in the prior year second quarter. As previously
disclosed, the Company’s default rates in recent years have been
adversely impacted by the actions of “timeshare exist firms” which
had been encouraging some VOI owners to become delinquent and
ultimately default on their obligations. The Company believes that
the improvement in its default rates in the second quarter of 2019
compared to the second quarter of 2018 is in part due to its
zero-tolerance strategy and ongoing steps to address this issue,
which has resulted in a reduction of cease and desist letters
received and a reduction in average annual default rates and
correspondingly the provision for loan losses in the second quarter
of 2019. The Company’s provision for loan losses has recently
ranged between 14.9% and 20.7%, and expectations for the remainder
of 2019 are below the midpoint of that range.
Fee-based sales commission revenue was $55.3 million in the
second quarter of 2019, compared to $60.1 million in the second
quarter of 2018. The period over period change reflected lower
sales of third-party VOI inventory, due to lower system-wide sales
as described above, as well as an average fee-based sales
commission of 66% during the second quarter of 2019 as compared to
67% during the comparable prior year period.
In the second quarter of 2019, cost of VOIs sold represented
15.5% of sales of VOIs compared to 9.9% in the second quarter of
2018. Cost of VOIs sold as a percentage of sales of VOIs varies
between periods based on the relative costs of the specific VOIs
sold in each period and the size of the point packages of the VOIs
sold. During the second quarter of 2018, the cost of sales
benefited from VOI sales of relatively lower cost VOIs as to
compared to the second quarter of 2019 where VOI sales were of
relatively higher cost VOIs. Cost of VOIs sold is expected to range
from 10% to 15% for the remainder of 2019.
Net carrying cost of inventory increased $3.6 million in the
second quarter of 2019 compared to the second quarter of 2018,
primarily due to the carrying cost associated with the Éilan Hotel
and Spa, which was acquired in April 2018 and increased maintenance
fees and developer subsidies associated with the increase in VOI
inventory as well as decreased net operating profits from the
Company’s sampler program.
Selling and marketing expense increased to 51% of system-wide
sales of VOIs during the second quarter of 2019 as compared to 48%
during the second quarter of 2018. The increase in selling and
marketing expenses as a percentage of system-wide sales of VOIs is
primarily attributable to higher costs per guest tour and a lower
VPG, due in part to decreased sales associated with disruptions in
the Company’s sales offices as a result of the recently resolved
Bass Pro dispute, as well as changes in our yield management
program during the 2019 period.
Resort Operations and Club Management Segment (dollars in
millions)
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
% Change
2019
2018
% Change
Resort operations and club management
revenue
$
45.0
$
41.3
9.1
%
$
92.1
$
82.8
11.2
%
Segment adjusted EBITDA
$
14.5
$
13.8
5.4
%
$
27.7
$
25.8
7.3
%
Resorts managed
49
49
—
%
49
49
—
%
In the second quarter of 2019, resort operations and management
club revenue increased by $3.7 million, or 9.1%, to $45.0 million
from the prior year quarter. The increase was driven primarily by
the full period of management fees in 2019 related to managed
resorts added during 2018 and higher third-party rental
commissions. Segment adjusted EBITDA grew by 5.4% to $14.5
million.
Bass Pro Settlement
As previously disclosed, on April 17, 2019, Bass Pro and its
affiliates brought an action against the Company, alleging that the
Company failed to pay certain commissions due it under the parties’
marketing agreement, amongst other alleged breaches. On May 24,
2019, the Company received notice from Bass Pro and its affiliates
that it was terminating the marketing agreement based on the
failure to cure the alleged breaches. Subsequently, the Company
filed a counter claim against Bass Pro and its affiliates.
On June 13, 2019, the Company entered into a settlement
agreement which resolved the action filed by Bass Pro and
reinstated and amended the marketing agreement. Pursuant to the
terms of the settlement agreement, Bass Pro agreed to reinstate the
Company’s access to Bass Pro’s marketing channels, including Bass
Pro and Cabela’s retail stores. Additionally, with no admission of
any wrongdoing, the Company paid Bass Pro $20 million within 15
days after the execution of the settlement agreement; the Company
agreed to pay Bass Pro $4 million on each January 1 from 2020
through 2024; and the Company agreed that Bass Pro would keep the
remaining $1.5 million of an amount prepaid to them earlier in 2019
under the marketing agreement. Additionally, in lieu of the
previous commission arrangement, the Company agreed to pay Bass Pro
a fixed annual fee of $70,000 for each Bass Pro and Cabela’s retail
store that it accesses (excluding retail stores which are
designated to provide tours to Bluegreen/Big Cedar Vacations, or
“Bluegreen/Big Cedar Feeder Stores”) plus $32 per net vacation
package sold (less cancellations and refunds within 45 days of
sale), excluding sales at Bluegreen/Big Cedar Feeder Stores. The
fixed annual fee will be prorated for the remainder of 2019.
