Bluegreen Vacations Corporation Reports Second Quarter 2018 Results

  • 2Q18 Earnings Per Share (“EPS”) Increases 6%
  • 3% Growth in System-Wide Sales of Vacation Ownership Interests
  • Selling and Marketing Expenses Decreases to 48% of System-Wide Sales
  • Cap-Light Revenue (1) Increases to 70% of Total Revenue
  • Commences Expansion of Resorts and Sales Offices; Acquires First Resort in Texas, Additional Fee-Based Service Contract in New Orleans and Exclusive Inventory and Resort Management Agreement for New York City Resort

BOCA RATON, Florida (August 2, 2018) – Bluegreen Vacations Corporation (NYSE: BXG) ("Bluegreen" or the “Company") today reported its second quarter 2018 financial results.

 

Shawn B. Pearson, Chief Executive Officer and President said, “We are pleased with our second quarter results, which saw a 6% increase in earnings per share highlighted by a 3% increase in system-wide sales of vacation ownership interests (“VOIs”) and reduction in selling and marketing expenses to 48% of sales, marking the third consecutive quarter we’ve generated improvement across these key growth metrics. We also benefited from a reduced effective income tax rate due to the Tax Cuts and Jobs Act of 2017 (the “Tax Act”).

“While our sales growth in the second quarter chiefly reflected same store sales increases, we made investments that we believe will contribute to growth in both sales and management revenues in the future. Most significantly, we added two outstanding resorts to our network, the Éilan Hotel & Spa in San Antonio, our first resort in Texas, and The Marquee in New Orleans, Louisiana.  We also entered into an exclusive agreement to acquire inventory and, by 2021, the resort management contract at The Manhattan Club in New York City. All three resorts have planned frontline sales centers which, in addition to six other currently planned new sales centers, will put Bluegreen on pace for sales capacity expansion, of over 80,000 square feet of prime sales center space to be open by summer 2019. 

“We believe Bluegreen is well-positioned for future growth in the exciting and fast-growing vacation ownership sector.   We believe that we will benefit from our unique resort offerings, which target middle-America and millennial consumers, our digital initiatives, and our robust strategic partnerships as we continue to grow VOI sales and pursue the creation of long-term value for our shareholders,” Pearson said.

Second Quarter 2018 Highlights:

(dollars in millions, except per share data)

 

 

 

 

 

 

 

 

 

Three Months Ended
June 30,

 

2018

 

2017

 

% Change

 

 

 

 

 

 

 

 

System-wide sales VOIs

$

 172.0

 

$

 166.4

 

 3

Resort operations and
  club management revenue

$

 41.3

 

$

 36.1

 

 14

Income before non-controlling interest and

 

 

 

 

 

 

 

  provision for income taxes

$

 39.4

 

$

 42.8

 

 (8)

Net income attributable to shareholders

$

 26.7

 

$

 24.0

 

 11

Earnings per share Basic and diluted

$

 0.36

 

$

 0.34

 

 6

Adjusted EBITDA

$

 41.9

 

$

 43.2

 

 (3)

Capital-light revenue(1) as a percentage of

 

70%

 

 

68%

 

 

total revenue

 

 

 

 

 

 

 

Selling and marketing expenses, as a percentage

 

 

 

 

 

 

 

of system-wide sales of VOIs

 

48%

 

 

52%

 

 

Effective income tax rate

 

26%

 

 

39%

 

 

 

  • 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.

 

Income before non-controlling interest and provision for income tax decreased $3.4 million or 8.0% in the second quarter of 2018 (“2Q18”) compared to the second quarter of 2017 (“2Q17”). This decrease was primarily a result of:

 

  • Cost of VOIs Sold increased $5.0 million to 10% of Sales of VOIs in 2Q18 compared to 3% in 2Q17. In 2Q17, Bluegreen benefited from a $5.1 million reduction to Cost of VOIs Sold ($3.1 million net of income tax), in connection with the implementation of a revised pricing matrix, with no such comparable benefit in 2Q18. Excluding this benefit from 2Q17, Adjusted EBITDA would have increased 5% and EPS would have increased $0.04 or 23%. 

 

  • General and Administrative Expenses – Corporate & Other increased $4.4 million in 2Q18 compared to 2Q17, as a result of:
    • Higher self-insured health care costs;
    • Higher outside legal expenses in connection with a new focus on vigorously defending claims which the Company believes to be frivolous;
    • Increased depreciation expense in connection with information technology assets;
    • Executive severance expense related to continuing corporate realignment activities commenced in December 2017; and
    • Investor and public relations activities related expenses.

 

These increased expenses were partially offset by growth in profits from our Sales of VOIs and Financing segment as well as our Resort Operations and Club Management segment, more fully described below.

 

Year-to-Date 2018 Highlights:

(dollars in millions, except per share data)

 

 

 

 

 

 

 

 

 

Six Months Ended
June 30,

 

2018

 

2017

 

% Change

 

 

 

 

 

 

 

 

System-wide sales VOIs

$

 304.8

 

$

 296.0

 

 3

Resort operations and
  club management revenue

$

 82.8

 

$

 74.1

 

 12

Income before non-controlling interest and

 

 

 

 

 

 

 

  provision for income taxes

$

 70.2

 

$

 73.7

 

 (5)

Net income attributable to shareholders

$

 47.7

 

$

 41.6

 

 15

Earnings per share Basic and diluted

$

 0.64

 

$

 0.59

 

 8

Adjusted EBITDA

$

 75.2

 

$

 75.2

 

 —

Capital-light revenue(1) as a percentage of

 

72%

 

 

69%

 

 

total revenue

 

 

 

 

 

 

 

Selling and marketing expenses, as a percentage

 

 

 

 

 

 

 

of system-wide sales of VOIs

 

49%

 

 

52%

 

 

Effective income tax rate

 

26%

 

 

38%

 

 

 

  • Bluegreen's "capital-light" revenue included 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.