Subject to the terms and conditions of the settlement agreement,
the Company will generally be required to pay the fixed annual fee
with respect to at least 60 Bass Pro retail stores and a minimum
number of Cabela’s retail stores that increases over time to a
total of at least 60 Cabela’s retail stores by the end of 2021.
Notwithstanding the foregoing, the minimum number of Bass Pro and
Cabela’s retail stores for purposes of the fixed annual fee may be
reduced under certain circumstances set forth in the settlement
agreement, including as a result of a reduction of traffic in the
stores in excess of 25% year-over-year. The Company also agreed to
contribute to the Wonders of Wildlife Foundation $5.00 per net
package sold (less cancellations and refunds within 45 days of
sale), subject to an annual minimum of $700,000 which was not
prorated for 2019. The parties executed mutual waivers and releases
and agreed to the dismissal of the litigation.
Balance Sheet and
Liquidity
As of June 30, 2019, unrestricted cash and cash equivalents
totaled $180.2 million. Bluegreen had availability of approximately
$150.6 million under its receivable-backed purchase and credit
facilities and corporate credit line as of June 30, 2019, subject
to eligible collateral and the terms of the facilities, as
applicable. Excluding receivable-backed notes payable, the
Company’s net debt-to-EBITDA ratio as of June 30, 2019 was .23.
Free cash flow, which the Company defines as cash flow from
operating activities, less capital expenditures, was $(2. 9)
million for the six months ended June 30, 2019, compared to $8.1
million for the six months ended June 30, 2018. The decrease in
free cash flow was primarily attributable to the $20.0 million
payment to Bass Pro in June 2019, partially offset by decreased
spending on the acquisition and development of inventory in the
2019 period.
Dividend
On July 30, 2019, Bluegreen’s Board of Directors declared a
quarterly common stock cash dividend of $0.17 per share. The
dividend is payable on August 27, 2019 to shareholders of record as
of the close of trading on August 13, 2019.
Second Quarter 2019
Webcast
The Company has provided a pre-recorded business update and
management presentation via webcast link, indicated below, in the
Investor Relations section of its website at
ir.bluegreenvacations.com. A transcript will also be available
simultaneously with the webcast. The webcast and supplemental
management presentation can be accessed on the Investor Relations
section of Bluegreen Vacations’ website at
ir.bluegreenvacations.com. The pre-recorded presentation can also
be accessed at 1-844-512-2921 (domestic) and 1-412-317-6671
(international) and entering pin number 1135129. The business
update via dial-in will be available through midnight Sunday,
September 1, 2019. A transcript will also be available
simultaneously with the webcast.
Forward-Looking
Statements:
Certain statements in this press release are "forward-looking
statements" within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. All statements, other than statements of
historical fact, are forward-looking statements. Forward-looking
statements are based on current expectations of management and can
be identified by the use of words such as “believe”, “may”,
“could”, “should”, “plans”, “anticipates”, “intends”, “estimates”,
“expects”, and other words and phrases of similar impact.
Forward-looking statements involve risks, uncertainties and other
factors, many of which are beyond our control, that may cause
actual results or performance to differ from those set forth or
implied in the forward-looking statements. These risks and
uncertainties include, without limitation, risks relating to our
ability to achieve increases in VOI sales including new owner
sales; our ability to successfully implement our strategic plans
and initiatives, generate earnings and long-term growth; risks that
our marketing alliances will not contribute to growth or be
profitable; the risk that our business relationship with Bass Pro
under the revised terms of our marketing agreement with Bass Pro
may not be as profitable as under the prior terms, or at all, or
otherwise result in the benefits anticipated; risks that the
increases in package sales may not continue and may not result in
increased guest tours in the timeframe anticipated or at all; risks
that dividend payments will not continue at current levels, if at
all; risks that the Company’s costs, including costs of VOIs sold,
for the remainder of 2019 will not be within the expected ranges;
risks that the Company’s efforts to address the increase in default
rates may not be successful and default rates may not decrease and
may exceed the Company’s expectations; and the additional risks and
uncertainties described in Bluegreen's filings with the Securities
and Exchange Commission, including, without limitation, those
described in the “Risk Factors” section of Bluegreen’s Annual
Report on Form 10-K for the year ended December 31, 2018 and those
described in Bluegreen’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2019, which is expected to be filed on or
about August 6, 2019. Bluegreen cautions that the foregoing factors
are not exclusive. You should not place undue reliance on any
forward-looking statement, which speaks only as of the date made.
Bluegreen does not undertake, and specifically disclaims any
obligation, to update or supplement any forward-looking
statements.
Non-GAAP Financial
Measures:
The Company refers to certain non-GAAP financial measures in
this press release, including system-wide sales of VOIs, Adjusted
EBITDA and free cash flow. Please see the supplemental tables and
definitions attached herein for additional information and
reconciliation of such non-GAAP financial measures.
About Bluegreen Vacations
Corporation:
Bluegreen Vacations Corporation (NYSE: BXG) is a leading
vacation ownership company that markets and sells vacation
ownership interests (VOIs) and manages resorts in top leisure and
urban destinations. The Bluegreen Vacation Club is a flexible,
points-based, deeded vacation ownership plan with approximately
217,000 owners, 69 Club and Club Associate Resorts and access to
more than 11,300 other hotels and resorts through partnerships and
exchange networks as of June 30, 2019. Bluegreen Vacations also
offers a portfolio of comprehensive, fee-based resort management,
financial, and sales and marketing services, to or on behalf of
third parties. Bluegreen is approximately 90% owned by BBX Capital
Corporation (NYSE: BBX) (OTCQX: BBXTB), a diversified holding
company. For further information, visit
www.BluegreenVacations.com.
About BBX Capital
Corporation:
BBX Capital Corporation (NYSE: BBX) (OTCQX: BBXTB) is a
Florida-based diversified holding company whose principal
investments include Bluegreen Vacations Corporation (NYSE: BXG),
BBX Capital Real Estate, Renin Holdings, and IT’SUGAR. For
additional information, please visit www.BBXCapital.com.
BLUEGREEN VACATIONS
CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
AND COMPREHENSIVE INCOME
(UNAUDITED)
(In thousands, except for per
share data)
For the Three Months
Ended
For the Six Months
Ended
June 30,
June 30,
2019
2018
2019
2018
Revenue:
Gross sales of VOIs
$
80,221
$
82,027
$
143,105
$
146,187
Estimated uncollectible VOI notes
receivable
(11,919)
(13,454)
(23,072)
(21,473)
Sales of VOIs
68,302
68,573
120,033
124,714
Fee-based sales commission revenue
55,343
60,086
100,555
105,940
Other fee-based services revenue
30,703
30,391
60,271
58,415
Cost reimbursements
17,358
14,059
37,594
30,260
Interest income
21,875
21,118
43,883
42,240
Other income, net
1,993
710
2,082
891
Total revenue
195,574
194,937
364,418
362,460
Costs and expenses:
Cost of VOIs sold
10,572
6,789
14,420
8,601
Cost of other fee-based services
19,924
16,634
42,792
34,045
Cost reimbursements
17,358
14,059
37,594
30,260
Selling, general and administrative
expenses
147,668
109,580
237,882
203,129
Interest expense
10,061
8,495
19,567
16,262
Total costs and expenses
205,583
155,557
352,255
292,297
(Loss) income before non-controlling
interest
and (benefit) provision for income
taxes
(10,009)
39,380
12,163
70,163
(Benefit) provision for income taxes
(3,957)
9,353
1,346
16,554
Net (loss) income
(6,052)
30,027
10,817
53,609
Less: Net income attributable to
5,131
3,317
6,847
5,924
non-controlling interest
Net (loss) income attributable to
Bluegreen
Vacations Corporation
shareholders
$
(11,183)
$
26,710
$
3,970
$
47,685
Comprehensive (loss) income
attributable to
Bluegreen Vacations Corporation
shareholders
$
(11,183)
$
26,710
$
3,970
$
47,685
BLUEGREEN VACATIONS
CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
AND COMPREHENSIVE INCOME
(UNAUDITED)
(In thousands, except for
share and per share data)
For the Three Months
Ended
For the Six Months
Ended
June 30,
June 30,
2019
2018
2019
2018
(Loss) Earnings per share attributable
to Bluegreen Vacations Corporation shareholders - Basic and
diluted
$
(0.15)
$
0.36
$
0.05
$
0.64
Weighted average number of common
shares outstanding:
Basic and diluted
74,446
74,734
74,446
74,734
Cash dividends declared per
share
$
0.17
$
0.15
$
0.34
$
0.30
BLUEGREEN VACATIONS
CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED)
(In thousands)
For the Six Months
Ended
June 30,
2019
2018
Operating activities:
Net income
$
10,817
$
53,609
Adjustments to reconcile net income to net
cash provided
by operating activities:
Depreciation and amortization
9,056
7,597
Gain on disposal of property and
equipment
(1,945)
—
Provision for loan losses
23,055
21,447
(Benefit) provision for deferred income