 

Income before non-controlling interest and provision for income tax decreased $3.5 million or 5% in the first half of 2018 (“1H18”) compared to the first half of 2017 (“1H17”). This decrease was primarily a result of (i) Cost of VOIs Sold increased $3.7 million to 7% of Sales of VOIs in 1H18 compared to 4% in 1H17 (as indicated above, there was a $5.1 million benefit to Cost of VOIs Sold in 2Q17) and (ii)  General and Administrative Expenses – Corporate & Other increased $10.5 million in 1H18 compared to 1H17. 

 

These increased expenses were partially offset by growth in profits from our Sales of VOIs and Financing segment as well as our Resort Operations and Club Management segment, more fully described below.

 

 

Segment Results – Second Quarter 2018

(dollars in millions, except per guest and per transaction amounts)

 

Sales of VOIs and Financing Segment

 

 

 

 

 

 

 

 

 

 Three Months Ended

June 30,

 

2018

 

2017

 

% Change

 

 

 

 

 

 

 

 

System-wide sales of VOIs

$

 172.0

 

$

 166.4

 

 3

Financing revenue, net of financing expense
  relating to the sale of VOIs

$

 15.2

 

$

 15.3

 

 (1)

Net carrying cost VOI inventory

$

 1.7

 

$

 0.7

 

 133

General and administrative expenses - sales and

 

 

 

 

 

 

 

  marketing

$

 7.5

 

$

 6.3

 

 18

Segment operating profit

$

 46.6

 

$

 47.7

 

 (2)

Segment Adjusted EBITDA

$

 48.3

 

$

 49.2

 

 (2)

Number of sales offices at period-end

 

 24

 

 

 23

 

 3

Average sales price per transaction

$

 15,442

 

$

 15,475

 

 —

Guest tours

 

 65,570

 

 

 70,972

 

 (8)

Sale-to-tour conversion ratio

 

17.1%

 

 

15.3%

 

 12

Sales to the Company's existing owners as

 

 

 

 

 

 

 

percentage of system-wide sales of VOIs

 

49%

 

 

47%

 

 3

Sales volume per guest ("VPG")

$

 2,646

 

$

 2,366

 

 12

Provision for Loan Losses as a percentage of gross

 

 

 

 

 

 

 

sales of VOIs

 

16%

 

 

18%

 

 

Costs of VOIs sold as a percentage of sales

 

10%

 

 

3%

 

 

Selling and marketing expenses, as a percentage

 

 

 

 

 

 

 

of system-wide sales of VOIs

 

48%

 

 

52%

 

 

Weighted-average interest rate on notes receivable

 

 

 

 

 

 

 

at period end

 

15.4%

 

 

15.5%

 

 

 

The Company has continued its initiatives to screen the credit qualifications of potential marketing guests, which the Company believes has resulted in both increased VPG and a lower number of Guest Tours in 2Q18 compared to 2Q17.

 

2Q18 Selling and marketing expenses decreased as a percentage of System-wide sales due to the increased VPG noted above, the higher percentage of sales to the Company’s existing owners and the reduction of certain fixed selling and marketing expenses in connection with the “corporate realignment” initiative commenced during the fourth quarter of 2017.

 

The Company previously disclosed a dispute regarding commissions paid to Bass Pro, Inc. (“Bass Pro”) under a marketing and promotions agreement.  As previously disclosed, in order to demonstrate good faith, the Company paid $4.8 million to Bass Pro in October 2017 in connection with the dispute, pending future discussion and resolution of the matter. On July 23, 2018, Bass Pro again raised the same issue regarding the commission calculation since the $4.8 million payment and requested additional information regarding the commission calculation as well as other amounts payable under the agreements, including reimbursements paid to Bluegreen.  The issues raised by Bass Pro have not impacted current operations under the marketing agreement or relative to Bluegreen/Big Cedar Vacations, LLC, the Company’s 51%-owned joint venture with an affiliate of Bass Pro.  The Company intends to formally respond to Bass Pro with its view on these matters and intends to provide Bass Pro with all appropriately requested information. While the Company does not believe that any material additional amounts are due to Bass Pro as a result of these matters, any change in the payments or reimbursements made under the agreements could impact future results.

 

The decrease in Financing revenue, net of financing expense, was primarily attributable to the higher cost of borrowing and the lower weighted-average interest rate on notes receivable.  The decrease in the weighted-average interest rate was primarily attributable to the introduction of “risk-based pricing” pursuant to which borrowers’ interest rates are determined based on their FICO score at the point of sale.

 

Resort Operations and Club Management Segment

(dollars in millions)

 

 

 

 

 

 

 

 

 

 Three Months Ended
June 30,

 

2018

 

2017

 

% Change

 

 

 

 

 

 

 

 

Resort operations and
  club management revenue

$

 41.3

 

$

 36.1

 

 14

Segment operating profit

$

 13.3

 

$

 10.7

 

 25

Segment Adjusted EBITDA

$

 13.8

 

 

 11.1

 

 24

Resorts managed at quarter end

 

 49

 

 

 47

 

 

 

Increases are primarily due to the two additional resort management contracts added since June 30, 2017.