taxes
(10,041)
2,215
Changes in operating assets and
liabilities:
Notes receivable
(24,742)
(24,236)
Prepaid expenses and other assets
(11,674)
(16,122)
Inventory
(8,071)
(25,770)
Accounts payable, accrued liabilities and
other, and
deferred income
25,157
4,475
Net cash provided by operating
activities
11,612
23,215
Investing activities:
Purchases of property and equipment
(14,516)
(15,105)
Proceeds from sale of property and
equipment
1,820
—
Net cash used in investing activities
(12,696)
(15,105)
Financing activities:
Proceeds from borrowings
collateralized
by notes receivable
45,095
73,706
Payments on borrowings collateralized by
notes receivable
(66,769)
(68,531)
Proceeds from borrowings
collateralized
by line-of-credit facilities and notes
payable
20,386
50,042
Payments under line-of-credit facilities
and notes payable
(17,407)
(24,671)
Payments of debt issuance costs
(132)
(187)
Dividends paid
(25,312)
(22,420)
Net cash (used in) provided by financing
activities
(44,139)
7,939
Net (decrease) increase in cash and
cash equivalents
and restricted cash
(45,223)
16,049
Cash, cash equivalents and restricted cash
at beginning of period
273,134
243,349
Cash, cash equivalents and restricted cash
at end of period
$
227,911
$
259,398
Supplemental schedule of operating cash
flow information:
Interest paid, net of amounts
capitalized
$
16,871
$
14,250
Income taxes paid
$
14,357
$
14,618
Supplemental schedule of non-cash
investing and financing activities:
Acquisition of inventory, property, and
equipment for notes payable
$
—
$
24,258
BLUEGREEN VACATIONS
CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except for per
share data)
June 30,
December 31,
2019
2018
ASSETS
Cash and cash equivalents
$
180,166
$
219,408
Restricted cash ($19,018 and $28,400 in
VIEs at June 30, 2019
and December 31, 2018, respectively)
47,745
53,726
Notes receivable, net ($308,042 and
$341,975 in VIEs
at June 30, 2019 and December 31, 2018,
respectively)
440,854
439,167
Inventory
342,220
334,149
Prepaid expenses
14,946
10,097
Other assets
57,970
49,796
Operating lease assets
23,395
—
Intangible assets, net
61,556
61,845
Loan to related party
80,000
80,000
Property and equipment, net
102,361
98,279
Total assets
$
1,351,213
$
1,346,467
LIABILITIES AND SHAREHOLDERS'
EQUITY
Liabilities
Accounts payable
$
18,270
$
19,515
Accrued liabilities and other
102,183
80,364
Operating lease liabilities
24,584
—
Deferred income
17,668
16,522
Deferred income taxes
81,015
91,056
Receivable-backed notes payable -
recourse
86,820
76,674
Receivable-backed notes payable -
non-recourse (in VIEs)
351,316
382,257
Lines-of-credit and notes payable
136,796
133,391
Junior subordinated debentures
71,691
71,323
Total liabilities
890,343
871,102
Commitments and Contingencies
Shareholders' Equity
Common stock, $.01 par value, 100,000,000
shares authorized; 74,445,923
shares issued and outstanding at June 30,
2019 and December 31, 2018
744
744
Additional paid-in capital
270,369
270,369
Retained earnings
137,299
158,641
Total Bluegreen Vacations Corporation
shareholders' equity
408,412
429,754
Non-controlling interest
52,458
45,611
Total shareholders' equity
460,870
475,365
Total liabilities and shareholders'
equity
$
1,351,213
$
1,346,467
BLUEGREEN VACATIONS
CORPORATION
ADJUSTED EBITDA
RECONCILIATION
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
(in thousands)
2019
2018
2019
2018
Net (loss) income attributable to
shareholders
$
(11,183)
$
26,710
$
3,970
$
47,685
Net income attributable to the
non-controlling interest in Bluegreen/Big Cedar Vacations
5,131
3,317
6,847
5,924
Adjusted EBITDA attributable to the
non-controlling interest in Bluegreen/Big Cedar Vacations
(5,193)
(3,292)
(6,974)
(5,884)
(Gain) loss on assets held for sale
(1,989)
11
(1,980)
(9)
Add: depreciation and amortization
3,504
2,989
6,870
5,917
Less: interest income (other than interest
earned on VOI notes receivable)
(1,792)
(1,381)
(3,638)
(2,816)
Add: interest expense - corporate and
other
4,991
3,873
9,235
6,930
Add: franchise taxes
25
43
60
124
Add: (benefit) provision for income
taxes
(3,957)
9,353
1,346
16,554
Add: corporate realignment cost
—
275
—
751
Add: Bass Pro settlement
39,121
—
39,121
—
Total Adjusted EBITDA
$
28,658
$
41,898
$
54,857
$
75,176
BLUEGREEN VACATIONS
CORPORATION
SEGMENT ADJUSTED EBITDA
SUMMARY
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
(in thousands)
2019
2018
2019
2018
Adjusted EBITDA - sales of VOIs and
financing
$
36,197
$
48,255
$
67,327
$
91,981
Adjusted EBITDA - resort operations and
club management
14,490
13,750
27,726
25,829
Total Segment Adjusted EBITDA
50,687
62,005
95,053
117,810
Less: corporate and other
(22,029)
(20,107)
(40,196)
(42,634)
Total Adjusted EBITDA
$
28,658
$
41,898
$
54,857
$
75,176
BLUEGREEN VACATIONS
CORPORATION
SALES OF VOIs AND FINANCING
SEGMENT- ADJUSTED EBITDA
For the Three Months Ended
June 30,
2019
2018
Amount
% of System- wide sales of
VOIs (5)
Amount
% of System- wide sales of
VOIs (5)
(in thousands)
Developed VOI sales (1)
$
99,271
61%
$
80,715
47%
Secondary Market sales
53,337
33
55,258
32
Fee-Based sales
83,352
51
89,934
52
JIT sales
2,418
1
15,314
9
Less: Equity trade allowances (6)
(74,805)
(46)
(69,260)
(40)
System-wide sales of VOIs
163,573
100%
171,961
100%
Less: Fee-Based sales
(83,352)
(51)
(89,934)
(52)
Gross sales of VOIs
80,221
49
82,027
48
Provision for loan losses (2)
(11,919)
(15)
(13,454)
(16)
Sales of VOIs
68,302
42
68,573
40
Cost of VOIs sold (3)
(10,572)
(15)
(6,789)
(10)
Gross profit (3)
57,730
85
61,784
90
Fee-Based sales commission revenue (4)
55,343
66
60,086
67
Financing revenue, net of financing
expense
15,225
9
15,160
9
Other fee-based services - title
operations, net
1,941
1
2,060
1
Net carrying cost of VOI inventory
(5,288)
(3)
(1,650)
(1)
Selling and marketing expenses
(83,001)
(51)
(83,323)
(48)
General and administrative expenses -
sales and marketing
(46,408)
(28)
(7,511)
(4)
Operating profit - sales of VOIs and
financing
(4,458)
-3%
46,606
27%
Add: Depreciation and amortization
1,534
1,649
Add: Bass Pro Settlement
39,121
—
Adjusted EBITDA - sales of VOI and
financing
$
36,197
$
48,255
BLUEGREEN VACATIONS
CORPORATION
SALES OF VOIs AND FINANCING
SEGMENT- ADJUSTED EBITDA
For the Six Months Ended June
30,
2019
2018
Amount
% of System- wide sales of
VOIs (5)
Amount
% of System- wide sales of
VOIs (5)
(in thousands)
Developed VOI sales (1)
$
167,424
57%
$
128,246
42%
Secondary Market sales
112,490
38
131,547
43
Fee-Based sales
150,146
51
158,618
52
JIT sales
4,652
2
18,683
6
Less: Equity trade allowances (6)
(141,461)
(48)
(132,289)
(43)
System-wide sales of VOIs
293,251
100%
304,805
100%
Less: Fee-Based sales
(150,146)
(51)
(158,618)
(52)
Gross sales of VOIs
143,105
49
146,187
48
Provision for loan losses (2)
(23,072)
(16)
(21,473)
(15)
Sales of VOIs
120,033
41
124,714
41
Cost of VOIs sold (3)
(14,420)
(12)
(8,601)
(7)
Gross profit (3)
105,613
88
116,113
93
Fee-Based sales commission revenue (4)
100,555
67
105,940
67
Financing revenue, net of financing
expense
30,090
10
29,923
10
Other fee-based services - title
operations, net
3,459
1
3,506
1
Net carrying cost of VOI inventory
(12,976)
(4)
(4,167)
(1)
Selling and marketing expenses
(148,223)
(51)
(149,006)
(49)
General and administrative expenses -
sales and marketing
(53,382)
(18)
(13,644)
(4)
Operating profit - sales of VOIs and
financing
25,136
9%
88,665
29%
Add: Depreciation and amortization
3,070
3,316
Add: Bass Pro Settlement
39,121
—
Adjusted EBITDA - sales of VOIs and
financing
$
67,327
$
91,981
(1)
Developed VOI sales represent sales of VOIs acquired or developed
by us under our developed VOI business. Developed VOI sales do not
include Secondary Market sales, Fee-Based sales or JIT sales.
(2)
Provision for loan losses is calculated as
a percentage of gross sales of VOIs, which excludes Fee-Based sales
(and not of system-wide sales of VOIs).
(3)
Percentages for costs of VOIs sold and
gross profit are calculated as a percentage of sales of VOIs (and
not of system-wide sales of VOIs).
(4)
Percentages for Fee-Based sales commission
revenue are calculated as a percentage of Fee-Based sales (and not
of system-wide sales of VOIs).
(5)
Represents the applicable line item,
calculated as a percentage of system-wide sales of VOIs, unless
otherwise indicated in the above footnotes.