 

Segment Results – Year-to-Date 2018

 

Sales of VOIs and Financing Segment

(dollars in millions, except per guest and per transaction amounts)

 

 

 

 

 

 

 

 

 

 Six Months Ended

June 30,

 

2018

 

2017

 

% Change

 

 

 

 

 

 

 

 

System-wide sales of VOIs

$

 304.8

 

$

 296.0

 

 3

Financing revenue, net of financing expense
  relating to the sale of VOIs

$

 29.9

 

$

 30.8

 

 (3)

Net carrying cost VOI inventory

$

 4.2

 

$

 2.4

 

 75

General and administrative expenses - sales and

 

 

 

 

 

 

 

  marketing

$

 13.6

 

$

 13.1

 

 4

Segment operating profit

$

 88.7

 

$

 85.4

 

 4

Segment Adjusted EBITDA

$

 92.0

 

$

 88.4

 

 4

Number of sales offices at period-end

 

 24

 

 

 23

 

 4

Average sales price per transaction

$

 15,351

 

$

 15,675

 

 (2)

Guest tours

 

 115,767

 

 

 124,208

 

 (7)

Sale-to-tour conversion ratio

 

17.3%

 

 

15.3%

 

 13

Sales to the Company's existing owners as a

 

 

 

 

 

 

 

percentage of system-wide sales of VOIs

 

51%

 

 

49%

 

 4

Sales volume per guest ("VPG")

$

 2,653

 

$

 2,403

 

 10

Provision for Loan Losses as a percentage of gross

 

 

 

 

 

 

 

sales of VOIs

 

15%

 

 

17%

 

 

Costs of VOIs sold as a percentage of sales

 

7%

 

 

4%

 

 

Selling and marketing expenses, as a percentage

 

 

 

 

 

 

 

of system-wide sales of VOIs

 

49%

 

 

52%

 

 

Weighted-average interest rate on notes receivable

 

 

 

 

 

 

 

at period end

 

15.4%

 

 

15.5%

 

 

 

The average annual default rate for the twelve months ended June 30, 2018 was 8.43%, compared to 7.96% for the twelve months ended June 30, 2017.  The Company believes that a significant portion of the default increase is due to the receipt of letters from attorneys who purport to represent certain VOI owners and who have encouraged such owners to become delinquent and ultimately default on their obligations.


 

 

 

Resort Operations and Club Management Segment

(dollars in millions)

 

 

 

 

 

 

 

 

 

 Six Months Ended
June 30,

 

2018

 

2017

 

% Change

 

 

 

 

 

 

 

 

Resort operations and
  club management revenue

$

 82.8

 

$

 74.1

 

 12

Segment operating profit

$

 25.0

 

$

 20.8

 

 20

Segment Adjusted EBITDA

$

 25.8

 

 

 21.6

 

 19

Resorts managed at quarter end

 

 49

 

 

 47

 

 

 

Balance Sheet and Liquidity

As of June 30, 2018, unrestricted cash and cash equivalents totaled $205.7 million. Bluegreen had availability of approximately $140.5 million under its receivable-backed purchase and credit facilities, inventory lines of credit and corporate credit line as of June 30, 2018, subject to eligible collateral and the terms of the facilities, as applicable.

 

Free cash flow, which the Company defines as cash flow from operating activities, less capital expenditures, was $8.1 million for the six months ended June 30, 2018, compared to $18.6 million for the six months ended June 30, 2017. The decrease in free cash flow was primarily attributable to sales office expansions, increased information technology spending, acquisition of secondary market and just-in-time inventory, and decreased working capital, partially offset by lower income tax payments.  The Company believes the Tax Act will continue to have a favorable impact on income tax payments in the future.

 

On April 6, 2018, Bluegreen and Bluegreen/Big Cedar Vacations, LLC, a joint venture in which the Company owns a 51% interest, renewed their $50.0 million, revolving non-recourse VOI notes receivable purchase facility (the “Quorum Purchase Facility”) with Quorum Federal Credit Union (“Quorum”). The amendment to the Quorum Purchase Facility extended the purchase period from June 30, 2018 to June 30, 2020. In addition, pursuant to the amendment, Quorum has agreed to an interest rate of 4.95% per annum on advances made through September 30, 2018. The interest rate on advances made after September 30, 2018 will be set at the time of funding based on rates mutually agreed upon by all parties. The amendment also extended the maturity of the Quorum Purchase Facility from December 2030 to December 2032.  As of June 30, 2018, $29.7 million was outstanding under the Quorum Purchase Facility.  

 

Acquisition Activity

On April 17, 2018, as previously disclosed, the Company acquired the Éilan Hotel & Spa in San Antonio, Texas for approximately $34.3 million. The Company intends to open a 13,000 square foot sales office at the Éilan Hotel & Spa by the end of 2018. In connection with the acquisition, Bluegreen entered into a non-revolving acquisition loan which provides for advances up to $27.5 million, $24.3 million of which was used to fund the acquisition of the resort and up to an additional $3.2 million may be drawn upon to fund certain future improvement costs over a 12-month advance period.  The Company believes that this acquisition is consistent with its “drive-to” strategy; over 10% of Bluegreen Vacation Club owners live in Texas and surrounding states.