(6)
Equity trade allowances are amounts
granted to customers upon trading in their existing VOIs in
connection with the purchase of additional VOIs.
BLUEGREEN VACATIONS
CORPORATION
SALES OF VOIs AND FINANCING
SEGMENT
SALES AND MARKETING
DATA
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
2019
2018
% Change
2019
2018
% Change
Number of sales offices at period-end
26
24
8
26
24
8
Number of active sales arrangements with
third-party clients at period-end
15
14
7
15
14
7
Total number of VOI sales transactions
10,674
11,235
(5)
18,917
20,004
(5)
Average sales price per transaction
$
15,432
$
15,442
—
$
15,591
$
15,351
2
Number of total guest tours
65,167
65,570
(1)
113,305
115,767
(2)
Sale-to-tour conversion ratio– total
marketing guests
16.4%
17.1%
(4)
16.7%
17.3%
(3)
Number of new guest tours
40,473
41,628
(3)
68,537
71,507
(4)
Sale-to-tour conversion ratio– new
marketing guests
13.6%
14.8%
(8)
13.7%
14.8%
(7)
Percentage of sales to existing owners
53.0%
49.0%
8
54.7%
51.2%
7
Average sales volume per guest
$
2,528
$
2,646
(4)
$
2,603
$
2,653
(2)
BLUEGREEN VACATIONS
CORPORATION
RESORT OPERATIONS AND CLUB
MANAGEMENT SEGMENT- ADJUSTED EBITDA
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
(dollars in thousands)
2019
2018
2019
2018
Resort operations and club management
revenue
$
45,021
$
41,275
$
92,097
$
82,812
Resort operations and club management
expense
(30,895)
(27,928)
(65,101)
(57,781)
Operating profit - resort operations and
club management
14,126
31%
13,347
32%
26,996
29%
25,031
30%
Add: Depreciation
364
403
730
798
Adjusted EBITDA - resort operations and
club management
$
14,490
$
13,750
$
27,726
$
25,829
BLUEGREEN VACATIONS
CORPORATION
CORPORATE AND OTHER - ADJUSTED
EBITDA
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
(dollars in thousands)
2019
2018
2019
2018
General and administrative expenses -
corporate and other
$
(18,629)
$
(18,870)
$
(36,757)
$
(40,462)
Adjusted EBITDA attributable to the
non-controlling interest in Bluegreen/Big Cedar Vacations
(5,193)
(3,292)
(6,974)
(5,884)
Other income, net
1,993
710
2,082
891
Add: Financing revenue - corporate and
other
1,950
1,460
3,941
2,968
Less: Interest income (other than interest
earned on VOI notes receivable)
(1,792)
(1,381)
(3,638)
(2,816)
Franchise taxes
25
43
60
124
(Gain) Loss on assets held for sale
(1,989)
11
(1,980)
(9)
Depreciation and amortization
1,606
937
3,070
1,803
Corporate realignment cost
—
275
—
751
Corporate and other
$
(22,029)
$
(20,107)
$
(40,196)
$
(42,634)
BLUEGREEN VACATIONS
CORPORATION
FREE CASH FLOW
RECONCILIATION
For the Six Months Ended June
30,
(in thousands)
2019
2018
Net cash provided by operating
activities
$
11,612
$
23,215
Purchases of property and equipment
(14,516)
(15,105)
Free Cash Flow
$
(2,904)
$
8,110
BLUEGREEN VACATIONS
CORPORATION
OTHER FINANCIAL DATA
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
2019
2018
2019
2018
Financing Interest Income
$
19,925
$
19,658
$
39,942
$
39,272
Financing Interest Expense
(5,070)
(4,622)
(10,332)
(9,332)
Non-Financing Interest Income
1,950
1,460
3,941
2,968
Non-Financing Interest Expense
(4,991)
(3,873)
(9,235)
(6,930)
Mortgage Servicing Income
1,544
1,471
3,034
2,916
Mortgage Servicing Expense
(1,174)
(1,347)
(2,554)
(2,933)
Title Revenue
3,040
3,175
5,768
5,863
Title Expense
(1,099)
(1,115)
(2,309)
(2,357)
BLUEGREEN VACATIONS
CORPORATION
SYSTEM-WIDE SALES OF VOIs
RECONCILIATION
(In thousands)
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
(in thousands)
2019
2018
2019
2018
Gross sales of VOIs
$
80,221
$
82,027
$
143,105
$
146,187
Add: Fee-Based sales
83,352
89,934
150,146
158,618
System-wide sales of VOIs
$
163,573
$
171,961
$
293,251
$
304,805
BLUEGREEN VACATIONS
CORPORATION
TRAILING TWELVE MONTH ADJUSTED
EBITDA
(In thousands)
For the Twelve Months
Ended
June 30, 2019
Net income attributable to
shareholders
$
44,247
Net income attributable to the
non-controlling interest in Bluegreen/Big Cedar Vacations
13,313
Adjusted EBITDA attributable to the
non-controlling interest in Bluegreen/Big Cedar Vacations
(13,558)
(Gain) on assets held for sale
(1,968)
Add: depreciation and amortization
13,345
Less: interest income (other than interest
earned on VOI notes receivable)
(6,866)
Add: interest expense - corporate and
other
17,500
Add: franchise taxes
135
Add: provision for income taxes
13,333
Add: corporate realignment cost
2,899
Add: Bass Pro settlement
39,121
Total Adjusted EBITDA
$
121,501
BLUEGREEN VACATIONS CORPORATION
DEFINITIONS
Principal Components Affecting our Results of
Operations
Principal Components of Revenue Fee-Based Sales.