 

On May 10, 2018, as previously disclosed, the Company announced a fee-based service agreement with Marquee Developer, LLC (“Marquee Developer”), owner and developer, of The Marquee – also known as 144 Elk Luxury Lofts – in New Orleans, Louisiana. The resort will be open for Vacation Club guests in 2019. Under the agreement, Bluegreen will provide a suite of fee-based services that include vacation ownership sales and marketing, property management, and title and escrow services. Bluegreen will also provide design and development planning as well as consumer receivable servicing for the Marquee Developer, also on a fee-basis. This agreement will add 94 units of resort inventory which will be sold through The Bluegreen Vacation Club. Additionally, Bluegreen has plans to add frontline and in-house sales centers, which are expected to be operational by fourth quarter 2018.

 

On June 22, 2018, as previously disclosed, the Company announced that it has entered into an exclusive agreement to acquire inventory and, by 2021, the resort management contract at The Manhattan Club in New York City.  In addition to significantly expanding access to The Manhattan Club within the Bluegreen Vacation Club, Bluegreen is planning to open a 2,500-square foot sales center. The agreement provides Bluegreen the exclusive right, on a non-committed basis, to acquire the remaining timeshare inventory at The Manhattan Club under Bluegreen’s “capital-light” Secondary Market program through periodic purchases over time, and subject to the terms and conditions of the agreement, the exclusive right to acquire the management contract for The Manhattan Club resort in 2021.


 

Dividend

On July 18, 2018, Bluegreen’s Board of Directors declared a cash dividend payment of $0.15 per share of common stock. The dividend is payable on August 15, 2018 to shareholders of record on the close of trading on July 31, 2018.

 

Second Quarter 2018 Webcast

The Company has provided a pre-recorded business update and management presentation via webcast link, listed below, on the Investor Relations section of its website at ir.bluegreenvacations.com. A transcript will also be available simultaneously with the webcast. 

 

Webcast link: https://services.choruscall.com/links/bxg180802.html

 

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 successfully implement our strategic plans and initiatives, generate earnings and long-term growth, risks relating to improving our digital capabilities, including our virtual reality technology, complete sales office expansions when planned or at all and that such expansions will be profitable, that marketing alliances will drive growth or be successful, 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, 2017 and Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2018, expected to be filed on or about August 3, 2018.  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, adjusted EPS 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 215,000 owners, 69 Club and Club Associate Resorts and access to more than 11,100 other hotels and resorts through partnerships and exchange networks as of June 30, 2018. 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 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 activities include its 90% ownership interest in Bluegreen Vacations Corporation (NYSE: BXG) as well as its real estate and middle market divisions. For additional information, please visit www.BBXCapital.com

 

Investor Relations Contact:
Edelman Financial Communications
Danielle O’Brien
Bluegreen@edelman.com
(212) 704-8166

Media Contact:
Brad Simon
Bradley.Simon@edelman.com
(305) 358-5291


 

BLUEGREEN VACATIONS CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

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,

 

 

 

2018

 

2017

 

2018

 

2017

 

 

 

 

 

 

*As Adjusted

 

 

 

 

*As Adjusted

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross sales of VOIs

 

$

 82,027

 

$

 72,738

 

$

 146,187

 

$

 136,183

 

Estimated uncollectible VOI notes receivable

 

 

 (13,454)

 

 

 (13,333)

 

 

 (21,473)

 

 

 (22,542)

 

Sales of VOIs

 

 

 68,573

 

 

 59,405

 

 

 124,714

 

 

 113,641

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee-based sales commission revenue

 

 

 60,086

 

 

 63,915

 

 

 105,940

 

 

 109,069

 

Other fee-based services revenue

 

 

 30,391

 

 

 29,935

 

 

 58,415

 

 

 56,056

 

Cost reimbursements

 

 

 14,059

 

 

 11,893

 

 

 30,260

 

 

 26,563

 

Interest income

 

 

 21,118

 

 

 21,991

 

 

 42,240

 

 

 44,377

 

Other income (expense), net

 

 

 710

 

 

 244

 

 

 891

 

 

 (1)

 

Total revenues

 

 

 194,937

 

 

 187,383

 

 

 362,460

 

 

 349,705

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of VOIs sold

 

 

 6,789

 

 

 1,749

 

 

 8,601

 

 

 4,908

 

Cost of other fee-based services

 

 

 16,634

 

 

 15,374

 

 

 34,045

 

 

 31,481

 

Cost reimbursements

 

 

 14,059

 

 

 11,893

 

 

 30,260

 

 

 26,563

 

Selling, general and administrative expenses

 

 

 109,580

 

 

 107,488

 

 

 203,129

 

 

 197,323

 

Interest expense

 

 

 8,495

 

 

 8,077

 

 

 16,262

 

 

 15,721

 

Total costs and expenses

 

 

 155,557

 

 

 144,581

 

 

 292,297

 

 

 275,996

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before non-controlling interest and

 

 

 

 

 

 

 

 

 

 

 

 

 

  provision for income taxes

 

 

 39,380

 

 

 42,802

 

 

 70,163

 

 

 73,709

 

Provision for income taxes

 

 

 9,353

 

 

 15,292

 

 

 16,554

 

 

 25,903

 

Net income

 

 

 30,027

 

 

 27,510

 

 

 53,609

 

 

 47,806

 

Less: Net income attributable to
  non-controlling interest

 

 

 3,317

 

 

 3,520

 

 

 5,924

 

 

 6,167

 

Net income attributable to Bluegreen Vacations

 

 

 

 

 

 

 

 

 

 

 

 

 

  Corporation shareholders

 

$

 26,710

 

$

 23,990

 

$

 47,685

 

$

 41,639

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to

  Bluegreen Vacations Corporation

  shareholders - Basic and diluted

 

$

 0.36

 

$

 0.34

(1)

$

 0.64

 

$

0.59

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares
  outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

 74,734

 

 

 70,998

(1)

 

 74,734

 

 

 70,998

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per share

 

$

 0.15

 

$

 0.28

 

$

 0.30

 

$

 0.28

 

*See Note 2: Significant Accounting Policies within the June 30, 2018 quarterly report on Form 10-Q for further discussion.

 

  • The calculation of basic and diluted earnings per share were based on shares issued in connection with our initial public offering during November 2017 and give effect to the stock split effected in connection therewith as if the stock split was effected January 1, 2017. See Note 1: Organization and Basis of Presentation within the June 30, 2018 quarterly report on Form 10-Q for further discussion.

 

BLUEGREEN VACATIONS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended

 

 

June 30,

 

 

2018

 

2017

 

 

 

 

 

*As Adjusted

Operating activities:

 

 

 

 

 

 

Net income

 

$

 53,609

 

$

 47,806

Adjustments to reconcile net income to net cash provided

 

 

 

 

 

 

by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

 7,597

 

 

 7,012

Loss on disposal of property and equipment

 

 

 —

 

 

 428

Provision for loan losses

 

 

 21,447

 

 

 22,546

Provision (benefit) for deferred income taxes

 

 

 2,215

 

 

 (4,077)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Notes receivable

 

 

 (24,236)

 

 

 (14,741)

Prepaid expenses and other assets

 

 

 (16,122)

 

 

 (17,397)

Inventory

 

 

 (25,770)

 

 

 (26,351)

Accounts payable, accrued liabilities and other, and

 

 

 

 

 

 

deferred income

 

 

 4,475

 

 

 8,795

Net cash provided by operating activities

 

 

 23,215

 

 

 24,021

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

 (15,105)

 

 

 (5,407)

Net cash used in investing activities

 

 

 (15,105)

 

 

 (5,407)

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

Proceeds from borrowings collateralized

 

 

 

 

 

 

by notes receivable

 

 

 73,706

 

 

 148,374

Payments on borrowings collateralized by notes receivable

 

 

 (68,531)

 

 

 (133,244)

Proceeds from borrowings collateralized

 

 

 

 

 

 

by line-of-credit facilities and notes payable

 

 

 50,042

 

 

 30,000

Payments under line-of-credit facilities and notes payable

 

 

 (24,671)

 

 

 (16,039)

Payments of debt issuance costs

 

 

 (187)

 

 

 (2,839)

Dividends paid

 

 

 (22,420)

 

 

 (20,000)

Net cash provided by financing activities

 

 

 7,939

 

 

 6,252

Net increase in cash and cash equivalents

 

 

 

 

 

 

and restricted cash

 

 

 16,049

 

 

 24,866

Cash, cash equivalents and restricted cash at beginning of period

 

 

 243,349

 

 

 190,228

Cash, cash equivalents and restricted cash at end of period

 

$

 259,398

 

$

 215,094


BLUEGREEN VACATIONS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended

 

 

June 30,

 

 

2018

 

2017

 

 

 

 

 

 

 

Supplemental schedule of operating cash flow information:

 

 

 

 

 

 

Interest paid, net of amounts capitalized

 

$

 14,250

 

$

 13,071

Income taxes paid

 

$

 14,618

 

$

 26,406

 

 

 

 

 

 

 

 

 

Supplemental schedule of non-cash investing and financing activities:

 

 

 

 

 

 

Acquisition of inventory, property, and equipment for notes payable

 

$

 24,258

 

$

 —

Restricted cash received on securitization, pending provision
  of additional collateral

 

$

 —

 

$

 14,578

 

* See Note 2: Significant Accounting Policies within the June 30, 2018 quarterly report on Form 10-Q for further discussion.


 

BLUEGREEN VACATIONS CORPORATION

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except for per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

June 30,

 

2017

 

 

2018

 

*As Adjusted

ASSETS 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 205,745

 

$

 197,337

Restricted cash ($20,959 and $19,488 in VIEs at June 30, 2018

 

 

 

 

 

 

and December 31, 2017, respectively)

 

 

 53,653

 

 

 46,012

Notes receivable, net ($296,016 and $279,188 in VIEs

 

 

 

 

 

 

at June 30, 2018 and December 31, 2017, respectively)

 

 

 429,647

 

 

 426,858

Inventory

 

 

 327,897

 

 

 281,291

Prepaid expenses

 

 

 17,037

 

 

 10,743

Other assets

 

 

 61,996

 

 

 52,506

Intangible assets, net

 

 

 61,912

 

 

 61,978

Loan to related party

 

 

 80,000

 

 

 80,000

Property and equipment, net

 

 

 87,430

 

 

 74,756

Total assets

 

$

 1,325,317

 

$

 1,231,481

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Accounts payable

 

$

 21,189

 

$

 22,955

Accrued liabilities and other

 

 

 86,009

 

 

 77,317

Deferred income

 

 

 14,442

 

 

 16,893

Deferred income taxes

 

 

 91,181

 

 

 88,966

Receivable-backed notes payable - recourse

 

 

 101,582

 

 

 84,697

Receivable-backed notes payable - non-recourse (in VIEs)

 

 

 325,512

 

 

 336,421

Lines-of-credit and notes payable

 

 

 149,651

 

 

 100,194

Junior subordinated debentures

 

 

 70,908

 

 

 70,384

Total liabilities

 

 