Represent sales of third-party VOIs where we are paid a
commission.
JIT Sales. Represent sales of VOIs acquired from third parties
in close proximity to when we intend to sell such VOIs.
Secondary Market Sales. Represent sales of VOIs acquired from
HOAs or other owners, typically in connection with HOA maintenance
fee defaults. This inventory is generally purchased at a greater
discount to retail price compared to developed VOI sales and JIT
sales.
Developed VOI Sales. Represent sales of VOIs in resorts that we
have developed or acquired (not including inventory acquired
through JIT and secondary market arrangements).
Financing Revenue. Represents revenue from the financing of VOI
sales, which includes interest income and loan servicing fees. This
also includes fees from certain third-party developers for
providing mortgage servicing of loans granted by them to purchasers
of their VOIs.
Resort Operations and Club Management Revenue. Represents
recurring fees from managing the Vacation Club and transaction fees
for certain resort amenities and certain member exchanges. We also
earn recurring management fees under our management agreements with
HOAs for day-to-day management services, including oversight of
housekeeping services, maintenance, and certain accounting and
administrative functions.
Other Fee-Based Services. Represents revenue earned from various
other services that produce recurring, predictable and long-term
revenue, such as title services.
Principal Components of Expenses Cost of VOIs Sold.
Represents the cost at which our owned VOIs sold during the period
were relieved from inventory. In addition to inventory from our VOI
business, our owned VOIs also include those that were acquired by
us under JIT and secondary market arrangements. Compared to the
cost of our developed VOI inventory, VOIs acquired in connection
with JIT arrangements typically have a relatively higher associated
cost of sales as a percentage of sales while those acquired in
connection with secondary market arrangements typically have a
lower cost of sales as a percentage of sales as secondary market
inventory is generally obtained from HOAs at a significant discount
to retail price. Cost of VOIs sold as a percentage of sales of VOIs
varies between periods based on the relative costs of the specific
VOIs sold in each period and the size of the point packages of the
VOIs sold (primarily due to offered volume discounts, and taking
into account consideration of cumulative sales to existing owners).
Additionally, the effect of changes in estimates under the relative
sales value method, including estimates of projected sales, future
defaults, upgrades and incremental revenue from the resale of
repossessed VOI inventory, are reflected on a retrospective basis
in the period the change occurs. Cost of sales will typically be
favorably impacted in periods where a significant amount of
secondary market VOI inventory is acquired or actual defaults and
equity trades are higher and the resulting change in estimate is
recognized. While we believe that there is additional inventory
that can be obtained through the secondary market at favorable
prices to us in the future, there can be no assurance that such
inventory will be available as expected.
Net Carrying Cost of VOI Inventory. Represents the maintenance
fees and developer subsidies for unsold VOI inventory paid or
accrued to the HOAs that maintain the resorts. We attempt to offset
this expense, to the extent possible, by generating revenue from
renting our VOIs and by utilizing the inventory in our sampler
programs. We net such revenue from this expense item.
Selling and Marketing Expense. Represents costs incurred to sell
and market VOIs, including costs relating to marketing and
incentive programs, tours, and related wages and sales commissions.
Revenue from vacation package sales are netted against selling and
marketing expenses.
Financing Expense. Represents financing interest expense related
to our receivable-backed debt, amortization of the related debt
issuance costs and other expenses incurred in providing financing
and servicing loans, including administrative costs associated with
mortgage servicing activities for our loans and the loans of
certain third-party developers. Mortgage servicing activities
include, amongst other things, payment processing, reporting and
collection services.
Resort Operations and Club Management Expense. Represents costs
incurred to manage resorts and the Vacation Club, including payroll
and related costs and other administrative costs to the extent not
reimbursed by the Vacation Club or HOAs.
General and Administrative Expense. Primarily represents
compensation expense for personnel supporting our business and
operations, professional fees (including consulting, audit and
legal fees), and administrative and related expenses.