 860,474

 

 

 797,827

 

 

 

 

 

 

 

Commitments and Contingencies 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' Equity

 

 

 

 

 

 

Common stock, $.01 par value, 100,000,000 shares authorized; 74,734,455

 

 

 

 

 

 

shares issued and outstanding at June 30, 2018 and December 31, 2017

 

 

 747

 

 

 747

Additional paid-in capital

 

 

 274,366

 

 

 274,366

Retained earnings

 

 

 140,785

 

 

 115,520

Total Bluegreen Vacations Corporation shareholders' equity

 

 

 415,898

 

 

 390,633

Non-controlling interest

 

 

 48,945

 

 

 43,021

Total shareholders' equity

 

 

 464,843

 

 

 433,654

Total liabilities and shareholders' equity

 

$

 1,325,317

 

$

 1,231,481

 

*See Note 2: Significant Accounting Policies within the June 30, 2018 quarterly report on Form 10-Q for further discussion.

 

 


 

BLUEGREEN VACATIONS CORPORATION

ADJUSTED EBITDA RECONCILIATION

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended
June 30,

 

For the Six Months Ended
June 30,

(in thousands)

 

2018

 

2017

 

2018

 

2017

Net income attributable to shareholder(s)

 

$

 26,710

 

$

 23,990

 

$

 47,685

 

$

 41,639

Net income attributable to the
  non-controlling interest in
  Bluegreen/Big Cedar Vacations

 

 

 3,317

 

 

 3,520

 

 

 5,924

 

 

 6,167

Adjusted EBITDA attributable to the
  non-controlling interest
  in Bluegreen/Big Cedar Vacations

 

 

 (3,292)

 

 

 (3,413)

 

 

 (5,884)

 

 

 (5,973)

Loss (Gain) on assets held for sale

 

 

 11

 

 

 18

 

 

 (9)

 

 

 40

Add: depreciation and amortization

 

 

 2,989

 

 

 2,309

 

 

 5,917

 

 

 4,669

Less: interest income (other than interest
  earned on VOI notes receivable)

 

 

 (1,381)

 

 

 (2,091)

 

 

 (2,816)

 

 

 (4,195)

Add: interest expense - corporate and other

 

 

 3,873

 

 

 3,533

 

 

 6,930

 

 

 6,871

Add: franchise taxes

 

 

 43

 

 

 28

 

 

 124

 

 

 55

Add: provision for income taxes

 

 

 9,353

 

 

 15,292

 

 

 16,554

 

 

 25,903

Corporate realignment cost

 

 

 275

 

 

 —

 

 

 751

 

 

 —

Total Adjusted EBITDA

 

$

 41,898

 

$

 43,186

 

$

 75,176

 

$

 75,176

 


 

BLUEGREEN VACATIONS CORPORATION

SEGMENT ADJUSTED EBITDA SUMMARY

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended
June 30,

 

For the Six Months Ended
June 30,

(in thousands)

 

2018

 

2017

 

2018

 

2017

Adjusted EBITDA - sales of VOIs
  and financing

 

$

 48,255

 

$

 49,211

 

$

 91,981

 

$

 88,372

Adjusted EBITDA - resort operations
  and club management

 

 

 13,750

 

 

 11,068

 

 

 25,829

 

 

 21,632

Total Segment Adjusted EBITDA

 

 

 62,005

 

 

 60,279

 

 

 117,810

 

 

 110,004

Less: Corporate and other

 

 

 (20,107)

 

 

 (17,093)

 

 

 (42,634)

 

 

 (34,828)

Total Adjusted EBITDA

 

$

 41,898

 

$

 43,186

 

$

 75,176

 

$

 75,176

 


 

BLUEGREEN VACATIONS CORPORATION

SALES OF VOIs AND FINANCING SEGMENT- ADJUSTED EBITDA

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended June 30,

 

 

2018

 

2017

 

 

Amount

 

% of

System-

wide sales

of VOIs (5)

 

Amount

 

% of

System-

wide sales

of VOIs (5)

(in thousands)

 

 

 

 

 

 

 

 

 

 

Developed VOI sales (1)

 

$

 80,715

 

47%

 

$

 65,214

 

39%

Secondary Market sales

 

 

 55,258

 

32

 

 

 40,316

 

24

Fee-Based sales

 

 

 89,934

 

52

 

 

 93,612

 

56

JIT sales

 

 

 15,314

 

9

 

 

 17,490

 

11

Less: Equity trade allowances (6)

 

 

 (69,260)

 

(40)

 

 

 (50,282)

 

(30)

System-wide sales of VOIs

 

 

 171,961

 

100%

 

 

 166,350

 

100%

Less: Fee-Based sales

 

 

 (89,934)

 

(52)

 

 

 (93,612)

 

(56)

Gross sales of VOIs

 

 

 82,027

 

48

 

 

 72,738

 

44

Provision for loan losses (2)

 

 

 (13,454)

 

(16)

 

 

 (13,333)

 

(18)

Sales of VOIs

 

 

 68,573

 

40

 

 

 59,405

 

36

Cost of VOIs sold (3)

 

 

 (6,789)

 

(10)

 

 

 (1,749)

 

(3)

Gross profit (3)

 

 

 61,784

 

90

 

 

 57,656

 

97

Fee-Based sales commission revenue (4)

 

 

 60,086

 

67

 

 

 63,915

 

68

Financing revenue, net of financing expense

 

 

 15,160

 

9

 

 

 15,270

 

9

Other fee-based services - title operations, net

 

 

 2,060

 

1

 

 

 4,597

 

3

Net carrying cost of VOI inventory

 

 

 (1,650)

 

(1)

 

 

 (707)

 

0

Selling and marketing expenses

 

 

 (83,323)

 

(48)

 

 

 (86,672)

 

(52)

General and administrative expenses - sales and
  marketing

 

 

 (7,511)

 

(4)

 

 

 (6,345)

 

(4)

Operating profit - sales of VOIs and financing

 

 

 46,606

 

27%

 

 

 47,714

 

29%

Add: Depreciation

 

 

 1,649

 

 

 

 

 1,497

 

 

Adjusted EBITDA - sales of VOI and financing

 

$

 48,255

 

 

 

$

 49,211

 

 

  • Developed VOI sales represent sales of VOIs acquired or developed by us as part of our developed VOI business. Developed VOI sales do not include Secondary Market sales, Fee-Based sales or JIT sales.
  • 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).
  • 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).
  • Percentages for Fee-Based sales commission revenue are calculated as a percentage of Fee-Based sales (and not of system-wide sales of VOIs).
  • Represents the applicable line item, calculated as a percentage of system-wide sales of VOIs, unless otherwise indicated in the above footnotes.
  • 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- ADJUSTED EBITDA

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended June 30,

 

 

2018

 

2017

 

 

Amount

 

% of

System-

wide sales

of VOIs (5)

 

Amount

 

% of

System-

wide sales

of VOIs (5)

(in thousands)

 

 

 

 

 

 

 

 

 

 

Developed VOI sales (1)

 

$

 128,246

 

42%

 

$

 138,544

 

47%

Secondary Market sales

 

 

 131,547

 

43

 

 

 78,979

 

26

Fee-Based sales

 

 

 158,618

 

52

 

 

 159,793

 

54

JIT sales

 

 

 18,683

 

6

 

 

 23,068

 

8

Less: Equity trade allowances (6)

 

 

 (132,289)

 

(43)

 

 

 (104,408)

 

(35)

System-wide sales of VOIs

 

 

 304,805

 

100%

 

 

 295,976

 

100%

Less: Fee-Based sales

 

 

 (158,618)

 

(52)

 

 

 (159,793)

 

(54)

Gross sales of VOIs

 

 

 146,187

 

48

 

 

 136,183

 

46

Provision for loan losses (2)

 

 

 (21,473)

 

(15)

 

 

 (22,542)

 

(17)

Sales of VOIs

 

 

 124,714

 

41

 

 

 113,641

 

38

Cost of VOIs sold (3)

 

 

 (8,601)

 

(7)

 

 

 (4,908)

 

(4)

Gross profit (3)

 

 

 116,113

 

93

 

 

 108,733

 

96

Fee-Based sales commission revenue (4)

 

 

 105,940

 

67

 

 

 109,069

 

68

Financing revenue, net of financing expense

 

 

 29,923

 

10

 

 

 30,831

 

10

Other fee-based services - title operations, net

 

 

 3,506

 

1

 

 

 6,128

 

2

Net carrying cost of VOI inventory

 

 

 (4,167)

 

(1)

 

 

 (2,381)

 

(1)

Selling and marketing expenses

 

 

 (149,006)

 

(49)

 

 

 (153,924)

 

(52)

General and administrative expenses - sales and
  marketing

 

 

 (13,644)

 

(4)

 

 

 (13,099)

 

(4)

Operating profit - sales of VOIs and financing

 

 

 88,665

 

29%

 

 

 85,357

 

29%

Add: Depreciation

 

 

 3,316

 

 

 

 

 3,015

 

 

Adjusted EBITDA - sales of VOIs and financing

 

$

 91,981

 

 

 

$

 88,372

 

 

  • Developed VOI sales represent sales of VOIs acquired or developed by us as part of our developed VOI business. Developed VOI sales do not include Secondary Market sales, Fee-Based sales or JIT sales.
  • 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).
  • 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).
  • Percentages for Fee-Based sales commission revenue are calculated as a percentage of Fee-Based sales (and not of system-wide sales of VOIs).
  • Represents the applicable line item, calculated as a percentage of system-wide sales of VOIs, unless otherwise indicated in the above footnotes.
  • 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,

 

 

2018

 

2017

 

% Change

 

2018

 

2017

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of sales offices at period-end

 

 

 24

 

 

 23

 

 4

 

 

 24

 

 

 23

 

 4

Number of active sales arrangements
  with third-party clients at period-end

 

 

 14

 

 

 13

 

 8

 

 

 14

 

 

 13

 

 8

Total number of VOI sales transactions

 

 

 11,235

 

 

 10,851

 

 4

 

 

 20,004

 

 

 19,040

 

 5

Average sales price per transaction

 

$

 15,442

 

$

 15,475

 

 —

 

$

 15,351

 

$

 15,675

 

 (2)

Number of total guest tours

 

 

 65,570

 

 

 70,972

 

 (8)

 

 

 115,767

 

 

 124,208

 

 (7)

Sale-to-tour conversion ratio–
  total marketing guests

 

 

17.1%

 

 

15.3%

 

 12

 

 

17.3%

 

 

15.3%

 

 13

Number of new guest tours

 

 

 41,628

 

 

 47,197

 

 (12)

 

 

 71,507

 

 

 80,613

 

 (11)

Sale-to-tour conversion ratio–
  new marketing guests

 

 

14.8%

 

 

12.5%

 

 18

 

 

14.8%

 

 

12.6%

 