Key Business and Financial Metrics and Terms Used by
Management Sales of VOIs. Represent sales of our owned VOIs,
including developed VOIs and those acquired through JIT and
secondary market arrangements, reduced by equity trade allowances
and an estimate of our provision for loan losses. In addition to
the factors impacting system-wide sales of VOIs, sales of VOIs are
impacted by the proportion of system-wide sales of VOIs sold on
behalf of third-parties on a commission basis, which are not
included in sales of VOIs.
System-wide Sales of VOIs. Represents all sales of VOIs, whether
owned by us or a third party immediately prior to the sale. Sales
of VOIs owned by third parties are transacted as sales of VOIs in
our Vacation Club through the same selling and marketing process we
use to sell our VOI inventory. We consider system-wide sales of
VOIs to be an important operating measure because it reflects all
sales of VOIs by our sales and marketing operations without regard
to whether we or a third party owned such VOI inventory at the time
of sale. System-wide sales of VOIs is not a recognized term under
GAAP and should not be considered as an alternative to sales of
VOIs or any other measure of financial performance derived in
accordance with GAAP or to any other method of analyzing our
results as reported under GAAP.
Guest Tours. Represents the number of sales presentations given
at our sales centers during the period.
Sale to Tour Conversion Ratio. Represents the rate at which
guest tours are converted to sales of VOIs and is calculated by
dividing the number of sales transactions by the number of guest
tours.
Average Sales Volume Per Guest (“VPG”). Represents the sales
attributable to each guest tour at our sales locations and is
calculated by dividing VOI sales by guest tours. We consider VPG to
be an important operating measure because it measures the
effectiveness of our sales process, combining the average
transaction price with the sale-to-tour conversion ratio.
Adjusted EBITDA. We define Adjusted EBITDA as earnings, or net
income (loss), before taking into account interest income
(excluding interest earned on VOI notes receivable), interest
expense (excluding interest expense incurred on debt secured by our
VOI notes receivable), income and franchise taxes, loss (gain) on
assets held for sale, depreciation and amortization, amounts
attributable to the non-controlling interest in Bluegreen/Big Cedar
Vacations (in which we own a 51% interest), and items that we
believe are not representative of ongoing operating results,
including $39.1 million of expenses incurred during the three and
six months ended June 30, 2019 in connection with the Bass Pro
Settlement. For purposes of the Adjusted EBITDA calculation, no
adjustments were made for interest income earned on our VOI notes
receivable or the interest expense incurred on debt that is secured
by such notes receivable because they are both considered to be
part of the operations of our business.
We consider our total Adjusted EBITDA and our Segment Adjusted
EBITDA to be an indicator of our operating performance, and it is
used by us to measure our ability to service debt, fund capital
expenditures and expand our business. Adjusted EBITDA is also used
by companies, lenders, investors and others because it excludes
certain items that can vary widely across different industries or
among companies within the same industry. For example, interest
expense can be dependent on a company’s capital structure, debt
levels and credit ratings. Accordingly, the impact of interest
expense on earnings can vary significantly among companies. The tax
positions of companies can also vary because of their differing
abilities to take advantage of tax benefits and because of the tax
policies of the jurisdictions in which they operate. As a result,
effective tax rates and provision for income taxes can vary
considerably among companies. Adjusted EBITDA also excludes
depreciation and amortization because companies utilize productive
assets of different ages and use different methods of both
acquiring and depreciating productive assets. These differences can
result in considerable variability in the relative costs of
productive assets and the depreciation and amortization expense
among companies.
Adjusted EBITDA is not a recognized term under GAAP and should
not be considered as an alternative to net income (loss) or any
other measure of financial performance or liquidity, including cash
flow, derived in accordance with GAAP, or to any other method or
analyzing our results as reported under GAAP. The limitations of
using Adjusted EBITDA as an analytical tool include, without
limitation, that Adjusted EBITDA does not reflect (i) changes in,
or cash requirements for, our working capital needs; (ii) our
interest expense, or the cash requirements necessary to service
interest or principal payments on our indebtedness (other than as
noted above); (iii) our tax expense or the cash requirements to pay
our taxes; (iv) historical cash expenditures or future requirements
for capital expenditures or contractual commitments; or (v) the
effect on earnings or changes resulting from matters that we
consider not to be indicative of our future operations or
performance. Further, although depreciation and amortization are
non-cash charges, the assets being depreciated and amortized will
often have to be replaced in the future, and Adjusted EBITDA does
not reflect any cash requirements for such replacements. In
addition, our definition of Adjusted EBITDA may not be comparable
to definitions of Adjusted EBITDA or other similarly titled
measures used by other companies.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190806005031/en/
Bluegreen Vacations Corporation Investor Relations: Nikki Sacks,
203-682-8263 or Evelyn Infurna, 203-682-8265 Email:
bluegreenvac@icrinc.com
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