 17

Percentage of sales to existing owners

 

 

49.0%

 

 

47.4%

 

 3

 

 

51.2%

 

 

49.2%

 

 4

Average sales volume per guest

 

$

 2,646

 

$

 2,366

 

 12

 

$

 2,653

 

$

 2,403

 

 10

 


 

BLUEGREEN VACATIONS CORPORATION

RESORT OPERATIONS AND CLUB MANAGEMENT SEGMENT- ADJUSTED EBITDA

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended
June 30,

 

For the Six Months Ended
June 30,

(in thousands)

 

2018

 

 

 

2017

 

 

 

2018

 

 

 

2017

 

 

Resort operations and
  club management revenue

 

$

 41,275

 

 

 

$

 36,091

 

 

 

$

 82,812

 

 

 

$

 74,065

 

 

Resort operations and club management expense

 

 

 (27,928)

 

 

 

 

 (25,420)

 

 

 

 

 (57,781)

 

 

 

 

 (53,237)

 

 

Operating profit - resort
  operations and club management

 

 

 13,347

 

32%

 

 

 10,671

 

30%

 

 

 25,031

 

30%

 

 

 20,828

 

28%

Add: Depreciation

 

 

 403

 

 

 

 

 397

 

 

 

 

 798

 

 

 

 

 804

 

 

Adjusted EBITDA - resort operations
  and club management

 

$

 13,750

 

 

 

$

 11,068

 

 

 

$

 25,829

 

 

 

$

 21,632

 

 

 


 

BLUEGREEN VACATIONS CORPORATION

CORPORATE AND OTHER - ADJUSTED EBITDA

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended
June 30,

 

For the Six Months Ended
June 30,

(in thousands)

 

2018

 

2017

 

2018

 

2017

General and administrative expenses -
  corporate and other

 

$

 (18,870)

 

$

 (14,461)

 

$

 (40,462)

 

$

 (29,960)

Adjusted EBITDA attributable to the
  non-controlling interest
  in Bluegreen/Big Cedar Vacations

 

 

 (3,292)

 

 

 (3,413)

 

 

 (5,884)

 

 

 (5,973)

Other income (expense), net

 

 

 710

 

 

 244

 

 

 891

 

 

 (1)

Add: Financing revenue - corporate and other

 

 

 1,460

 

 

 2,167

 

 

 2,968

 

 

 4,356

Less:  Interest income (other than
  interest earned on VOI notes receivable)

 

 

 (1,381)

 

 

 (2,091)

 

 

 (2,816)

 

 

 (4,195)

Franchise taxes

 

 

 43

 

 

 28

 

 

 124

 

 

 55

Loss (Gain) on assets held for sale

 

 

 11

 

 

 18

 

 

 (9)

 

 

 40

Depreciation and amortization

 

 

 937

 

 

 415

 

 

 1,803

 

 

 850

Corporate realignment cost

 

 

 275

 

 

 —

 

 

 751

 

 

 —

Corporate and other

 

$

 (20,107)

 

$

 (17,093)

 

$

 (42,634)

 

$

 (34,828)

 

 


 

BLUEGREEN VACATIONS CORPORATION

FREE CASH FLOW RECONCILIATION

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended
June 30,

(in thousands)

 

2018

 

2017

Net cash provided by operating activities

 

$

 23,215

 

$

 24,021

Purchases of property and equipment

 

 

 (15,105)

 

 

 (5,407)

Free Cash Flow

 

$

 8,110

 

$

 18,614

 


 

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,

 

 

2018

 

2017

 

2018

 

2017

Gross sales of VOIs

 

$

 82,027

 

$

 72,738

 

$

 146,187

 

$

 136,183

Add: Fee-Based sales

 

 

 89,934

 

 

 93,612

 

 

 158,618

 

 

 159,793

System-wide sales of VOIs

 

$

 171,961

 

$

 166,350

 

$

 304,805

 

$

 295,976

 


 

BLUEGREEN VACATIONS CORPORATION

OTHER FINANCIAL DATA

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended
June 30,

 

 

For the Six Months Ended
June 30,

 

 

2018

 

2017

 

 

2018

 

2017

Financing Interest Income

 

$

 19,658

 

$

 19,824

 

 

$

 39,272

 

$

 40,021

Financing Interest Expense

 

 

 (4,622)

 

 

 (4,544)

 

 

 

 (9,332)

 

 

 (8,850)

Non-Financing Interest Income

 

 

 1,460

 

 

 2,167

 

 

 

 2,968

 

 

 4,356

Non-Financing Interest Expense

 

 

 (3,873)

 

 

 (3,533)

 

 

 

 (6,930)

 

 

 (6,871)

Mortgage Servicing Income

 

 

 1,471

 

 

 1,256

 

 

 

 2,916

 

 

 2,417

Mortgage Servicing Expense

 

 

 (1,347)

 

 

 (1,266)

 

 

 

 (2,933)

 

 

 (2,757)

Title Revenue

 

 

 3,175

 

 

 5,737

 

 

 

 5,863

 

 

 8,554

Title Expense

 

 

 (1,115)

 

 

 (1,140)

 

 

 

 (2,357)

 

 

 (2,426)

 


 

BLUEGREEN VACATIONS CORPORATION
DEFINITIONS

 

Principal Components Affecting our Results of Operations

 

Principal Components of Revenues

 

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 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. We also earn fees from providing mortgage servicing to certain third-party developers 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 through utilizing them 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. Revenues 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 tours 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, 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. 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.